Rwanda Aims to Show Nigeria That Size Doesn't Always Matter in Economic Success

Rwanda, a small, landlocked East African nation, is increasingly being viewed as an economic model, even in comparison to Nigeria, the "Giant of Africa" with its vast resources and population. While Nigeria boasts a significantly larger GDP, Rwanda's focused development strategies, efficient governance, and commitment to sustainability are positioning it as a formidable player on the continent.

Rwanda's Remarkable Transformation

Rwanda's journey from the ashes of the 1994 genocide to a thriving economy is nothing short of remarkable. The country has prioritized good governance, investing heavily in infrastructure, technology, and human capital. This has led to sustained economic growth, averaging around 8% per year over the last two decades. In the first half of 2024, Rwanda's real GDP increased by 9.7%, building on an average growth of 8.2% in 2022-2023. The World Bank projects that this momentum will continue into 2025-2026, driven by a recovery in global tourism, new construction projects, and manufacturing activities.

Rwanda's Vision 2050 articulates the long-term strategic direction for “the Rwanda we want” and the enabling pathways to achieve this ambition. Energized by – but by no means content with – the past two decades of success in reducing poverty, increasing incomes, improving living standards, strengthening good governance, promoting home grown solutions, establishing rule of law, maintaining stability, promoting gender equality and women empowerment, peace and security. Rwanda now aspires to transform its economy and modernize the lives of all Rwandans. Recognizing that achieving these aspirations will require bold and decisive action, Vision. 2050 serves as the critical planning and policy blueprint to guide the efforts of all players in Rwanda's development, including Government, private sector, citizens, diaspora, civil society and faith-based organizations, development partners, academia and research institutions, and political parties.

Nigeria's Economic Challenges

Nigeria, with a population of over 223 million and a nominal GDP of $477 billion in 2023, is Africa's largest economy. However, it faces numerous challenges, including over-reliance on oil exports, corruption, inadequate infrastructure, and insecurity. These issues have hindered economic diversification and inclusive growth. Nigeria's economy remains dependent on the oil sector for the bulk of its fiscal revenues and foreign exchange earnings, making it vulnerable to volatilities in oil prices. The oil price shock of late 2014 and its aftermath pushed the economy into recession and precipitated a major budgetary crisis at the national and state levels which brought to light the longer-term trend of weak domestic revenue mobilization.

The World Bank notes that Nigeria continues to face many social and economic challenges that include insecurity such as banditry and kidnappings especially in the northwest region. President Tinubu has continuously pledged to turn around the economy and ensure security across the country.

Key Areas of Comparison

While Nigeria has a significantly larger GDP, a closer look at other indicators reveals a more nuanced picture.

• GDP per capita: Nigeria's GDP per capita was approximately $2,100 in 2023, while Rwanda's was around $1,000. However, Rwanda has made significant strides in reducing poverty and improving living standards.
• Economic Growth: In 2023, Rwanda's GDP growth was 8.24%, significantly higher than Nigeria's 2.86%.
• Ease of Doing Business: Rwanda consistently ranks higher than Nigeria in the World Bank's Ease of Doing Business Index, reflecting its business-friendly regulatory environment. Rwanda jumped over 100 places in the World Bank Doing Business Index, ranking 38th globally and 2nd in Africa.
• Governance and Corruption: Rwanda is recognized for its transparent governance and low levels of corruption, while Nigeria continues to struggle with these issues.
• Human Capital Development: Rwanda spends a higher percentage of its GDP on education and healthcare compared to Nigeria. Rwanda spends 3.8% of its total GDP on education as of 2021. Nigeria spends 0.5% of total GDP on education as of 2013. Rwanda spends 7.3% of its total GDP on healthcare as of 2020. In Nigeria, that number is 3.4% of GDP as of 2020.
• Infrastructure: Rwanda has made significant investments in infrastructure, particularly in Kigali, its capital city, which is known for its cleanliness and organization.

Rwanda's Development Strategy

Rwanda's success can be attributed to its clear development strategy, which focuses on:

• Diversification: Moving away from agriculture towards services and technology.
• Private Sector Development: Creating a conducive environment for businesses to thrive.
• Human Capital Investment: Improving education, healthcare, and skills development.
• Regional Integration: Participating in regional trade and economic initiatives.
• Environmental Sustainability: Integrating environmental considerations into its development plans.

Rwanda aspires to become a Middle-Income Country by 2035 and a High-Income Country by 2050. It plans to achieve this through the implementation of the second National Strategies for Transformation (NST-2), a five year-development agenda underpinned by sectoral strategies focused on meeting the UN's Sustainable Development Goals (SDGs).

Nigeria's Development Plans

Nigeria also has ambitious development plans, including the National Development Plan (NDP) 2021-2025 and the Nigeria Agenda 2050. These plans aim to diversify the economy, improve infrastructure, and enhance human capital development. The Nigeria Agenda 2050 (NA 2050) is the long-term economic transformation blueprint of Nigeria to address the afore-mentioned developmental challenges and become an upper middle-income country, with average real GDP growth rate of 7 percent, nominal GDP of US$11.7 trillion by 2050, and an end period per capita income of US$33,328 per annum.

However, the implementation of these plans has been hampered by various challenges, including corruption, insecurity, and policy inconsistencies.

Implications and Future Outlook

Rwanda's economic success demonstrates that size and natural resources are not the only determinants of development. Good governance, strategic planning, and a focus on human capital can enable even small, landlocked countries to achieve significant economic progress.

While Nigeria faces significant challenges, it also has immense potential. With its large population, abundant resources, and vibrant entrepreneurial spirit, Nigeria could become a major economic force in Africa. However, this will require addressing its governance issues, diversifying its economy, and investing in its people.

The recent signing of a Memorandum of Understanding (MoU) between the Lagos Chamber of Commerce and Industry (LCCI) and the Private Sector Federation (PSF) Rwanda underscores the commitment to enhancing trade and investment ties between the two nations. This strategic partnership aims to foster collaboration and create new avenues for businesses in both countries, with specific sectors identified for collaboration including agriculture, energy, manufacturing, technology, and creative industries.

Ultimately, both Rwanda and Nigeria have the potential to achieve sustainable economic growth and improve the lives of their citizens. By learning from each other's experiences and focusing on their respective strengths, they can contribute to a more prosperous and equitable Africa.