Rwanda will be one of the top 10 fastest-growing economies in the world this year even as it braves challenges presented by aid cuts.
Last year, Germany, the US, Britain and the EU suspended part of their budget support for this year over allegation that the country was helping M23 rebels in the DR Congo
The Economist, in its latest report on global economic trends for 2013, indicated that Rwanda’s economy would grow at 7.8 per cent this year, making the country the ninth fastest-growing economy in the world and the second-best in sub-Saharan Africa.
In the global ranking of what it terms as ‘the top growers’, the paper has Mongolia, with a projected growth rate of 18.1 per cent, on top of the list followed by Macau at 13.5 per cent. Libya leads in Africa at 12.2 per cent. In sub-Saharan Africa, Mozambique is projected to register the highest growth at 8.2 per cent, with Rwanda, which is seen growing; at 7.8 per cent, on its heels.
This projection echoes that of the economic planners at the Ministry of Finance and Economic Planning.
The Economist termed Rwanda’s ranking, along with other star performers of the world, as part of a ‘more cheerful segment’ of an otherwise gloomy global economic outlook.
The newspaper also lauded Rwanda as one of the countries that have made tremendous progress over the last 10 years, enabling it to transform its economy towards a service-oriented one.
While reacting to the report, the Rwanda Development Board (RDB) acting chief executive officer, Clare Akamanzi, affirmed that the country would this year achieve or even surpass its medium-term plan economic objectives.
“Rwanda’s economy has been on track, growing at over 7 per cent annually; therefore, the fundamentals for achieving this target are already in place. That is why analysts at The Economist and others rank Rwanda highly,” Akamanzi said.
The RDB Chief added: “What is most important for us is to increasingly build our economy’s competitiveness to attract more private sector investments. This is a key input for economic growth. ”
A Ministry of Trade and Industry 2012 preliminary economic performance review shows that the country’s investment rate (the per cent of investment to the gross domestic product – GDP) reached 25 per cent, surpassing the 21 per cent target set earlier.
Another key fundamental was the growth of exports that reached $429m, higher than the $344m targeted. The robust growth of the tourism sector was another factor.
The sector raked-in $263m in the 2011/12 period, exceeding the earlier target of $244m. This was also reflected on strong growth of Rwanda’s services sector.
Although the Central Bank had pegged the inflation rate at 7.5 per cent, it was contained at a commendable 4.6 per cent. Rwanda, The economist noted, achieved a “hat-trick” of rapid growth, sharp poverty reduction and lessened income inequality.
“Because of this, many donors were reluctant to stop or reduce aid, whatever the arguments that came up over the eastern DR Congo saga,” the publications added.
This performance is a good indicator that the suspension of aid would most likely not hurt the country as it continues guiding its economy towards its chosen path of transformation.