Analysts attribute the strong GDP growth to the country’s continued commitment to reforms, creation of a good business environment, and implementing a strategy to raise productivity and services diversification.
Industry players believe the appetite for credit to fund businesses is set to increase as the government’s domestic borrowing reduces, lending costs diminish and non-performing loans improve.
Some of the reforms driving the country’s economic growth in agriculture and animal husbandry include the consolidation of land so that different parts of the country can grow the crops best suited for its soil. This has increased income for households and the country’s food productivity.
President Paul Kagame’s government is credited for a growing and stable economy, expanding by 45.6 per cent from $5.77 billion in 2010 to $8.4 billion in 2016, and significantly reducing poverty levels.
Analysts attribute the strong GDP growth to the country’s continued commitment to reforms, creation of a good business environment, and implementing a strategy to raise productivity and services diversification.
Kigali has also come up strongly to support regional integration projects and programmes as it seeks links with East Africans markets for free movement of capital and labour.
Debt management
On the domestic front, the central bank has kept inflation in check, averaging four per cent annually, while market forces have determined the exchange rate for the past seven years — creating a predictable economic environment.
While guaranteed debt has kept growing, reaching $1.9 billion in 2016, the debt burden remains at low-risk levels, with all indicators below the indicative thresholds established by the World Bank and IMF Debt Sustainability Analysis tool.
“The Debt Sustainability Analysis carried out in December last year shows Rwanda’s debt service to export stood at 19.4 per cent, against debt service to export threshold of 25 per cent while the external debt to GDP ratio stood at 29.8 percent by end of 2016,” according to data from the Ministry of Finance and Economic Planning.
The growth in exports — attributed to a shift from a heavy reliance on traditional exports to non-traditional exports — has improved the account deficit and is expected to reduce to 20.1 per cent in 2017.
Credit to the private sector has been growing. The ratio of bank credit to private sector, according to available data reached 21.33 in 2015, from 12.19 per cent in 2010.
Industry players believe the appetite for credit to fund businesses is set to increase as the government’s domestic borrowing reduces, lending costs diminish and non-performing loans improve.
Energy generation
The country has also invested heavily in cheaper sources of electricity to power industries and push down the tariffs that The government has also continued to subsidise electricity costs to help manufacturers’ products remain competitive.
The Electricity Utility Corporation Ltd managing director, Jean Claude Kalisa, said the subsidies have helped bring down the power costs from $0.27 per kilowatt-hour to $0.11 for manufacturers.
The heavy investments in power generation and imports have seen the country’s installed capacity increase to 210MW by July 26, from 98.77MW in July 2011.
Emmanuel Kamanzi the Director General Energy Development Corporation Ltd, said the increased power generation has helped stop load shading.
According to Rwanda Patriotic Front (RPF) Inkotanyi, the economic achievements of the past seven years are a result of the citizen being the nucleus of the country’s economic growth.
“The party’s primary objective is to promote the welfare of every Rwandan, as is evident in various programmes such as Vision 2020 and in the Economic Development and Poverty Reduction Strategy (EDPRS),” according to the party’s manifesto.
The party focuses on promoting agriculture and animal husbandry, infrastructure, science and technology. There will also be a focus on strengthening the private sector through trade, industry and craft, tourism and investment.
Some of the reforms driving the country’s economic growth in agriculture and animal husbandry include the consolidation of land so that different parts of the country can grow the crops best suited for its soil. This has increased income for households and the country’s food productivity.
The continuous supply of quality fertiliser to farmers has improved the fertility of over-used small plots of land. All these have reduced the food import bill.
According to official data, over one million people have been lifted out of poverty.
“GDP per capita rose from $600 in 2010 to $720,” said Wallace Gisamagera, the RPF spokesperson.
Rwanda has invested in the expansion of RwandAir and is aggressively promoting park tourism. The government also targets the country becoming a hub for IT and tech industries in East Africa. A nationwide fibre optic infrastructure has ensured secure connectivity to drive e-governance, e-health and smart agriculture.
