Friday, January 30, 2015

How To Talk To Rwandan Rulers: First Flatter Them, And Then Hit Hard With Truth

Lagarde was only warming up. Here she is with another flattery: "Since the early 2000s, Rwanda has grown at an average of about 8 percent—well above the regional average and on par with emerging Asia. Per capita income has more than trebled, and while poverty is still high—at about 45 percent of the population—the poorest have shared the benefits of growth. This is a remarkable feat."
And then she hits them below the belt:
"Mobilizing domestic revenues will be critical in creating fiscal space as reliance on aid gradually recedes. At 16 percent of GDP, the tax collection effort is still low compared to peers in Africa, and well below the 25 percent target set by the East African Community."
In plain language: you guys get serious. You cannot claim success when your economy is driven by aid which remains as high as 15 percent of GDP and 40 percent of your government spending. This is no success story. Low tax collection makes you a lousy performer even by African standards. This means your country hardly has any private sector to tax!
Lagarde gives another blow: "Rwanda has made important strides over the years, such as cutting red tape for construction permits, making it easier to get electricity, and strengthening the legal rights of borrowers and lenders. At 46 out of 189 countries in 2015, Rwanda is now in the top three sub-Saharan performers according to the World Bank Doing Business Indicators. Even so, infrastructure gaps continue to hold back the private sector from flourishing. In particular, key infrastructure projects in transportation, water and energy need to come on stream to unlock its full potential."
In plain language - your Doing Business ind  How To Talk To Rwandan Rulers: First Flatter Them, And Then Hit Hard With Truth

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