Rwanda's President Paul Kagame (seated, 2nd right) and his host Kenya's President Uhuru Kenyatta (seated on right) sit in the control room at the official commissioning of a KenGen 140MW Olkaria geothermal power plant in Naivasha, Kenya in February.  Picture: REUTERS
Rwanda's President Paul Kagame (seated, 2nd right) and his host Kenya's President Uhuru Kenyatta (seated on right) sit in the control room at the official commissioning of a KenGen 140MW Olkaria geothermal power plant in Naivasha, Kenya in February. Picture: REUTERS

FEW people could be more aware of the constraints that Rwanda has been working under than President Paul Kagame. Little more than 20 years ago, the hardline leader was engaged in a battle for the country’s existence as it was devastated by genocide. Today its turnaround amounts to an extraordinary feat, often referred to as "Rwanda’s economic miracle".

Tiny, landlocked and 1,000km from the nearest port, with high electricity prices and 120-million mostly poor inhabitants, Rwanda has recorded 8% annual growth rates for the decade to 2012. More than 1-million people have been taken out of extreme poverty.

Good roads, security, healthcare services and an efficient bureaucracy are impressive in a region where all are in short supply.

The country is developing agro-processing industries to add value to rural products and is marketing itself as a continental hub for services. The World Bank ranks it third as Africa’s most business-friendly destination. This is not merely the result of growth from a low base, but also one of policy directed from the top.

The president is a former military commander brought up in a Ugandan refugee camp, who now mingles with global leaders discussing subjects from the dignity of education to speeding up the pace of e-government. Under Mr Kagame, Rwanda has studied locations worldwide — from Jersey to Singapore — that perform against the odds, and considered what to emulate.

His administration has reformed business rules, offered tax incentives, promoted women, championed East African integration, attracted aid money — which still funds 38% of the budget — and provided state spending that has propelled growth.

All this will not be enough, however, to secure Rwanda’s future. Several of the efforts underpinning one key goal — to become a middle-income country by 2020 — are turning sluggish.

Growth is slowing and forecast at 6.5% this year. Dollars are so scarce that some firms cannot pay bills. Exports amount to only $600m a year, producing what the World Bank calls a "chronic, large trade deficit" at 17.2% of gross domestic product.

Flagship projects in construction, tourism and energy are behind schedule. The effort to develop the "land of a thousand hills" as a hub for services — which accounts for the lion’s share of growth — is limited by Rwanda’s small number of consumers.

So perhaps it makes sense that, at a national leadership retreat in March, Mr Kagame took issue with senior staff in his administration. "Why are you not interested in delivering on what you must deliver for your people?" he asked. "Don’t just be so full of yourselves."

In an attack judged by his critics to be "dehumanising", he called on ministers and senior officials "to deliver or die". He added: "We are failing as individuals to take stock of our own weaknesses and problems that we transmit into the system."

He had the right to be angry, he said, accusing individuals of doing "little or nothing" to correct planning failures and weak leadership in state-backed projects.

Mr Kagame’s authoritarianism can inspire fear. "He just loses it," says a close collaborator who attended the retreat, choosing his words with care despite offering his view anonymously.

"He definitely expressed his displeasure with the speed at which certain projects are moving. I guess he gets frustrated. Our president won’t allow us to waste time. He knows we can’t afford to be complacent."

In many ways, Mr Kagame may well be right. Given its past, Rwanda cannot afford to fail. Almost a generation after the 1994 genocide that killed 800,000 people, the country remains a "test-tube experiment", the outcome of which remains uncertain, says one senior western diplomat.


THE government, meanwhile, is writing its own rule book, one that is written in authoritarian ink and regularly coloured by allegations of human rights abuses, which range from the suppression of free speech to alleged murder of political rivals.

Social cohesion, such as it exists, is "imposed", according to one senior international official. The Tutsi-dominated hierarchy is drawn from the minority ethnic group that was targeted in the genocide.

Rwanda’s leaders still see an existential threat from Hutu extremists, drawn from the majority group, who carried out the genocide. Tensions seethe despite the fact that ethnicity has become taboo in the attempt to overlook divisions in a country where some victims and perpetrators of the 1994 atrocities live side by side.

One foreign former admirer of the administration says the government risks recreating an "apartheid" system. "Hutus understand there is a glass ceiling," says the senior international official, who describes Rwanda’s "economic miracle" as overstated.

"If you’re not playing to the tune of the RPF (the ruling Rwandan Patriotic Front party) you’re dead economically. There is no such thing as free enterprise in Rwanda. It doesn’t exist."

While the state — frequently in the form of the RPF — has a heavy hand in many areas of the economy, it seeks to market a business-friendly environment for private investors. Neither the RPF nor Mr Kagame’s rule is likely to be tested in the short term, in spite of a 2017 constitutional deadline — by then he will have been president for 17 years — for him to step down.

Diplomats and insiders say changing the constitution would be easy, legal and probably widely supported even where driven only by fear of instability.

Most investors appear to back the prospect of continuity.

"He stays, no questions," says a senior international official, adding with irony: "He will have to abide by the wish of the Rwandan people, who will come on their knees (begging him to stay)."

The official worries, however, that although extending Mr Kagame’s personalised rule might secure stability in the near term, it risks weakening institutions and inflaming dissent in the longer term.

Donors, who in 2012 halted a considerable amount of aid following allegations that Rwanda was supporting rebels in the eastern Democratic Republic of Congo, are unlikely to resort to the same action should Mr Kagame stay on.

Private concerns persist, however. "You can make a perfectly credible administration case for him staying on, focusing on how it is remarkable what’s been achieved," says the western diplomat. "But it is also impossible to become a challenger. It is not permitted, even within the (ruling) party. My concern is if he does stay on, when does he ever go?"

Against the echoey soundtrack of building works, Ali Kashan, project manager of Rwanda’s forthcoming — and long-delayed — Marriott Hotel, points towards a boarded up, large, dusty door frame. "This is our ballroom," he says. There is a hint of triumph in his voice that is in keeping with Kigali’s ambitious view of its future. "The entire vision of the country is to develop Rwanda as a hub for meetings, incentives, conferences and exhibitions," says Frank Murangwa, of the Rwanda Convention Bureau, a state marketing agency.

Rwanda is betting big on becoming a pan-African conference destination. Well-laid roads pass building project after building project across the capital, many of them hotels planning conference facilities.

"Conference bookings come with capacity," says Mr Murangwa. "We need 20, 50 conferences (a year). The more we get bigger hotels, the more we will attract more conferences."

Several of the conference-related projects are attracting big names, including a five-star Radisson Blu, a four-star Park Inn by Radisson and, for 2018, a Sheraton.

The five-star Marriott plans to open this year with 254 rooms and gala conference facilities. The ballroom should be big enough for 187 people.

"This would be a big hotel anywhere in the world," says Mr Kashan, a Dubai-based contractor, standing on a balcony looking down on to the pool area, where 500 workers are applying the finishing touches.

Of Rwanda’s $305m tourism takings last year, conferences accounted for $49m. The aim is to raise that to $150m by 2017.

Tourism is the biggest foreign exchange earner and the conference programme "can be a quick-win in terms of increasing our foreign exchange", central bank governor John Rwangombwa says. "We expect that in the next three years we’ll have yielded results."

Key to this is the expansion of RwandAir, the national flag carrier, in which the government owns 99%. Its present 17 destinations and seven aircrafts are expected to increase respectively to 25 and 14 over the next few years.

RwandAir CEO John Mirenge wants to fly a million passengers a year by 2019, double that of today’s number. "The most important objective the government of Rwanda set itself when they were reinvesting in this airline was to provide accessibility to the country, to support the other service industries in the country — tourism, conference possibilities, meetings," he says.


HE adds that the expansion has "catalysed" the travel market and attracted international airlines such as KLM and Qatar to land in Kigali.

Rwanda aims to lure dollars out of the pocket of every conference-goer, with activities ranging from evening entertainment to weekend gorilla treks.

"Conference delegates in Rwanda spend $245 each per day but internationally it’s $665," says Mr Murangwa, comparing Kigali with the likes of Vienna, Berlin, Paris and Barcelona, as well as Africa’s top conference destinations in Egypt, Kenya and SA.

Many projects remain far behind schedule. One example is the $300m Kigali convention centre — the very place for which Rwanda issued its debut $400m bond on the international markets to fund. The crane towering above the capital’s great spherical hope stands abandoned following an argument with the Chinese contractor, which Rwanda is taking to court.

When Rwanda hosted the annual African Development Bank meetings last year it was forced to use tents for meetings and private villas to accommodate some of the 2,500 visiting delegates.

Rwanda’s cast-iron security is a plus, however. In November, Kigali hosts the annual general assembly of Interpol, the international police network.

Financial Times 

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