Karol Boudreaux: State Power, Entrepreneurship, and Coffee: The Rwandan Experience.

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Abstract
In the aftermath of the 1994 Rwandan genocide, Paul Kagame’s new government embarked upon a revolutionary restructuring of the economy. It lifted tight controls on the production, sale, and distribution of a variety of goods, liberalized many sectors of the economy, and gave people the freedom to trade openly.

Perhaps the biggest success story of Rwanda’s liberalization is the revitalization of the country’s coffee sector, particularly the development of a new niche product—specialty coffee. A mainstay of the Rwandan economy since the 1930s when Belgian colonial officials encouraged coffee production, coffee remains a key export crop for Rwandans, generating millions of dollars of export revenue and garnering international attention for the high quality of the local beans.

This study highlights two positive results flowing from Rwandan coffee production:

• Liberalization strategies alleviate poverty and develop human capital. By removing pervasive and oppressive government controls over coffee production and sale, the Rwandan government has created space for smallholder farmers to be entrepreneurial, create new ties with foreign buyers, develop valuable skills, and increase their incomes.
• Liberalization has had the unanticipated benefit of reconciliation. Liberalization in the coffee sector creates new incentives for smallholder farmers in Rwanda to work together for a common goal: improving their lives through the production of high quality specialty coffee. Working together toward this common goal has helped Rwandans to reconcile with each other in the aftermath of the 1994 genocide.

These positive outcomes suggest that a focus on economic liberalization in post-conflict environments may pay large dividends in terms of both economic development and peace.

Karol Boudreaux gives more insight into how Rwanda’s specialty coffee has impacted the nation:

This is an industry that did not exist in Rwanda seven years ago; it started get­ting off its feet in 1999 and really started to get going in 2000. This is an industry that is transforming people’s lives in Rwanda. What happened? The gov­ernment, the post-genocide government, came in and liberalized trade in coffee. What does that mean? It means the government said to people, “You don’t have to sell your coffee beans to the gov­ernment anymore. If you want to, we’re going to give you the freedom to sell your coffee beans to any coffee buyers, importers, any coffee roasters you want. It’s going to be a hard thing for you to do because you don’t necessarily speak English; you don’t necessarily have a good training in marketing. But if you can enter into those contracts, feel free to enter into the contracts.”

What also happened is that some local non-gov­ernmental organizations (NGOs) provided people in Rwanda with more technical capabilities to care for their coffee and then to wash their coffee so you have a higher-value product. I don’t think there’s a story that I’ve seen in Rwanda that is more inspiring than what’s happened—for the women who work, espe­cially—in the coffee sector, because many of these women are genocide widows or the daughters of people who were killed in the genocide. There are more women in Rwanda than men because the men were either killed or they’re off in prisons. There are over 100,000 people still in prisons in Rwanda wait­ing to be tried for genocide charges.

People like Cossilde, who I met when I was in Gisenyi, realize that if they get together with other women, work hard, and figure out how to produce a good quality product, they are going to make more money. There’s a profit motive involved, and the profit motive is doing a powerfully good thing in this case in Rwanda. What’s happening is that wom­en have the freedom, because the government has gotten off their backs, to join together into cooper­atives to sell their product.

Their product has become extremely highly val­ued by buyers around the world. This past Septem­ber, one lot of Rwandan coffee sold for $25 per pound. This same coffee seven years ago was selling for 80 cents a pound.

This is a dramatic change for these people, and think what it means in terms of their daily lives. These are people who exist on $280 a year per cap­ita income, and now they’re seeing that if they’re able to grow coffee effectively, they can transform their lives. They can send their children to school; they can buy medical care for their children; they can put shoes on their children’s feet.

When I talked to Cossilde, I asked her, “What do you do with your extra money?” And the first thing she said is, “I buy clothes for my children so they have shoes that they can walk in so they don’t have to walk barefoot to school.” That’s a great story, and it’s not a story that we hear a lot about in Africa.

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