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All the nations of the world fall into economic, social and political strata of some sort. As a result, terms such as developing and industrialised nations have come into existence. Developing nations are often characterised by poor socio-economic and political conditions. As such, the existing international system expects industrialised nations to support the developing nations in their economic development endeavours. Rwanda is one of the poorest countries across the world, but courtesy of foreign aid, it has made spectacular progress in the right direction. This progress is especially noticeable in its health care sector.
The world’s nations are diversely stratified along political, economic, and social lines. This stratification serves as the basis for the classification of countries into developed and developing nations. The latter category is characterised by low national income, excessive poverty levels, poor infrastructure, and low education. Additionally, low life expectancy and poor health care systems are key features of developing countries. Nielsen (2011) notes that most of the world’s countries fall into this category. Nations in this category require official development assistance (ODA) because they cannot raise adequate funds on their own to facilitate their development (Dicks-Mireaux, Mecagni & Schadler, 2000). This assistance comes from industrialised nations and international lending institutions such as the International Monetary Fund (IMF) and the World Bank. This paper explores the economic, social, and political impact of ODA on Rwanda with special attention to the health care sector.
Overview of Rwanda
Apparently, developing countries exist all over the world. Nonetheless, of particular interest to this discourse is the Republic of Rwanda. It is a small country located in the Great Lakes region of central Africa (Assessment of Development Results, n.d.). What makes it a subject of interest in this paper is its widely touted spectacular economic growth in the last two decades. After its devastating genocide of 1994, the international community decided to support Rwanda to expedite its recovery. Ezemenar, Kebede & Lahiri (2008) assert that for several years, Rwanda received close to US$1 billion constituting over 50 percent of its budget.
Social, Economic, and Political Impact of ODA on Rwanda
According to Ezemenari, Kebede and Lahiri (2008), ODA plays an instrumental role in the Rwandan economy. It serves as the major source of capital inflows and funds for the budget. Since foreign direct investment is scarce, the country also uses ODA to establish macroeconomic stability. In this respect, the aid arguably serves a meaningful economic purpose. On the flip side, the foreign aid influx instigated the increase of inflation as well as other significant changes in GDP. The effects of these changes include devaluation of the Rwandan currency by up to 45 per cent and higher domestic borrowing.
In the social sense, foreign aid has helped Rwanda to make notable steps in the right direction. The U.S., the U.K., the World Bank, and the IMF have rated Rwanda’s overall progress in terms of attaining the millennium development goals MDGs positively. One of the prominent aspects of the MGDs is the empowerment of women. Rwanda is one of the two countries across the world that has a higher percentage of women in the legislative assembly than men (Ezemenari, Kebede and Lahiri (2008). Apparently, Rwanda’s desire to impress its donors has enabled it to make major steps in the social sense.
In the political sense, Rwanda’s political elite is obliged to maintain a cordial relationship with the donors since the absence of such a relationship can mean reduced or no foreign aid. On the one hand, this unwritten rule has helped strengthen the governance structures of Rwanda because establishing a cordial relationship with the World Bank and the IMF does not necessarily require good personal relationships, but rather the ability to maintain high levels of integrity and commitment to existing agreements.
The Benefits of a Healthy Population to the Economy of Rwanda
Rwanda has expressed a desire to move from the aid-dependent economy to a self-sustaining economy. This transition calls for a healthy population. Incidentally, the country’s achievements in health-related MDGs have delivered a healthier population for Rwanda. As a result, the country has recorded steady growth in its revenue collection. Ezemenari, Kebede and Lahiri (2008) note that between 1994 and 2002 revenue as a percentage of GDP grew from 4 percent to 12.2 percent.
Second, Musango et al. (2006) assert that Rwanda’s population has universal health insurance. Since the government caters for the costs, a healthy population implies that less money goes into hospital bills. Consequently, the funds can be used elsewhere to fast track economic development. Third, the increase in revenue collection implies that apart from a stronger and more reliable labour force, the private sector is also coming up strongly in Rwanda. This assertion stems from the fact that the Rwandan government currently places emphasis on TVET programmes to foster entrepreneurship.
Fourth, Rwanda is looking to achieve a per capita income of US$1000 (Ezemenari, Kebede & Lahiri, 2008). This feat requires a healthy and productively engaged population. However, an important to note is that for the country to make such a projection, it has done some groundwork and concluded that the feat is achievable. As such, Rwanda’s progress in building a healthy population is opening the country up for sustainable economic growth.
The Impact of Foreign Aid on Rwanda’s Health Care System
The first and most notable example of using foreign aid to develop health care in Rwanda is the establishment of universal health insurance for all citizens. This investment has placed Rwanda among the counties with the most elaborate health care systems in the world (Musango et al., 2006). Clearly, without foreign aid, such an achievement would have been impossible for Rwanda considering its situation immediately after the genocide. Elsewhere, when Global Fund, PEPFAR and other partners decided to pump health aid into Rwanda to combat HIV, the country’s leadership capitalised on the opportunity and concentrated the funds on enhancing primary care (Price et al., 2009).
As a result, Rwanda has realised unprecedented results in terms of caring for HIV patients. Reportedly, it retains over 90 percent of HIV patients in care (Price et al., 2009). This achievement has been made possible by the country’s decision to train about 45,000 community health workers to take primary care to people’s homes. The efforts of this group are supported by a robust network of health care facilities that were built courtesy of health aid and the leadership’s commitment to ensuring that every citizen could access health care (Musango et al., 2006). Other examples exist to support the leadership’s use of donor aid to support health care, but purposes of this discourse, the cited instances will suffice.
Rwanda is clearly a special case insofar as the use of donor aid is concerned. It has received more aid than the average developing country and has put the funds to good use. Although some concern about aid dependency exists, the fact remains that foreign aid has made a notable impact in Rwanda. Critics may argue in many different ways, but Rwanda shall remain a spectacular example of proper aid utilization as long as the current goodwill persists. The international community and international lending institutions all agree that Rwanda has done a commendable job in all aspects of development, but most notably, in its health care sector.
Assessment of Development Results: Rwanda – OECD. (n.d.). Web.
Dicks-Mireaux, L., Mecagni, M., & Schadler, S. (2000). Evaluating the effect of IMF lending to low-income countries. Journal of Development Economics, 61(2), 495-526.
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Ezemenar, K., Kebede, E., & Lahiri, S. (2008). The fiscal impact of foreign aid in Rwanda: A theoretical and empirical analysis (World Bank Policy Research Working Paper No. 4541). Web.
Musango, L., Butera, J., Inyarubuga, H., & Dujardin, B. (2006). Rwanda’s Health System and Sickness Insurance Schemes. International Social Security Review, 59(1), 93-103. Web.
Nielsen, L. (2011). Classifications of countries based on their level of development: How it is done and how it could be done (IMF Working Paper 11/31). Web.
Price, J. E., Leslie, J., Welsh, M., & Binagwaho, A. (2009). Integrating HIV clinical services into primary health care in Rwanda: a measure of quantitative effects. AIDS Care, 21(5), 608-614. Web.