Fitch Ratings revised Rwanda’s Outlook to ‘Positive’ from ‘Stable’ while simultaneously affirming Rwanda’s long-term foreign and local currency Issuer Default Rating (IDR) at ‘B’ and short-term foreign currency IDR at ‘B’. Fitch has also affirmed Rwanda’s Country Ceiling at ‘B’.
According to Fitch ratings, the revision of the outlook from stable to positive reflects continuing rapid and inclusive GDP growth in the future, high governance standards relative to regional peers, marked improvements in poverty reduction that attracted high levels of international support, and low public and external debt.
A sovereign rating indicates the rating agency’s opinion of a country’s credit worthiness, or in other words ability and willingness to meet its financial obligations in timely manner. Credit ratings, as opinions on vulnerability to default, do not necessarily imply a specific likelihood of a country’s defaulting on its payment.
This year’s rating is the fourth following the first in 2006, the second in 2010 and the third in 2011. At ‘B’, Rwanda’s rating is within the range of regional countries. A ‘Positive” outlook may imply to a certain extent possibility of rating upgrade provided continued positive trends in factors that triggered the upgrade in the outlook.
Rwanda’s debut US$400Million Eurobond has been over subscribed, a lead banker has revealed saying, “its well over subscribed as you can imagine”.
An investor source told media that the order book was $3 billion, or 7.5 times the issue size.
The 10-year dollar bond was issued on Thursday with a 6.875% yield, a lead banker said. That was at the tighter end of Rwanda’s final guidance of 6.875-7 %.
Investors were attracted by Rwanda’s strongly growing economy, low debt and recent political stability.
President Paul Kagame has been commended for presiding over Rwanda’s recovery after the 1994 genocide against the tutsi that claimed over a million lives.
Economic growth averaged 8.2% from 2006 to 2012 and the International Monetary Fund projects growth of 7.6% this year.
Rwanda’s debt levels are equivalent to 23.3 % of gross domestic product in 2012 and Inflation is in single digits.
Rwandan President Paul Kagame said Thursday his country will aim for average annual economic growth of 11.5 percent for the next five years.
“We have set ourselves a target of promoting this country’s economic development. We want economic growth to average 11.5 percent” for the period 2013-2017, Kagame told a government retreat.
“It’s a feasible target,” he went on, saying that the fact that Rwanda managed 8 percent growth in 2012 despite suspensions of foreign budget support was “a miracle”.
The 8 percent growth figure is according to the government. The International Monetary Fund put Rwanda’s 2012 growth at 7.7%.
In 2012 several donor countries suspended their budget support to Rwanda following accusations from the United Nations that Kigali was backing rebels in eastern Democratic Republic of Congo.
Rwanda has always denied the claims.
Nearly two decades after the 1994 genocide, 40% of Rwanda’s budget still comes from aid.
In February Germany unfroze some 7 million euros of aid and reallocated it for professional training.
The growth of information communication technologies will increase employment and boost the country’s competitiveness and economic growth overtime,” Jean Philbert Nsengimana, the youth and ICT minister, has said.
Nsengimana added that this would also ensure provision of quality services and products. He was speaking at the launch of Techno Brain, an international software development company, at Umubano Hotel in Kacyiru, Kigali on Tuesday.
A modern IT laboratory, with fully-equipped ICT infrastructure, was also unveiled during the event.
Yvette Uwineza, the Techno Brain country manager, said the facility was one of the efforts by the firm to contribute to the country’s growing ICT sector.
The firm, which started operations in June last year, employs 20 Rwandans and is expected to recruit over 100 more in the coming months. It recently won a tender to train the Rwanda Development Board staff in ICT use.
Rwanda’s ICT landscape has evolved greatly in the last 10 years, especially after the laying of the fibre optic cable and the introduction the National Data Centre and e-governance services, as well as the rise in mobile telephony penetration.
The International Telecommunication Union 2012 report ranked Rwanda as one of the developing nations with vibrant ICT markets, along with Bahrain, Brazil, Ghana, Kenya, and Saudi Arabia.
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.
“Rwanda, our beautiful and dear country / Adorned of hills, lakes and volcanoes / Motherland, would be always filled of happiness…”
Over 1,200 job seekers with various skills were last week connected to prospective employers during a job fair in Kigali organised by Job in Rwanda Association.
Youth employment and productivity is among development plans the government has in five years
Job seekers also found time to sit interviews with different organisations.
The fair, sponsored by Rwanda Development Board and the Ministry of Youth and ICT, was aimed at connecting job seekers and employers from both public and private institutions.
The Minister of Youth and ICT, Jean Philbert Nsengimana, who opened the event, said it is a good opportunity for both employees and employers to meet and get connected as there is normally a mismatch between demand and supply.
Job seekers at Global Health Corps stall during the Job day at Kigali Public Library yesterday. The New Times / T. Kisambira.
“What is important today is not that all people who are here get a job immediately but to share information and knowledge,” said Nsengimana.
He commended Job in Rwanda for creating the opportunity to connect job seekers to prospective employers.
“I would recommend public and private institutions and universities to adopt such activity as job seekers are too many yet there are employers out there who need them,” he added.
The unemployment rate is below 2 per cent and under employment now is at 40 per cent, according to the minister.
He noted that the most important avenues to create jobs is to equip Rwandans with vocational skills and to train people how to be job creators and be confident when they are looking for jobs.
Most of the job seekers – about 70 per cent of them university graduates – intimated that they had failed to find jobs.
“I graduated in 2008 with a Bachelor’s in Finance but I have failed to find a job. I have submitted my credentials to various companies in vain. Most of the time, about 200 of us have competed for the same job,” a woman who gave her name only as Chantal said. She was one of those who sat interviews at the Rwanda Development Board (RDB) yesterday.
A critical examination of the tourism sector shows that 2012 was an impressive year.
With the sector generating $232 million by October 2012, compared to $204 million in 2011, it was the biggest foreign exchange earner.
The reason for the continued growth of tourism is the country’s security and stability that attracts visitors keen to see and enjoy the country’s various attractions.
President Paul Kagame, in his State of the Nation Address recently noted that it is critical that we strive to provide excellent service and customer care so that visitors to Rwanda leave as good ambassadors who will return and also encourage others to visit.
That aside, ensuring long term development of the tourism sector should be the country’s priority. This can be achieved through creating more tourism avenues to minimise pressure on Mountain gorillas and the national parks which are Rwanda’s traditional tourism attractions.
For example, Rwanda should promote heritage tourism. There should be a deliberate effort to encourage people to come and experience the unique places and activities that represent the stories of Rwandan tradition.
Heritage tourism is said to be the fastest growing segment of the tourism industry as the trend tilts towards an increase in specialisation among tourists.
There are many tourists who seek adventure, culture, history, archaeology and interaction with local people.
Rwanda is gifted with a rich historical, natural and cultural heritage which if properly harnessed, can potentially improve the socio-economic situation of Rwandans and provide employment through heritage tourism.
Apart from the national museum in Huye, there are other equally important museums and heritage sites in the country as well as intangible heritage like our traditional music which can help boost tourism in Rwanda.
It therefore requires the documentation of these sites and incorporation of the information into tourism itineraries or guides.
December 13, 2012
Rwanda has been getting a lot of attention lately, but not the good kind. With the possible appointment of Susan Rice to replace Hilary Clinton as US Secretary of State, many media outlets are digging up one of the more embarrassing moments in recent history, as the Western world stood idle while a genocide unfolded in this small Central African nation. In addition, the recent siege of Goma by the M23 rebels has attracted a certain level of suspicion over Rwanda’s motives in the region, while others have defended its stance on the conflict.
But leaving these two angles aside for the moment, all this coverage has ignored a more interesting story: that the Rwandan government has actually implemented ideas that work, resulting in a small economic miracle. Should other African governments pay attention?
Having moved beyond the horror of the 1994 genocide, even if the West has not, this nation of 10-million is experiencing fast growth based on tourism and services despite a near total absence of mineral wealth. Averaging above 8% GDP growth for the past five years, more than one million Rwandans have been lifted out of poverty, according to the Rwanda Household Living Conditions Survey.
Unlike some other African nations who have struggled despite enormous mining exports and oil production, Rwanda’s business and service sectors account for two-thirds of GDP, having replaced agriculture. Tourism is a key part of the service sector, and multinationals are beginning to pay attention. Recently it was announced that Hotel giant firm Marriott is building one of its first three hotels in sub-Saharan Africa, with a 5-star, 250-room hotel in Kigali.
Marriott is eager to cash in on the promise of booming services, transportation, and logistics industries in the country, where thanks to strong education programs put in place by the government, foreign investors enjoy a particularly vibrant talent pool of recent graduates and experienced workers.
Rwanda has had more success than others in translating its economic growth toward solving social issues. The country has recorded a significant boost in the health sector where infant mortality dropped from 86 per 1000 live births in 2005 to 50 per 1000 live births in 2011. The strides made in the health sector have also spread to the use of contraceptives in a country with a very high population density, providing an improved public safety net against the threat of infectious diseases.
Infrastructure has been improving quickly. Households on the electricity grid have jumped from 91,000 in 2006 to 215,000 in 2011, according to government statistics.
Access to education improved sharply with primary school completion rates for 2011 reaching 79 percent for boys and 82 percent for girls, much higher than the overall targets of 59 percent and 58 percent respectively, while participation in secondary level education doubled from 2006 to 2011.
Instead of absorbing more and more donor aid without any visible improvement, Rwanda is actually taking less and less.
In 1995, donor accounted for 100% of the state budget, while today it is less than 40%.
The country is also trying to make some inroad in the technology sector, as Carnegie Mellon University has already opened a computer science training institute in Kigali, where ambitious young Rwandese gather to push forward an African innovation hub. The idea is that the university will be able to attract the brightest and most promising students and help build and support the nation’s IT sector to study in their own countries.
Rwanda is described by many experts as the most well connected country in Africa, boasting the fastest internet speeds on the continent. Thanks to this advantage, the government landed a crucial foreign investor with Visa, which launched a partnership with the state to develop a cashless economy.
Undoubtedly, many challenges remain for the political development of the country. The opposition complains of unfair treatment, while the authorities are often accused of meddling in the neighboring conflicts in the Congo, where untold wealths of diamond, gold, copper, and cobalt deposits are attracting many potential suitors from across the region and beyond, who are all positioning to be part of the opportunity.
But judging strictly by the social and economic progress achieved in the past decade, something is going right in Kigali, and that’s no small feat.