Kagame seeks lasting economic miracle for Rwanda

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 turnround amounts to an extraordinary feat, often referred to as "Rwanda's economic miracle".

Tiny, landlocked and 1,000km from a port, with high electricity prices and 12m mostly poor inhabitants, Rwanda has recorded 8 per cent annual growth rates for the decade to 2012. More than 1m 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. Rwanda 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 Africa's third most business-friendly destination.

This is not merely the result of growth from a low base, but also 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 per cent of the budget - and provided government 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 per cent this year. Dollars can be so scarce that some businesses are unable to pay bills. Exports amount only to $600m a year, producing what the World Bank calls a "chronic large trade deficit" at 17.2 per cent of GDP. 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 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 personnel in his administration. "Why are you not interested in delivering on what you must deliver for your people?" he said. "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.

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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", says one senior western diplomat, the outcome of which remains uncertain.

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 re-creating 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's nor Mr Kagame's rule is likely to be tested in the short term, in spite of a 2017 constitutional deadline for him - by then president for 17 years - to step down.

Diplomats and insiders say changing the constitution would be easy, legal and probably widely supported if only because of fear of instability otherwise. Investors appear mostly 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 longer term.

Donors, who in 2012 halted a considerable amount of aid following allegations that Rwanda was supporting rebels in eastern Congo, are unlikely to make the same sort of move should Mr Kagame stays 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 senior 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?"

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