Month: December 2018

Rwanda: The Emerging Economy To Watch

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In recent years, Rwanda has proven to be a role model for the continent.

During her November 2018 visit to Rwanda, World Bank CEO Kristalina Georgieva described the country as one that has enjoyed impressive growth and often has bold ambitions.

At business summits across the world, it’s not uncommon to hear such praise about Rwanda. Various speakers have singled it out as one of the emerging economies to look out for in terms of investment opportunities, value for money and economic growth.

The statistics explain why Rwanda has become Africa’s poster child for progress. The country has reduced reliance on donations and currently, domestically funds about 84% of the budget up from about 36% two decades ago.

In the last fiscal year (2017-2018), the economy grew by 8.9%.

Barely 24 years after the horrific genocide against the Tutsi, when the East African nation lost over a million lives and the devastation left a trail of trauma and economic ruin, its achievements have often been described as miraculous.

At the center of the tiny country’s recovery is President Paul Kagame, who led the revolt that ended the genocide.

Kagame has led his country from penury to prosperity. His government has co-invested alongside private capital to reduce risk and create a more appealing proposition.

For instance, when one of Africa’s leading telecoms groups, MTN, was keen on entering the Rwandan market in 1998, the government boosted their confidence by purchasing a 20% stake in the company.

This was driven by an ambition to not only attract the firm to the country but to ensure citizens have access to affordable telecom services. Years later, the government offloaded its stake in the firm through an initial public offering, allowing citizens to be part of a meaningful income-generating firm.

MTN is just one example of the strategic approaches taken by the Kagame-led government. The same has been replicated in multiple sectors, including finance and agriculture.

The last two decades on the Rwandan economic front have also been characterized by improving the investment ecosystem to create interest from the international and local business community.

While most would concentrate on the odds against the country, such as its small size, and its landlocked location, amidst a volatile region, Kagame sought to give investors every reason to put their money in Rwanda.

In a continent that has always been associated with corruption, the Rwandan government adopted a zero-tolerance stance on graft.

This was paired with the improvement of service delivery across all sectors, eliminating the need for bribes to access public services.

The most recent Corruption Perceptions Index by Transparency International placed Rwanda as third least corrupt country in Africa.

The reforms have for the last two decades addressed challenges that have often kept investors up at night. Steps that are cumbersome in countries across the world, such as business registration, were eased to a six-hour activity, while tax declaration and registration were simplified to online processes.

The World Bank ranked Rwanda 29th globally in its 2018 Ease Of Doing Business Report and put it second in Africa. The index tracks business efficiency across the wd

Statistics from the RDB indicate there were about 10,488 hotel rooms in the country in 2017, while aviation traffic is expected to grow to about 1,151,300 in 2018, from 926,571 in 2017.

The trend is expected to persist going forward. Rwanda will by the end of 2020 have a new modern airport located in the Bugesera District, a 25-minute drive from the capital.

While pursuing externally-driven growth, Kagame has not forgotten about the home front. This led his government to adopt a ‘Made in Rwanda’ strategy in 2016, which has reduced the trade deficit by about 36% and increased the value of total exports by about 69% from about $558 million to $943 million. Local producers have fast become empowered to produce for the local and export market.

The Rwandan leader has turned his attention to regional integration in the six-member East African Community to counter complaints about Africa’s small, fragmented markets.

The consolidated market of over 200 million citizens is more reassuring to investors and makes a business case for joint infrastructure projects such as the Standard Gauge Railway, which will connect the major Kenyan centers of Mombasa and Nairobi.

Lisa Kaestner, a practice manager for finance competitiveness and innovation at the International Finance Corporation, says: “I see Rwanda is keen on this and trying to support through the East African Community. This is one way to reduce the cost of doing business. If you look at it through the doing business lenses, all countries are trying to improve.”

Kagame’s continental mission has been evident in his various roles at the African Union (AU).

As the chairperson of the AU Reforms team, Kagame has advocated for less donor dependency and more sustainable funding by African states.

He has often challenged African countries who contribute less than 30% of the AU’s budget and turn to external donors with a begging bowl, which has been blamed for influencing the body’s decisions and priorities.

As  AU chair, Kagame has sought an adjustment of terms between Africa and the rest of the world for mutual benefit. This, he has argued, is more sustainable in the long run and presents an avenue for growth among all parties, as opposed to aid, which maintains dependence.

Months after assuming the chairmanship of the AU, in March 2018, Kagame hosted over 50 African heads of state and government in Kigali for the signing of the African Continental Free Trade Area.

As a trade bloc, the trade agreement envisions a continental market of 1.2 billion people, with a combined gross domestic product of more than $3.4 trillion.

So far, 49 countries have signed the agreement, with nine ratifications. The development is a huge step towards encouraging industrialization and job creation across Africa.

Peter Mathuki, Executive Director of the East African Business Council, says: “The country’s leadership is on the grip to lift the EAC country to middle-income level faster than most African countries. The fast economic growth is premised on pillars of good governance, easy-to-do business climate and zero tolerance to corruption… Rwanda is indeed Africa’s rising star and driver for economic transformation.”

Credits to Collins Mwai and the publication in Forbes

How Can Research Support Rural Women Farmers and Entrepreneurs to Thrive in Africa?

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Winnie is an entrepreneur from Uganda who runs a successful business making probiotic yogurt and selling to other businesses and schools. When I heard her speak at a recent food security meeting in Ottawa, Canada, I learned that Winnie has not always been this successful.

Winnie’s family had always kept cattle, but most of the milk the cows produced was for consumption by the family. In 2014, Winnie received training from an organization called Yoba for Life on how to use freeze-dried bacteria to produce probiotic yogurt from her family cows’ milk, a practice that has been common in the Netherlands where Yoba for Life is based, but not in Africa. Research conducted by Yoba for Life and Heifer International developed the technology used by Winnie for producing and using freeze-dried bacteria to make yogurt in Uganda.

Winnie started selling the yogurt to neighbors and to the local shopping center. As sales increased, her family milk was not enough, and she started purchasing milk from other women farmers in her neighborhood. Soon, she teamed up with a few other women to start the Kiboga Ikamiro Women’s Group production facility. Using the new freeze-dried bacterial technology, they currently produce 150-200 liters of yogurt per day, earning USD 3500 per month. She has increased her cattle herd to 20 milking cows, employs 27 women and youth in the production facility and built a better house for her family.

Winnie is one of more than half a million women who has been involved in research projects funded under the Canadian Food Security Research Fund, a research program implemented in 24 countries over the last nine years by Canada’s International Development Research Centre and Global Affairs Canada. This program has been hugely successful at helping women, who often provide half of the agricultural labor but do not have the same land rights and access to income as men, improve their livelihoods.

It may be surprising to learn that a program focused on research can help rural women engaged in agriculture and agribusiness to thrive. When people hear of research, they often think of complex experiments done in laboratories by serious looking scientists in white lab coats working on things only they understand. But research can have very practical implications in the lives of people.

I have been a researcher for 20 years now, and I have seen the power of research and innovation in transforming the lives of women like Winnie.

First, research can help identify and develop innovations that enable women to add value to their products and thereby increase their incomes. In Nigeria and Benin, the production of indigenous vegetables has been hampered by low consumption and lack of markets for smallholder farmers. Through several years of research, researchers found new ways and technologies for producing wine and syrups, in addition to the more traditional products such as bread, to add value to these vegetables. Women increased their incomes from indigenous vegetables by over 120 percent.

Second, research can find ways of reducing the drudgery of food production and processing for women. Of the 250 million tons of crops grown in sub-Saharan Africa in 2012, a total of 75 percent were grown by smallholder farmers and these were weeded by hand. Between 50 and 70 percent of these farmers’ time was spent on weeding, and 90 percent of women smallholder farmers carry out this task themselves. In India, processing one bag of millet can take up to two days. As a result, the consumption of millet, a crop that is highly nutritious and has the potential to contribute to better nutrition is rarely consumed in India.  Through research, scientists developed a threshing machine that reduces the time it takes to thrash a bag of millet to two or three hours. As a result, women entrepreneurs using the technology increased their income from US$1800 to US$4500 per annum, close to a three-fold increase.

Third, innovations from research can increase the nutrition and health of women. In the Indian State of Uttar Pradesh, 50 million women and 15 million children suffer from anemia. A new technology that encapsulates salt with iron and iodine has led to the local production of double fortified salt in the state. Between 2014 and 2017, 40,000 metric tonnes of double fortified salt were distributed through India’s public distribution system with 85% of the targeted households purchasing and using the salt on a regular basis. The use of double fortified salt has led to a decline in the prevalence of iron deficiency from 23 to 9 percent.

Finally, research can illuminate the financial needs of women smallholder farmers and entrepreneurs and facilitate the development of appropriate products and access to these products. In Bolivia, researchers working with the Insitucion Financiera De Desarrollo increased the understanding of the fisheries sector by the financial company, leading to dthe evelopment of financial products that suited the needs of women in the sector. Between 2015 and 2017, US$ 1.9M was loaned to women entrepreneurs in the sector with an average loan size of US$ 6000.

For research to work for women, women must be engaged as researchers, producers, business owners, consumers so that they can set their priorities and contribute to the development of innovations that best suit their needs and priorities.

Dr. Jemimah Njuki is a Senior Program Specialist at Canada’s International Development Centre where she works on gender and women’s empowerment. She is an Aspen New Voices 2017 fellow. Follow her @jemimah_njuki