Pride and Joy swept me off my feet after the Rwandan government announced a continual 5% rise in GDP levels from 2005 – 2016 , some years ago.
I had even written this : (Rwanda: The totem of Africa ) , highlighting the key economic transformation through its infrastructural and key sector investment.
Why was a Nigerian so delighted for Rwanda? First , I am Pan- African before even being Pro-Nigerian . Secondly, for a nation coming to terms with the aftermath of a war , this ‘ buoyancy’ was never better for the african adage that, ” He who cleans the feaces on the bush-path , never worries while going for a meeting ” .
So when this report ( Rwanda’s growth : a mirage ) turned up, I was skeptical . Some opposition trying to whip up sentiments after President Paul Kagame’s presidential extension bid to 2034? Or is there some fact in this ?
Economic growth has been seen as an increase in the ability of an economy to produce more goods and services , if and when the prices are adjusted for inflation. We measure economic growth through Gross Domestic Product ( GDP) . GDP is the total value of goods and services produced in an economy.
So basically , there is an increase in Goods and services produced by the economy of rwanda and it certainly means a rise in value. Good.
Now, while GDP shows increase in productivity, incomes for households and could slowly build to economic development, there seems to be something wrong with the average Rwandan household consumption.
Look at this.
This graph shows that while official GDP per capita has continually increased , reaching almost 500000 Rwandan francs by 2013 , the average consumption per household has become totally stagnant since 2013 at 300 francs ! .
If incomes are increasing and productivity is improving and the value of goods and services are improving and affordable( barring immigration and population) , why are Rwandans saving more than consuming?
A key indicator of economic growth and development is improved standard of living through increased value driven consumption . This would lead to reduced poverty levels .
Rwanda’s statistics might have shown economic growth , but it seems more cosmetic . The government seems focused on infrastructure development and high rise buildings as a means of driving foreign investment drive.
The nations GDP to debt ratio seems to be rising: pointing to the fact that the government might have secured loans to build those structures and woo investors.
Rwanda is growing , there is no doubt about that. However, the Paul kagame led government would need to ensure the cost of goods and services are affordable for the average Rwandan; not making things too high . Creating sustainable development is also key.
It is still a rising Totem ; but until then , it needs to look at the bottom of its golden staff .
It could be rusting after all!
This article was written by Nkemjika Okeke, the Co -founder of Remok Consults Nigeria Limited , A business research and development firm based in Nigeria .