RWANDISTAN

Published: Afghanistan Times 28 July 2013

UTTAM PRAKASH, RAHUL ARYA*

Imagine you are air dropped somewhere blind folded. As you open your eyes, you see grassy uplands and hills and take notice that the relief is mountainous. You also learn this is a landlocked country with a predominantly rural population. You wish to know more about the place and so you ask a passerby. He is in a hurry, but gives you some quick facts:

The country is heading towards what we can say a “failed state”

There are two major ethnic groups vying for power.

Two million people have died in genocide.

Social, political and economic structures have collapsed.

Until last year aid dependence is more than 40% of the budget.

There's a buzz about a constitutional amendment to enable a third term for the current President. The constitution only allows two terms.

People feel that the international community has not been fair to it.

The skill/capacity of the civil servants is low.

Did you guess it to be “Afghanistan” in 2013?

Sorry! We are referring to Rwanda of 1994, a small middle African country that is half the size of the province of Herat or Kandahar and a little bigger than that of Ghazni. Colonised by Germany in the 19th century, followed by Belgium in the 20th century, the country witnessed genocide in 1994 that killed an estimated million people which was over 10% of its population. Hutus and Tutsis, two major ethnic tribes bayed for blood of each other. Social, political and economic structures had collapsed. In 1994 Rwanda was written off as a failed state. There was indeed a buzz about a constitutional amendment for President Paul Kagame to have a third term. Few had trust in destiny of Rwanda and few believed in its recovery, for it to be able to become strong enough to stand on its own. The fallout of this tragedy was so severe that the then US President regretted, the West regretted, International community regretted for its failure to intervene and prevent this tragedy.

Fast forward to year 2013, Rwanda by every measure, is one of the most successful countries in Africa. Between 2005 and 2012, Rwanda reduced its poverty levels by 12.5% — the highest level ever recorded anywhere in the world. In 2010, Transparency International ranked Rwanda as the eighth cleanest out of 47 countries in Sub-Saharan Africa and 66th cleanest out of 178 in the world in terms of corruption. It is also the safest place to live in the world according to the Gallup’s World Poll report "Global States of Mind: New Metrics for world leaders" published in October 2012. Rwanda has the fastest broadband internet in Africa, according to Ookla’s NetIndex.  Its capital Kigali is popularly known as the safest, cleanest, fastest and more liveable city in Africa.

Post 1994 – what started as unpromising beginning, Rwanda proved its adversaries wrong and is walking strongly on the path of progress and development. A look at the Country Data Report, World Bank on six governance indicators – Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption – Rwanda has done exceptionally well considering the 1994 baseline. The percentile growth in five indicators except in Voice and Accountability has seen remarkable growth moving from around 10 percentile in all the five indicators and moving up to almost 50 percentile while in Government Effectiveness and Control of Corruption, it is touching 60 and 70 percentile respectively. The economy has strengthened, with per-capita GDP (PPP) estimated at USD 1,592 in 2013, compared with $416 in 1994. Rule of law and efforts to clear red tape have given it a business friendly climate, leading journalists to call Rwanda the "Singapore of Africa".

Sounds like a fairy tale? You may wish to Google if you have any slightest doubt. The big question is, can Afghanistan go the Rwanda way? Is there something that can be learnt and replicated here? But more importantly, how was this done? Probably the most appropriate word that can explain this miracle is “determination”. The nation accepted its follies, made good of the opportunities available and led its determination to prosperity with determination. The determination of course was from the entire population united.

President Kagame speaking at Harvard Business School on 11^th March 2013 remarked: “It's all about the ambition you have. People in Rwanda cannot afford to waste any opportunity. Every day we are looking to see what is it that will make a difference for us. We had to take on responsibility of rebuilding the country. Even though we benefited from external support, we decided early on to take the lead. We had to take the lead in building the foundation necessary for the country. We knew if we didn’t take ownership, it wasn't going to last.”

The other important word apart from determination is “ownership”. Rwanda’s transformation story can give Afghans lessons about a population that is shaping its future and believing in  its ability to govern  itself in these two words ‘determination’ and ‘ownership’. More lessons can be learnt from the ways Rwandans became Singaporeans.

The Rwandan story can be read in the policy decisions taken post 1994. Similar to the “Afghanistan National Development Strategy (ANDS)”, the Rwandans developed the “Economic Development and Poverty Reduction Strategy (EDPRS)”. As the strategy is named the goal, clearly were two Economic Development and Poverty Reduction. The strategy thus was designed to accelerate economic growth and promote human development.

The Poverty Alleviation Programmes were designed as they call it “the Rwandan Way” The Rwandan way was unique as the programmes were designed to be heavily embedded in local norms and traditions. This promoted a sense of ownership of the projects, ensuring not only effective implementation, but also their long term sustainability. This ability to localise solutions to development to fit Rwanda’s local context, has been one of the major drivers to the economic transformation that has taken shape in Rwanda.

Some of the programmes worth taking note of are:

Vision 2020 Umurenge: This is aimed at eliminating extreme poverty by 2020; the programme involves public works, credit packages and direct support.  It is implemented at village level through participatory methods.

One cow per family (Giringa project):  In this project cows are distributed to poor families. Once that cow gives birth, the calf is given to a neighbour who is poor. The project was chosen considering the cattle culture of Rwanda. The milk from the cow improves nutrition and milk sales supplements income. The cow dung used as manure improves soil fertility leading to overall food security.

Umurenge SACCO: This is a nationwide cooperative savings scheme aimed at improving access to finance for the unbanked village population. Villagers make frequent contributions to this savings scheme. Once their savings reach a given threshold, the government contributes to the scheme. Members of the community then borrow from the SACCOs and later pay back in order to sustain the revolving funds.

Performance contracts (Imihigo): Imihigo seeks to promote self government and greater citizen engagement. Performance targets under ERDPS are set and agreed upon as performance contracts. Citizens actively participate in defining their preferences and priorities and are empowered to hold national government and the ministries accountable against commitments made. Local communities are also encouraged to come up with their own solutions to problems. Citizen empowerment thus is a central element in the implementation of the Rwanda’s Poverty reduction Strategy

From 1961 to 1990, Rwanda had an administered economy, which imposed severe restrictions on trade and foreign exchange transactions. In 1995, a number of economic reforms were implemented. Rwanda embraced a market economy and introduced trade reforms. Reforms to the ‘soft’ infrastructure for business and reducing business costs were seen as the first priority. Incentives were provided for FDI including export processing zones and industrial parks. Tariffs were reduced considerably with the average rate decreasing to 18 percent a significant reform when compared with an average tariff rate of 34.8 percent. A one-stop centre called Rwanda Development Board was set up for attracting foreign direct investment and increasing jobs in the different sectors of the economy. In order to identify and plan national priorities and strategies, the Rwandan Government organises an annual Leadership Retreat. The retreat involves the President and heads of government ministries aimed at achieving private sector-led growth in Rwanda. Major reforms that have assisted the business community include easing the process of starting a business, registering property, protection for investors, trade across borders, access to credit and paying taxes. Getting credit was made easier. Paying taxes was made easier by introducing online applications. The implementation of these various policies and reforms contributed to Rwanda’s improved ranking in the World Bank’s 2010 Doing Business Report from 143rd to 67th place.

Rwanda thus pursued a developmental state approach with the key objective as sustainable economic growth and social development. The main aim of EDPRS was to overcome the key constraints to economic growth identified through a growth diagnostic and investment climate analysis by: systematically reducing the operating costs of business; investing in the private sector’s capacity to innovate; and widening and strengthening the public sector.

As Eleanor Roosevelt said, “The future belongs to those who believe in the beauty of their dreams”. And the dreams were knit on the bedrock of the ugly history. To keep a constant reminder, Rwanda built a genocide memorial recording their bad experiences. In the words of their President Kagame, “The idea was in remembering, you create a consciousness that stops that thing from happening again. History should not be forgotten”. Certainly acknowledging pain and trauma strengthens the resolve to move further.

Rwanda’s vision is to build a knowledge-based economy and to become a private sector led middle income country by 2020. The question is can Afghanistan turn into a new avatar, shall we say Rwandistan? The answer is an emphatic YES provided we dare to dream to take off from the edge of an abyss. Because it is said, if a man can do it, a man can do it and the same applies to nations.

*The authors are Advisors with Civilian Technical Assistance Programme (CTAP) GoIRA. The views are personal.

The Permanent Exit

Americans have declared their exit strategy. They have announced that their terms of engagement in Afghanistan have changed. Troop withdrawal after more than a decade of fighting has begun. Is the war over? or is more remaining to be fought? Will the lessons drawn from 1989 when Soviet troops withdrew be put to use or will history repeat itself sometimes soon after 2014? Does Afghanistan have an exit strategy of its own?

The fundamental issue, over which this war was begun, was the felt need of the West towards integration of Afghanistan with the world communities, through building adequate governance capacities towards prosperity by gradually marginalising those who fish in troubled waters. All this was singularly aimed at making the world a safer place, through containing divisive forces on the soils of blood soaked Afghanistan that threatened global security. There are other perceptions taking rounds though. Going by the available evidence, resource hunting in this alien land does not seem to be a plausible reason because the beneficiaries of major resource acquisition till now have been only the countries whose soldiers never laid foot here. Strategic control of this territory too appears to be a debatable subject in this age of sophisticated technology and shortening distances. This controversy of intentions behind reasons of aggression in Afghanistan is perhaps because too much was invested in the military style of winning the war gradually losing sight of the fundamental issue – integration through development.

Exiting out of Afghanistan for the international community is a lot easier as compared to that of the Government of Afghanistan. The country needs to have an “exit strategy” to come out of this dreadful war once and for all. Does Afghanistan have ONE? Or is it going to repeat its historical mistakes yet again? If we wish to come out of the mess we are in, the war needs to intensify though with a different approach and priorities. What should be the nature of this war? Who are the enemies hence forth?

The three enemies strengthening divisive forces traditionally have been and remain poverty, corruption and illiteracy though some would argue for continued political interferences. Looking carefully, these interferences are a consequence of the above factors and not the other way round. Unsurprisingly, Afghanistan is ranked by the UN on the Human Poverty Index, with a value of 59.8%, the 135^th among 135 countries for which the index has been calculated. It is 181^th among 182 countries on the Human Development Index. Afghans have an average life expectancy at birth of 48 years, and their adult illiteracy rate is around 72%. No wonder institutions failed to take roots, be it political, economic or judicial. The deeply divided population continues to look for meaning in its identity as it finds rosy solace in identifying itself with groups that promise quick ways of amelioration. This promotes an overemphasized sense of honour and a dangerously blown out of proportion sense of entitlement.

However, it would be wrong to assume that rebuilding efforts have completely gone down the drain. For reasons associated with nature of fragile states where institutions and systems are at basic formative stage, the donors designed and implemented their programs through their own methods and procedures. The Afghanistan government, one of the key stakeholders in such projects, could not participate effectively as it is very difficult to have demand driven projects in an insecure and volatile environment where social or community mobilization is hardly possible. The aid projects therefore assumed the nature of being donor driven and supply driven instead of being demand driven. Non-involvement of the Government in identifying and leading priority areas for development further resulted in uneven distribution and allocation, often leading to crowding of programs in few areas and absence in other areas. It is estimated that during the period from 2002 to 2011 US$ 57 billion was spent in Afghanistan. Of this 90 percent were spent on projects directly implemented by donors according to World Bank, Country Program Evaluation Report.

Things have changed gradually though. Afghanistan’s estimated per capita Gross Domestic Product of $591 in 1390 (2011) is five times higher than the $123 per capita GDP of 10 years ago. Access to primary health care has increased from 9% of the population to more than 57%. Nearly 8,000 kilometres of national highways, regional highways and provincial roads have been built. Civil aviation services have also improved considerably connecting Afghanistan to all major hubs in the region. Access to electricity has increased by 250% and the national power utility has grown into a more efficient, well-managed corporation.  The Information and Communications Technology (ICT) sector has grown from almost no coverage in 2001 to 86% of Afghan residential areas. The Agriculture Sector has seen irrigated land, increase from 1.2 to 1.8 million hectares; wheat production has grown from 1.5 to 3.2 million tons; and the total horticulture area has grown from 75,000 to 120,000 hectares, increasing grape production by 69 percent and almonds by 195 percent.

Afghanistan’s economy remains strong with around 10% average annual growth since 2002. However, no pat on the back yet, there are multiple issues that pose serious challenges to development that we have just noted. Apart from tackling insecurity and widespread corruption’ much needs to be done on building key institutions that can support the growth trajectory. Poverty and illiteracy can easily dry up the thin visible progress leading to much dreaded crisis and conflict.

To consolidate the gains, building confidence amongst locals, expats and foreign investors is the key. This can come provided there is confidence to do business on fair and equitable manner. Experience from the last 30 years has revealed that competition amongst businesses has been beneficial for less developed countries, as markets have opened up leading to more products and more jobs. Competition also brings in transparency and accountability in government-business relationship. Linkage between “competition” and “poverty reduction”- which is central to ills in Afghanistan, is rather simple to establish. Small producers if are considered as consumers of ‘inputs’ and ‘infrastructure services’ then any interventions by the  government in improving competition in these markets would help these producers and hence propel further growth. Thus, there are enormous possibilities for competition to address poverty by improving access to services and creating jobs. One of the definitions of poverty is the absence of an individual from a market because they simply can’t afford to operate in it. Thankfully, a number of countries, most notably South Africa and Senegal, are examples of how new entry in market encouraged by competition policy can help widen access and bring more poor consumers into markets. Learning from these experiences, it is time Afghanistan starts investing in building institutions that promote and protect “fair trade”, in markets that ensures fairplay.

Perhaps the biggest challenge in Afghanistan will be in finding ways to make this happen at the soonest. Here lies the “Permanent Exit Strategy” of Afghanistan that will restore it to its recently lost glory. This will allow the world to feel safer averting the unlearnt mistakes of 1989 and that which was airdropped after 9/11.

War to Wealth

Kabul 2012

How does a nation become wealthy? This question has been bothering Economists ever since Adam Smith wrote “Wealth of Nations”.  The debate continues and Public Policy analysts continue to struggle to arrive at a definite answer.

One simplistic yet potent answer though is: The Nation that allows each of its population to contribute and reap corresponding benefits out of its efforts, is for sure on the road to success towards wealth creation. It is easier said than done, as it requires an environment where every talent is nurtured and promoted and where every property right is protected.

According to World Bank report titled, “States and Markets, 2002”: “people rise from poverty when countries act on two pillars of development:  Building a good investment climate in which private entrepreneurs will invest, generate jobs, and produce efficiently, and Empowering poor people and investing in them so that they can participate in economic growth”.  The role of institutions and their efficiency thus is the critical factor.

Strength of institution is dependent upon enviable Political will, handled with immense political maturity. In this context, the Afghanistan Constitution makers have set the road map for economic development. Article 10 provides for market economy and Article 11 says that suitable policies and mechanism be developed towards facilitating creation of a sound economic environment.

What did the Fathers of Constitution mean when they wished a market economy?

Well for sure, a level field for markets to compete for profits. And economic theories say that in the process of competing freely, the resource allocation is efficient benefiting the consumers in having lower price, better quality and even better service. Ideally this would happen if the market place is dominated by hardworking, innovative people. But blame it on human nature, tendency is to take shortcuts. Instead of competing fairly, it can often pay to take the so called smart route, through anti competitive practices such as forming cartels to fix prices for earning those extra wealth in the shortest possible time. Take the case of early 2008. Afghanistan’s main food and energy imports were hit simultaneously by dramatic price increases in international markets. Domestic prices of these products rose substantially, resulting in significant hardships suffered by households. The Government of Afghanistan was found wanting at policy instruments and institutional mechanisms to tackle this unusually severe situation, a situation made worse by the subsequent global financial crisis. Popular perceptions attributed the multiple crises to chronic market deficiencies and in particular to the presence of cartel-like behaviour by a few groups controlling trade and distribution of food and energy products. These perceptions have not been verified, yet the case makes a good ground for the necessity of institutions regulating market behavior and fair competition, to avert such situations in future or lessening its impact wherever possible.

In Afghanistan, where poverty is affecting a large portion of the population, and where the smallest variations in prices have a strong effect on the purchasing power and negative implications on the livelihoods of many such pressing issues such as high (rising) prices of essential goods  need to be dealt with in an informed and preventive manner.

The government’s role of protecting the vulnerable against price shocks; alongside with increased capacity to prevent and /or react to supply constraints of essential goods thus comes into focus.  The public policy responses to such concerns regarding scarcity generally include

·            Building up strategic reserves of key commodities

·            Implementing price controls

·            Establishing consumer cooperatives

·            Anti-hoarding policies and legislation

·            Rationing.

These government centered measures and interaction with the private sector are criticized by those who support a minimal state interference in the economy and a market based approach to dealing with scarcity. The criticisms have been primarily on the grounds that the measures are difficult to implement, may not work well, and are likely to be expensive for the government, and not achieve efficiency of public funds spending. Furthermore, experience shows that strategies such as price controls have often resulted in long term disincentive effects for local production; they have also generally resulted in long term disadvantage to consumers.

Nonetheless, there is a need in Afghanistan to implement measures to shield consumers from the worst consequences of sudden vagaries in supply and efforts at deliberate market manipulation. There is also a need to build up the technical capacity to deal with scarcity and diminish the occurrence of fraud in markets.

On the Policy front, we must therefore ensure that markets behave democratically where none of the players have undue advantage in controlling the market behavior.  And here comes the argument of a self correcting competitive market structure that provides for a level playing field to its participants.

As a general proposition (rule), all citizens benefit from competitive markets, whatever the state of development of the country that they live in, except that the process of intensifying competition may lead to certain part of the population to be immediately benefited, while others are actually penalized, such as firms going out of business and workers losing their jobs. Other policies are needed to deal with the dislocation that is caused by the loss of inefficient firms, and to help redistribute available resources such as human capital, efficiently onto the market. On a micro-economic level, the competition brings about immediate ‘losers’ and ‘winners’ while overall (macro-economic level), the economy definitely benefits from an intensifying competition, availability of more consumer choices, growth and development. The key is thus a fair and regulated distribution of resources, allowing for the positive effects of competition to come into play.

If a country does wish to base its economic development on free-market principles and the process of competition, such as envisioned by the  Article 10 of the Afghanistan Constitution  a much better solution is the adoption of a competition law that prohibits anti-competitive practices .The existence of such a law  shall provides clear and unequivocal signal to all stakeholders: that competition is a benefit to society as a whole and is something that enhances consumer and producer welfare, in a fair and equitable manner.

With a demonstrable sense of certainty for fairness, markets would naturally grow, investments will pour in and the road that ends in war will have a silver lining that will soon glitter as gold. Because the biggest incentive will be profit. In the case of undue increase in prices of essential goods that Afghanistan has experienced, through an effective competition mechanism, it can be ensured that the markets are not being manipulated in any unfair way, such as through collusion and price gouging. 

 Those having doubts about the prescription, if it applies to the state in which Afghanistan in now may like to take note of what the 2001-Nobel Prize winner economist Joseph Stiglitz said “Strong competition policy is not just a luxury to be enjoyed by rich countries, but a real necessity for those striving to create democratic market economies”. 

Published: Afghanistan Times; 20 September 2012

Why our Politicians are not scared of us?

City Shamed: Girl gangraped in bus in South Delhi at 9.30 PM was the frontline story on The Times of India on Tuesday December 18, 2012.

I was particularly disturbed about the choice of the wording “City Shamed”. Was it just the city? There were few other wordings elsewhere such as “brutal rape”. Are not all rapes brutal? Electronic and print media later came up with greater imagination “Rape Capital” after analysing the statistics in various cities in 2011: Mumbai-239, Delhi-572, 47- Kolkata, Chennai 76 and Bangalore 96. The attempt it appeared to me was to shame Delhi more than the heinous crime itself.

We were told she was brutally beaten, stripped and raped in a moving bus.  “Nirbhaya” as named by Times of India, battled two hours on the well lit roads of Delhi, while 6 men surging with Testosterone were having casual fun. She ultimately breathed her last in a Singapore hospital after a sixteen days fight against all odds.

Later when the “Breaking News” flashed on our TV screens; a frustrated Sharukh Khan said “I am ashamed of being a man”. Around the same time another man in the crowd at Jantar Mantar was groping Rukmini Shrinivasan; a Times of India correspondent who was out covering the protests there. In all probability, the enlightened guy was having casual fun taking advantage of the commotion. I am wondering what change was he a part of the “protest for change”? Rukmini in her article further says “I tweeted about the episode and was inundated with support, which I appreciate. Yet, there were a few men who suggested that I must have enjoyed it, and several others who thought I was doing it for "publicity" or to help one party or the other”.  I am aghast.

On the other side of the canvas were our Politicians. Seeing them speaking from their heart I had updated my Facebook status “Every other guy is on the TV condemning, weeping, yet somewhere within us we are not confident that these guys for once are honest in their speech............I am confused as well....... I cannot reason.........Why are these guys not scared of us? After all we are their masters.......... What a state of Affairs!!! What a day of "trust deficit?”
 

My friend Shilpi commented “Exactly. It doesn't seem real to me either. Why do we Indians make everything so dramatic? There is suspicion in everything that is happening. Most importantly, I was looking at the men protesting and thought given a chance they would also eve tease. Seriously Uttam my take on the entire thing is..the problem of eve-teasing and rape is beyond the control of police and law and courts now. People have to change. If you see any girl being molested fight then and there...and the girls no more should keep quite thinking it is a part of our society as we thought when we were in College. We girls should also be ashamed of that; we should have fought like we are doing today long long back. Look where has that lead us to? Every man, every child, every women just needs to fight back. Men be more vigilant when you are walking on the street, and don't just shrug your shoulders off, if you see any girl losing her respect- even if that is only a whistle.... that should also stop”.

Another friend Ashraf had a different view though “because they know that most of us are too selfish once it comes to vote, caste, creed, religion and region will prevail over just and merit finally, and this is the real challenge for us as society”.

Shilpi’s prediction was so true and felt like puking if Rukmini’s narration has even an iota of truth. However Ashraf’s comments were more striking. It made me think how true and profound the remark was? Today there are six state lawmakers facing rape prosecutions. Two Parliamentarians face charges of crimes against women. Why these "law makers" take us for granted? And why for once no one demanded for fast track courts for them?

But there are others as well who however genuine in their thoughts did not appear genuine to us. No wonder the protests continue even in the bone chilling cold winter in Delhi. Only one thought comes to my mind now, Our Politicians need a good hard look into the mirror. Probably the mirror will yell loud and clear YEH JINA BHI KOI JINA HAI LALLU? The same applies to us citizens.