By Jason Muhire
In the current difficult context where many countries around the world are struggling to re-launch their economies, trying to contain the coronavirus pandemic and its devastating effects on people’s livelihoods, David Himbara is busy with his usual prophecies of doom for Rwanda’s economy; a country whose government he, undoubtedly, despises and for which he holds vengeance. Obviously, Himbara is on a mission who doesn’t mind contradicting himself in pursuit of his goals.
In this article, Himbara contradicts his own predictions by the choice of institutions he cites, unconvincingly, as evidence of his doomsday prophesy. He knowingly omits crucial information by Moody’s, when he suggests that Rwanda may fail to repay its loans. On the contrary, the rating agency, when justifying its recent rating action, notes that despite the difficult conditions created by the corona virus pandemic, “Rwanda has a track record of effective policy implementation and reform, leveraging support from international financial institutions, which support the formulation and implementation of sound macroeconomic policies.”
In other words, if Himbara wasn’t on a mission to destroy Rwanda’s image and if he was an honest person, he would have written that unlike other countries that may default on their loans, Moody’s has declared that Rwanda’s is expected to remain on course on its payment due to its sound macroeconomic environment. Moody’s only underscored the widely recognized effectiveness of the government that allows Rwanda to retain the trust of financial institutions with regard to her capability to enact corrective measures and preserve debt service capacity.
This in turn, allows Rwanda to secure future loans if necessary, thereby avoiding a liquidity crisis. Additionally, according to Moody’s, “immediate risks to the economy are limited by ample foreign exchange reserves, which remain adequate to cover upcoming external debt servicing need”. But Himbara would rather choke himself than acknowledge these undeniable facts.
Moreover, one would wonder how a man who portrays himself as a seasoned economist fails to make sense of numbers. For example, Himbara notes that “According to the ministry of finance, servicing Rwanda’s external debt costs the country $72.3 million annually. This is about the same amount of money Rwanda earned from MICE in 2019 at $88 million.” Himbara, the “seasoned economist” believes that Rwanda’s external debt is serviced only by MICE investments. Even a first-year university student in economics would know that MICE earnings are hardly the only source of government’s revenues. Even if one were to consider tourism alone, Rwanda earned $498 million from the sector in 2019 and Gorilla trekking alone earned approximately $68m in revenues.
Himbara misrepresents Moody’s the same way he does for the IMF. He omits to mention that IMF’s remarks highlighting the fact that Rwanda’s tax revenues have been stronger than expected, which is another indicator that Rwanda’s economy is showing signs of recovery. Additionally, the government’s ability to collect more taxes than expected, and doing so in a challenging environment, is one among many reasons why Rwanda is trusted to meet her financial obligations.
Himbara, out of frustration, ignores all these facts because they are inconvenient to his mission and his predictions of doom. Undeniably, this is a man frustrated that his past predictions of doom have not materialized and that anyone who still takes them seriously is equally deranged.
Himbara’s frustration is noticed in his in a follow-up article. In it he laments that “the funds received from overseas Rwandans by far outstrips the money earned by MICE activities.” But what do remittances have to do with MICE?
One would expect Himbara, a self-styled expert in economics, to be informed about the new trends in his area of expertise. Everyone knows that remittances have already overtaken Foreign Direct Investments (FDI) as the biggest source of external financing and foreign exchange earnings in low- and middle-income countries. Real economists predict that in a few years, remittances will overtake development assistance and FDI, combined. Does Himbara not know this or is it wilful ignorance at play, and If Himbara doesn’t know this, why is he commenting on things he is ignorant about?
Himbara needs to be able to think small before criticising Rwanda’s Think Big approach to development that he calls “delusional.” But only a deluded failed economist would fail to make the basic connection between Rwanda’s approach and the vote of confidence from investors regarding them. For instance, why doesn’t he ask himself why a successful operator like Quatar Airways has signed a huge investment deal to take 60% stake in the Bugesera airport and a 49% stake in RwandAir. Between a failed economist and a successful airline, who should sensible people listen to?