Big houses, hotels and increasingly expensive gorillas!

Amid stories of ‘Africa Rising’, the idea of the developmental state is receiving attention again.  The concept was coined by Chalmers Johnson in his study of Japanese industrial policy.  It was later applied to a range of East Asian countries, each of which followed different state-driven paths to development.  These states were not strictly benevolent; indeed, they were often violent, corrupt and vicious towards labour unions.  However, they successfully embraced structural transformation, facilitating capital accumulation and yet ensuring that capitalists did not bend policies too far towards their narrow self-interests. In short, coercion and ideology played critical roles in pushing elites to commit to economic development.

No country in Sub-Saharan Africa has been able to imitate the success of the East Asian countries in ‘catching up’, although – as Thandika Mkandawire has argued – there is no intrinsic reason why they should not.  In fact, a handful of states in Africa today are increasingly being discussed as emerging or even full-blown developmental states.  For example, scholars have begun to analyse whether such states as South Africa, Botswana, Ethiopia and Mauritius can be considered in these terms.

Rwanda is another example that has caught the attention of many.  The country has achieved sustained economic growth since 1994, with annual GDP growth exceeding five per cent every year except 2003.  Rwanda’s VISION 2020 strategy is focused on becoming a knowledge-based economy, driven by high-value services sectors such as ICT and tourism, as well as superior health and education services.  These priorities reflect Rwanda’s lack of extensive natural resources and the fact that achieving competitiveness in manufacturing remains challenging for late developers in the current international context.

Much of this vision centres on Kigali as a regional hub for business, tourism, real estate and other services.  The Kigali Master Plan, which has attracted considerable interest and controversy, lies at the centre of Rwanda’s aspiration to reposition itself regionally and globally as a sophisticated services economy.  With its ‘model city’ sitting amid the natural allure of the ‘land of a thousand hills’, Rwanda aims to be the ‘Singapore-cum-Switzerland’ of the African continent.

The government’s focus on services comes amid much talk of global de-industrialisation. Certain service sectors can provide much-needed foreign exchange to address the trade deficit, and they can even provide access to wage employment.  If, however, services are prioritised before workers can procure the necessary skills, it can result in ‘a dangerous imbalance between an economy’s productive structure and its workforce’, as Dani Rodrik argues. In the long term, it can also skew power relations against labour.

Two sectors linked to Rwanda’s high-value services vision – tourism and construction – have been central to the successful growth Rwanda has experienced.  In April 2013, Rwanda launched a US$400 million, 10-year Eurobond.  Proceeds were used to fund the Kigali Convention Centre (which affects both the construction and tourism sectors), Rwandair (directly linked to growth in the tourism sector) and a 28MW hydropower station (important for meeting Rwanda’s energy needs).