Rwanda plans to uplift another million people out of poverty by 2016; the Word Bank has announced in its latest update on the country’s economic situation.
The World Bank says, Rwanda’s economy will grow at a rate of 7.6% in 2016 and if this is maintained, the country will be able to cut down the poverty rate from 63% (2011) to 54% (2016).
This, in essence means about a million people will be lifted out of poverty.
The report, The Rwanda Economic Update: Financing Development, says, the country’s growth rate has tremendously recovered from its lowest of 4.7% in 2013 since 2003 to 7.0% in 2014.
Rwanda is currently experiencing a growth rate of 7.4% in 2015 after lifting at least one million citizens out of poverty between 2006 and 201.
In 2014, the government made a commitment of three million more people out of poverty in five years.
Yoichiro Ishihara, Senior Economist and Task Team Leader of the report noted that Rwanda’s recovery is largely led by; “Private and government consumptions reflected in the accelerated growth of the services sector.”
He said that developments of the monetary sector have also been supportive to the economy.
“Low inflation rate and appreciation of real effective exchange rate is favorable for the accommodative monetary policy to support the economy through financing,” says Yoichiro.
Meanwhile, the report says the drop in global oil prices has had a positive effect on Rwanda’s economy in both inflation and imports.
Transportation prices declined by about 4%, which brought down the overall Consumer Price Index (CPI).
On energy imports, prices started to significantly decline in November 2014, resulting in energy import values drop of 20-40% until April 2015.
However, the report notes that although Rwanda’s GDP investment of 24% is slightly higher than the average of low/medium income countries, it is still mostly financed by foreign savings, including aid.
Experts recommend that the country needs to find alternative means of funding.
“Workers remittance and foreign direct investment are potential sources…they have steadily increased without significant volatilities in the past several years,” says Carolyn Turk, World Bank Country Manager for Rwanda.