The services sector was at the vanguard as Rwanda registered a strong economic rebound of 7 per cent last year, from 4.6 per cent in 2013, figures from the National Institute of Statistics of Rwanda (NISR) show.
Yusuf Murangwa, NISR’s director-general who presented the figures at a joint media conference with the Minister for Finance and Economic Planning in Kigali, yesterday, said economic activity in 2014 was faster compared to 2013 resulting into a rise in GDP (Gross Domestic Product) to Rwf5.4 trillion from Rwf4.9 trillion of the previous year.
Murangwa said the services sector contributed 47 per cent of the figure, Agriculture accounted for 33 per cent, while the industry sector contributed 14 per cent with the balance attributed to tax adjustments minus subsidies on products.
“In real terms, 2014 estimates, calculated based on 2011 prices, show that GDP was 7 per cent higher than in 2013,” said Murangwa.
The NISR’s announcement puts to rest differing predictions by the National Bank of Rwanda (BNR) and World Bank Group economists. Both institutions had previously predicted that 2014 economic growth would surpass the earlier 6 per cent forecast by the government and 5.7 per cent by World Bank; but their earlier lower growth forecasts had been set on the backdrop of 2013 performance that got hurt by effects of donor aid delays and suspensions.
In its Rwanda Economic Update, released last month, the World Bank said the economy grew by 7.1 per cent in 2014, which is within close range of NISR’s statistical range.
Analysis of individual sector contribution to GDP growth shows that the services sector led the pack followed by the agriculture and industry sectors, respectively.
Murangwa said in 2014 Rwanda’s services sector as a whole expanded by 9 per cent which contributed 4.3 percentage points to the 7 per cent GDP growth.
The agriculture sector which grew by 5 per cent contributed 1.6 per cent while Industries which expanded by 6 per cent contributed 0.9 per cent.
GDP is the monetary value of all the finished goods and services produced within a country’s borders usually calculated on an annual basis.
In Rwanda’s case, it now means that the services sector is the most important driver of economic growth having contributed more than both the agriculture and industry sectors. It includes trade-related activities, hotel and restaurants, transport among others.
Amb. Claver Gatete, the minister for finance and economic planning, said the 7 per cent growth was fair considering where the economy was in 2013.
“We are happy with 7 per cent as sign that the economy is back on track,” he said.
The minister added that projections for 2015 should be out by end of the month after analysing the figures released by NISR.
“Making projections is not something you can do overnight. We shall work with our partners such as IMF to come up with both growth and inflation projections for this year,” he said.
To increase industry’s contribution to GDP, Robert Bayigamba, the chairperson of Rwanda Manufacturers’ Association, told The New Times that there’s need to promote consumption of ‘Made in Rwanda’ products to spur the sector’s growth.
“It also calls for our manufacturers to improve on the quality of their products in order to motivate local consumers,” Bayigamba said.
Rwanda’s industrial sector, according to Bayigamba, is also hurt by the high cost of production mainly resulting from the expensive and unreliable electricity supplies among many other issues which manufacturers have to contend with.
“We have just commissioned a study that will capture the nature of costs that our members incur and their implications on business to inform our course of action,” he said.
In reaction to agriculture’s performance, the Permanent Secretary at the Ministry of Agriculture, Innocent Musabyimana, said although the sector performed better than in 2013, there’s need to accelerate growth.
“Under the second Economic Development and Poverty Reduction Strategy, our target is to see the sector grow by 8.5 per cent. Although a 5 per cent growth shows that we are on track, we must accelerate our efforts to attain the set target,” he said.