Rwanda’s economy has started 2015 on a high, after recording a 7.8 per cent growth in the third quarter of last year (July-September). If statistics for the fourth and last quarter, also turned out good, growth could surpass the 6 per cent projected by the central bank. This development holds great significance because it will signal full economic recovery from the 4.8 growth rate recorded in 2013, the lowest in almost a decade. However, appetite tends to be high during recovery from sickness and that means Rwanda’s economy is going to be hungry for food in 2015, if this high growth is to be sustained. Unfortunately, the rebound comes at a time when global consumption is at its lowest. This low consumption has already affected oil prices that have stumbled to their lowest in five years. Low oil prices are projected to weaken demand even more during the first half this year. What does this mean? The central bank says that low oil prices mean lower transport costs hence lower inflation and higher growth prospects; very good. But low demand in big economies due to weak economic activity will also mean weak demand for raw materials from developing countries, including Rwanda. As a shock absorber to this threat, Rwanda’s should do two things; concentrate on value addition while increasing trade with regional partners. Instead of selling unprocessed wolfram or Coltan, we should attract investors to process the minerals at home and create more jobs. And rather than sell coffee beans, we could sell Nescafe to the region and beyond. Moreover, most of Rwanda’s imports are composed of consumer products that could be consumed locally, even when external demand was weak. That way, Rwanda’s fast economic pace can be shielded from external shocks.
