Past Reconstruction to Constructing Rwanda

Twenty years after the genocide in Rwanda, things seem to be looking a bit brighter. With an average annual growth rate of eight percent since 2001 and over one million people lifted out of poverty, Rwanda is poised to continue growing by leaps and bounds. Even so, 20% of Rwanda’s economy comes from foreign aid, only trailing its exports of coffee and tea. As with most developing countries, one of the most visible signs of growth is the new buildings sprouting from the ground around the capital of Kigali. As impressive as office buildings and shopping malls are, it remains to be seen how beneficial these structures are to the economy and people of Kigali and other developing cities.

Construction workers in Kigali

The benefits of the construction industry in developing countries is clear. The global construction industry was approximately $1.7 trillion in 2007, and typically accounts for 5-7% of each country’s GDP. Jobs in the construction sector tend to be low-skill jobs, something that most developing countries, and especially Rwanda, have in abundance. A report by the International Labor Organization (ILO) found that workers in places as diverse as India, Brazil, and China were significantly more likely to be illiterate and have few years of schooling. Construction is also an investment, as there are roads, buildings, and other structures that can be used to house offices, transport goods, and improve the human and business capabilities. Kigali is already one of the most urbanized cities in Africa, and is expected to grow by 79.9% by 2025. Construction in Kigali and satellite cities is meant to ease congestion of an already dense capital of a densely-populated country.

Map of Rwanda

There are some issues with the construction industry in the developing world. The first one involves property rights. Large amounts of people in cities in the developing world don’t have a title or ownership to the land that they live on, especially in slums. Hernando de Soto, president of the of the Institute for Liberty and Democracy in Peru, has referred to slums as “dead capital”, alluding to the idea that people make improvements by building shantytowns but are not able to use it for collateral due to red tape. The perniciousness of not actually owning the land that one’s house is built on is even worse. In Kigali, 70% of housing is informal, with the government proposing to demolish that housing and creating more high-density areas and rent-to-own schemes. However, housing in the suburbs of Kigali currently typically costs 25,000 francs ($36.87) a month in a country where 45% of people still live below the poverty line. There’s a fear that parts of Kigali could end up like Nova Cidade de Kilamba, a suburb of Luanda that is a ghost town built and funded by the Chinese.

Developing countries, and Africa in particular, have been raising questions about who benefits from the construction industry. Recent reports by investigative journalists from the Forum for African Investigative Reporters (FAIR) in Kigali have found that foreign firms, notably the Chinese, have done a substantial portion of construction. The Chinese are able to undercut local firms by using Chinese contractors backed by subsidized loans provided by the Chinese state. An operations engineer at a Chinese company working in Rwanda stated that his company could get loans with an 8% interest payment while Rwandan companies could only obtain loans with 17-18%, if they could even get a loan at all.

The view of Kigali’s town center and surrounding areas

There is a final concern about construction and corruption. Since construction contracts tend to be a fee and cost of materials, construction companies tend to be implicated more frequently. They overstate the amount of labor used on a project, pocketing the difference. One field experiment in Indonesia found that an increase in official audits of construction projects reduced missing expenditures of labor, ie nonexistent workers, by between 14 and 22%. Construction and engineering companies dominate the current World Bank list of debarred firms, the largest of which was SNC-Lavalin, a Canadian firm, which was debarred over bribery charges around the $1.2 billion funding of the Padma bridge in Bangladesh. Because of these troubling factors, questions, concerns, and confidence over construction in cities like Kigali will continue to surface.

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Down and Out in Doha

Notoriety in the Gulf region usually rests on Saudi Arabia or the United Arab Emirates, but Qatar has slowly been rising in the world’s consciousness. Mostly this has been due to sporting reasons, with the purchase of Paris Saint-Germain by the Qatari Investment Authority and the granting of the 2022 World Cup to Qatar. However, this increased attention and scrutiny has shed more light on the “kafala” system of migration used in the Gulf states, and used extensively in Qatar. This has swiftly led to criticism of this system and its many abuses against migrant workers.

Migrant workers in Qatar at a construction site for the world cup

The kafala system is the migration laws and regulations used mostly in the Gulf states. Under the kafala system, sponsors pay for the recruitment of foreign workers and assume economic and financial responsibility for them. The visas for the workers are also tied to the sponsor, linking employee and employer in a tight relationship. Because the visa is bound to the employer, workers cannot seek employment with another employer without the consent of their sponsor. Any breaking of the contract means that the worker must compensate their sponsor the recruitment fee that the sponsor had paid. Workers must even get permission from their employers to leave the country while under contract. Being stuck with your employer for a two year period like this has led to numerous abuses.

Qatar in particular has been prone to abuses tied to the kafala system. With a Gross National Income per capita of $80,470, Qatar is awash with petrodollars to fund the importation of skilled and unskilled workers. Roughly 85% of Qatar’s population are not Qatari citizens, highlighting their reliance on foreign workers, particularly from South Asia and the Philippines. Many times, workers are promised a certain level of wages, and then either paid drastically lower wages or not paid at all. Workers in the construction industry face particularly bad conditions. The Indian embassy in Qatar has reported that over 500 Indians have died in Qatar since January 2012, while 185 Nepalese died in 2013 alone, mostly from cardiac arrest resulting from working long hours in the heat. Amnesty International has reported about workers living in cramped accommodations with wooden floors and no mattresses, all while being owed 1.5 million riyals ($412,000) in backpay.

Market street in Qatar

The abuses of the kafala system are not limited to construction workers. A recent report by the Guardian found that domestic workers and restaurant employees were working extremely long hours while not receiving the pay they were promised. Workers have needed to find second jobs to make enough money to get by, even though this is illegal under the kafala system. Some have even needed their families to send money, invalidating their reason to come to Qatar in the first place. Domestic workers in Qatar typically work more hours than other foreign workers, averaging 60 hours a week. Oddly enough, even soccer players have been caught under the kafala system, with French player Zahir Belounis being stuck in Qatar for a year after his club, Al-Jaish, refused to grant an exit permit. This led to the players’ union, FIFPro, sending a delegation to Qatar in 2013 to advocate against the kafala system.

One of the stadium designs for the 2022 World Cup

With increased international attention on Qatar’s kafala system, it remains to be seen what Qatar’s response will be. Most of the gulf states have similar systems, but have responded differently. Bahrain scrapped their kafala system, replacing employer sponsorship with sponsorship by the state Labour Authority. Meanwhile, Saudi Arabia has focused on deporting foreign workers to open up more jobs for native Saudis. Qatar has so far issued new safety and security reforms while increasing the amount of trained labor inspectors, all without abolishing the kafala system. With the World Cup in Qatar still a ways off in 2022, it remains to be seen how these new regulations will help migrant workers, or if anything changes. One thing that can be guaranteed is that this practice will not disappear any time soon.