Rwanda: The Story That Could Have Been Ours

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1994 was a very pivotal year for both Rwanda and South Africa. South Africa emerged from Apartheid with the promise of a rainbow nation, a future of reconciliation and growth. There were encouraging signs of a return in foreign direct investment, as all tariffs on the once isolated country were lifted. Rwanda, on the other hand, was completely devastated by a genocide, which left a million citizens dead, not to mention the amount that lost their lives in the civil war. Rwanda’s GDP per capita collapsed to $125.50 in 1994[1], the population stagnated at 6 million[2] and the average life expectancy declined to 28.[3]

Fast forward 25 years and the two stories couldn’t be more of a contrast. Rwanda rose like a phoenix from the ashes, averaging extremely high rates of success, at one point reaching 13% economic growth in 2002.[4] Its GDP per capita has shot to $878.671[5], that is to say, the average Rwandan’s wealth grew by 600% over that period. Furthermore, the population has doubled[6] and the median life expectancy now averages around 68 years of age.[7] If one walks around the tranquil and beautifully managed towns and cities of Rwanda, one experiences no sense of fear, for Rwanda has one of the lowest crime rates in the world. Sophisticated and armed policemen are everywhere to see, an opposing sight to the rabble that is the South African Police Force.

More importantly, there is a sense of optimism, a feeling of an underdog that can rise to become a real power. There is a spirit of tackling issues, off taking responsibility and a great work ethic. There is no talk of, “Because of the genocide, we cannot do anything.” In fact, the current president, Paul Kagame has stated that their purpose should be to change Rwanda in such a significant way, that the future country should be unrecognizable to the horrors of the past. The president has a vision of transforming Rwanda into the Singapore of Africa and if the country continues in its projections, he will be successful with that. So be careful ANC. You are not only at risk of losing your majority and severely damaging South Africa’s livelihood. You are in danger of regulating South Africa to has-been, being overshot by East African countries that are seizing upon the vacuum of opportunity that is left behind by South Africa’s paralysis. The dominance of East African airlines is a clear example of this.

Of course, in South Africa’s 25 years, everything wasn’t always as terrible as they are now. We experienced quite a period of economic success in the latter years of the Mbeki presidency, a man who did his best to defy his own party. But the Zuma years, to be liberal could only be described as a waste of time, something that even our current president agrees with. We have stagnated at an average of 1% growth for five years now and any achievements that had been attained by President Mbeki have by now been virtually wiped out. At the beginning of the Zuma presidency, unemployment was 21%.[8] It is now back to 29%.

But, more importantly, there is a sense of pessimism in the country. Struck by repeated setbacks, the country has a serious problem with morale and this can be sensed more than anything. There is little hope and a feeling that to dream of any high aspirations would only lead to ruin. The best one could do, is to keep your head down and do your work diligently, hoping and praying that things can slightly improve. And why should we settle for that? When did it reach this point where our goals had reached the stage that to survive is good enough?

But more importantly, how did Rwanda succeed in the period we failed. How did their situation so drastically improve while we stagnated? How did a landlocked country, which was previously so backward and still surrounded by dubious neighbors engaged in civil war, rise so far above its station. To this, economists offer various answers, which illustrates the sometimes dogmatic and narrow-minded pursuit of the profession. But one thing that binds all of their reasons is that Rwanda, in its pursuit of the Singapore model, drastically liberalized its economy. Here is a graph that demonstrates this.

The economic freedom of South Africa compared to Rwanda over a 25-year cycle. (Rwanda is pink, South Africa is grey.)[9]
Produced by the Heritage Foundation, this tracks the economic freedom of a country and it is amazing to see the success a country reaches, the higher it climbs on the scale. It is an average of the categories listed at the bottom, starting at property rights and ending at financial freedom. To receive an idea of how important to the prosperity of a country it is to have a high percentage on this scale, consider that some of the countries that are achieving the greatest level of riches (Hong Kong, Singapore, New Zealand, Switzerland, Australia, and Ireland) are rated in the free category (between 80% and 100%). The countries that have the lowest score, are the Republic of the Congo, Eritrea, Cuba, Venezuela, and North Korea. So while South Africa collapsed 10% in the economic freedom outcome, Rwanda rose 30%.

To delve quickly into the specifics, Rwanda has, for example, some of the lowest labor costs and the most liberal labor laws in the world. In Rwanda, the overall tax burden equals 15% of total domestic income.[10] In South Africa, that number is 35%.[11] Rwanda goes so far as to incentivize companies to come to their shores in numerous ways, such as reduced or even zero corporate tax, if the company establishes itself in a sector that Rwanda deems critical.[12] Compare that to South Africa, with its constant diatribes against white monopoly capital and proposed new amendments to the Employment Equity Act, which will set specific targets for business to have a certain number of blacks representatives.[13] It should not come as a surprise that Rwanda is looked upon as more investment-friendly.

Coupled with that, is the simple truth that power corrupts and absolute power corrupts absolutely. So, the fact that Rwanda has a much smaller state than South Africa automatically entails less corruption, which is evident by the corruption score of Rwanda. Rwanda is rated 51st least corrupt out of a total of 180 countries, that is to say, there are only 50 countries in the world that are less corrupt than Rwanda.[14] South Africa, on the other hand, is ranked 70th, above a country such as Greece.[15]

Therefore, in summary, we do not have a problem in South Africa of a specific race that should control the country. That is clear. The majority of Rwandans are black and the country is thriving. The majority of Singapore is Asian and the country is thriving. The majority of Ireland is white and the country is thriving. This is not an issue of race. It is a problem of the wrong ideas.

South Africa is plagued by the concepts of Socialism and Communism. The idea that the state is a more efficient method of generating investment, when it clearly isn’t, and the record of history is absolutely clear on this matter. Remove the economic shackles of control on the populace and in pursuit of their dreams, in the furtherance of their ideals, they will make the country great on their own. That is the only way we will claim the future of Rwanda for ourselves, a story that should have been ours.

Donald Brown is studying LLB through the university of South Africa, residing in Somerset West. But he is also a trader (forex/indices), programmer, author and entrepreneur. He spends his free time gaming, creating games and apps, writing and reading, with the latter two mostly devoted to political and philosophical issues. His books can be found here:

https://www.amazon.com/Storms-Sanctuary-Donald-Brown-ebook/dp/B0822RRQJB

https://www.amazon.com/dp/B082WD4YMR

 

[1] https://tradingeconomics.com/rwanda/gdp-per-capita

[2] https://tradingeconomics.com/rwanda/population

[3] https://data.worldbank.org/indicator/SP.DYN.LE00.IN?locations=RW

[4] https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=RW

[5] https://www.ceicdata.com/en/indicator/rwanda/forecast-nominal-gdp-per-capita

[6] https://tradingeconomics.com/rwanda/population

[7] https://www.worldlifeexpectancy.com/rwanda-life-expectancy

[8] https://tradingeconomics.com/south-africa/unemployment-rate

[9] https://www.heritage.org/index/visualize?cnts=southafrica|rwanda&src=country

[10] https://www.heritage.org/index/country/rwanda

[11] https://www.heritage.org/index/country/southafrica

[12] https://rdb.rw/why-rwanda/investment-incentives/

[13] https://businesstech.co.za/news/business/370656/south-africas-big-employment-equity-shake-up-is-coming/

[14] https://tradingeconomics.com/south-africa/corruption-rank

[15] https://tradingeconomics.com/south-africa/corruption-rank