Rwanda has distinguished itself by its economic reforms and institutional foundations for economic growth. But can Rwanda’s institutions survive a change in political leadership? Are there lessons for other African countries?
In September 2011, a working group led by the Legatum Institute visited Rwanda to gain a better understanding of the country’s economic experience in the post-genocide period.
Co-authored by Eli Dourado (Department of Economics at George Mason University), LI’s Dalibor Rohac (Deputy Director of Economic Studies) and Hemal Shah(Programme Coordinator of Economic Studies), Six Questions You Always Wanted to Ask About Africa… and Answers from Rwanda summarises the key lessons Legatum’s team has drawn from the trip.
Questions and key findings:
1. Can rule of law take root in Africa?
Yes. Rwanda illustrates that with a commitment to reducing corruption and improving institutions, good governance can emerge in the heart of Africa. Other sub-Saharan countries can learn from Rwanda’s example.
2. What does Rwanda tell us about effective policymaking in Africa?
Rwanda’s pursuit of radical economic reforms is exemplary. The economic reforms that have occurred in Rwanda are due to the combination of a clear sense of direction embraced by Kagame’s administration and the technical competence required to execute the necessary reforms.
3. Are good institutions enough?
No. While the immediate bottlenecks to economic growth in the country are largely independent of policies, there are still a number of areas, especially taxation, where "having good institutions" does not automatically translate into having the best and most efficient policies.
4. Can "Big Push" development assistance work?
Although large-scale aid programmes have been largely discredited, if "Big Push" is going to work anywhere, it is going to work in Rwanda. Unlike most other African countries, Rwanda has good institutions and relatively low rates of corruption. And unlike most other African governments, the Rwandan government has demonstrated its commitment to using aid money to foster economic growth.
5. Is education the answer to the problem of lack of skills?
Maybe. Solutions to the human capital shortage are not readily available. Spending more money on education is unlikely to help, since many of the skills that are lacking are tacit and subtle. However, the developed world can help by relaxing any existing visa restrictions and facilitating exchange and internship programmes for Rwandan students and young professionals.
6. Does culture matter?
It does, sometimes in unexpected ways…