Were the World Bank and Foreign Aid responsible for the Rwandan Genocide of 1994?

Disclaimer: I wrote this essay in 2009 for my Year 12 History class. I thought it may make for good reading, despite some recognisable errors and weaknesses. Anyway, enjoy.

Against a background of social disarray, dating back to colonial times, racial tensions between Rwanda’s two ethnic clans, the Hutus and the Tutsis, intensified at the close of the twentieth century, causing the Rwandan genocide of 1994. This social problem was aggravated by an economic crisis, created by an overdependence on one commodity: coffee. In response to it, the World Bank believed that foreign aid would help Rwanda’s economic development, as proposed in its “Public Expenditure Program: An Instrument of Economic Strategy[1] of 1989. However, economist, Michel Chossudovsky, claims in his article, “IMF-World Bank policies and the Rwandan Holocaust[2], that the World Bank, and its associated foreign aid, inadvertently assisted the downfall of the Rwandan economy. The emerging financial troubles, which were being made worse by foreign aid, resulted in severe hardships for the Rwandan people. These conditions exacerbated the racial division between the two ethnicities, resulting in the Hutus committing genocide against the Tutsis. Furthermore, African economist, Dambisa Moyo, argues in her book, “Dead Aid[3], that money gained from foreign aid was being invested in armaments and war provisions by the Hutu-backed government. Therefore, by helping dismantle the economy and causing the hardships which fuelled ethnic hatred, foreign aid, in conjunction with the IMF and World Bank, were largely responsible for the Rwandan genocide of 1994.

A legacy of ethnic elitism, caused by colonialism, was the mainspring for the 1994 genocide. Rwandan society has been divided by the ethnic rivalry between the country’s differing clans, the Hutus and Tutsis. Originally, the Tutsis invaded the Hutus, the original inhabitants of Rwanda, and took ownership of their land and cattle. A feudal relationship of control developed whereby the Tutsis gave the Hutus military protection and access to resources in exchange for their labour. When the Germans colonised Rwanda in 1894, they exploited this pre-existing social structure to maintain their control without wasting money and effort. Fuelling the ethnic rivalry, the Germans fostered an ethnic elitism in favour of the Tutsis, by allowing them to govern the country. After World War I, Rwanda was given over to the Belgians, who continued to maintain this elitist design. Canadian economist, Chossudovsky, asserts in his article, “IMF-World Bank policies and the Rwandan Holocaust”, that:

“… it was largely the administrative reforms initiated in 1926 by the Belgians which were decisive in shaping socio-ethnic relations. The Belgians explicitly used dynastic conflicts to reinforce their territorial control.”[4]

However, after World War II, when the Belgians were given less power, the Church and colonial leaders strategically (and on moral grounds) began to switch allegiance to the Hutus, who insisted on fundamental change. A change in the power structure between the Hutus and Tutsis was imminent, but the Tutsis resisted and tension erupted into violence. By July, 1962, Rwanda became independent and the form of government had changed from a monarchy to a democracy, giving the Hutus power as they made up the majority.[5]

The Rwandans lacked experience in self-government and economic management after independence, resulting in an overdependence on coffee exportation which would create problems in the future. According to Chossudovsky, Rwanda was sustained by its coffee industry, providing employment and income for many Rwandans, ranging from the small scale peasant farmer to the coffee trader, and even the government. The coffee trade became so significant that approximately 70% of rural households cultivated it to supplement their income and coffee traders became politically influential. The government earned more than 80% of its foreign exchange from coffee. [6] Though this overdependence on coffee made the rural economy vulnerable, it was sustainable as long as the country was self sufficient in its domestic food supplies, which foreign aid would ultimately make ineffective. However, this economic dependency, Chossudovsky argues, would have major repercussions for government stability and economic growth.

“The economic foundations of the post-Independence RwandanState remained extremely fragile, a large share of government revenues depended on coffee, with the risk that collapse in commodity prices would precipitate a crisis in the State’s public finances.”[7]

By 1991, the Rwandan government was facing an economic catastrophe as a result of a growing debt crisis and a slump in the coffee market, followed by massive inflation. During the debt crisis, coffee and tea earnings were allocated for debt servicing (repayment of loans), further pressuring small-scale farmers to increase coffee production and, in turn, decrease food production. This problem was compounded by a 50% decline in export earnings because of plummeting international coffee prices between 1987 and 1991. “According to World Bank data, the growth of GDP per capita declined from 0.4% in 1981-86 to -5.5% in the period immediately following the slump of the coffee market (1987-91).[8] The reduced food production, loss in income and massive inflation resulted in severe economic hardship and famine, indicators of social unrest.

To help Rwanda’s economy, the World Bank recommended macro-economic reforms in 1989 to create a free market economy, which proved to be pivotal in the course towards genocide. In its “Public Expenditure Program”, the Bank’s report on the Rwandan economy circa 1989, the Bank suggested that the “economic pressures were spurred largely by strong fluctuations in commodity markets and aggravated by inappropriate adjustment response by the Government to external factors.”[9] Subsequently, it aimed at implementing procedures to reduce government control of the economy and increase private enterprise, easing the government’s difficulty in handling the economy itself.

“The privatization of some public enterprises (currently envisaged) would ease the burden on government finances; more important, it would provide a new impetus to the private sector through improved environment, training, and promotion of individual initiatives.”[10]

In other words, the World Bank wanted to encourage expansion of a business community which would use the market forces of supply and demand to develop the economy. However, the Bank admitted that an increase in foreign aid input was necessary to support its strategies: “…as foreign aid disbursements are projected to increase in parallel with the public investment program.[11]

Economists, Michel Chossudovsky and Dambisa Moyo, both allege that many economic problems could have arisen from the World Bank’s programme. For example, liberalising Rwanda’s rural economy meant the transfer of economic control from the government to small scale peasant farmers who were focused solely on their own survival, rather than that of the country…

“… what might have been logical on the national level often does not make sense for individual farmers, basing their decisions on the household’s needs for long-term food security, rather than the national need for an overall increase of production.”[12]

Also, Chossudovsky argues that “with the liberalisation of trade and the deregulation of grain markets,” to allow the country to focus on coffee exporting, “as recommended by the Bretton Woods institutions, (heavily subsidised) cheap food imports and food aid from the rich countries were entering Rwanda with the effect of destabilising local markets. Similarly, Moyo argues, in “Dead Aid”, that such a liberalisation of trade becomes ineffective while foreign aid also enters the country. Foreign aid in the form of cheap food imports and food aid in times of famine would be in competition with local food markets, hence undermining the self-sufficiency needed to sustain the fragile economy:

“This is the micro-macro paradox. A short-term efficacious intervention may have few discernible, sustainable long-term benefits. Worse still, it can unintentionally undermine whatever fragile chance for sustainable development may have already been in play.”[13]

Instead of aiding the Rwandans’ economic efforts, the plans instigated by the World Bank competed with them and so played a part in the creation of the hardships of famine and poverty which would ultimately fuel the ethnic tensions which prompted genocide. Moyo claims that:

… in an indirect manner, by lowering average incomes and slowing down economic growth (  both in themselves powerful predictors of civil wars), aid increases the risk of conflict.”[14]

These hardships fuelled resentment for the Rwandan Government, a sentiment manipulated by a group of Uganda-supported Tutsi refugees, the “Rwandan Patriotic Front”. Led by Fred Rwigyema, “the rebels declared that the political reform process”, which was actually instigated at the suggestion of the World Bank, was inadequate and that President Habyarimana must go.[15] In October, 1990, they invaded Rwanda. Many Hutus believed that it was a substantiation of years of oppression faced at the hands of the Tutsis. The Front’s invasion turned into civil war, which ended with the “Arusha Accords” of August 4th, 1993, an agreement seeing both ethnic groups share power in government.

The war stirred racist sentiments that escalated with the persistence of the economic crisis, inadvertently promoted by the actions of the World Bank. By 1992, it reached its climax; according to Chossudovsky: “Rwandan farmers in desperation uprooted some 300,000 coffee trees” and because the World Bank encouraged a free-market, the State was unable to transfer funds into its “Fonds d’egalisation” (the State coffee stabilisation fund) which purchased coffee from Rwandan farmers at a fixed price”. In June 1992, a second devaluation was ordered and coffee production plummeted by 25% in just one year.

“The seriousness of the agricultural situation had been amply documented by the Food and Agriculture Organisation (FAO) which had warned of the existence of widespread famine in the southern provinces. A report released in early 1994 also pointed to the total collapse of coffee production due to the war but also as a result of the failure of the State marketing system which was being phased with the support of the World Bank.”[16]

Consequently, on April 6th, 1994, the Rwandan President, Juvénal Habyarimana, on a flight back into the country, was suspiciously shot down, giving “Hutu Power” militia groups, the “Interahamwe” and the “Impuzamugambi”, a reason to begin killing Tutsis and Hutu moderates. With the death of Habyarimana, the government was overthrown by elitist Hutu politicians, who backed both these groups and the “Akazu”, who directed the ensuing carnage. Over the next 100 days,  Hutus sought genocide, killing between  800,000 and 1,000,000 Tutsis and Hutu resistance (the number is indefinite) and committed crimes against humanity, apart from the systematic mass murders of a specific race, including systematic rape, other forms of sexual subjugation, torture, slavery and arbitrary imprisonment.

As the Rwandan government backed the “Hutu Power” factions, it follows that they also funded them with the money they were receiving from multilateral aid (aid which is given straight to state authority).

“ … funds administered by the Central Bank had been earmarked (by the donors) for commodity imports, yet it appears likely that a sizeable portion of these ‘quick disbursing loans’ had been diverted by the regime (and its various political factions) towards the acquisition of military hardware …”[17]

Evidently, the government – which could not use the multilateral aid to help state-run projects, due to the liberalisation of trade – was able to use the freely received money to acquire the military supplies it granted to the war-criminals. Moyo supports this:

“With aid’s help, corruption fosters corruption … foreign aid props up corrupt governments – providing them with freely usable cash. These corrupt governments interfere with the rule of law, the establishment of transparent civil institutions and the protections of civil liberties…”[18]

Thus, it is plausible to suggest that foreign aid allowed the Rwandan government to fund the genocide of hundreds of thousands of Tutsis.

Despite the World Bank’s attempts to invigorate Rwanda’s agriculture, as proposed in its “Public expenditure program” of 1989, economists, Dambisa Moyo and Michel Chossudovsky, both suggest that they were heavily detrimental to the country. Both economists show that the Bank and foreign aid helped generate the economic downfall, which fomented ethnic hatred between Hutus and Tutsis, and then allowed the Hutu-led regime to acquire armaments to use against the Tutsis. Therefore, foreign aid was to a large extent responsible for the instigation of the Rwandan genocide of 1994. Additionally, Moyo, an African herself, also argues that foreign aid is hindering most of Africa’s other economically challenged countries, with approximately one trillion dollars in development-related aid transferred to the continent in the past fifty years, while it has become poorer.

[1] World Bank (1989) Rwanda – Public expenditure program : an instrument of economic strategy [online] (accessed 27/05/2009)

[2] Chossudovsky, Michel (1995) IMF-World Bank policies and the Rwandan holocaust [online] (accessed 01/05/2009)

[3] Moyo, Dambisa  (2009) Dead Aid, Penguin Group, United Kingdom

[4] Chossudovsky, op. cit.

[5] Waller, David (1993) Rwanda Which Way Now?, Oxfam (UK and Ireland), United Kingdom,

Page 4-5

[6] Chossudovsky, op. cit.

[7] Chossudovsky, ibid

[8] Chossudovsky, ibid

[9] World Bank, op. cit.

[10] World Bank,  ibid

[11] World Bank,  ibid

[12] Waller, op. cit., Page 25

[13] Moyo, op. cit., Page 44

[14]Moyo, ibid, Page 60

[15] Waller, op. cit., Page 11

[16] Chossudovsky, op. cit.

[17] Chossudovsky, ibid

[18] Moyo, op. cit., Page 49

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