In interview with Kfm’s ‘Business Talk’ show, the new TradeMark Africa country manager for Rwanda gave insights into the country’s economy. Below are excerpts.

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Rwanda’s economy is projected to grow at more than 6 per cent this year but we know that since last year even when we had a rebound of 7 per cent we sort of struggled, specifically after the aid cuts and suspension in 2012. To what extent has the economy recovered?

Let me start with the global economy. It is tough times. We are seeing a sluggish economic growth in global economies. We are seeing many currencies weakening against the dollar. But the Rwandan economy has been performing well.

Despite the turbulences in global economies. It is projected that by 2016 even 2017 it will grow by 7 per cent. the projection is above 7 per cent.

The performance of the services sector that was growing at more than 49 per cent, the greatest contributor to GDP was growing at 6 per cent. So the cuts did not really result in a direct implication on the economy here but it is a point to consider given sources of foreign exchange revenues that come here in aid remains the biggest source of foreign currency.

It is good that the Rwandan policymakers have been looking at many things to diversify the economy not relying on only one source of revenue but also other sources of revenue.

We still have a lot of government’s push in spending that is driving the economy. To what extent has this growth translated into opportunities for the private sector?

Yes, to a large extent public spending accounts for a lot more in the economy. There is a little more dependency of the public sector. The good thing is that even a sector like infrastructure those investments are passed onto the private sector and we see that money invested.

To what extent is the Rwandan economy feeling the external shocks of a weaker global economy?

Even at the back of good governance and macroeconomic policies in place, we see shocks though our currency against the dollar.

That shows that there is a bit of a problem. Why is it that the currency is depreciating at that speed in a short period of time? What happened to our sources of foreign currency reserves we had? Or what has actually happened on the market that has taken all our foreign reserves we had?

That shows that there is a mismatch in the economy. We feel the shocks when you go to the side investments. I am sure you will see a reduction in foreign direct investment. Delays in the implementation of some of the projects that investors had committed here in Rwanda.

In recent years, the government has been investing in promoting exports. How would you assess progress?

The export sector has been growing, but at an alarmingly slow pace on account of cost of doing business.

The costs of setting up, for example a manufacturing plant here, may be the same but the cost of transportation, the cost of energy all these things compound the problem and result in uncompetitive situation that by the time we produce the goods in Rwanda, they cannot compete with imported ones from some of the countries in the region.

The export sector in many countries would be the biggest source of foreign currency.

But in our situation much as the exports have been growing in volume some of the traditional exports we have — mineral — on the international market is actually dropping in value. Coffee is almost the same. For tea, there has not been growth in value.

So you realise that the export sector is the only hope we have to actually redeem us during tough times like this but it has not taken off to the tune that we want. Those are the impediments currently being addressed to make sure we have a stable and robust economy.

The service sector is contributing slightly to over 40 per cent to GDP. However, this is yet to translate into more job opportunities. What will it take to generate jobs?

Let me start by saying that even in other developed economies, the services sector is not for jobs creation but it has value.

In other countries the good thing they do is to follow up policy to grow industrialisation because with industrialisation and manufacturing you create jobs rather than the services sector.

Because services sector becomes highly specialist in nature and employs few. The actual sectors that will produce jobs are the productive sectors — manufacturing, light industries, agro processing- these sectors that are going to employ many.

Source: The East African

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.