The World Bank has released a Country economic memorandum report 2024, that commends Rwanda’s economic development but also called for a further push of efforts in becoming a high income economy by 2050.
The second edition of the report or the updated version of the Future Drivers of Growth report, with the title ‘Pathways to sustainable and inclusive Growth” was commissioned this November 13, 2024 by the Prime Minister of Rwanda Édouard Ngirente.
The report shows for example that from 20 2006 to 2022, Rwanda’s GDP grew by an average of nearly 7% annually, outperforming most other African nations and indeed most nations globally.
Life expectancy in Rwanda reached nearly 70% in 2022 reflecting significant strides in health care. Access infrastructure development has achieved transformative results where the share of the population with access to electricity surged from 6% in 2000 to more than 80%.
However, the report made some policy recommendations which showed that Rwanda needs to make significant inputs in improving key areas of inclusive growth and development indicators in order to reach its 2050 goals.
For instance, more work needs to be done in private sector investment where the government remains the sole capital investor of 73.5% (GDP 2023) and needing at least a 30% (of GDP investment) in order to reach the 2050 goals.
Rwanda public investment increased faster than private investment, boasting an annual growth rate of 6.7 percent in 2010–21, compared to an annual increase in private investment of 2.6 percent over this period.
The report showed that job creation is insufficient with a wide skills gap, while productivity remains low, reflecting infrastructure gaps, limited progress in innovation, and sub-optimal allocative efficiency.
Human Capital Index (HCI), which measures the amount of human capital that a child born today can expect to attain by age 18, places Rwanda at 160th out of 174 countries.
On HCI, the report says the performance is still lower with a Rwandan being able to be productive at 38% despite investment in education and decrease in stunning levels, and lower savings which are now at 12% on the national level.
The report showed high public debt levels, vulnerability to climate change, and the increasing pressure on natural resources will make it difficult to achieve the country’s targets of becoming an upper-middle-income country by 2035 and a high-income country by 2050.
“Overcoming these challenges will require greater reliance on private sector investment to enhance productivity growth, raise incomes, and provide the financing to address infrastructure shortfalls,” the report said in part.
Ngirente said that the publication of this report is particularly timely for the Government of Rwanda. After six years and with numerous challenges, including shifts in the global, regional, and domestic landscapes, this analysis is both needed and welcomed.
“The report will play an important role in guiding the implementation of our future strategies. In fact, as it was developed concurrently with the National Strategy for Transformation (NST2), the report’s preliminary findings have already informed it,” Ngirente said.
Ngirente stated that the achievements made over the years stand as a testament to the success of development partnerships and thus Rwanda is committed to implementing the recommendations of the report, based on the existing strong collaboration with the World Bank and other development partners.
“As Government we always work towards achieving our commitments. We are committed to remaining an accountable, responsible and result-oriented Government,” Ngirente stated.
Victoria Kwakwa, the Vice President of the World Bank for Eastern and Southern Africa said that this is not the end for Rwanda and a lot has to be worked on if Rwanda has to get a high income economy by 2050.
“Promote private sector growth needed in expansion of investment and foster inclusion in poverty reduction especially that many have low incomes,” Kwakwa said.
The Private Sector Federation (PSF) chairperson Jeanne Francoise Mubiligi revealed that they are developing a database and information portal that will be private sector driven to improve access to information to drive as much of the data is government driven.
Minister of Trade and Industry, Prudence Sebahizi said that to be competitive as government, Rwanda is creating enabling environment for private sector to venture in manufacturing that is tech driven to increase productivity and doubling exports revenues from the current $2.5billion to $7.3billion, doubling private sector investment from $2.2billion to $4.6billion in the next five years.
Sebahizi stated that this will be reached by increasing value addition, labor intensive manufacturing and increase of market based skills in vocational training that will add on existing efforts of research and establishing special economic zones for private investment.
