It is earnings season and companies are releasing their financial statements showcasing mixed growth depending on the strength and the resilience of each company and which industry they operate in.

Financial institutions particularly, banks have made decent returns.

BK Group Plc recorded a 25 per cent annual increase in net profit, reaching Rwf74.8 billion in 2023. Its banking subsidiary made a 23 per cent profit to Rwf73.8 billion in the same period.

I&M Bank Rwanda’s net earnings increased 15 per cent to Rwf10.7 billion, driven by growth across key business segments. Net operating income grew in tandem at 17 per cent to Rwf45.8 billion. As a result, the Board of Directors recommended a dividend payout of Rwf1.41 per share.

BPR Bank Rwanda’s profit after tax grew 15.7 per cent to Rwf25.8 billion in 2023. The bank experienced good growth in its total revenue, marking a 13 per cent rise to Rwf81.1 billion, while customer deposits also surged by 33.4 per cent to Rwf589 billion.

ALSO READ: BPR Bank Rwanda registers Rwf25bn profit after tax

The Development Bank of Rwanda (BRD), Ecobank Rwanda, and Access Bank Rwanda are other financial institutions that have released their earnings. Reeling through their books, it seems to be clear that banks made a fortune last year except for a few that are struggling to recover bad loans.

However, other corporate firms such as MTN Rwanda have seen their profit margins decline. The telecommunication’s net earnings declined by 28.9 per cent to Rwf11.4 billion in 2023, despite an 11 per cent increase in service revenue to Rwf246.5 billion and a 6.5 per cent year-on-year growth in subscriber base.

Insurance firm Old Mutual’s net profit declined 11.4 per cent to Rwf1.3 billion in the same period, despite an increase in total insurance revenue to Rwf19.9 billion and an 8 per cent growth in overall gross premium.

Bralirwa, Rwanda’s largest brewery, saw its profitability somehow shrink with sales volume declining by 1 per cent in 2023 due to a slowdown in consumer demand caused by inflationary pressures. Global inflationary pressures and high commodity prices also weighed heavily on the brewery’s cost of sales in the year under review.

MTN Rwanda, the leading telecommunication firm in the country, attributed the decline to the rising financing costs related to the American dollar, as well as depreciation of the Rwandan franc against the US dollar.

ALSO READ: Rwanda central bank’s fight against inflation

The business outlook for 2023 by major companies reflects events that have shaped the economy in Rwanda, across the African region, and globally. These events range from a rise in commodity prices, unstable currencies, and a series of geopolitical events such as a war in Ukraine and Israel.

Despite these events, the Rwandan economy grew at 8.2 per cent, higher than the initially predicted growth of 6.2 per cent in 2023. The National Bank of Rwanda indicated that this growth momentum will be maintained in 2024, provided that growth fundamentals remain the same.

However, the Rwanda Central Bank Governor John Rwangombwa recently told this publication that trickle-down effects from the continued depreciation of the Franc and disruptions of the Red Sea might compound economic growth.

ALSO READ: Economic Growth momentum expected to continue in 2024 – Rwangombwa

The New Times spoke to different economic analysts and company executives to highlight what they think will drive economic growth in 2024. Below are their views:

Diane Karusisi, CEO of Bank of Kigali Plc

Karusisi suggests that the performance of the agriculture sector in Season A will continue for the most part of the year, but she says it is the momentum in the service sector that will drive economic growth this year.

"Lots of uncertainty in the global economy is mainly driven by geopolitical tensions,” she warns.

Some of the geopolitical tensions that the world is witnessing include the war in Ukraine and Red Sea disruptions. These risks could lead to a surge in transport and food costs, potentially leading to inflation hikes, and worsen the local currency which already lost 18 per cent of its value against the US dollar last year.

"The only trend that is certain is continuous technology disruption, Gen AI driving this trend,” Karusisi notes, adding that she was convinced that interest rates will start coming down in the second half of the year.

"Finally, I am, as always, bullish about Africa.”

Andrew Mold, Chief of Cluster, ECA Subregional Office for East Africa

The United Nations Department of Economic and Social Affairs forecast growth in East Africa to increase slightly by 5.5 per cent in 2024 despite slow growth seen last year due to sharp rise in imported food prices and severe climate shocks that have undermined regional food production.

Mold, Chief of Cluster at the United Nations Economic Commission (ECA) Subregional Office for East Africa in Kigali, is convinced that despite slow growth, East Africa and Rwanda economies in particular will likely register improved growth in 2024. "We can broadly expect these trends to continue in 2024.”

The International Monetary Fund (IMF) predicts global economic growth to be at 3.1 per cent in 2023 driven by growth recorded by the largest economies such as the United States.

The world’s largest economy – the United States – has been surprising analysts with the strength of its growth, Mold says.

"Encouragingly, inflation is falling faster than expected in most of the world, leading to the prospect of renewed reductions in interest rates. This is important because debt burdens are still large, both in high income economies and developing countries,” he adds.

Mold says that a positive sign is that recent international bond issues by Benin and Ivory Coast were actually oversubscribed, and the fact that The Economist believes that 12 of the 20 fastest growing economies in the world will be in Africa in 2024.

Eric Quartey, CEO of Axis Pensions

Quartey estimates that the Rwandan economy will grow in line with the central bank of Rwanda’s projection of 6.6 per cent in 2024 owing primarily to government and private construction activity, which he expects will be funded by rising foreign direct investment. He believes that the agriculture sector will recover from its 2023 levels of modest growth.

"In our case, we find ourselves on the defensive side of the economy, hence high interest rates impact positively on our portfolios. For the private pension sector, better interest rates translate into better nominal investment returns, which benefits our bottom lines in one way or another,” he says.

However, Quartey warns that if the economy experiences any form of depression, companies may struggle and investment in private pension funds could decelerate, which would reduce margins.

Quartey asserts that higher yields on government securities will continue for the most part of 2024 until inflation stabilizes, which means that pension funds will continue to invest in government securities hoping to continue to make decent returns.

Dario Giuliani, Founder, Briter Bridges

Giuliani of Briter Bridges, a research firm, says the post-pandemic enthusiasm triggered a spike in investments from both local and international investors towards African ventures. However, he argues that cash abundance did not last too long and an adjustment period that started in 2022 is still felt across the continent.

"Activity remains relatively high compared to pre-pandemic volumes, and a longer-term horizon allows to see the bigger picture and both activity and value of deals have grown significantly,” he notes.

Guiliani insists that more financial instruments are being made available, and that more investors both local and international are entering the ecosystem all across Africa.

"But some setbacks that have to do with cash bonanza and overvalued companies have had a negative impact on the risk perception, especially at late stage,” he weighs in.