Economics

Key unit competence: Learners will be able to describe the role of
various sectors of Rwandan economy.

My goals

By the end of this unit, I will be able to:
⦿ Describe the structure of Rwanda’s economy and examine its implications to the development of the country.

⦿ Explain the meaning, forms, advantages and disadvantages of dependence.

⦿ Examine the forms, advantages and disadvantages of dualism.

⦿ Analyse the meanings, limitations and role of the subsistence and informal sectors to the development of Rwanda.

⦿ Compare the objectives, roles and problems facing the private and public sectors.

⦿ Suggest policies to boost the private sector.

⦿ Describe the forms, rationale and limitations of privatisation and liberalisation.

Activity 1

Case study 1

Rwanda, a beautiful land locked nation is located in eastern part of Africa surrounded by Uganda, Kenya, Tanzania, Burundi and DR Congo. The land of a thousand hills has had its ups and downs before and after the 1994 genocide. This has made Rwanda have a variety of features that basically describe its existence. For example it has the rich and poor, it is majorly relies on agriculture for well being. Agriculture is done both on a small and large scale though the former is dominant and it is
for home use. Most youths engage in activities such as salons, motor bike riding among others. Figure 1 of this unit shows how the major sectors of agriculture, industry and services have evolved over time.
The government of Rwanda carries out the control measures to check on standards of the goods, protect the environment, and security while the small but growing private sector enjoys a variety of activities due
to good governance and subsidies from the central government. With this, vision 2020 is to be achieved in due time and the government is considering embarking on another long journey vision 2040 that will
completely transform the economy to safer heavens.

Basing on the case study above and figure 1 of this unit, discuss the following questions:

(i) What are the basic features of the Rwandan economy?

(ii) Examine the implications of the above features to the development of the economy of Rwanda.

The above figure 1 shows percentage contribution by 2012 according National institute of statistics of Rwanda. By October 2016, according to CIA world fact book, the statistics had shot up as shown below
Agriculture: 32.6%
Industry: 14.1%
Services: 53.3% (2015 est.)

13.1 Structure of Rwanda’s Economy

Facts

Rwanda officially called the Republic of Rwanda occupies a total area of 26,338 square kilometers of which 24,668 square kilometers (94%) is land and 1670 square kilometers (6%) is open to water and swamps. It has a population of approximately 12 million (2015 statistics). The population
is relatively younger and predominantly rural with density amongst the highest in Africa.

Structure of an economy is a range of characteristics or features that describe the economy of a country. These features range all the way from agriculture sector, industry, trade to the community sector. These sectors have each contributed the gross domestic product and greatly contributed towards

the development of the country. The general structure of the economy can
be seen below.

13.1.1 Structure of Rwanda’s economy

Features of the economy

The Rwandan economy, the land of a thousand hills as it is known, is
characterised by the following features:

• Predominantly agricultural in nature is composed of both food crops like rice, potatoes, beans and cash crops like tea.

• Dual economy: There is existence of two contrasting sectors one being advanced while the other backward. e.g rich and poor, subsistence and commercial agriculture, educated and the uneducated etc.

• Mixed economy because we have both the private sector and the government participating in production.

• Open economy because it is involved in international trade with other countries around or far away.

• Large subsistence sector where most of the food grown is for home consumption and incidental surplus is sold.

• High population growth rate which is shown by the increasing number of children born.

• Dependent economy: This is shown by dependence on agriculture sector and foreign aid from other countries.

• Small but growing industrial sector where most are agro processing industries and a few manufacturing and assembling plants.

• Wide spread unemployment and underemployment leading to poverty among the people and affecting standards of living.

• High levels of illiteracy though the rates are improving due togovernment policies of universal education and nine-year and twelveyear basic education schools.

Implications of such a structure

The characteristics that describe the Rwandan economy have had implications that are both positive, i.e. they have helped in the growth of the economy, and negative i.e. they have slowed down growth. Some of
these are shown below:

• Low export earnings because of the economy basing on agriculture as the major export and this is responsible for the balance of payment problem.

• Increased trade with other countries since the country is open and this provides market for the local goods hence leading to increase in foreign exchange earnings.

• Large subsistence sector implies low incomes to the people since most of what is grown is for home consumption and this has led to low incomes, savings, low capital accumulation and finally continuous
poverty.

• Fast growing population implies limited social services and too much pressure on resources hence sometimes some are left stranded without the basic treatments and social services.

• Dependent economy implies that the country cannot be self-sustaining and high rates of capital outflow when paying back the loans acquired. This causes continuous balance of payment problem.

• Small but growing industrial sector implies low quality and quantity goods leading to low earnings from the manufacturing sector.

• Wide spread unemployment and underemployment imply high levels of depreciation of the educated human resource and also poverty and low standards of living.

• High levels of illiteracy implies low skills possessed by the people hence low levels of innovation and invention leading to importation of experts who are expensive leading to capital outflow.

• Being a dual economy implies that some areas develop faster than others and this leads to imbalance in development and income inequality among the sectors and regions.

• Mixed economy implies that there is both government and private sector in the economic activities and this reduces chances of monopoly and consumer exploitation. These features of the economy can be explained in detail later.

13.2 Dualism (Dual Economy)

Activity 2

Referring to Case Study 1 of this unit, discuss the following questions:

(i) The existence of both the rich and the poor alongside each other is known as……………..

(ii) Give other examples related to that situation of the rich and the poor in your home areas.

(iii) Explain why the above situation exists and what are its disadvantages are.

Facts

Meaning of dual economy

A dual economy is one where there is co-existence of two contrasting sectors one advanced and modern and the other backward and traditional, one superior and the other inferior, one desirable and the other undesirable within the same setting. These contrasting sectors both live alongside each other day in day out. They are important to the economy since they help in linking different sectors and secondly the advanced ones tend to pull the backward.

Features of a dual economy

1. Different sets of conditions, of which some are “superior” and others “inferior”, can coexist in a given space. Examples of this element of dualism include Lewis’s urban and rural sector dualism, the
coexistence of wealthy, highly educated elites with mass of illiterate poor people; and the dependence notion of the coexistence of powerful wealthy industrialised nations with weak, impoverished peasant
societies in the international economy.

2. This coexistence is chronic and not merely transitional. It is not due to a temporary phenomenon, in which case time could eliminate thediscrepancy between superior and inferior elements. In other words,
the international coexistence of wealth and poverty is not simply a
historical phenomenon that will be rectified in time.
3. Not only do the degrees of superiority or inferiority fail to show
any signs of diminishing, but they even have an inherent tendency
to increase. For example, the productivity gap between workers in
developed countries and their counterparts in most LDCs seem to
widen with each passing year.
4. The interrelations between the superior and inferior elements are such
that the existence of the superior elements does little or nothing to pull
up the inferior elements let alone “tickle down” to it. In fact it may
actually serve to push it down-“to develop its underdevelopment”;
(Hans Singer 1970:60-61.).
Other notable features include the following
• Commercial versus subsistence production.
• Modern versus rudimentary/ traditional technology.
• Small scale production versus large scale production.
• Barter exchange versus monetary exchange.
• Formal sector versus informal sector.
• Rural versus urban.
• Educated versus the uneducated.
• Production for home consumption versus production for foreign markets.

Forms of dualism

1. Sectoral dualism

This shows the co-existence of two sectors one developed while the other
is backward. For instance, industry and agriculture, rural and urban among
others. These sectors though different in size and nature, work hand in hand
through linkages. Some supply raw materials while others supply tools like
machines. They therefore have to live along side each other for their survival.

2. Economic dualism

This shows existence of two economic categories in society for example the rich and the poor. The rich can be seen in society living alongside the poor. The rich provide employment to the poor to improve their living standards.

Apart from the social life, economically there is a discrepancy between and
among economic ventures where some are financially well off with big infrastructure while others are finally poor depending on stipends to survive.

3. Technological dualism

This involves backward technology which is mainly labour intensive and used in rural areas and modern technology that is capital intensive used in modern sectors. Normally the big firms use modern technology while the small firms use the backward technology they can afford.

4. Intra-sector dualism

This involves differences within the sector. For example, in the agricultural
sector, we have both commercial agriculture and subsistence production
and these have different contributions and roles they play in an economy.

5. International dualism

This involves different economies in the world whereby some economies
are more developed than others. These developed economies are the ones
that help the developing ones through foreign aid and grants.

6. Regional dualism

This involves regional inequalities where some regions are more developed
than others leading to both rural and urban regions. Regional dualism has
played a high role in encouraging rural urban migration. The developed
regions with good infrastructure and jobs, have attracted young productive
labour from other regions. This has led to the backward regions lagging
behind since its labour is constantly on the move.

Causes of dualism

There are many causes of dualism some of which are discussed below.

• Differences in distribution of resources, for instance some regions have more resources than others hence they develop faster than others.

• Differences in social and economic infrastructure like roads to ease the transportation of goods and services from one area to another. This makes some regions to develop faster than others.

• Government policies like a regressive tax which taxes the poor more than the rich cause some people to become poor while others become rich.

• Historical factors e.g. one can get much income because of inheriting property from rich parents. In rural areas, most people become rich because of inheriting land. Those with poor backgrounds have always
remained poor.

• Differences in natural abilities, for example when one is physically handicapped. He/she is likely to have little income than one who is physically well and able hence causing income dualism.

• International dualism basically is caused by some countries having passed through the development stages earlier than others. This made them leave the rest behind.

• Intra-sectoral dualism is caused by development part of the sector faster than others. Still different approaches are adopted such as commercial farming rather than subsistence farming.

• Sectoral dualism is caused mainly by discrimination among the sectors where by the government decides to put more emphasis on some sectors while others are left behind. This is more so when looking at the industry versus the agriculture sector.

• Technological dualism is mainly caused by technology transfer and development in some sectors while in other sectors, they still use the traditional technology which has outdated tools.

Advantages of dualism

Dualism is advantageous to the economy in the following ways:

• Linkages can develop between the developed sectors and the underdeveloped sectors and also within the same sector.

• International dualism helps some poor countries to access aid and assistance from the developed nations and also through trade, the underdeveloped countries are able to access foreign exchange.

• Income is in hands of few people who can invest it and produce commodities for other people.

• It encourages the poor to work hard so as to survive.

• The rich can invest in research and innovations and improve technologies.

• The few rich employ the poor in the different activities that may not be done by the rich people.

• More tax revenue is realised by taxing the rich and the developed sectors in the economy.

• Developed technology can lead to the development of the local technology in the country and this can be through innovation and invention.

• Foreign exchange in earned by rich export firms compared to the ones that produce for home market.

Disadvantages of economic dualism

Despite its advantage, dualism has got some demerits some of which areshown below:

• It brings income inequalities since there are two groups of people and the rich and this at times creates tension and mistrust in the society.

• Regional inequalities create regional imbalances in the development and this causes people to move to different developed areas creating the unemployment problem.

• Exploitation of the poor since the sellers may have an assumption that all people have high incomes so they may end up charging them high prices as well.

• Misallocation of resources since the rich people tend to spend on luxurious commodities that may not be very important.

• There is social unrest between the rich and the poor. The poor tend to see themselves as inferior and so they tend to feel neglected.

• Low revenue is collected since there are few people capable of paying tax revenue to the government because of a narrow tax base.

• Policy implementation becomes difficult because the government has got little sources of income and also some sectors are lagging behind others.

• Government planning becomes hard because the plans drawn may not be able to cover all sectors. The government has to make partial plans for the different sectors and regions since there are imbalances.

• It increases rural urban migration due the difference in the developments. People will tend to move to urban centres where there are good social services.

13.3 Economic Dependence

Activity 3

Referring to Case Study 1 of this unit, answer the following questions:

(i) …………… is the reliance of Rwanda on agriculture.

(ii) What other examples apart from agriculture does Rwanda rely on?

(iii) Discuss the causes and benefits of Rwanda relying on other countries and sectors.

Facts

Meaning of economic dependence

Economic dependence is the reliance of an entity/ party/ individual on another for resources and decisions. Or it can be defined as the reliance of an economy entity/ individual or party on specific economic activities/ sectors for economic livelihood and development. Or it may be defined as
the reliance of a country on another. Most developing countries depend on developed countries.

According to the dependence theory, the developing countries have continued to be backward because they tend to look at and wait for assistance from developed nations. Worse still, developed nations tend to dictate and interfere with the politics of the developed nations. If developing countries
want to move steps a head, they need to become self sustaining and put their own ideas in practise other than waiting for developed nations. The economy is dependant in the following ways.

1. Sectoral dependence: This involves dependence on a few sectors like agriculture, industry, mining etc. This creates imbalances in sector developments and worse still a country may move into a dilemma
in-case one of the sectors fail.

2. Trade dependence: This involves dependence on exportation and importation of goods and services. Exportation may bring in increased

foreign exchange while importation may lead to imported inflation.
This may worsen the balance of payment problem of the country.
3. Direct dependence: This involves dependence on foreign decisions and may make the country take up decisions that may not be appropriate to the country.

4. External resource dependence: Dependence on foreign status, expatriates, technology, military hard ware etc. This also limits development of local technology and also the foreign experts are too
expensive to pay.

Causes of economic dependence

There are many causes of economic dependence some of which are discussed
below:

• High population growth rate creates a gap in the social services and essentials needed by the people hence the solution is to seek aid.

• Low technology development creates a technology gap in the country and this leads to the need to import foreign technology which also comes with its associated problems.

• Occurrence of catastrophes like floods, famine, landslides and drought among others. The government may not be prepared for them and so seek help by depending on other countries.

• Wide spread poverty among the population creates income gap so the government to cover the gap, has to resort to seek aid from other countries.

• Low tax base due to the few economic activities that are carried out. These activities cannot raise enough revenue needed by the government so it has to constantly depend on other countries for assistance.

• Poor education policy that has tended to create more job seekers than creators. People lack the necessary skills to perform hands on. This causes the government to seek for foreign experts.

• Low level of industrialisation has made the country to depend on sectors that don’t involve manufacturing. This explains the reason for constant depending on the agriculture sector.

• Inadequate foreign exchange due to the low quality exports and also
the low bargaining power at the world market. The country does not
get enough foreign exchange and so resort to dependence on foreign
countries for assistance.

Advantages of economic dependence

Dependence is advantageous as shown in the reasons discussed below:

• Dependence helps to increase a country’s resources, this helps it to meet its deficits especially in the national budget.

• Dependence helps a nation to alleviate the effects of catastrophes. Calamities like landslides, earth quakes and floods normally leave nations in a helpless state.

• Dependence helps to close the manpower gap which is prevalent in developing countries. The skilled manpower that is inadequate in LDCs is covered by the manpower aid from developed nations.

• It improves on the technology gap in developing countries; dependence on foreign technology and other equipment from developed countries improves upon quality of output and production methods in developing LDCs.

• Dependence increases employment opportunities to people in LDCS. Direct investment aid employs people of developing countries and indirectly to people who construct the investment.

• It closes the foreign exchange gap in developing countries. Financial aid extended to LDCs is in form of foreign currencies increases the foreign exchange reserves in developing countries hence developing
them.

• Sectoral dependence helps the nation to carry out more research aimed at developing that particular sector in terms of quality and quantity.

• Dependence on trade creates market for the home made goods hence leading to foreign exchange inflow, still the economy gets what it can not produce from outside.

• Dependence strengthens relationship between the depending country and the one that provides assistance. This creates swift flow of economic activities and ideas between the two countries.

Disadvantages of economic dependence

Activity 4

Visit the library or internet and research on the following:

(i) The weaknesses that may come up as a result of Rwanda relying on other economies.

(ii) What the government of Rwanda should do to reduce the problem of dependence.

Facts

Despite the numerous advantages, dependence suffers demerits as shown
below:
• Dependence on a few sectors like agriculture may make the country lose foreign exchange during periods when the sectors fail because of unavoidable circumstances like failure of rains.

• It worsens the debt servicing problem; loans contracted must be paid back and on several occasions with interest. This drains the national resources and deny nationals essentials.

• Dependence leads to high balance of payment deficits. The high out flow of resources to pay back loans and service them worsens the balance of payment position of the country.

• Sometimes the technological assistance given is inappropriate, it may be too underdeveloped or beyond the standards of developing countries, so it may just be wasted.

• Sometimes the pre-conditions set for foreign aid are disastrous for the country. Countries may be forced to devalue their currency, retrench workers or even accept anti social inhuman acts like homosexuality
etc. in order to receive their aid.

• Dependence on aid is sometimes tied to unproductive projects like digging boreholes in rural areas, financing wars. Paying back is difficult since such projects do not bring monetary returns.

• Dependence slows down initiative and hard work. Citizens of developing countries become lazy expecting to live on aid.

• Dependence distorts planning and plan implementation of developing countries because the recipient country is not sure when the aid will come.

• Dependence reduces local production as people expect to live on foreign imported goods. This retards economic growth of nations.

Measures to reduce economic dependence

Below are some measures that can be undertaken to reduce dependence:

• Diversification of the economy so as to have a variety of goods and services will reduce depending on other countries for goods.

• Training of labour force through seminars and workshops to reduce depending on foreign experts.

• Developing and promoting local intermediate technology so as to reduce depending on foreign technology which is expensive.

• Encouraging savings and investment by putting in place a good investment climate that will attract investors to produce more goods and services.

• Proper planning to ensure that the different sectors of the economy are
planned for to avoid inconveniences during times of disaster.

• Promoting import substitution strategy to produce goods that were formally imported so as to stop depending on imports.

• Improvement on the political climate so as to encourage production of goods and services so as to increase the national output.

• Diversification of the markets so as to increase export earnings.

• Controlling population growth to reduce exerting pressure on the few resources and underdeveloped sectors so that the government may not solicit for food aid.

• Promoting of initiatives that encourage the consumption of home made products so as to limit   depending on imports.

13.4 Structure of Trade (exports and imports)

Meaning of structure of trade

Structure of trade refers to the nature of exports and imports, contribution of trade to national income, composition of exports and imports among others. Normally, the nature of exports is low quality and charged low prices and imports are basically high quality and expensive.

Characteristics of structure of trade

• Exports are mainly raw materials such as coffee, and the imports are
manufactured goods like computers and cars among others.

• Export earnings are low while expenditure on the imports is high hence balance of payment problems.

• The exports are similar to those of other countries and this leads to floating at the world market hence low earnings. Most of the countries export coffee, cotton, tea among others.

• The export- import exchange is unbalanced because LDCs export low value items and import high value goods.

• Most of the trade is with the colonial masters however because of integration, the trend is changing to trading with a variety of countries.

• The export of manufactured products is limited in LDCs due to low levels of technology, low manufacturing capacity etc.

• Export promotion industries are mainly owned by foreigners meaning that profit repatriation is likely to be high. Examples of these are Azam, Matella Dodoma among others.

Consequences of such a structure

• Persistent balance of payment problems arising from import value exceeding export value.

• Because of low exports, the forex earnings are low and this hinders the speed of development.

The terms of trade are constantly deteriorating because of high prices for imports and low prices for exports and this has led to constant unfavourable terms of trade.

• There is likely to be excess capital outflow because most of the export promotion industries are owned by foreigners.

• Because of exporting similar commodities with other countries, there are low earnings expected because of too much at the world market.

• Trading mostly with the colonial masters limits the markets for the exports and at the same time limits getting a variety from other countries.

• There is a narrow market and this limits bargaining power and possible earnings from exports.

13.5 Subsistence Sector

Activity 5

Referring to Case Study 1 of this unit, discuss the following questions:

(i) Carrying out agriculture for home consumption is known as ………..

(ii) What are the characteristics of such a type of agriculture?

(iii) Examine the advantages and disadvantages of that type of agriculture.

Facts

Meaning of subsistence sector

Subsistence sector covers the biggest part of the economy where most of the production is for home use and little or incidental surplus is sold off to meet the basic needs of life. Subsistence sector may basically apply to agricultural output and small scale industrial output. The sector basically

relies on natural resources as inputs and family labour is used. There are no surpluses since it is done on a small scale. The incidental surpluses if any are taken to local markets.

Characteristics of the subsistence sector

• Dependence on family labour during the production of goods.

• Low productivity of labour due to the poor methods of production.

• There is lack of specialisation i.e. people grow a variety of commodities.

• Predominant system of exchange is barter which limits economic growth.

• Limited scientific methods of production e.g. limited use of fertilisers.

• The major aim is to produce for minimum survival and to avoid famine.

• Predominance of communal land tenure system as opposed to individual land system.

• Production is influenced by social attitudes and beliefs.

Advantages of subsistence sector

The sector is of great importance in the following ways:

• Little marketing is needed since most of the food is for home consumption and only the incidental surplus is sold.

• Subsistence sector is easily managed. This is because output is small and it employs few workers during the production process.

• There is little or no wastage. This is because production is done on small scale and bases on the size of the family.

• Variety is grown and kept. This helps the people to have a balanced diet which can save them from problems like malnutrition.

• Little losses are incurred if there are fire outbreaks. This is because the crops are grown on a small piece of land.

• It requires little capital which can be afforded by most of the people for buying simple tools and inputs.

• It does not need to hire and employ many workers since mostly family labour can be used during the production process.

• It is normally owned by sole proprietors who may be able to make decisions independently and quickly.

Disadvantages of subsistence sector

The demerits of the sector are discussed below:

• Firms don’t enjoy economies of scale. This is because they produce on a small scale and their output is low.

• Little incomes are earned by the farmers because they are basically on low scale and for home consumption.

• It retards development of the agriculture sector since simple tools are used and scientific methods are not embedded so much.

• Low quality is produced since simple tools are used and poor farming methods are used.

• Mechanisation is not possible since agriculture is carried out on small fragmented plots.

• Little or no government revenue is collected because of low output and only the incidental surplus is taken to the market.

• There is underutilisation of resources such as land due to small scale production and this may lead to low productivity.

• Specialisation is not normally possible under small scale farming and this limits the improvement of the quality that may be produced.

13.6 Informal Sector

Activity 6

Basing on the photos in figure 3 of this unit, answer the following questions:

(i) Describe the activities carried in the photos in figure 3.

(ii) With examples related to the activities in the photos,

explain the meaning of informal sector.

(iii) Describe the characteristics of the informal sector.

(iv) Assess the role played by people in the sector above to the development of the economy.

Facts

Meaning of informal sector

Informal sector is an intermediate sector existing between the traditionaland the modern sector comprised of the self-employed. Examples of the informal sector include tax washers, tax operators, charcoal sellers, road side sellers, brick making, salons etc. The sector is of great importance to
the economy since it employs a variety of people.

Characteristics of the informal sector

• Informal sector mainly produce on small scale because of the low capital employed.

• They mainly use poor or simple technology since they cannot acquire modern developed machines.

• They produce mainly low quality goods since the machines they possess cannot produce good quality output.

• Informal sector is dominated with poor or no record keeping mainly because they are done on small scale.

• It is basically sole proprietorship meaning they are owned by single individuals and most owned by families.

• It is dominated by semi-skilled or unskilled personnel.

• They use basically local resources that are provided naturally.

• They basically produce for the local market since they cannot produce to feed the entire external market.

• Business is operated in open and semi-permanent structures that can easily be demolished and the business transferred to another location.

Advantages of informal sector

The informal sector is advantageous in the following ways:

• Informal sector creates employment opportunities since it is labour intensive technique and this reduces income distribution.

• It produces essential goods that are beneficial to low income earners.

• It provides training grounds for growth of entrepreneurs.

• It provides revenue to the government through taxation of the business activities.

• It grows to pave way for transformation into a modern dynamic sector.

• It promotes development of appropriate technology which suits the resources of the country.

• It promotes linkages in production i.e. forward and backward and this leads to achievement of an integrated economy.

• It promotes the spirit of self-sustenance there by reducing the prevailing dependence on simple consumer products.

• It paves way for the development of small scale industries through innovations and inventions carried out.

• Informal sector widens consumer choice since it produces a variety. This is because there are many producers working under the informal
sector.

Disadvantages of informal sector

Despite its numerous advantages, the sector also has disadvantages:

• There is wasteful competition leading to duplication of goods and services and wastage of resources.

• There is pollution and its effects to the environment leading to degradation and hindering development.

• It leads to public revenue instabilities since production cannot be relied upon and also there is high rate of tax avoidance and evasion.

• It causes congestion in the semi-urban areas with its associated problems like prostitution, slums, theft etc.

• It leads to underemployment and unemployment hence labour capacity
to produce goods is not fully put to use.

• It produces at excess capacity and end up exploiting consumers through high prices.

• It produces low quality goods and this leads to low standards of living of the people and low income earnings.

• There are high administrative costs on the side of the government and this leads to increased government expenditure.

13.7 Private Sector

Activity 7

Case study 2

Mutoni and Mugwaneza are two different business women operating their personal businesses in different areas. They are basically sole traders having started with very little capital. Their businesses have
grown into big ventures and the two ladies know how to control their finances hence enjoy living a good way of life with good cars, good schools for children etc. They have employed many local people in their
areas of operation. Despite this, they still talk of the many problems they face in their businesses.

Referring to Case Study 2 of this unit, answer the following questions:

1. Mutoni and Mugwaneza are part of the sector known as

(a) Community sector

(b) Public sector

(c) Private sector

(d) Foreign sector

2. Describe the characteristics of the sector named above.

3. Apart from the good way of life enjoyed by Mutoni and Mugwaneza, what other roles does the sector play to the development of the Rwandan economy?

4. Examine the problems faced by the sector and advise the government of Rwanda on how to improve the sector.

Facts

Meaning of the private sector

Private sector is an area of production activities not mainly controlled by the government. It may include the informal sector, farmers, self-employed among others. The private sector is very active in a free market economy and mixed economic system as compared to the command of the economic
system. This is because most of the resources are owned by the companies and individuals which and who are free to take all the economic decisions like how to produce, when to produce, for whom to produce, etc with no government intervention. The government simply comes in to carry out
regulations during the production process.

The sector has become more vibrant due to the formation of the private sector federation-Rwanda (PSF) in 1999 replacing the former Rwanda chamber of commerce and industry. The PSF is a professional organisation dedicated to promote and represent the interest of the Rwandan business community.
It is an umbrella organisation that groups professional chambers, such as

• Chamber of agriculture

• Chamber of commerce

• Chamber of art and crafts

• Chamber of finance

• Chamber of ICT

• Chamber of industry

• Chamber of liberal professional

• Chamber of tourism

• Chamber of women entrepreneurs

• Chamber of young entrepreneurs.

Characteristics of private sector

• It is mainly operated on a small scale.

• It is dominated by individual producers (sole traders).

• It is mostly produces primary products.

• It is characterised by high levels of competition.

• It is driven by profit motive.

• Mainly it produces consumer goods and a few producer goods.

• Mainly it uses labour intensive techniques of production.

• It is mainly active in urban centres than rural areas.

Role of the private sector to development

The sector is very important to the economy due to the roles discussed below

• It employs majority of the people hence reduce unemployment and this increases incomes and standards of living.

• It produces goods and services hence contributing greatly to national income after the sale of the goods.

• It promotes gradual growth of the economy since it stimulates entrepreneurship which leads to discovery of new techniques of production.

• The sector contributes to the growth and modernisation of industry in the country through mobilising of private savings, stimulating
consumption and investment.

• The sector helps in exploiting the local resources hence reducing excess capacity that exploits consumers through high prices.

• The private sector uses local resources hence reducing foreign expenditure or resources and raw materials.

• It contributes to government revenue through taxation of the people, structures and also the profits of the businesses.

• The sector re-invests (ploughs back) profits hence expanding the existing productive capacity which increases economic growth and the size of the national income.

• Technological development is enhanced as the sector is innovative and adopts new techniques to suit the changing consumer tastes.

• The sector helps to reduce the subsistence sector by monetarising of majority of the economy.

• It enhances infrastructure development because of its tremendous expansion and this further leads to the development of the country.

Challenges of the private sector

Though the sector employs majority of the people, it faces numerous
challenges that hinder its operations. Some of these are shown below:

• High taxation by the government. The government sometimes taxes them highly hence they have high operation costs that limit their expansion.

• Underdeveloped infrastructure like roads limits their movements from their production sites to the markets. This sometimes cause losses to them.

• Inadequate market both within and outside. This is because of the low quality of the goods that are produced and worse still they produce similar goods that create surplus at the markets.

• The technology is still low and this has continuously led to low output and low revenues.

• Because of competition, most of them produce similar products hence calling for high advertisement costs which lead to increased cost of production. The inefficient firms are sometimes driven out of the
business leading to unemployment.

• Low prices paid by the consumers. This is sometimes due to price legislation by the government. The firms earn low profits that don’t enable them to develop.

• Underdeveloped structure for production. Some of the firms under the private sector don’t have permanent markets so they don’t have a developed structure of production. This has sometimes led to
overproduction and wastage of resources.

• Inadequate capital for production. This is the major problem that the private sector faces. Some have few equipment that cannot enable them to get loans from the banks hence their businesses have constantly not changed from small scale to large scale.

• Low levels of skills of the entrepreneurs has led to low innovations and inventions leading to low quality outputs and low profit.

Achievements of the private sector

Despite the challenges discussed above, the sector has been able to have many achievements geared towards development of the economy:

• The sector has contributed to government revenue through taxation of the people, structures and also the profits of the business.

• The sector re-invests (ploughs back) profits hence expanding the existing productive capacity which increases economic growth and the size of the national income.

• Technological development has been enhanced as the sector is innovative and adopts new techniques to suit the changing consumer tastes.

• It has helped to reduce the subsistence sector by monetarising of majority of the economy.

• Infrastructure development has tremendously expanded and this further leads to the development of the country.

• The sector employs the majority of the people hence reduce unemployment and this increases incomes and standards of living.

• The sector produces goods and services which contributes greatly to the national income after sale.

• It promotes gradual growth of the economy since it stimulates entrepreneurship which leads to discovery of new techniques of production.

• The sector contributes to growth and modernisation of industry in the country through mobilising of private savings, stimulating consumption and investment.

• The sector helps in exploiting the local resources hence reducing excess capacity that exploits consumers through high prices.

• The sector uses local resources hence reducing foreign expenditure or resources and raw materials.

Weaknesses of the private sector /negative role of the private sector to development

Activity 8

Use the library or any other economics source to research and share your views in a class discussion about the following:

(i) Analyse the weaknesses of the private sector.

(ii) Suggest how the government of Rwanda can improve

the performance of the private sector.

Facts

Apart from the achievements shown above, negatively the sector has slowed down development of the economy in the following ways:

• Private sector is mostly located in urban centres hence cause rural urban migration with its associated problems like theft, prostitution and slum development among others. These problems retard development.

• Tendency of using capital intensive techniques to increase production leads to unemployment with its associated problems like poor standards of living. etc.

• It tends to specialise in few activities leading to consumer exploitation in form of high prices since sometimes they become monopolies with no competition.

• Private sector concentrates on small scale production activities and this may not enable it to generate adequate economies of scale.

• The use of rudimentary/ outdated technology limits production hence little output for the growth of the country.

• The sector is profit motivated hence it may not provide services that are good for the society but non-profit making.

• Capital outflow may occur if the productive ventures are owned by foreigners and thus the country may lose foreign exchange.

• Limited levels of diversification due to production of similar commodities causes the consumers not to get a variety of commodities.

• Production of low quality goods may fetch little when exported hence low foreign exchange.

• Income inequalities may arise where a few people get engaged in such activities and this may create tension in society and underdevelopment of some regions.

Policies adopted to encourage/ promote the private sector

In capitalist economies, there is a need for a strong and vibrant sector and the IMF and World Bank too call for a private sector run economy since it helps reduce the expenditures of the government and government basically provides the supervisory role. A strong private sector needs to be developed
and below are some of the policies that can assist in attaining that objective.

• Provision of both economic and social infrastructures such as roads, power, water supply etc.

• Trade liberalisation where entry into a particular field is not restricted

• Government has tried to maintain security and political stability.

• Economic incentives like subsidisation policies, tax holidays, etc. have been encouraged by the government to promote investments.

• Relaxing the procedures followed when opening up businesses to encourage private investors.

• Price stabilisation in the market has created confidence in the private sector and this has increased their participation in the production.

• Inputs especially to the farmers have been given to encourage their activities.

• Consistent and uniform application of government policies aimed at ensuring fair and equal treatment among the private, foreign and state owned enterprises.

• Respect of contracts provided to the private investors and protection of property rights.

13.8 Public Sector

Activity 9

Use the library or internet and research on the following questions:

(i) Explain the meaning of the public sector and show its characteristics.

(ii) Examine the objectives of the public sector towards the development of the economy of Rwanda.

Facts

Meaning of public sector

Public sector is part of the economy owned and operated by the government. The government owns and carries out the major economic decisions. Government enterprises include, public corporations/enterprises which provide specific services for free or reduced prices, government parastatals which are non-profit making and local authorities which provide essential
services. Rwanda’s public appears to be the main focus of much of the capacity building support in the country. In Rwanda’s public sector, significant resources are being devoted to human resource development inform of short term training seminars and workshops. The sector is very important to smooth governing and development of the Rwandan economy at large.

Characteristics of the public sector

• Development oriented i.e. it aims at developing the nation.

• It is characterised by bureaucracy and red tape. This involves a range of procedures so as to achieve what someone wants.

• Normally it takes on projects which require large capital that cannot be taken up by the private sector.

• Medium and large scale industries dominate.

• It employs a large size of the population however with the present trend, its contribution is reducing.

• It is normally organised on monopoly basis as it provides services which are vital to the people.

• It involves high levels of external influence in decision making and implementation of the plans since foreigners fund the projects.

• It has limited flexibility as it is for private sector in the production of goods and services.

Objectives of the public sector

• To create employment for the people so as to reduce the problems associated with unemployment.

• Provision of goods and services at reduced prices since the public sector does not aim at profit maximisation but welfare maximisation

• To ensure equitable income distribution so as to have balanced development.

• To provide public utilities that don’t yield profits such as defense, water and sanitation among others.

• To regulate the activities carried out in the country and this is mainly done by the central government.

• To bring competition with the private sector for efficiency through reducing monopoly powers.

• To develop the economy through planning and plan implementation which may be both short term, medium and long term plans.

• To take up projects that cannot be done by the private sector because they may require large amounts of capital and at the same time they may be non-profit generating.

Justifications of the public sector

• It is composed of manufacturing industries which are fundamental in reducing imports hence reducing the balance of payment problems.

• The sector is composed of parastatals which provide goods that are vital to the society.

• It provides a means through which the government promotes equitable distribution of income and this is through public spending on social economic activities.

• It avoids duplication and wastage of resources since it is the sole producer.

The sector takes on risky projects which the private sector is unwilling to take on.

• It provides services which are vital to the society but are non profit generating and which cannot be provided by the private sector.

• It influences the private sector by working hand in hand in some activities through privatisation and cost sharing.

• The sector is responsible for the welfare of the people and development of the economy as a whole.

Role of the public sector in the country

Activity 10

Use the library, the internet or any other economics source and research about the following:

(i) What is the role of the public sector to the development process of Rwandan economy?

(ii) Examine the challenges faced by the public sector in its bid to achieve its objectives in Rwanda.

Facts

Below are some of the roles of the public sector towards development of the economy:
• Provision of essential goods and services like national defense, health, education to bring about development.

• Ensuring fair income distribution and social justice among the citizens by protecting them from private monopoly and fair income distribution.

• Allocation of resources through proper planning especially where the private sector has failed to provide.

• Controls economic activities such as exportation, importation, industry distribution and also the activities  of the private sector through monetary and fiscal policies.

• Provides favourable environment for economic growth through setting
up price stability, political stability among others.

• Negotiation for foreign assistance inform of capital and other foreign assistance needed for development.

• Provision of employment and training of the labour force.

• Creating and maintaining good working conditions within the country and with outside economies through integration and price negotiations.

• Promotion of agriculture development through adoption of strategies like diversification, subsidisation, technology improvement among others.

• Improving the balance of payment position through export promotion, import substitution among others.

• Funding, directing and implementing programmes aimed at improving the economy.

Problems faced by the public sector

Like all other sectors, the public sector also faces many challenges as shown below:

• Limited finance due to narrow tax base and this limits expansion..

• Corruption and embezzlement which has depleted funds which would be invested..

• Persistent inflation in the country increases the cost of production and amount of risks.

• Inadequate skilled manpower due to poor man power training policy has led to dependence on foreign labour which is expensive.

• Foreign influence by external organisations like IMF and World Bank into the activities dictates policies to be followed by the country.

• They have poor management because of heavy government intervention through selecting top management and constant change of officials among others.

• Inadequate infrastructural facilities needed for development like road facilities, telecommunication among others limits coordination of different sectors.

• Bureaucratic red tape slows down decision making and implementation.

• Sector runs a lot of objectives which conflict and in the end there is poor performance due to involvement in unproductive enterprises.

• Limited market both domestic and foreign explains the poor performance of the manufacturing establishment.

13.9 Privatisation

Activity 11

Use the library or the internet and research on the following questions:

(i) Explain the meaning of privatisation and the different types of privatisation.

(ii) What are the advantages and disadvantages of privatisation?

(iii) Examine the problems faced during the privatisation process.

Facts

Meaning of privatisation

Privatisation is the reduction of the role of the state in the national economy while at the same time increasing private ownership and private sector both local and foreign. Or, it refers to the transfer of production assets from state ownership to private ownership. The process aims to create a
free and competitive environment in which the private sector can drive the country’s economic growth. The process began in 1997 with 94 state owned companies earmarked to go through the privatisation process to ensure the entry of innovative investors who could help increase resource utilisation.
The private sector has been the basing of development in many countries.

Forms of privatisation

Privatisation takes various forms

1. De- nationalisation (divestiture)

This involves the sale of all or part of the enterprise owned by the government to private people or the public. Or, divestiture or divestment is the reduction of an asset or business through sale, liquidation, exchange, closure or any other means for financial or ethical reasons. It is the opposite investment.
It may also take the form of,

• Total sale

• Joint venture where the government enters into agreement with private
firms and individuals

• Abandonment, winding up or liquidation.

2. Liberalisation (De-regulation)

This involves opening up entry into activities which were previously restricted to the public sector enterprises only by allowing private sector participation. Or, it is the process of removing or reducing state regulations, typically in the economic sphere. It is the undoing or repeal of government
regulation of the economy. This is meant to increase competition and good quality output.

3. Contracting out

This is where the provision of the good or service is transferred from the public to the private sector while the government retains the responsibility to supply the good or service. It takes the following forms:

(a) Franchising. This is the right to market on behalf of the government.

(b) Contract management. Here the government owns the property but gives out management like maintenance, providing goods and services among others.

(c) Leasing or renting. Here the government contracts the private sector to provide part of the service or to use/ rent its assets.

4. Cost sharing

This is where the government retains ownership of the enterprises but the beneficiaries contribute to the running costs e.g in schools and universities

where the government pays part of the fees and the students pay the rest. In healthcare, cost sharing occurs when parties pay for a portion of health care costs not covered by health insurance. The ‘‘out of pocket payment’’ varies among health care plans and depends on whether or not the patient
chooses to use a healthcare provider who is contracted with the health care plans network. In Rwanda common health insurance companies include RSSB, Britain, Rediant, Soras, Saham among others.

Reasons for privatisation (rationale)

• To enable firms, operate more efficiently.

• To reduce corruption tendencies in the public sector.

• To attract foreign investments in the economy without fear of nationalisation.

• To reduce government expenditure on public sector enterprises

• Fulfilment of the International Monetary Fund conditionality of a private sector led economy.

• To create more job opportunities in the long run when the private sector expands it enterprises.

• To improve resource utilisation through efficiency of the private sector
and the profit motive.

• To allow government concentrate on provision of essential services like health and education.

• To expand the tax base for revenue to the government.

• To encourage competition and improve quality of services offered by reducing monopoly basis.

Advantages of privatisation

Activity 12

“Privatisation should be undertaken if Rwanda has to improve efficiency in production” analyse the statement above and share your views with the rest of the class

Facts

Privatisation is of importance in the following ways:

• It increases efficiency in the sold parastatals leading to good quality goods and services.

• It helps to increase output of the sold firms.

• It reduces corruption and financial mismanagement of the enterprises.

• It reduces the state of the burden of concentrating on the production of essential services.

• It increases revenue to the government realised from the sold enterprises.

• Increased competition results into emergence of several firms providing services which had been monopolised by the state enterprises.

• It has increased private sector confidence in the country.

• It reduces government budgetary deficits

Disadvantages of privatisation

Despite its importance, the process of privatisation has some disadvantages
as discussed below:

• Increased resource outflow by the new owners of the enterprises leads to profit repatriation.

• The government loses property through transactions with dubious businessmen who don’t pay but spoil the property.

• Privatisation increases debts to the government because a lot of money is borrowed to fund the process yet little is realised after selling

• Foreigners dominate in the economy as the nationals are reduced in the process.

• There is poor working conditions to the workers inform of low wages, longer hours of work, etc.

• Over exploitation of natural resources causes environmental degradation.

• Associated with low levels of labour absorption in some sectors, underemployment and even reduction of local employment because they bring in foreign labour.

• Over competition leads to use of non-price competition measures which include reduction in weight of goods like bread etc..

Limitations of privatisation

Privatisation process is not very smooth as it sounds, it has got numerous challenges as discussed below:

• Corruption in the privatisation unit i.e. some officials are not transparent and connive with prospective buyers.

• Opposition from the general public often delays the process of privatisation.

• Poor valuation of the enterprises leads to assets being sold at giveaway prices.

• Poor states of the enterprises due to poor maintenance making it hard to sale them.

• Political sabotage by opposition leaders sometimes block the sale of enterprises just to frustrate the government and advance their causes .

• Poverty among the nationals makes the enterprises to be sold to foreigners leading to foreign domination in the country.

• Small market discourages potential buyers due to limited potential for expansion.

• Political instability in some parts of the economy discourages potential investors from buying the enterprises.

• Unscrupulous buyers win the bids to buy the enterprises and they end up not paying after taking over the property.

• Underdeveloped capital markets. Government enterprises are sold under a capital market so its underdevelopment limits the potential buyers to access the enterprises.

13.10 Economic Liberalisation

Activity 13

Using the library or internet, research and attempt the following:

(i) Explain the meaning of economic liberalisation.

(ii) What are the advantages and disadvantages of economic liberalisation?

(iii) Examine the limitations of economic liberalisation.

Facts

Meaning of economic liberalisation

Economic liberalisation is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. The doctrine is associated with classical liberalism. . The introduction of the private sector through economic liberalisation tends to iron out of monopolistic tendencies by public sector through active competition with the government.

Advantages of economic liberalisation

Liberalisation is very essential to the economy because it gives power to the sector to engage in economic activities because of the price mechanism engine. Below are the advantages:

• Trade liberalisation allows countries to specialise in producing the goods and services where they have a comparative advantage (produce at lowest opportunity cost). This enables a net gain in economic
welfare.

• Lower prices: The removal of tariff barriers can lead to lower prices for consumers. E.g. removing food tariffs in the West would help reduce the global price of agricultural commodities. This would be particularly a benefit for countries who are importers of food.

• Increased competition: Economic liberalisation means firms will face greater competition from abroad. This would act as a spur to increase efficiency and cut costs or it may act as an incentive for an economy
to shift resources into new industries where they can maintain a competitive advantage.

• Economies of scale: Liberalisation enables greater specialisation. Economies concentrate on producing particular goods. This can enable big efficiency savings from economies of scale.

• Removing barriers to international investing: Economic liberalisation process begins by relaxing these barriers and relinquishing some control over the direction of the economy to the private sector. This
attracts foreign investors.

• Unrestricted flow of capital: The primary goals of economic liberalisation are the free flow of capital between nations and the efficient allocation of resources and competitive advantages. This is
usually done by reducing protectionist policies such as tariffs, trade laws and other trade barriers. One of the main effects of this increased flow of capital into the country is that it makes it cheaper for companies
to access capital from investors.

• Stock market performance: In general, when a country becomes liberalised, the stock market values also rise. Fund managers and investors are always on the lookout for new opportunities for profit,
and so a whole country that becomes available to be invested in will tend to cause a surge of capital to flow in.

• Diversification for investors: Investors can also benefit by being able to invest a portion of their portfolio into a diversifying asset class. This happens because the country becomes more integrated with the rest of the world and has become more sensitive to events that happen outside
the country. A high degree of integration can also lead to increased inflow of investors.

Demerits of economic liberalisation

Despite the advantages, economic liberalisation has some demerits as discussed below:

• Economic liberalisation often leads to a shift in the balance of an economy. Some industries grow, some decline. This may cause structural unemployment when certain industries close. Economic
liberalisation can be painful in the short run, because industries and workers suffer when uncompetitive firms decline.

• Economic liberalisation could lead to greater exploitation of the environment, e.g. greater production of raw materials, trading toxic waste to countries with lower environmental laws.

• Economic liberalisation may be damaging for developing economies who cannot compete against free trade. The infant industry argument suggests that trade protection is justified to help developing economies to diversify and develop new industries. Most economies had a period
of trade protectionism. It is unfair to insist that developing economies cannot use some tariff protectionism.

Unbalanced economic sectors; This is because the introduction of the private sector in the business sector creates an increased desire for profit motives. This leads to some sectors that yield in profits to
develop faster than those that are non profit making

• Increased dependence: This is because an increase in trade liberalisation makes the economy to shift from an independent one to the one that depends on imports and exports.

• Increased production of undesirable goods that may be harmful to people. The private sector engages in any activity that brings in profits so with little monitoring by the government, there may be production
of undesirable products in the economy.

Limitations of economic liberalisation

The process of economic liberalisation has faced numerous challenges of
which are discussed below:

• Increased government influence in resource allocation makes companies fail to locate their businesses in strategic areas that are
profitable.

• Overtaxation by the government makes the enterprises fail to achieve
their intended objectives.

• Price legislation by the government does not allow automatic adjustment between the forces of demand and supply hence profits got are few.

• Need to control some production of public utilities such as defense and water among others limits their liberalisation.

• Nationalisation by the government scares the participants in economic liberalisation. Some firms fail to join due to fear of nationalisation

• Poverty among the people, limits their participation in economic activities even after the government has carried out liberalisation.

• Inadequate manpower or expertise since some sectors may require specific labour. So even after liberalisation, the sectors have continued to be run by sole monopolies.

Unit assessment

1. (i) Rwandan economy is both public and private sector led. Give examples of enterprises that are under private sector and public sector.

(ii) How important has the private sector been to developing the nation?

2. (i) Sometime selling government property to the private sector seems unavoidable. Why is this so?

(ii) What major problems are faced by the government when transferring property to the private individuals?

3. (i) Under which group are charcoal sellers and salons classified?

(ii) What is their contribution to the development of the economy of Rwanda?

4. Most of the agriculture done in Rwanda is on small scale and for home consumption. What are the features of such type of agriculture?

Glossary

ཀྵཀྵ Contract management: This is where the government owns the property but gives out management like maintenance, providing goods and services among others

ཀྵཀྵ Cost sharing: This is where the government retains ownership of the enterprises but the beneficiaries contribute to the running costs. eg in schools and universities where the government
pays part of the fees and the students pay the rest.

ཀྵཀྵ Community sector: This is a sector which is neither in the private nor in the public sector but is in hands of the community. Examples of the sector include NGOs, cooperatives and other
self employed/ help community development organisations

ཀྵཀྵ Commercial sector: This is a sector where most of what is produced is for the market.

ཀྵཀྵ Contracting out: This is where the provision of the goods or services is transferred from the public to the private sector while the government retains the responsibility to supply the
goods or services.

ཀྵཀྵ De- nationalisation: This involves the sale of all or part of the enterprise owned by the government to private people or thepublic. It can also be called divestiture.

ཀྵཀྵ Dualism: This is the co-existence of two contrasting sectors one advanced and modern and the other backward and traditional, one superior and the other inferior, one desirable and the
other undesirable.

ཀྵཀྵ Economic liberalisation: This is the removal of unnecessary control on economic activities hence giving people the liberty to participate without government controls.

ཀྵཀྵ Economic dependence: This is the reliance of an economy on another for resources and economic decisions. OR, It is the

reliance of an economy on specific economic activities/ sectors for economic livelihood and development.

ཀྵཀྵ Franchising: The right to market on behalf of the government.

ཀྵཀྵ Government enterprises: These include public corporations/ enterprises which provide specific services for free or reduced prices, government parastatals which are nonprofit making
and local authorities which provide essential services.

ཀྵཀྵ Informal sector: An intermediate sector existing between the traditional and the modern sector comprised of the self employed.

ཀྵཀྵ Leasing or renting: Here the government contracts the private sector to provide part of the service or to use/ rent its assets.

ཀྵཀྵ Liberalisation: This involves opening up entry into activities which were previously restricted to the public sector enterprises only. It can also be known as de-regulation.

ཀྵཀྵ Private sector: An area of production activities not mainly controlled by the government.

ཀྵཀྵ Public sector: This is part of the economy owned and operated by the government.

ཀྵཀྵ Privatisation: This is the reduction of the role of the state in the national economy while at the same time increasing private ownership and private sector both local and foreign. OR,
it refers to the transfer of production assets from state ownership to private ownership.

ཀྵཀྵ Parastatal organisations: These are organisations owned by the government and set by the act of parliament to provide specific services but are none profit making.

ཀྵཀྵ Subsistence sector: This is a sector where most of what is produced is for home consumption and incidental surplus is exchanged through barter trade to meet the other basics.

Unit summary

• Dualism

    • Meaning and forms

     • Advantages and disadvantages

• Economic dependence

     • Meaning, forms and causes

     • Advantages and disadvantages

• Subsistence sector

      • Meaning, advantages and disadvantages

• Informal sector

    • Meaning, advantages and disadvantages

• Private sector

     • Meaning, characteristics and roles

    • Challenges and achievements

    • Weaknesses and measures to improve the private sector in  Rwanda

• Public sector

    • Meaning, objectives and roles

    • Justification for public sector

• Privatisation

    • Meaning, rationale and forms

    • Advantages, disadvantages and limitations

• Economic liberalisation

    • Meaning and advantages

   • Disadvantages and limitations