Political Economy Analysis of Decentralization and the IMIHIGO Process in Rwanda: A Review of the Literature

Many countries have embarked on ambitious decentralization reforms, introducing local elections, devolving administrative powers, and implementing financial decentralization. However, not all cases have been successful, with some decentralized units lacking capacity, being captured by local interests, and contributing to instability. Rwanda has undergone extensive decentralization reform over the past 20 years, with boundaries redrawn, responsibilities reassigned, and elections restructured. The Rwandan government has also introduced performance-based contracts, known as imihigo, to keep government officials and local governments accountable and improve efficiency. This literature review investigates the Rwandan decentralization reform, the imihigo system, and public financial management, with a specific focus on the role of citizen participation in the decentralized structure and the imihigo process. The Rwandan government has been dominated by the Rwandan Patriotic Front (RPF) party since 1994, led by President Paul Kagame. The RPF's major objectives have been to establish security, promote development, and consolidate power. The regime has been largely successful in achieving these objectives, with rapid improvements in living standards and reductions in poverty. Rwanda is considered a business-friendly and safe country, with a strong focus on development and security. The Rwandan constitution of 2003 enshrines a mode of governance that incorporates smaller parties and cultivates consensus politics. A majority of cabinet posts are guaranteed to non-RPF parties, as are the positions of Prime Minister, the Speaker of Parliament, the President of the Senate, and the President of the Supreme Court. Decision-making within the cabinet and parliament is results-oriented and based on broad consensus. The Rwandan government's developmental state efforts are supported by a range of business networks that contribute to the government's policy agenda without seeking specific favors or rents. An investment group owned and operated by the ruling party, Crystal Ventures Ltd., is used to make risky investments or jumpstart industries that are important to the regime's policy agenda. Despite multi-party elections, democracy in Rwanda is generally considered not free and fair, with Polity giving Rwanda a score of -3 in 2018 and Freedom House scoring Rwanda as 21 out of 100 and classifying it as "not free" in 2020. Policy is largely driven by decisions made at the top, with the government able to streamline its developmental agenda and implement large changes. Some of these changes can come suddenly, with little consultation or preparation of lower levels of government or even line ministries. The Rwandan government has also removed ethnic distinctions from official documents and public discourse, focusing instead on new dimensions such as class, urban vs. rural, returnees vs. non-returnees, French speaking vs. English speaking, and regime supporters vs. skeptics. The degree to which former ethnic divisions overlap with these new dimensions is difficult to assess due to the lack of data and societal stigma on the topic. Rwanda's decentralization reform has been driven by a strong national ownership and homegrown solutions. The government has cultivated an image of being efficient and capable, embracing key developmental policies such as decentralization, professionalizing its bureaucracy, and focusing on growth. The imihigo system has been introduced to keep government officials and local governments accountable and improve efficiency, with a focus on performance-based contracts and citizen participation. The literature review will continue to discuss the technical details of Rwandan decentralization, the rules of the game in terms of the decentralized structure, the setting of priorities in the imihigo process, and the implementation of these priorities. It will also discuss more recent developments and conclude with a summary of the findings, areas of contention in the literature, and gaps in our understanding.