Rwanda is seeking to become the first East African country to achieve middle-income status by 2020, with a new blueprint rolled out on Friday.
During the next five years of the Economic Development and Poverty Reduction Strategy (EDPRS2), which is part of the bigger Vision 2020, the country hopes to double its GDP per capita.
In 2008, Rwanda came up with a development strategy to propel the country to middle-income status, with a target of growing income per capita from less than $600 currently to $1,200 by 2018.
Data on economic growth for the EDPRS1 period 2008 –2011 shows the GDP growth averaged 8.2 per cent annually, which translated into GDP per capita growth averaging 5.1 per cent per year, but experts say the country should target 11.5 per cent growth if many Rwandans are to be lifted out of poverty.
The third Integrated Household Living Conditions Survey carried out by the Rwanda statistics body shows that poverty is still high in rural areas and among the population involved in agriculture. Rural poverty stands at 48.7 per cent while urban poverty is at 22.1 per cent of the population.
The new development plan was launched by President Paul Kagame, who cautioned that, despite the progress made over the past decade, the country is still a long way from reaching its goal of attaining middle-income status in the medium term and eradicating poverty in the long term.
“EDPRS1 has given us confidence that we can achieve the goals we set as a nation and the potential for doing more is there,” the Rwandan leader told a gathering of leaders and donors.
“In EDPRS2, we are aiming at double digit growth of 11.5 per cent and reducing poverty by at least 15 per cent (from 45 per cent to fewer than 30 per cent) over the next five years. Achieving this means putting more emphasis on self-reliance, which in turn means increasing productivity at every level — individual Rwandans and the private sector, taking full ownership of the strategy and working in a more co-ordinated manner,” President Kagame said.
President Kagame, who has been credited with turning around a country devastated by genocide and civil war 19 years ago, says the impact of EDPRS “must be felt by all Rwandans.
“Every franc invested by the public treasury and the private sector should earn more in terms of impact on people’s livelihoods,” he added.
Rwanda has also been lauded by donors for using funds well and accounting for every dollar received.
Lamin M. Manneh, the UN resident co-ordinator, said donors are confident that Rwanda will achieve its five targets, especially if the country continues to put development support to use.
“Anybody who is familiar with Rwanda’s determination will have no doubt that it will surmount all its challenges. Rwanda will be among the few African countries that will attain the MDGs by 2015,” Mr Manneh said, adding that Rwanda’s proactive, dynamic and innovative approach to economic transformation remains the key driver.
According to the Ministry of Finance and Economic Planning, the EDPRS2 starting this year and ending in 2018 has budgeted $15 billion to be raised from both donors and taxpayers to lift the country out of poverty, spur economic growth, raise living standards.
Finance Minister Claver Gatete said the first thematic area of EDPRS 2 emphasises economic transformation, which will require a structural shift if the country is to achieve the 11.5 per cent average growth target.
“Private sector development and urbanisation will be key if we are to achieve our targeted growth. We will also focus more on rural development since the majority of the Rwandan population continue to live in rural areas,” he said.
The government of Rwanda is looking at increasing energy production to meet current and future demand through upping generation from the current 110MW to 600MW by 2018. This, it is hoped, will trigger industrial growth and bring down power costs.
Power in Rwanda costs $0.24/kwh compared with Kenya’s $0.15/kWh, Uganda’s $0.17/kwh, and Tanzania’s $0.05/kwh. Expensive power has been cited as one of the factors that push up production costs and make Rwanda uncompetitive for investment.
Under EDPRS2, the country has also earmarked $600 million to build a new international airport at Bugesera. The airport, according to the plan, will link Rwanda to the export market. Another plan is to position national carrier RwandAir as a strong, profitable airline.
The airline’s fleet is expected to be expanded further from seven narrow-bodied aircraft to 12, and three wide-bodied aircraft will be added.
The investment, according to government officials, will help the airline grow its annual turnover from the current $46 million to more than $350 million by 2018. RwandAir’s destinations will also grow from the current 15 to at least 25.
The country is also set to invest in an oil pipeline and railway line along the Central and Northern Corridors.
During the five years, Rwanda plans to drive export growth to 28 per cent annually through building of off-dock container depots in Mombasa and Dar es Salaam, an investment that will check inefficiencies at the ports significantly and reduce cost and time for Rwandan exports.
The country also plans to promote One-Stop Border Posts to facilitate cross-border trade and reduce transportation costs and time prior to the full implementation of the EAC Common Market.
Resources are to be invested in monitoring non-tariff barriers on the Northern and Central Corridors to reduce transportation costs and delays.
The government also plans to aggressively promote its commodities in the export market and increase production.
Resources will also be invested in the mining sector. A new law paving the way for overhaul of the concessions strategy in the mining sector is being developed. The law allows for merging of prospecting and exploration licences.
Tea production will be doubled by 2018 through working with communities and farmers to support a shift to tea production in 14,000ha of greenfield sites in addition to the existing 4,000ha.
Apart from the existing factories, five more being built on 7,500ha of new tea plantations.
To increase productivity in the coffee sector, capacity building and research will be intensified through research, focusing on tackling diseases, fertiliser application, exploring coffee varieties and strengthening the management of the government’s coffee research plantations.
More tourism attractions will be developed to offer a diversity of products.