In his state of the union delivered on December 21, 2020, Rwandan head of state, General Paul Kagame, boasted that despite the Covid19 pandemic, Rwanda earned more than US$400 million from agricultural exports in 2020. He further bragged that Rwanda registered 172 new foreign investment projects worth US$1.2 billion that will create more than 22,000 jobs. This, of course, is hot air.
For a thorough analysis of what happened in Rwanda in 2020, read the International Monetary Fund’s January 2021 review of Rwanda’s economic performance. The overall IMF’s conclusion is that Rwanda’s near-term economic outlook “remains highly uncertain.” Here are the highlights of how Rwanda performed in 2020, per IMF’s review:
- In the first half of 2020, exports receipts from travel and tourism shrank by nearly 60 percent.
- Similarly, merchandise exports dropped by 32.4 percent.
- Near collapse in Rwanda’s tourism receipts and other key exports was a high risk.
- Key domestic businesses offering services in tourism and related industries, construction and manufacturing face solvency problems.
- Public debt is expected to increase to about 66 percent of GDP in 2020 and 71 percent of GDP in 2021.
- Sharply reduced foreign direct investment was a major factor.
- Inflow of remittances shrank due to a fall in the wages and employment of migrant workers abroad.
How does the Rwandan government describe the economic situation in its correspondence with the IMF?
According to the Rwandan government’s Letter of Intent attached to the IMF’s review, every revenue-generating activity suffered in 2020:
“COVID-19 outbreak and the related deterioration of global economic conditions are having an adverse effect on Rwanda’s economic activity…The shock is affecting our economy through weaker demand from key trading partners, lower FDI and remittances, near cessation of tourism, and disruptions in regional and global supply chains. Real GDP growth…is now projected at around -0.2 percent.”
In other words, despite Kagame’s public boasts, his government agrees with the IMF that Rwanda’s economic outlook is highly uncertain.
By David Himbara