Sunday, February 8, 2009

Off to Rwanda

I'm sitting in the Amsterdam airport, in route to Rwanda.  As some of you may know, WDI has a major capacity building program at the School of Finance and Banking (SFB) in Kigali, the capital city.

Rwanda is an interesting test case for the Services Shift.  It is a small, land-locked country in Eastern Africa (west of Kenya, east of Congo).  Temperate climate, few natural resources, and terrible transportation links to major population centers or to ports.  Rwanda also has the continent's highest population density.  GDP per capita is between $200 and $300 dollars (or about 30% of India's GDP.  This is one of the poorest countries in the world.

So, the development challenge is:  what can the country export to the rest of the world in exchange for the imports it needs?

There is some progress in coffee and tea.  And there are the famous mountain gorillas that bring in tourists.  But not much else.  Human capital is low -- more than 80% of the population does subsistence farming, and only 3% of 18-20 year olds go to college.  

This seems like a classic setup for carving out a services niche.  Find something basic, build a core competence, and rush to fill the market with your low cost workers.

The problem is that even basic business skills are in short supply.  There are few accountants, managers, telecom engineers, etc.

So the country remains stuck in a low level equilibrium.  Very low costs and a huge need to break into services.  But not enough local skills to make this happen.

We hope the SFB engagement can be part of closing this skills gap.  But only time will tell.  There is a lot to offer in Rwanda.  But the skills gap is preventing the country from grasping even the lowest rung on the global services ladder.

1 comment:

ColoredOpinions said...

Have a save trip, hope to read more about this initiative soon.