RPF’s involvement in business is problematic but it spurs growth
Saturday April 01 2017
Ordinarily, political parties aren’t created to do business nor are they expected to.
They are started to advance certain ideas regarding the organisation and governance of society and work to gain political power so as to turn those ideas into policies.
Today, however, the Rwanda Patriotic Front (RPF) does not only hold political power, but also has a chain of profitable businesses under Crystal Ventures Ltd.
And while its net worth runs to billions of francs, the company employs anywhere between 10,000 and 120,000 people, making it the richest and second largest employer in the country (after the government).
This involvement in business has led some to accuse the ruling party of unfair competition. But, President Paul Kagame, who is also RPF’s chairman, rejects this accusation.
Speaking to the Wall Street Journal’s Gerard Baker on March 2, Kagame challenged “anybody to bring any proof” that the company was receiving favourable treatment.
Despite the denials however, it sounds fair to ask whether RPF’s involvement in business isn’t stifling competition. But asking and finding answers to this question tells us little since it only focuses on one aspect of the effect of involvement in business and not the cause.
To get a better understanding, there is a need to broaden the inquiry to include “why” and to what effect.
Doing this not only helps us understand why even the military is involved in business (through Horizon Holdings Ltd) but also opens our eyes to the organising principle informing the post-genocide development path.
You see, after the genocide, no one wanted anything to do with Rwanda. Citizens were deeply divided and foreigners had no confidence in the country and some even expected the country to collapse.
The pressing question for RPF then was “where to start” rebuilding the economy. Remember that by July 1994, banks were empty and the business class together with state elites were either on the run due to their role in the genocide; had been killed or were in prison. The few remaining ones were either indifferent or hostile to RPF.
So, how do you set about reviving the economy?
Of course, conventional wisdom would say the government should have pacified the country; put in place enabling laws and invite private investors to invest. But that’s a path that works in ordinary post-conflict situations where the foundation of society hasn’t been decimated.
But in a situation where almost the entire state and business class has been criminalised as was the case in Rwanda, an unconventional approach was needed.
Thus, while I agree that RPF’s involvement in business is problematic especially because it inevitably leads to the concentration of power, the strategy should be credited for four things:
First, the strategy was largely driven by locally identified problems; not textbooks.
Secondly, it has not only led to investments in areas no one was interested in but has also created jobs especially for retired military men and women — a factor that has contributed to peace. It seems that at the time, someone in RPF must have suggested that, “Now that few are willing to invest here, why don’t we, as a party start investing the money raised from our members?”
Thirdly, the approach has facilitated the mobilisation of local capital and formation of investment groups of like-minded citizens, which has made it possible for them to invest in big projects.
Finally, from everything I have seen, a national patriotic spirit has slowly been nurtured and is being meshed with the entrepreneurial spirit. It is partly this spirit that is driving the development we see today.
The challenge for RPF then is how to reproduce this spirit; ensure its businesses are run by professionals rather than feeble supporters; exercise restraint in the use of its unmatched power to ensure fair competition and ensure access to opportunities is available to all; including opponents.
For the political opposition, the challenge will be how to compete with and wrestle power from a cash-loaded incumbent whose ears are everywhere.