“At the beginning we didn’t expect an immediate impact on our economy from the financial crisis because our economy is small and not fully integrated into the world economy, so it could really take time for us to feel the impact of this crisis,” says Permanent Secretary, MINECOFIN.
Rwanda has hardly been affected by the impact of the global financial crisis. This though, the country felt a slight pinch through reduced tea prices and declining remittances, as revealed by a top government official.
In October last year, Rwanda set up a commission to monitor the financial trends in a move which was aimed at controlling the possible impact of the global financial crisis on the Rwandan economy.
The commission comprises representatives from Rwanda’s different financial institutions including commercial banks, Micro-Finance Institutions (MFI’s), insurance companies, Capital Market Advisory Council (CMAC) and the Social Security Fund of Rwanda (SSFR).
John Rwangombwa, the Permanent Secretary (PS) in the Ministry of Finance and Economic Planning in an interview with The New Times said, “We received the first report of the committee last month and the analysis is sort of in line with our earlier expectation.”
“At the beginning we didn’t expect an immediate impact on our economy from the financial crisis because our economy is small and not fully integrated into the world economy, so it could really take time for us to feel the impact of this crisis,” explained Rwangombwa who is also secretary to the Treasury.
The global financial crisis which led to the collapse of some large international financial institutions has also resulted into a global economic recession.
Mid last year the government of Rwanda anticipated that if it persists in the long run, Rwanda’s economy was bound to suffer negatively particularly through reduced export revenues, tourism recipes and remittances.
And since 60 percent of Rwanda’s tea is traded on the Mombasa auction market which automatically responds to international markets, Rwangombwa said tea prices fell by 25 percent last year as a result of low purchasing power of the rich world which the is destination for the product.
“To be sincere that is the major impact we have had so far,” he said.
There where also fears that the global financial crisis would lead to reduced tourists. “Up to now we haven’t had that problem,” he added.
However, he has not ruled out a possible impact on the sector (tourism) which is currently Rwanda’s leading hard currency earner.
He said, “With tourism, maybe we will have that (impact) in the next five or six months. Tourists normally book ahead of time, when it happened in the third and forth quarter of the year almost all tourists had already booked their holidays so it didn’t affect them.”