Lessons for Nigeria on borrowing as Rwanda finances 84% of budget
Nigeria may need to explore innovative measures of improving productivity and generating revenue beyond increased borrowing, if it hopes to increase its Gross Domestic Product (GDP), as Rwanda announces 84 per cent funding of its 2019 budget, with plans to increase such by attracting fresh investments and encouraging local patronage.
With a proposal to explore new loans to finance its 2020 budget, members of the Organised Private Sector (OPS), had raised concerns about Nigeria’s rising debt profile, urging the Federal Government to improve the business environment in order to attract foreign investments.
According to the Minister of Finance, Zainab Ahmed, Nigeria deployed 54.3% of her earned revenue for debt service in 2018, even though President Muhammadu Buhari recently sought the approval of the National Assembly to borrow $29.96billion as contained in the 2016-2018 External Borrowing Plan.
For Rwanda, the goal is to increase revenue from tourism, patronage of made-in-Rwanda goods, and attraction of foreign investments into the country for improved budget funding.
Speaking at the country’s National Dialogue Council, otherwise known as, Umushyikirano, in Kigali, yesterday, President of Rwanda, Paul Kagame, said despite the improved performance of the country in global rankings, its target is to improve citizens’ well-being in line with its 2020 development targets.
The National Dialogue presents a participatory forum for Rwandans to ask the President and other leaders, questions directly about issues affecting their well-being, while scorecards are presented for assessment based on set-targets of the preceding year(s).
According to Kagame, Rwanda hopes to record a growth of 8.5 per cent by the end of 2020, adding the country Rwanda needs to run and avoid distractions.
He said: “When we started vision 2020, we set some goals and today, we have RwandAir, building a new airport and expanding tourism by encouraging people to visit Rwanda to see things for themselves. There is an advancement, but it is slow. We need to build a knowledge economy in order to build global competitiveness.”
He continued: “the gender indicators showed that we are in the top ten in promoting gender globally, however, our goal is to be in the top five. That means there is still a long way to go, to be in the top five. We have moved from sixth to ninth position.”
On Security, the President said Rwanda is stable, even as for the last two years or so, some elements wanted to sabotage it, a move he said the country has been able to address.
He equally identified the need to address issues of climate change, noting that while some natural changes are inevitable, crisis emanating from such can be mitigated.
On the case of relocation from the high risk zones, mainly the marshland, Kagame described as unfortunate, that the disasters affected people in normal residential areas and those in areas that are not designated for residence.
A new trend has seen people being pushed to relocate from wetlands to establish their houses in safe areas. Those who resisted saw their buildings demolished and given temporary shelter as the country seeks a permanent solution.
Rwanda’s Minister of Finance and Economic Planning, Dr Uzziel Ndagijimana, affirmed that the country’s GDP per capita has increased, leading to inclusive growth.
He however stressed the need to deploy home-grown solutions, unite Rwandese, and improve private sector participation in the economy.
On her part, the Minister of Trade and Industry, Soraya M. Hakuziyaremye, said industrialisation has aided GDP growth, especially with the made-in Rwanda campaign, which started in 2015.
She added that her Ministry’s target is to ensure the growth of industries to 17 per cent by encouraging new firms with subsidies, especially in the areas of the tariff, access to raw materials, and taxes.
To expand exports, she said Rwanda is working on an export growth facility, to help the manufacturing sector export their goods and de-risk small scale entrepreneurs.