AfDB report paints an optimistic picture for Rwanda’s economy to grow at 7 percent or more in the next three consecutive years.
Rwanda’s economy made a quick rebound from the economic turbulence and attendant decline it experienced in 2009, a report by Africa Development Bank (ADB) says.
“The African Economic Outlook 2011” says that despite a gloomy picture awaiting a vast number of African countries that will witness high food, fuel prices and political upheavals, Rwanda is one of the few countries that have rebounded and is expected to remain stable.
Stability in Rwanda will be ensured through a quick rebound witnessed starting from 2009 and beyond. An important indicator of the rebound stated in the report is the estimation that Rwanda’s real GDP grew at 7.4 percent last year, following the crisis that involved a reduction in demand for Rwandan exports as well as liquidity constraints faced by banks in its domestic economy.
“ The main drivers of the recovery in Gross Domestic Product(GDP) for Rwanda are continued growth in agriculture, recovery in the services sector, particularly telephones, construction and the export sector,” the report states.
The report says that Rwanda largely bounced back by taking steps to boost agriculture which is a source of livelihood to the vast majority of the population.
“The government has taken steps to help the sector play a developmental role, transforming lives as well as ensuring stable food prices for the expanding non-agricultural sector”.
Among the items listed as having contributed to boost agriculture is the Crop Intensification Program that seeks to “improve farm productivity through the utilisation of fertilisers, improved seeds and extension services”, adding that the program promotes the import of fertilisers in sufficient quantities, training of district and sector agronomists in its optimal application, storage of produce at village level to prevent waste, and the provision of improved seeds for crops such as maize, wheat, Irish potatoes and cassava cuttings.
The report further talks about the government’s program for rural areas known as Vision 2020 Umurenge.
“These concerted efforts by the government, as well as better weather conditions, have led to robust growth in the last three years”. The report says that last year, Rwanda’s crop production in the first two seasons increased by 8.2 percent, driven mainly by substantial growth in root crops.
The production of export crops also boomed in 2010, with coffee registering a rebound of 22.5 percent and tea up by 10.8 percent. The increments are attributed to new investments in the production of coffee, better terms of trade, the privatisation of some of the tea producing firms, and the treatment of diseases that had attacked tea leaves in the preceding year.
Rwanda’s industrial sector grew by 8.4 percent in 2010, compared with 1.4 percent in 2009, while construction sector led the way to expand by 10.9 percent after registering a mere 1.9 percent growth in 2009 due to liquidity constraints faced by the banks.
The services sector expanded at a double-digit rate between 2005 and 2008, driving the overall growth in the economy during the period. In 2009, growth in services declined to 5.9 percent but rebounded in 2010 by expanding to 7.3 percent. The recovery in the services sector was made possible by growth in the financial sector which experienced a 20.0 percent growth and transport and communications which saw a 10.8 percent growth.
Part of the economic stability in the coming days is also premised on current investment in utilities such as gas, electricity and water. Evidence of stability is reported where the share of the services and construction sector in total GDP increased by about 7.5 percentage points in 2010, in comparison to 2005.
The stability in the report can also be said to be premised on a number of strategic public investment programs and global demand for Rwanda’s main exports, as well as the loosening of domestic credit to the private sector.
Strategic investments include the broadening of access to electricity for the population by increasing household grid-connectivity from six percent to 16 percent in 2013; completion of the Fiber Optic Program that will allow wireless access for up to 100,000 new users; the international railway line that will facilitate Rwanda’s import/export trade across the borders of Tanzania and Burundi; the construction of an international airport in Bugesera, which on completion has the capacity to make Rwanda a gateway across East and Central Africa; and the new convention centre in Kigali together with a five-star hotel that caters to demands by a variety of customers visiting the country.
Consequently, the report says that rising public investment and efforts to raise agricultural productivity have created what it terms as “an optimistic scenario for the economy to grow at 7 percent or more in the next three consecutive years”.