August 8, 2019

Burera Milk Factory Woes Symbolize Bigger Problem To Our Development Path

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President Paul Kagame is taken on guided tour of a major agricultural produce storage facility by former Agriculture Minister Dr Agnes Kalibata and other senior officials. As our writer Dr Kayumba Christopher argues, once such large scale projects are established, they will usually not last as they are handed to low-level managers who are disconnected from the vision of the top leadership

In the past six to eight years, factories producing varied products have been opened in different regions of the country and cooperatives encouraged to partake in this government-inspired industrialization from “regions”.

What’s most interesting about this policy is that these factories aren’t only supposed to be “communally” owned─at least in the long term by cooperative members as “local shareholders”, but are also tailored to be located in regions that produce the raw materials needed to feed the factory in question and, in the process, offer a market and jobs to locals.

For example, in the north and north-western regions that are known to grow potatoes and have good pastures for cattle keeping, one finds a potato factory (in Nyabihu) and Burera milk factory respectively while in the Eastern province, known to grow Bananas, one finds wine factories─like the Rwamagana Banana Wine and Rugali Agro-processing cooperative that produce “Urwagwa”, etc.

This targeted industrialization from regions owned “locally” is pursued hand-in-hand with investing in “made-in-Rwanda industries” at the national level; high-end tourism and encouraging farmers, artisans, traders and even ordinary workers to join and work in cooperatives as springboards for collective income generation and investment.

For keen observers, this government engineered “top-down” but “locally owned” approach to development isn’t isolated but is part of a broader development path that the RPF-led leadership started implementing around 1995 when Tri-Star Investments Limited was established.

As I argued in The East African newspaper of October 8, 2016 in an article headlined: “RwandAir’s Airbus purchase proof of ‘Kaganomics’ at work”, this development path, which is different from the “development discourse” you find in high-level conferences is made up of, in practice, five “development tactics”.

The first is allowing the ruling party, RPF and the military (through Horizon Holdings Ltd) to invest and act as investment catalysts where private investors are unwilling to invest. The second is encouraging like-minded businessmen and women to pull resources together and invest. The third is mobilizing cooperatives to invest or government investing on their behalf; the fourth is direct government investments in things like Rwandair and Kigali International Convention Center, and finally, encouraging traditional investors and foreign direct investment.

As I argued in The East African of October 8, 2016, “It is these five development tactics — primarily led by the unfailing belief in the civilizing role of government — that constitute what I would refer to as “Kaganomics” and which are driving post-genocide development in Rwanda”.

As I will illustrate, this development path, is not only in direct contrast with the neoliberal public rhetoric we hear in conferences in Kigali but is currently threatened by an ideological disconnect between the top leadership and mid-level managers and beneficiaries in regions.

Let us illustrate: For some time now, different media outlets in the country have been reporting about the failing of this or that factory in this or that region with no connection made as to the meaning of such failure to the larger development trajectory the country has taken.

For example, The Chronicles on August 7, 2019 carried an interesting story headlined: “Burera Milk Factory: Trade Ministry Paid Geography Graduate-Consultant 49,500 Euros For No Work Done”.

Besides reported mismanagement and poor capitalization that even President Kagame addressed while in the region in May this year, what ails Burera diary factory isn’t isolated but seems to have attacked other similar factories.

On June 12, 2018, Taarifa online wrote a story headlined: “Rwamagana Banana Wine Factory Was “Eaten” Before it was Built” and on June 07, 2016, KT Press published a story that told us: “Nyabihu Potato Factory Fails to work, farmers stranded”.

And on January 5, 2018, The New Times reported that “Govt to sell Nyabihu Potato Factory to boost production”.

The basic reasons provided for the failure of these factories are two: poor management and limited capitalization.

Yet on August 7, 2019, The Chronicles told us that that the “Development Bank of Rwanda Gives Billions In Loans To Cooperatives Without Knowledge of Members”.

In this story, we are further told that in some cases, cooperatives were given “loans” without either requesting for it or providing requisite documents and that, in some cases, the amount signed for didn’t reach the bank accounts of the cooperatives in question.

Besides BRD that is supposed to give ‘development loans” to such factories that is now misused, these ventures are also supposed to be benefiting from the National Industrial Research and Development Agency (NIRDA)’s “Open calls program” and BDF (Business Development Fund).

Clearly, the issue of money or lack of capital shouldn’t arise nor should the problem of mismanagement─as NIRDA is supposed to be directly involved in helping such industries increase their managerial capacity and technological know-how.

So why do these issues persist and what does this persistence tell us about the country’s development path?

First, as I have noted elsewhere, the general failure of most regional factories can be explained by a lack of ownership. It’s also this spirit that one reads in the approach of BRD giving loans to cooperatives that never applied for them and then we could ask: “Whose money is this and for what purpose? Whose factories are these”?

The second and most fundamental is that these factories are ailing because of an ideological disconnect between the top national leadership and mid-level managers and ordinary citizens about what the country is supposed to do to “develop” and the role of every actor.

Thirdly, due to this ideological disconnect and the fact that these factories are started without the participation of local actors and are therefore perceive as “gifts” from the central government, there might be a feeling that they will be maintained through “donations” or “free” money from the state.

This disconnect constitutes three questions where the top-leadership doesn’t seem to be on the same wave-length with mid-level managers and the citizenry, nor has there been a proper national debate about it.

These questions are the (a) What to do to develop; (b) Who should do what; and (c) Why. In other words, there is a general lack of clarity about what the proper role of government in development is or should be compared to other actors like the individual and the community.

In other words, there is a mismatch between what the top-leadership know will develop the country and what mid-level officials and communities hear and know as their role and what will develop the country.

To clarify, the point isn’t that there hasn’t been any debate about Rwanda’s development path; the issue is that the debate that takes place in conferences and workshops in Kigali is different from practice or what top leaders are doing to develop the country.

For instance, on the 14th of February, 2018, there was a “high-level” conference titled “Rwanda’s Development path for the next 30 years” funded by the government together with the Tony Blair Institute for Global Change and International Growth Center.

As usual, in the debate, renown people like Prof Paul Collier and Tony Blair concentrated more on what they call “economic fundamentals” and drivers of economic growth like savings, investments, quality of education, etc – rather than the nitty-gritty of what one actually does to “develop” in practice or what Rwanda is doing.

Yet, while rhetorically the government supports the neoliberal market and private sector-led development where the individual investor is the ultimate guarantor of progress, at the core, the Kagame-led development path is based on a deep belief on the “civilizing” role of government and collective (cooperative, group-based) capital generation, investment and ownership.

This belief is derived both from the RPF struggle where individuals’ “small” financial contributions not only contributed to victory but were also used to help the country to interest outside investors by using these “locally” generated resources to venture where outsiders couldn’t.

In that sense, while the Kagame-led development path believes in the power of the “collective” to produce wealth and value, market-led neoliberalism believes in the liberating power of the individual, who, through pursuing selfish-interest, create wealth that society may benefit from through reasons not of his or her intentions.

This Kagame approach is also borne out of the fact that the country doesn’t have enough local entrepreneurs with individual capital to invest on their own or at a scale that can generate growth and, therefore, capital must be generated through pulling resources together.

For these factories to be rescued and ensure that the country’s development path succeeds, there must be an ideological meeting of the mind between the top national leadership, mid-level managers as well as district leaders and the citizenry.

That would mean not only having an open debate about and agreement about the role of government in development, but also that of an individual citizen, entrepreneurs, cooperatives and community.

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