State-led Economic Transformation in Rwanda 2000-2019: An Evaluation of the Role of Policy in Coffee-processing, Tourism, Food Crops, and Manufacturing

Heinen, Sebastian

Abstract

Less than thirty years after civil war and genocide, the government of post-conflict Rwanda has achieved a remarkable level of state-building and economic growth. This thesis uses a political settlements framework to make sense of the country’s recent development trajectory. Rwanda's political economy is characterized by a dominant ruling party whose leadership pursues a full-fledged capitalist transformation of society to cement its legitimacy, while also distrusting its domestic firms in a capitalist sector that is extraordinarily small and weak and exhibits low capabilities. In addition, there is substantial political repression to keep political control maximal. Shaped by these characteristics, an elaborate governance system of performance contracts (imihigo) has evolved, resembling results-based frameworks. This institutionalised construct compels all public sector employees to put in very high efforts to reach their respective annual targets. But the system is also overly rigid, focuses too strongly on directly measurable indicators, leads to uncritical acceptance of crude top-down decisions, and creates perverse incentives for data tweaking. Using 139 interviews from ten months of fieldwork and other qualitative and quantitative evidence, the thesis presents case studies of four economic sectors: coffee-processing, tourism, food crops, and manufacturing. The results reveal nuanced industry trajectories and varied sector performance, ranging from impressive (partial) transformational success in coffee-processing and the hospitality sector to disappointing (preliminary) failure in agriculture and manufacturing. Connecting the country’s political economy with the respective industry paths, the thesis concludes that the Rwandan government succeeded with its economic development strategy in sectors where its control-maximising governance system was sufficient to enforce transformational change, while it failed in more complex sectors, where experimental tinkering and learning from failure were crucial to eventually getting things right. This perspective is useful for thinking about necessary governance reforms to overcome current structural weaknesses. Finally, the merits and limits of political settlements theory for explaining varied economic sector performance are discussed.

Citation

Heinen, S. State-led Economic Transformation in Rwanda 2000-2019: An Evaluation of the Role of Policy in Coffee-processing, Tourism, Food Crops, and Manufacturing. (Thesis). SOAS University of London

• Thesis Type: Thesis
• Deposit Date: Mar 3, 2023
• Publicly Available Date: Mar 3, 2023
• DOI: https://doi.org/10.25501/SOAS.00039057
• Additional Information: Number of Pages : 249
• Award Date: Jan 1, 2023