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www.aei.org/publications ··· tail.aspRwanda Redux Print Mail
By Mauro De Lorenzo
Posted: Tuesday, November 21, 2006
ARTICLES
The American (November/December)
Publication Date: November 21, 2006
A decade after the genocide, Rwanda, with help from two Chicago
financiers, has been spreading the idea that it's a good place to do
business, not just a place for do-gooders to come help. Now, it's the
most improved country in Africa.
Resident Fellow Mauro De Lorenzo
When Arthur Karuletwa left Rwanda in 1995 to study in the United
States, there was not much to lure him back. The year before, the
country had endured such terrible destruction that it took more than a
year of sustained effort just to bury the dead. Gérard Prunier, the
best historian of the genocide, was so cynical about Rwanda's
prospects that he thought a return to killing inevitable, to "be
covered by an eager media, for the benefit of a conventionally
horrified public opinion which will finance another round of
humanitarian aid."
A startling array of top American business leaders has been visiting
Rwanda at the president's invitation.
But today, for those in the know, Rwanda is hot. After fighting two
wars in neighboring Congo, resettling more than a million refugees,
and designing a system of justice for several hundred thousand
imprisoned genocide suspects, Rwanda's leaders are now turning their
energy to making the country hospitable to business. Rwanda's
president, Paul Kagame, a charismatic former guerrilla leader who
earned a diploma in business studies by correspondence after he took
office (his exams were proctored by the British ambassador), has a
vision of Rwanda as a service economy integrated into the global
marketplace through information technology--a sort of Dubai in the
highlands of Central Africa.
This year, the Heritage Foundation/Wall Street Journal Index of
Economic Freedom recognized Rwanda as the most improved country in
Africa over the past ten years (and seventh most improved in the
world) in terms of economic freedom. The World Bank's annual Doing
Business survey, which measures regulation around the world, notes
Rwanda's impressive gains in contract enforcement, tax administration,
and ease of starting a business. Both indices, however, show that
Rwanda is still mired in the lower third of countries in terms of
global competitiveness. It is particularly hard for domestic
entrepreneurs to get credit, and import-export procedures can be a
hassle.
Yet a startling array of top American business leaders has been
visiting Rwanda at the president's invitation, and hosting the
president on his trips to the U.S. The list includes Microsoft's Bill
Gates, Riley Bechtel of the private infrastructure giant Bechtel,
Steve Forbes of the eponymous magazine, and CEOs and senior executives
from Google, Merrill Lynch, Starbucks, Columbia Sportswear, Morgan
Stanley, and General Electric. None has yet invested in Rwanda, but
according to Zac Nsenga, Rwanda's ambassador to the U.S., a hard sell
is not part of the strategy behind the meetings. Rwanda is looking to
build a network of friends and advisers that can help it chart a
sensible long-term economic course. Business-friendly reforms are a
balm to entrepreneurs, but what Rwanda really needs is a strategy for
overcoming the main infrastructure bottlenecks to its prosperity:
electricity, transportation, and communications. Kagame is betting
that savvy executives can give him better advice than international
aid agencies.
Much of the credit for spreading the idea that Rwanda is a good place
to do business, and not just a place for do-gooders to come help, goes
to Joe Ritchie and Dan Cooper of Chicago-based Fox River Investments.
They have no financial interests in Rwanda, but have done more than
any aid agency to introduce Rwanda to movers and shakers in American
business, setting up the first meetings between Kagame and U.S. CEOs.
Joe Ritchie became familiar with Rwanda when his daughter volunteered
there. As Ritchie and Cooper got to know the country and its leaders
for themselves, they became convinced that Rwanda is a "misvalued
stock," and set out to change perceptions of the nation among their
colleagues.
All of a sudden, Rwanda's problem is to make sure the country has
enough high-quality coffee to meet demand.
The first deal to result from Ritchie's and Cooper's networking
involves Costco, the retailing giant. Working with Karuletwa, who
returned to Rwanda in 2002 to found Inzozi Coffee Traders, Costco will
soon have branded Rwandan coffee on its shelves. This follows a
specially-packaged Rwandan coffee that was sold in Starbucks stores
earlier this year--another linkage created by Ritchie and Cooper.
Starbucks was satisfied enough with the quality of that coffee that it
now plans to buy processed beans directly from Rwanda for its regular
blends. All of a sudden, Rwanda's problem is to make sure the country
has enough high-quality coffee to meet demand. Thanks to USAID, which
funded washing stations and farmers' cooperatives, Rwandan farmers are
also retaining more of the value of their crop.
Quietly, Rwanda has been adopted by a different kind of do-gooder. The
deal with Costco may become the harbinger of many more deals--deals
whose sustainability is guaranteed by their profitability, not by
sentimentality or charity. What this web of relationships suggests,
above all, is that "development" and "poverty-reduction" are not just
about UN bodies, NGOs, and an endless carousel of handouts.
Mauro De Lorenzo is a resident fellow at AEI.