03 January 2009

In addition to the YAP reference English class I teach two times a week at ALARM’s office in Kacyiru, I also visit from time to time an English Club, which meets once a week on Wednesday at the Free Methodist church in Gikondo were Ben Nkusi pastors. The members come prepared each week to talk about a prearranged topic selected by a moderator. A few weeks ago capitalism was the topic discussed in a debate format. I learned a lot about how Rwandans feel about capitalism and would like to share some of the insights I discovered.

As the debate began positions for and against quickly developed. The side which supported capitalism claimed many people in Rwanda are poor because they are lazy and don’t want to work. Under a capitalistic economy, instead of waiting for the government to provide enough jobs for everyone, people should be diligent about finding their own job or creating one for themselves by starting a business.

From what I understood after further discussion, Paul Kigami, President of Rwanda, made an appeal to Rwandans to begin creating their own jobs by starting businesses. One of the group members recently graduated from a local University in Literature. She told me many students graduating from University leave school expecting to receive government positions, which are becoming more competitive because there are not enough government jobs to go around for every graduate. Therefore, there is a growing population of unemployed University graduates in Rwanda.

Micro-finance seems to be the best answer in Rwanda right now for empowering people of all economic levels to create jobs for themselves and others. Unfortunately, on the micro-economic level many people do not have the insight or education to run a business effectively and avoid common mistakes (things like separating business and personal expenses). On the macro-economic level there seems to be a crisis brewing.

I was fortunate enough to sit in on a discussion between a local faith based organization and a private German financier over funding the organization’s micro-business division. During the conversation, the German man told us he has seen many micro-business projects in Rwanda used to fund humanitarian initiatives. He stated the major problem Rwanda will face in the near future is over supply of goods people do not need. For instance, tailoring, animals and farming are three major sectors people are choosing to invest their micro-loans into. Unfortunately, according to market forces of supply and demand, if there are too many people investing in the same markets then a lot of people will loose money because they cannot sell their goods due to a lack of demand. It is yet to be seen if Rwandans will take the initiative to diversify their investments into other markets.

Getting back to the debate again, the side that argued against capitalism claimed a free market system is not fair to everyone. There are inevitably winners and losers; some people will receive jobs which pay a lot of money, while others do not receive enough. In addition, one person pointed out that under capitalism, the rich in Rwanda are getting richer, while the poor are getting poorer; a middle class does seem to be developing at this point.

One case in point in support of the dissenting side is high end, luxury housing developments, sprouting up all over Kigali, which most people in Rwanda cannot afford. A friend of mine from a local faith based organization told me the government is on a path to upgrade the appearance of Kigali by promoting high-end housing development. The funding is coming from foreign investment by NGOs, foreign government residing in country and private western homeowners. In addition, money from the Rwandan social security fund, since it is not being tapped due to the young population, is allocated to build lavish homes, which will be given to retired workers who have paid into the fund over their tenure. The eventual result will be overall increase in land and housing value, which will most likely push out the poor from the city. The government possesses all land rights in Rwanda, so it is legally possible to displace poor persons from their homes with minimal compensation to build lavish homes on the same ground without public hearings.

After listening to each person give their opinion, I was invited to share my thoughts on the subject. I asked everyone if it was possible for both sides to be right: there are many people in Kigali who should be given incentive to work through a free market system and at the same time there are macro-economic forces backed by the government and foreign investors outside the average person’s control which unfairly burden the have-nots.

I went on to tell the group that pure capitalism is more theoretical than reality in modern societies. I explained that even in America, a bedrock of capitalism, there are/have been socialist aspects like welfare, the food bank and other government and private sponsored programs which help protect people in hard times. It seemed to me the debate was not so much about capitalism: take it or leave it. But about why the current hybrid economic systems in place are or are not working for the citizenry at large. Any system can be taken hostage and abused by the rich and powerful, which may be the case in Rwanda right now.

Overall, it will be interesting to see how Rwanda will develop in coming years through the growing pains of an ever-accelerating economy hopefully to the benefit and not the detriment of its people.