Rwanda’s GDP Rose by 11.1% 2021 as WB Calls for a More Broad-based Recovery

By George Kalisa

Rwanda recorded economic recovery with her GDP increasing by 11.1 per cent the first nine months of 2021, said a World Bank report released early this month. The report, however, says female unemployment suffered a blow and is on downward trend.

Economic recovery from the 2020 recession is attributed to the growth registered by Industrial production, rise in Agricultural output and increase in traditional exports. Exports grew by 35 per cent followed by Agriculture with 16.5 per cent.

“Gross domestic product (GDP) increased by 11.1% in the first nine months of the year, reflecting a broad-based recovery from the 2020 recession,” says WB report.

Industrial production expanded by 16.5% and agricultural output rose to 6.8% in the same year, while traditional exports (coffee, tea, cassiterite, wolfram, and coltan) increased by about 35% during the same period.

 “However, the report observes that the level of unemployment continued to deteriorate despite the recovery, as the growth acceleration partly reflected a shift in employment to higher-productivity activities (manufacturing and construction). While the GDP got close to the pre-pandemic level, the unemployment rate remained more than 13 percentage points above levels at the beginning of 2020, with female employment deteriorating” adds the report. 

“While the current recovery shows that Rwanda’s robust fiscal and medical responses to the crisis have had a notable impact on the economy, the government will need to continue its efforts to promote a more broad-based recovery that extends benefits to rural areas and protects the well-being of the most vulnerable members of society, including women,” said Rolande Pryce, World Bank Country Manager.  

In its special focus on Boosting Regional Trade Integration in the Post-COVID Era, the report underscores the importance of sustained growth in trade as a key driver for Rwanda to achieve its goal of becoming an upper-middle-income country by 2035.    

“Despite important progress, Rwanda has yet to fully achieve its trade potential with regional partners, notably, due to a relatively narrow export product base, discriminatory non-tariff barriers within the region, and persistent regional trade infrastructure gaps,” said Calvin Djiofack, World Bank’s Senior Economist for Rwanda.

The Rwanda Economic Update (REU18) notes that Rwanda has benefited from regional cooperation to reduce drastically its trade cost in recent years on both Central and Northern corridors, thus greatly facilitating its access to international markets. However, persistent security concerns among East Africa community members, leading to temporary border closures, create uncertainties that impede trade and Rwanda’s potential as regional logistic hub. 

Some of the actions proposed by the report for Rwanda to fully achieve its regional trade potential include: i) Developing a regional trade policy to foster industrialization and harness regional and continental opportunities; ii) implementing a new generation of trade facilitation and logistic reforms to further reduce trade costs; and iii) developing an effective logistics hub to unlock regional opportunities.