The Kigali Special Economic Zone. The World Bank Rwanda Economic Update report dubbed “Boosting Exports Through Technology, Innovation and Trade in Services” says manufacturing and exports can cushion the economy from external shocks.
A recent report released by the World Bank says that after a strong economic recovery last year, Rwanda’s GDP growth is expected to be moderate in 2022 due, in part, to the effects of the Russia/Ukrainian conflict and the persistent risk of the COVID-19 pandemic in major economies. Says the new Rwanda Economic Update launched on Friday, September 23.
According to the 19th edition of the Rwanda Economic Update (REU19) titled Boosting Exports Through Technology, Innovation and Trade in Services, GDP growth is projected at 6 percent for 2022, after reaching 11 percent in 2021. Inflation continues to mount as increases in international commodity prices and the disruption of global supply chains have led to substantial increase in energy, transport, and food prices.
“The mounting inflation in Rwanda, which comes at the time when employment has not yet recovered to its pre-pandemic level, has the potential to undo hard-won achievements in terms of poverty reduction and human capital development. Government interventions to protect the most vulnerable, building on the country’s social safety nets continue to be critical,” said Rolande Pryce, World Bank Country Manager.
In its special focus on trade, the report gives an insight into Rwanda’s export performance. The REU19 notes that Rwandan firms have increased their participation in international trade (particularly in services) over the last decade, to levels exceeding that of regional and continental peers.
Discussing the main drivers of trade performance, the report stresses that securing a certification for an international quality standard, such as International Organization for Standardization (ISO) certificate, is a critical factor in facilitating firms’ participation in international trade. Firms with ISO certification are 36 percent more likely to be exporters. The report says in part. However, this remains a major challenge for Rwanda as only 3 percent of Rwandan firms had obtained ISO certification in 2019.
The REU19 also observed a significant correlation between the adoption of e-commerce in Rwanda and the participation in international trade and noted its limited use by Rwandan firms.
“The strong link between e-commerce and exporting, and the lack of information regarding foreign markets regularly cited by firms in Rwanda, suggest investment in internet infrastructure can provide isolated enterprises, such as those in rural and underdeveloped urban areas, low-cost connectivity to markets and customers, and increase local firms’ participation in international trade.” Said Calvin Djiofack World Bank Country Economist .
According to REU19, Rwanda has placed great emphasis on services development to raise employment, income, and export earnings. In many respects Rwanda’s services trade regime is quite open, while a measure of overall services trade restrictiveness appears to be lower than for a sample of African countries with adequate data.
However, the country is facing a skills deficit that, if not addressed, will constrain potential growth for high-skill services exports.
One of the measures the report recommends to boost openness to trade in services, is for Rwanda to address its skills shortage in the short-run by recognizing qualifications of regional professionals, and abolishing work-permit regimes for them.
