Many European countries including Greece, Portugal and Ireland, as well as North America, have recently been hit by economic crises, a development that instantly made the World Bank and International Monetary Fund (IMF) to predict another global economic crisis.
The Business Times sought the opinion of experts about the extent to which the Rwandan economy is shielded from such future global crises.
Dmitry Gerhenson, the IMF Country Representative, said: “Rwanda is somewhat isolated from large global economic trends and is not yet fully integrated globally; this makes it difficult for its economy to be directly hit. However, because Rwanda also relies on tourism, it might suffer a shortage of tourists from the Western countries that are hit.”
He added that: “Rwanda relies heavily on exportation of agricultural products whose prices have nothing to do with the global economic crisis. Prices for exports are determined by demand and supply and unless Rwanda faces a drought, I do not see it being hit by global economic crisis any time soon.”
François Kanimba, the Minister of Trade and Industry believes that there will not be a general economic crisis like the one witnessed in 2008.
“Although they are suffering from a sovereign debt crisis, there is no way the Eurozone can let their economies to collapse now. It is true that the European environment at the moment might result into slow economic growth, but I believe there will be no general economic crisis.”
Sajeev Anand, the Managing Director of Commercial Bank of Rwanda said: “The global economic crisis is usually made worse by the people in the press, so I do not believe that it can have a significant impact on Rwanda.”
He added that, “If the Western powers suffer, they might surely reduce the aid they offer Rwanda, but all together, regardless of the amount, they will not simply stop supporting Rwanda because of a looming economic crisis.”
Robert Mathu, the Executive Director of Capital Markets Authority said, “Over all, the contagion effect of global economic crises may not hit Africa because most markets are not entirely correlated to the markets in the West. Save for South Africa, which has a developed economy, the effects of the financial crisis will not be fully felt in Africa. If Rwanda is hit anyway, it is most likely going to be a gradual process over a long period of time.”
He added that, “In a way, Africa is already facing some kind of crisis; countries like Uganda, Kenya, Tanzania and Zambia are facing high inflation rates and the banks are offering high interest rates as well.
“In Rwanda though, you can see the currency somewhat managed to remain the most stable in the region. If Rwanda can extinguish region economic trials yet they are closer, then it can surely withstand global issues as well.”