Why Rwanda needs to intensify efforts to build its industrial potential

Wednesday June 5 2019


Kigali Special Economic Zone. PHOTO | SEARCH 

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No country or region in the world has achieved prosperity and a decent standard of living for its citizens without a robust industrial sector and experts have repeatedly emphasised the importance of industrialisation for the continent’s inclusive and resilient growth.

Rwanda’s economic development and the attainment of the goals set out in the Vision 2020 rely to a large extent on industrial development.

The broad goals of the Rwanda Industrial Policy are those stipulated in the Vision 2020 and the Economic Development and Poverty Reduction Strategy (EDPRS): To create and build the transformational industrial growth that would make the country regionally and internationally competitive.

These include promoting the growth of the economy with the target of $900 GDP per capita by 2020 requiring GDP growth of eight per cent on average per annum.

They also include the goal of structural transformation, with industry accounting for 26 per cent of GDP by 2020, the national investment rate reaching 30 per cent of GDP, and non-farm employment reaching 1.4 million.

To achieve these goals, the National Industrial Research and Development Agency (NIRDA) was recently reformed to support industrial growth, which according to the national industrial policy should reach 12 per cent annually.


However, despite ongoing measures to make NIRDA effective, there are persistent reports of mismanagement and misuse of funds in local factories. It is commonplace for factories set up in rural areas to close shop in a few months due to limited access to basic infrastructure as well as limited access to raw materials.

Sometimes, local residents also complain that the factories are not doing enough to support them by buying their produce. Then officials complain that local residents are producing substandard goods.

For instance, issues about mismanaged factories featured very prominently recently during President Kagame’s citizen outreach in Northern and Western provinces, where ordinary citizens who complained that either most factories which were set up closed or not taking their produce. Of particular concern is the fact that quite often factories which are launched rarely live to see their second year.

Often issues of mismanagement including failing to co-ordinate suppliers, maintainace of factory infrastructure, which usually breaks down a few months down the road.

Unfortunately, this whole process costs the taxpayer who has to foot the bill in the end. The government needs to intensify efforts and do due diligence to minimise wasteful expenditure of public resources.

Concrete steps have to be taken to hold officials to account in particular local leaders. We have a rapidly growing ambitious young population, and an increasing demand for consumer goods and food. Together, these factors make Rwanda an attractive business and industrial proposition for the private sector.

Therefore, there is a need to advance the industrial agenda beyond policy briefs.