Rwanda’s government has embarked on an ambitious plan to expand the country’s coffee output and grow the lucrative industry. While the initiative has been well-received, it is doomed to fail unless the process is carefully managed.
The East Africa Trade and Investment Hub, an organisation that boosts trade and investment with and within the region, estimates that in 2008, 10% of Rwandan farmers planted coffee. In 2009, the crop remained a major source of export revenue, generating over 36% of total export revenue. Now coffee industry regulators plan to crank these numbers even higher than ever before.
Africa has often been referred to as a continent full of promise and potential. However, many of its politicians are known for empty promises and wasted potential. Rwanda, a land-locked little country in East Africa, has made many strides in terms of growing its economy in recent years.
Though Rwanda is known as a country of few natural resources, the tiny nation has most definitely fought for its well-deserved recognition.
Rwanda’s economy is based mostly on subsistence agriculture. In fact, an estimated 90% of the country’s working population is engaged in farming-related activities, according to government and World Bank data. This adds to the fact that agriculture accounted for roughly 42% of the Rwanda’s gross domestic product (GDP) in 2010.
GDP is an indicator of a nation’s financial health. It measures the value of economic activity within a country. Strictly defined, GDP is the sum of the market values, or prices, of all final goods and services produced in an economy during a period of time.
From as early as February 2018, world economists have expressed confidence in the small nation. The International Monetary Fund (IMF) for instance, projected at the time that Rwanda’s economic growth will continue to be strong as its GDP was predicted to rise by 8.6% in the first half of 2018.
Speaking at the time, IMF Rwanda Mission Chief, Laure Redifer stated that after rising to 6.1% in 2017, the country’s real GDP growth averaged 8.6% in the first half of 2018, consistent with the projected end-year growth rate of 7.2% in 2018.
The IMF Chief added that continued export diversification and public investment will ensure that “the country’s medium-term macroeconomic outlook remains favorable and real GDP growth remains strong.”
At the time, Redifer was addressing a press briefing after IMF staff completed discussions with several Rwandan government institutions on the 10th and final review of Rwanda’s macroeconomic program supported by the IMF Policy Support Instrument.
In light of these sentiments, the country’s coffee industry is thriving. The sector has a great deal of potential and some economists agree that coffee will help reaffirm Rwanda’s position on the proverbial and literal map.
A series of new strategies implemented by the country’s National Agricultural Export Development Board (NAEB) has helped the coffee industry expand. As a result, Rwanda’s coffee beans were ranked the second-best quality coffee globally by an independent international jury of coffee experts in New York, in the United States mid this year.
The country beat eight other competitors to scoop the ‘Best of the Best’ coffee accolade thanks to the beans’ aromatic richness, complexity, balance, elegance and aroma intensity and strength.
Rwanda went head to head with beans from Brazil, Colombia, Costa Rica, Ethiopia, Guatemala, India, Nicaragua and Honduras, which are ranked among the best coffee producers in the world.
Rwanda made $58.5 million (about Rwf49.7 billion) from coffee exports in its last financial year, which ran from July 2016 to June 2017.
Because of these developments the country’s National Agricultural Export Development Board plans to increase fully-washed coffee export volumes to more than 50% in the coming months, from 42% in 2014.
NAEB’s strategy is to make the sector more competitive and profitable. And while the idea itself is remarkable, the execution will determine the industry’s future.
Africa is perhaps one of, if not the richest continents in the world. From precious metals to oil reserves and rare earth minerals, the unfairly named ‘Dark Continent’ shines brightest in terms of unbridled potential. However, Africa also suffers from a culture of mismanaging resources.
Rwanda’s government believes that its coffee beans will make the country wealthy. The problem is, wealth rarely has the trickle-down effect that many believe it does. The revenue from the coffee exports could be used to bolster the sector. It could be used to create more employment opportunities, build roads, hospitals and schools. But it could also be used to line the pockets of greedy politicians. The money could be used to feed corrupt members of Rwanda’s society while common consumers remain oblivious to the con-man’s game.
A Lasting Legacy
Rwanda’s President, Paul Kagame is famous for his tireless fight against corruption. His efforts have ensured that the country’s stride in development have been incremental. But his term will eventually come to an end and many hope that his legacy will remain intact.
Rwanda is currently ranked among Africa’s three least corrupt nations again, according to the latest edition of a report titled the Corruption Perception Index.
Its agriculture industry is somewhat well-protected thanks to efforts by various Ministries and the relentless efforts of the Head of State.
The country’s coffee sector can indeed thrive under Kagame’s leadership. Some have even bet that it will.
However, his anti-graft strategy is a delicate plan that can be disassembled in the hands of a less forthcoming leader. His work can be undone by crooks, despots and power-hungry politicians. This is due in part to the fact that some experts believe his governing model cannot be replicated elsewhere in Africa.
Rwanda is, in many ways, a self-reliant country. Though it benefits from foreign investment, it does not allow for a heavy-handed approach like some of its East African countries. Kenya for instance, is so reliant on China to boost its economic development that the country is billions of dollars in debt.
Tanzania is no different.
Kenya, East Africa’s largest economy has seen its once-lucrative cotton industry rise and fall. The country is now attempting to resuscitate the sector, which was mismanaged in the past.
Rwanda, on the other hand, has a lot of the tools required to keep its coffee sector alive. This November, Chinese Ambassador to Rwanda, Henry Rao Hongwei, assured Rwandan coffee and tea producers of ready market in the Asian nation.
Speaking during a visit to Rwanda Farmers Coffee Company (RFCC), a coffee roasting plant located in Kigali, he promised to attract more investors to Rwanda by providing them with more information on available opportunities in the sector.
As long as the partnership is amicable and the agreements are mutually-beneficial, China and Rwanda have a smooth road ahead. If this is the case, then the coffee industry will grow and remain profitable. Rwanda just has to ensure that the sector is regulated by capable, competent and incorruptible leaders.