World Bank and Rwanda

The World Bank Group consists of the International Development Agency, the International Finance Corporation, and the Multilateral Investment Guarantee Association. The originals goal of the World Bank was to rebuild, with interest, European nation-states after the destruction caused by World War II, but “this changed after the following the decolonization of countries formerly controlled by European states” (Kruck, Rittberger & Zangl, 211). The main emphasis of the World Bank today is to provide loans to natural resource laden, technologically undeveloped nation-states.

The World Bank’s Economic Development and Poverty Reduction Strategy in Rwanda over the past five years, since the bloody civil war there ended in 1994, boasts of many accomplishments through a three phase adaptable loan: 1) Rural Sector Support project to increase production in the marshlands, 2) Land Husbandry, Water harvesting and Hillside Harvesting Project, 3) Annual Development Policy Operation. The positive results boasted by the World Bank range from the claim that the Rwanda poverty rate has dropped from 77.8% to 44.9% since 1995 and a growing Gross Domestic Product.

I understand that nothing is free in this world, especially when dealing with capitalism and the global private sector, so my first question was what natural resources were being exploited and profited from while the World Bank Group was improving the economy and working opportunities of the people of Rwanda. The first clue that I found was contained in a letter from Jessica Evans of the non-profit organization called Human Rights Watch addressed to Makhtar Diop, the World Bank Vice President for Africa.

“The World Bank is one of the most significant donors in Rwanda, with a lending portfolio of almost US$300 million in active projects as of March 2012, more than US$ 100 million of which is provided as general budget support annually. In addition, the World Bank is providing approximately US$ 88 million in Trust Funds to Rwanda. The World Bank is focusing on the key sectors of agriculture, energy, transport, skills development, demobilization and reintegration and private sector development.”

The next excerpt is from a report by the International Land Coalition entitled the Socio-economic impact of commercial exploitation of Rwandan marshes: A case study of sugar cane production in rural Kigali.

“Rwandan law provides strong incentives for investors to engage in commercial agriculture in the country’s marshlands. This should be seen in the context of a wider policy intended to transform and invigorate the agro-economy. By leasing these lands out to commercial enterprises, the Government wants to stimulate the use of more intensive forms of agriculture that can supply national or international markets.”

One of the answers concerning natural resources that I sought was Sugar Cane, but I assume there are also other areas.  The most economically powerful private sector investors will seek to exploit and profit from land and natural resources at every opportunity available. It has been that way for centuries. On the other side of the spectrum, Rwanda is one of the most densely populated nations in the world and was virtually destroyed after colonialism and the bloody civil war. It is a nation that truly needed reconstruction, and still needs reconstruction, if there was ever a case. In the case of Rwanda, the World Bank achieves its mission statement of improving poverty rates, enhancing economic and commercial investments (creating jobs), and assistance in strengthening a weak national economy while opening extremely profitable capitalistic markets for exploitation (through the import of technology for exploitation).

Human Rights Watch. Evans, Jessica. Letter for World Bank Vice President for Africa on Rwanda. September 5, 2012, (Accessed on December 6, 2012 from http://www.hrw.org/news/2012/09/05/letter-world-bank-vice-president-africa-rwanda)

Kruck, Rittberger, & Zangl, International Organization, 2nd ed. (New York, NY: Palgrave Macmillan, 2012)

Lankhorst, M. &Veldman, M., Socio-economic impact of commercial exploitation of Rwandan marshes: A case study of sugar cane production in rural Kigali, International Land Coalition, 2011 (Accessed on December 6, 2012 from http://www.landcoalition.org/sites/default/files/publication/908/RCN_Rwanda_web_11.03.11.pdf)

World Bank. Rwanda. 2012. (Accessed December 6, 2012 from http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:23276917~menuPK:64256345~pagePK:34370~piPK:34424~theSitePK:4607,00.html)

(RESPONSE)

I am shocked you chose not to cover the plight of the Gazan people at the hands of Israel (sarcasm).  Has the World Banks influx of money to Rwanda proved effective?  I did find it interesting that the Rwandan government was so open to outside international investors operating in Rwanda, colonial governments do not have the best track record acting in Africa, especially in Rwanda.  I had no idea that Rwanda was such a player in the sugar case industry, is the sustainability of that crop, what makes it such a positive investment for outside companies?

(REBUTTAL)

When I started looking into Rwanda, which I knew was a nation-state economy that was being rebuilt from the ground up after years of colonial exploitation and the bloody civil war there, I decided to research there instead.  I think capitalist economic exploitation can be found in almost all World Bank missions, but even holding that view, I must admit that in some cases it is a two-way street, especially in densely populated, poverty-stricken places like Rwanda.  While international corporations profit of the exploitation of lesser technological nation-states and their rich natural resources, that exploitation does build a fragile economy and creates jobs in economically devastated states.  In the case of Rwanda, the World Bank talks of technologically modernizing irrigation of the marshlands through private investment (which has elevated cane production for international private profits), as the marshlands are rich for sugar cane production.  I was researching on the largest sugar producing company, Madhvani, in Rwanda since 1995 and how the government has conducted land reforms (which has opened the land for international private investments). 

This link shows the increase of sugar cane production since 1995.  It is obvious in the growth that private investment has had a large impact.

http://www.indexmundi.com/agriculture/?country=rw&commodity=centrifugal-sugar&graph=cane-sugar-production