Sanghi Apurva, the World Banks’ lead economist for Rwanda, Eritrea and Kenya, believes that Rwanda needs to position itself well to benefit from opportunities presented by emerging economies and achieve economic sustainability. He talked to Business Times’ Peterson Tumwebaze about this and why the country should diversify its exports base.
Rwanda’s economy did not perform well last year, do you think the country will be able to achieve the targeted annual economic growth of 11.5 per cent envisaged in its medium-term growth agenda?
Answer: The rate of economic growth slowed, but that should not be the only benchmark as a lot can happen and put the economy back on track.
So, the projected annual growth of 11.5 per cent is viable. It has been achieved elsewhere; it should not be hard for Rwanda to achieve it. We are already projecting a 7.2 per cent growth this year, which is a good indicator.
We saw a much balanced economy during 2013. Africa, Rwanda in particular, also performed well last year with prudent macro-economic policies. So, I will not be surprised if Rwanda becomes part of Africa’s macro-economic excellent story.
Rwanda is already doing impressively, when you look at World Bank doing business report, and given the fact that the economy has been resilient despite external shocks experienced in 2013.
This should create confidence among all the stakeholders that the economy will continue to become stronger.
What is the one thing that Rwanda should do to ensure sustainable growth?
Export promotion and diversification will play an integral role in Rwanda’s economic development. So, the government and the private sector should scale up investments in all sectors of the economy to widen the exports base and also penetrate other markets, including China and Eastern Europe. Diversifying the country’s exports base is especially essential as reliance on a few traditional exports exposes the country to all kinds of economic shocks and vulnerability.
That’s why it’s important to promote and align the exports sector with demand from emerging markets. It’s also imperative for Rwanda to ensure the foreign exchange market is stable by building its foreign reserves and boosting domestic savings. These should help the country attain sustainable economic stability.
Investing in physical infrastructure and human capital development are also essential to keep the economy healthy. The country should also embrace public-private sector partnerships business models to ensure equitable investment in all sectors of the economy.
Some people argue that sector specialisation could be the key to sustainable growth?
Like I have said, Rwanda is already doing it right… However, it will not only be the services or agricultural sectors that will drive growth; all the sectors of the economy will play a big part if the country is to develop on a sustainable basis.