Saturday, February 25, 2012

Governance and growth: a lesson from Rwanda

Growth does not depend on resources, it depends on policy and governance. Many countries rich in natural resources from Nigeria, to the Congo to Angola remain poor because of bad governance.

The African continent seems to teem with ill-governed countries so it may come as surprise to learn that a country that seemed a basket case in 1994 is now progressing reasonably well, thanks to better governance. When Rwanda emerged from a genocide in 1994 prospects looked very bleak. Now things are much better, as this article explains.

They have cut red tape (Rwanda ranks 45 in the World Bank's ease of doing business report, in contrast to Sri Lanka's 89th position) and reduced corruption. Transparency International ranks Rwanda at 49 (out of a 182 countries and just below Macau, Brunei and Bahrain). Sri Lanka ranks 86, just below Jamaica, Panama and Serbia.

Although Sri Lanka is far, far ahead of Rwanda, I still think there are some useful lessons to be drawn. Hopefully the next time G.L Peiris takes wing it will be to Rwanda.

Some further reading here and here.

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