A vibrant private sector to drive economy

Rwanda’s Vision 2020 programme forecasts creating small and medium scale enterprises to create more employment boost trade and expand export volumes. 

Rwanda’s Vision 2020 programme forecasts creating small and medium scale enterprises to create more employment boost trade and expand export volumes. 

There has been growth in the industrial and services sectors at 6 percent. This progress has been driven by rapid development in transport, construction and mining sectors.

Coffee and minerals have ensured good performance of the export sector; there were increased performance in exports over the period 2002-2005 with annual average growth rates of around 30 percent. While there has been limited diversification of exports on an overall level (coffee, tea and minerals still account for over 80 percent of total exports), re-exports have seen a significant growth and it is hoped that the development of the Free Trade Zone and strategies for horticulture, hides and skins and ICT can support further diversification in the future.

The limited implementation of tea sector privatisation and subsequent lack of investment in tea factories has hampered faster growth of tea export earnings.

Registered investments have also risen rapidly from Frw66bn in 2002 to Frw251bn in 2005, with the level of operational investment roughly consistent at around 60 percent this should entail a large increase from Frw40bn in 2002 to potentially around Frw150bn in 2005 (it takes a year or so for investments for to become operational once they are registered).

However, even if this large increase is realised, the rate of investment will still be lower than 15 percent of GDP, well below the values of 20-30 percent that it has been suggested are necessary to meet Vision 2020 targets.

However, even with this impressive performance, there have been critical challenges that the EDPRS will have to deal with before the benefits trickle down to the grass roots. Targets and key performance indicators have only recently been developed for Private Sector Development issues and this lack of effective monitoring mechanisms has been a major problem in assessing progress.

Furthermore, apart from the general elements described in section a above, without detailed baseline targets one cannot determine the level of performance, i.e. whether the improved regulation of the banking sector has been tight enough, whether privatisation has been rapid enough or whether the ICT strategy has been effective.

Lack of data availability in areas such as employment and incomes hinders the capacity to undertake meaningful poverty analysis. This lack of data is further compounded by the lack of recognition or understanding of the likely poverty impacts of actions undertaken and the lack of identification of potential poverty impacts.

The lack of a strategic plan has meant that there has been no focus on priorities, weak coordination of implementing agencies and no clearly defined targets or indicators. These issues have still to be resolved, even with the recent development of the Diagnostic Trade Integration Study (DTIS).

However, in some areas – coffee, tea and tourism – strong strategies were developed with real involvement of the private sector and in these areas, work has progressed much faster. A coherent framework for actions under the Commerce ministry has been developed in the last years, based on the DTIS, but this needs further work to become a fully strategic document.

The PRSP chapter on Private Sector Development did not solely reflect activities under the control of Commerce ministry, but also failed to cover the entirety of ministry’s remit. The lack of an overarching Private Sector Development Strategic Plan behind which to align support has been the major barrier to better coordination and harmonisation of donors in this area.

This ensured lack of focus on priorities, weak coordination of implementing agencies and no clearly defined targets or indicators.

These issues have still to be resolved, even with the recent development of the DTIS.

However, in some areas – coffee, tea and tourism – strong strategies were developed with real involvement of the private sector and in these areas, work has progressed much faster. A coherent framework for actions under Commerce ministry has been developed in the last year, based on the DTIS, but this needs further work to become a fully strategic document.

Despite these constraints, available indicators generally show a marked improvement and the majority of actions set out in the PRSP were completed. Available indicators for Private Sector Development that span the period 2002-2005 show a general improvement, with a few exceptions, e.g. in export diversification or in credit to rural areas.

The fact that PRSP actions were completed is a positive sign of Government support for Private Sector development, however, these actions have been more process- rather than results-focused e.g. development of a long-term ICT strategy.

Ends

 

Have Your SayLeave a comment