Dr. Manzi Rutayisire Antoine, PhD

Why some state enterprises succeed while others fail? I recently read a headline announcing that the government had appointed a ministerial team to privatize some enterprises as you can read below. x.com/chroniclesrw/s… This article immediately brought me back to the late 1990s and early 2000s, when Rwanda went through a major wave of privatization driven by the belief that private ownership would improve efficiency, profitability, reduce pressure on the state, and create jobs through competition and productivity. The program was called Privatization Secretariat it was established within the ministry of Finance and Economic Planning. Many state-owned enterprises were sold or restructured under the belief that the private sector could run them better. Yet two decades later, the conversation has returned. The state is once again heavily involved in strategic sectors of the economy, either directly or through companies linked to public investment structures. This raises an important question: what happened in between, and what lessons can we draw from that experience? I personally do not believe state ownership is automatically a problem. In fact, some of the world’s most successful economies were built with strong state participation. South Korea is one of the clearest examples. The country did not become an industrial power simply by waiting for the free market to organize itself. The government deliberately identified strategic industries and supported companies like Samsung, Hyundai, and LG. These firms received protection from foreign competition, access to financing, export incentives, and long-term policy support. At the time, many Western economists criticized this model and viewed it as market distortion or favoritism. But the South Korean government had a clear objective: building globally competitive industries. The state did not simply hand out support without expectations. Companies were required to export, innovate, and compete internationally. Managers were chosen based on competence, not political comfort. Failure had consequences, while success was rewarded with even greater support. Today, Samsung alone generates revenues larger than the economies of several African countries combined. Hyundai became a global automotive giant. Within a few decades, South Korea transformed itself from a poor post war country into one of the world’s leading industrial economies. The important lesson is not simply that the state supported companies. The real lesson is that these companies were run with discipline, managerial independence, and clear performance expectations. This is where many African state enterprises struggle. In many cases, the problem is not public ownership itself, but weak governance. Operational independence becomes limited. Hiring capable managers becomes difficult when appointments are influenced more by politics than competence. Decision-making slows down, innovation weakens, and accountability becomes harder to enforce. Earlier last year (2025), Bank of Kigali publicly shared its 2024 annual report across its branches. Anyone interested could walk in and read it. The bank has consistently generated strong profits and expanded its operations over the years. When i asked people what explained BK’s success under Diane Karusisi’s leadership, many pointed to the same reason: the institution operates with strong business discipline, professionalism, and clear performance expectations. That distinction matters, Rwanda has also invested heavily in sectors such as dairy production and processing, especially in areas like Nyagatare. Companies like Inyange have made visible progress in expanding local production. Yet imported powdered milk brands such as NiDo remain highly visible on many shelves in Kigali. The same question applies to products like butter and processed foods. Why do imported products continue to dominate certain spaces despite local investment? Part of the answer lies in competitiveness, branding, pricing, distribution networks, and consumer trust. Protecting local industries alone is not enough. Domestic companies must also reach a level of quality and scale that allows them to compete regionally and internationally. Of course, critics argue that state owned enterprises can monopolize markets and limit private sector growth. That concern is legitimate, especially in small economies where a few dominant players can easily crowd out entrepreneurs and investors. However, the issue is not necessarily state participation itself. The real question is whether these enterprises compete fairly, operate transparently, and are allowed to succeed or fail based on performance rather than political protection. In growing economies like ours, completely abandoning state enterprises can also be risky, particularly in strategic sectors such as energy, transport, healthcare, agriculture, and infrastructure. Many successful countries relied on strong state investment during their early stages of development before gradually opening up their economies over time. History teaches us that development is rarely ideological. No country became prosperous through slogans alone. Some relied more heavily on private enterprise, others on state led industrialization, and many used a combination of both. The real challenge is not choosing between government and private sector. The challenge is building institutions that reward competence, enforce accountability, encourage innovation, and create industries capable of surviving beyond state support. Perhaps that is the conversation the appointed ministerial committee should focus on today, rather than simply deciding which enterprises to sell. Unless, of course, the recommendation is coming from donors. Then the discussion may follow a different direction.

#Rwanda leads in digital services—but many boardrooms still run on paper. If decisions stay analog, transformation stays incomplete. The next frontier isn’t just digital services. It’s digital decision-making. Are we ready? 🇷🇼 Click to read more about this: topafricanews.com/2026/05/05/dig… #Rwanda #DigitalTransformation #Governance