The Senate has resolved to summon a government representative to provide explanations to issues related to the depreciation of the Rwandan Franc (Rwf), and price fluctuations on the market, among others.

Other issues that the Upper House wants the central government to respond to include inadequate investment into the agriculture and livestock sector, and concerns in the insurance sector.

The resolution was made after a plenary session held virtually on February 7, debated an analysis by the standing committee on economic development of the National Bank of Rwanda’s annual report for the fiscal year 2020/2021.  

When parliament decides to summon a government representative, it writes to the prime minister who then delegates an official at cabinet level to appear before the legislators.

According to the Central Bank report, compared to the previous year, the Rwandan Franc further weakened in the year ending June 2021, owing to higher demand for forex compelled by recovering economic activities and rising imports to cater for Covid-19 related needs.

Year-on-year, the franc depreciated by 5.3 percent against the US dollar, higher than 4.3 percent recorded in June 2020.

The local currency also weakened against the British Pound, Euro, and the Yen, losing 18.6 percent, 11.5 percent and 2.7 percent respectively compared to 1.3 percent, 3.2 percent and 4.3 percent losses in the year ending June 2020.

At regional level, the report showed, the franc weakened against all regional currencies in 2020/2021, mirroring their behavior compared to the USD dollar, according to the report.

"The decline of the franc value implies the decrease of residents’ purchasing power, Senator Juvénal Nkusi, Chairperson of the Standing Committee on Economic Development and Finance told The New Times.

According to Investopedia, purchasing power is the value of a currency expressed in terms of the number of goods or services that one unit of money can buy.

Nkusi estimated that in 1974-1975, Rwf100 had the same value as the current Rwf5,000.  

Nkusi said that a country’s reliance on importing goods can make the weakening of its currency have a negative impact on the welfare of its people, suggesting that increasing domestic production and exports can help mitigate the problem.

The Central Bank’s indicated that Rwanda’s export revenues increased by 16.43 percent to $1,487.4 million (about Rwf1,487 billion) in 2020/21, up from $1,277.4 million recorded in 2019/20.

The growth in exports revenues reflects primarily a continued recovery of merchandise exports from the virus-induced collapse that bottomed out in the second quarter of last year, according to the report.

Similarly, the report showed, as the recovery of domestic economic activities accelerates, total imports increased by 9.8 percent amounting to $3,488 million in 2020/21, up from $3,204.5 million a year earlier largely driven by imports of consumer goods (+10.7 percent), capital goods (+15.8 percent) and intermediary goods (+16.0 percent).