How could a small country with a lean economic muscle like Rwanda outdo well-established African economies like Nigeria and South Africa?
It is the baffling question that economic experts have to grapple with after Rwanda emerged the most competitive African country in the just released Global Competitiveness Index (GCI) report.
The index, which analyzes national competitiveness on the basis of the institutions, policies and factors determining the level of productivity, ranks Rwanda at number 58, globally, with a score of 4.35, ahead of African economic giants like South Africa, Nigeria, Egypt, Morocco, and Algeria.
South Africa, the third largest economy in Africa, is the second African country on the list at number 61 with a score of 4.32, followed by its neighbor Botswana at number 63 with a score of 4.30.
Surprisingly, Nigeria, which is currently regarded as the largest African economy comes in at number 125, behind some rather beat-up African economies such as Zimbabwe, which is in position 124, Benin, Swaziland, Uganda, Zambia, Mali, The Gambia, Cameroon and several others.
How Did Rwanda Do It?
Since 2013, Rwanda has enjoyed a relatively steady growth in its Gross Domestic Product (GDP), which is expected to rise to 7.5 percent this year. Part of this growth has been attributed to the efforts put in place by the government to reconcile and unite the country after the deadly genocide in 1994.
The East African nation is also making significant progress in many of its economic sectors, including agriculture, tourism, energy, transport and ICT.
Last year, the World Bank ranked Rwanda as the second easiest country in sub-Saharan Africa to do business in and the top country in East Africa.
This unswerving progress has put Rwanda at par with some of the well-established economies of the world, with some experts predicting that the tiny East African state will soon be a force to reckon with globally.
Measuring Economic Performance
The Global Competitiveness Index measures the performance of about 140 countries from around the world on 12 key factors of competitiveness. It analyzes these factors alongside institutions identified through empirical and theoretical research as determining progresses in productivity.
According to GCI, these institutions are the key determinants of long-term growth and essential factors in a country’s economic development and success. Therefore, the main intention of preparing the GCI report is to help decision makers appreciate the complexities involved in development.
Once they understand the likely challenges, then they are in a better position to formulate well thought out policies, based on collaboration between the private and public sectors. With the help of this report, decision makers are also able to restore confidence in the possibilities of continued economic progress.
The 2017-2018 GCI identifies three main bottlenecks and lessons related to economic development, public-private cooperation, and policy action.
“First, financial vulnerabilities pose a threat to competitiveness and to economies’ ability to finance innovation and technological adoption; second, emerging economies are becoming better at innovation but more can be done to spread the benefits; third, labor market flexibility and worker protection are needed for competitiveness and shared prosperity in the Fourth Industrial Revolution,” the GCI report reads in part.
The report concludes by calling on decision makers to ensure their economic policies are focused on people’s well-being, adding that competitiveness remains a critical contribution to the larger goal of human-centric economic development through the creation of essential resources for improved well-being.