Rwanda’s economy in 2016 promising-research

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Workers at ADMA Biscuit factory in Kigali sort biscuits.

Workers at ADMA Biscuit factory in Kigali sort biscuits.

Rwanda will be among the fastest growing economies in 2016 despite external shocks caused by declining performance of major global economies, research has suggested.

Last year the overall global economic performance slowed down especially for China, decline in commodity prices and the hike of U.S. Federal Reserve interest rates.

The IMF says in 2015, sub-Saharan Africa experienced its slowest economic growth rate since the 1998 global financial crisis.

The region’s real GDP growth fell from 5.0% in 2014 to 3.75% in 2015 and will rebound to 4.3% in 2016.

Analysts say that due to recent global and regional trends, the IMF is likely to revise downwards its 2016 growth forecast for sub-Saharan Africa.

Foresight Africa report warns that, “despite successes the continent has gained in recent years, new and old dangers—economic, political, and security-related—threaten to derail its progress.”

However, experts advise that Africa can defeat these challenges with sound policymaking, effective leadership, and enough foresight.

Amadou Sy Senior Fellow and Director, Africa Growth Initiative Global Economy and Development Brookings Institution advises policy makers in Africa to plan along; managing economic shocks.

He also points out sustaining domestic growth, supporting human development, capitalising on urbanisation, maintaining governance gains and expanding Africa trade.

“Rather than seeing these and other trends and developments in 2016 only as challenges, policymakers should also see them as opportunities to strengthen the resilience of their economies,” says Ngozi Okonjo-Iweala former Nigeria’s Minister of Finance.

She added that average growth numbers mask differences between economies and in 2016, some of African countries such as Côte d’Ivoire, the DRC, Ethiopia, Mozambique, Rwanda, and Tanzania will be among the fastest-growing economies in the world.

David Dollar Senior Fellow at Brookings Institution explains that previously Africa benefited largely from China’s investment-led growth model which generated large demand for energy and minerals, boosting Africa’s terms of trade and export volumes.

However, China is switching to a new model that relies more on innovation and productivity growth on the supply side and on consumption on the demand side.

“This trend has an immediate effect on Africa because it is one factor leading to declining prices for primary products and to declining volumes of exports for African economies,” he said.

China is among the largest investors in Rwanda’s Mining sector with $19346148.15 invested since 2009. This includes $12,708,358.65 in joint investment with Rwanda and $6,637,789.5 totally Chinese invested mostly in mining.

Interestingly, in light of the announcements at the conclusion of the Forum on China-Africa Cooperation at the end of 2015, China is making a $60 billion bet that, with support, sub-Saharan Africa can ride the current shocks and return to its previously high growth.

President Paul Kagame has spoken about the gloom shaded on Africa’s economic future. “Africa will be just fine,” he said.


About the author

Olive Ndaka is the Junior Editor for RwandaEye. An investor and young entrepreneur, she is a quick learner and has contributed many articles for RwandaEye in Kinyarwanda.

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