14 May 2018

Uganda: Lessons From Rwanda - Institutions, Rules Matter


I recently visited the Rwanda - residing largely in Kigali.

I was particularly impressed by the transition and strong faith by citizens in their development trajectory. There is strong unionism and apprehension to do what is good.

Loosely speaking to colleagues, I intimated that a good number of officials in government - needless to mention the president, private sector and other stakeholders -had strong roots in Uganda, where some even profited from government of Uganda bursaries.

As such, they should pay us 0.5 per cent of their tax revenue for over the next ten years. If this were feasible, now would have been a good time to make this case, because Rwanda is increasingly growing towards self-sufficiency.

In the next financial year, 84 per cent of the budget will be funded by domestic resources - and this is the highest in the region. There are various reasons to underpin this strong progress in tax revenue as is strong sense of effective public service delivery which collectively built strong social contracts.

The question then becomes: why is it that those who were nurtured and raised, to some extent in Uganda, are 'diding' it in Rwanda?

The answer may lie in one of my favorite books - Why Nations Fail: The Origins of Power, Prosperity and Poverty by Daron Acemoglu and Jim Robinson. In this book, the authors interrogate a pertinent question of why some nations become rich, while others remain poor.

The answer, backed by over thousand years of economic history, is that institutions (economic and political) matter. The intimate connection between political and economic institutions is the heart of the major development contribution.

I must contend that the scope of this article is not to contextualize the book on Rwanda or even least draw comparisons between Rwanda and Uganda.

While I acknowledge that no model is absolute, from observation-based perspective, there may be some lessons we could draw from Rwanda.

The economics that works means doing the right thing right. This is the message coming from the top. This top down approach has arguably been pivotal to building strong institutions from basic foundations and the system has no room for complacency.

This is also demonstrated by the recent changes at the Ministry of Infrastructure, Agricultural Board, Education Board, as well as the mayor of Kigali. The public sector is no bedrock of inefficiency and retirement roadmap.

This message was also underlined by Kenyan President Uhuru Kenyatta while presiding over Pakasa Forum in 2014. He, indeed, showed remorse - nostalgically referring to the 1960s and 1970s when public service delivery was diligent, with pride undertaken by civil servants.

Public service delivery has far reaching effects on the wide economy, and trickle down are contingent on the level of efficiency of public service.

The global ratings in doing business, global competitiveness and corruption index, among others, put Rwanda ahead of her regional peers. In fact, Rwanda is among the four African countries ranked in top 50 in Corruption Transparency International index.

The quality of infrastructure, especially roads, is nakedly evident to anyone who visits Kigali and its neighboring towns. There is consistency with quality of works across national roads, especially greening road reserves and street lighting.

Until 2017, Rwanda had more traffic lights than Uganda. This is despite the fact that Uganda has seven times more cars and tarmacked road mileage than Rwanda. Key focus is also paid towards road maintenance. One observable contrast in Uganda is the mushrooming private infrastructure without commensurate public infrastructure. This is the reverse in Kigali; visibly public infrastructure is leveraging private settlements.

Digitalisation agenda is real. This covers, but not limited to, city bus transport, nationwide street parking, centralized billing machine receipts even in modest bars and restaurants ('funa receipt yo' is operational), e-procurement, e-tax filing system and renewal of ibyangombwa (passports, driving permits, national ID), among others.

Digitalisation reduces informality and improves efficiency of tax administration. In conclusion, strong institutions build positive sentiments and attitude requisite for economic transition. The journey is still long for Rwanda, but arguably institutional environment works even at local community level (umudugudu).

The latter is paramount in execution of local community work (every Saturday of the month). Rules matter to mention inter alia - no littering, no polythene bags, the so-called boda boda cyclists have helmets, seat belts are a must and speed limit of 60km/hour (highest) is respected.

I must underline that some of these rules, despite being backed by law, have failed to work, to some extent, in Uganda.

The author is an economist based in Kigali


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