Rwanda Gets Business Reformer Tag as Kagame Opponents Jailed

Photographer: Ludovic/REA/Redux

Rwandan president Paul Kagame. Close

Rwandan president Paul Kagame.

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Photographer: Ludovic/REA/Redux

Rwandan president Paul Kagame.

Rwandan President Paul Kagame has been criticized by the U.S. government and advocacy groups for cracking down on civil liberties and trampling on human rights. Investors are more focused on how his policies have fostered one of Africa’s fastest-growing economies.

U.S. Ambassador to the United Nations Susan Rice in November criticized Rwanda’s “closed” political culture. Harassment of civil-society activists, opposition figures and journalists as well as the disappearance of some of them pose the “next developmental challenge” for the country, she said. Her comments echoed similar statements by Amnesty International, the London-based rights group, last week.

The criticisms contrast with Kagame’s economic achievements since coming to power in April 2000. His pro-business policies helped the economy double in size by 2010 as the government sold stakes in state-owned companies to investors including Heineken NV (HEIA) on a newly created stock exchange. Foreign direct investment in the country jumped 57 percent to $626 million last year from 2010, the Rwanda Development Board says.

“Investors care about growth, and the side effect of growth is nearly always better human rights in the long-term,” Charles Robertson, global chief economist at Renaissance Capital, said in a March 9 phone interview. “The Rwandan government is producing growth and that’s very positive for the Rwandan people and eventually for Rwandan human rights and Rwandan democracy.”

100-Day Genocide

Rwanda is recovering from a genocide in 1994 in which 800,000 ethnic Tutsis and moderate Hutus were killed in a 100- day campaign led by extremist Hutus, according to the United Nations. As a result, gross domestic product shrank more than 49 percent that year, according to the International Monetary Fund.

Last year, GDP grew 8.8 percent, National Bank of Rwanda Governor Claver Gatete said in an interview on Dec. 26. If confirmed when the figures are official, it would be Africa’s second-quickest expansion after Ghana, IMF data shows.

“We are very happy with the performance of our business in Rwanda and very positive about the growth opportunities,” John- Paul Schuirink, communications manager at Heineken, the world’s third-biggest brewer by volume, said in an e-mailed response to questions on Feb. 17. “In emerging markets we are looking for population growth, economic growth and improving political stability. And we see all three of those in Rwanda.”

Beer and Phones

Heineken owns 75 percent of Bralirwa SA (BLR), Rwanda’s largest beer maker. The company listed on the domestic exchange last year. Other investors in Rwanda include Johannesburg-based MTN Group Ltd. (MTN), Africa’s biggest mobile-phone company, and Rabobank Nederland, the highest-rated private lender.

Rwanda, which had no credit rating until 2006, is rated B by Standard & Poor’s and Fitch Ratings. Finance Minister John Rwangombwa said last May that the country expects to sell its first global bond within the next three years. An issue of debt to nationals living abroad is planned by the end of June, Gatete said on Feb. 24.

The Rwanda Stock Exchange currently has four listed companies, including Bralirwa and Bank of Kigali Ltd., the nation’s biggest lender. Rwanda’s government plans to sell shares in six companies over the next three years as part of a plan to attract foreign investors, the Capital Market Advisory Council said in April.

Rwanda is also the only country with a female majority in parliament and is East Africa’s least-corrupt country, according to Transparency International, the anti-graft group.

Coffee and Tea

When Kagame came to power in 2000, his government unveiled its so-called Vision 2020 plan aimed at transforming the coffee- and tea-growing country into a middle-income, service-based economy by 2020. It targets projects such as a $9 billion international finance hub planned in the capital, Kigali, and a 10-fold expansion of electricity output to 1,000 megawatts.

To encourage investment, the government reduced the time it takes to license a business to one day. Construction companies can obtain permits to build in less than 30 days, compared with 210 previously, according to the African Development Bank.

Those changes helped Rwanda rank as the world’s leading business reformer in 2008 and 2009 among 183 nations rated by the World Bank.

“Rwanda’s economic vitality has moved the country forward,” Rice said on Nov. 23 at the Kigali Institute of Science and Technology. “Social progress has been substantial. Yet, the political culture in Rwanda remains comparatively closed.”

‘Speak for Ourselves’

Rwanda’s government rejected Rice’s criticism.

“We do not accept that the comments of a single U.S. official on a passing visit somehow define us,” said Anastase Shyaka, chief executive officer of the Rwanda Governance Board, a government institution the presidency referred to when asked for comment. “When it comes to the openness of political space in Rwanda, more than 80 percent of Rwandans say they are highly satisfied. We are capable of speaking for ourselves.”

To prevent a genocide from recurring in Rwanda, Kagame introduced laws including one that criminalizes denial of the atrocity. The ruling Rwandan Patriotic Front also compels citizens to attend camps that teach ruling party ideology, according to the Harvard Human Rights Journal. The camps, known as Ingando, enrolled 40,000 secondary-school graduates in November, according to the New Times, a Kigali-based newspaper.

Night Raids

“Ingando is simply a monthlong bridging course for students between high school and university that focuses on civic and peace education as well as physical fitness,” Yolande Makolo, Kagame’s communications director, said in an e-mail today. “The Ingando curriculum addresses the 1994 genocide against Tutsis as a means to enlist young Rwandans in our shared national mission of ‘Never Again.’”

The security forces also conduct night-time raids in search of government opponents. One such security sweep was carried out in Kigali hours after Rice spoke in November, according to the opposition Rwandan National Congress, led by General Faustin Kayumba Nyamwasa, the country’s exiled former army chief. Nyamwasa was sentenced in absentia to 24 years in prison last year for threatening Rwandan security.

Makolo said it was “nonsense to suggest that any such operation was timed to coincide with a speech given by a visiting U.S. official.”

In a similar raid in October 2010, a Rwandan university student said, he was awakened at 4 a.m. by the sound of eight armed members of the security forces preparing to enter his single-room hut on the outskirts of Kigali.

Home Ransacked

Ignoring his pleas that he had done nothing wrong, the men ordered him to stay outside while they ransacked his home in search of anti-government material. No one was allowed to leave the neighborhood, which he estimated was surrounded by 1,000 soldiers. The man declined to be identified for fear of retribution by the authorities.

Rwandan police spokesman Theos Badege said the raids are a legal method to protect Rwanda from incidents such as grenade attacks. The latest of these, which the government blames on rebel forces, killed three people and left 25 injured on Jan. 27, according to the New York Times. The sweeps are usually carried out when a neighborhood is suspected of harboring illegal weapons or drugs, Badege said in a phone interview from Kigali on Dec. 24.

“When police suspect an act that can affect our security, they can make a search,” Badege said. “Security is essential. Whatever we do we always respect rights, even when securing our nation.”

Searches are carried out “with a court-issued warrant and, according to explicit rules, never at night-time,” Makolo said.

Criticism Rare

Inside Rwanda, criticism of government institutions is rare. Alice Muhirwa, the national treasurer of the opposition United Democratic Force-Inkingi, says most dissidents remain silent out of fear. Party leader Victoire Ingabire is jailed and on trial, accused of genocide ideology and funding terrorism. Her arrest came shortly after she returned to Rwanda from living abroad to challenge Kagame in 2010 elections.

Mauro De Lorenzo, a development-policy specialist with the Washington-based American Enterprise Institute, said economic development and a government’s attitude to human rights shouldn’t be linked.

“Countries seem to be able to make progress on one without making progress on the other and they seem to be able to do that for a fairly long time,” he said in a Jan. 15 interview.

To contact the reporter on this story: Heather Murdock in Kigali via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.

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