Rwanda: Economy grows 4 percent in second quarter of 2017
The Rwandan economy grew by 4 per cent in the second quarter of 2017 largely driven by agriculture and services sector, according to the latest official figures that were released in Kigali yesterday.
In the second quarter of the year (April-June), GDP was estimated at Rwf1,869 billion up from Rwf1,636 billion in the same quarter last year.
The latest figures come against the backdrop of a sluggish 1.7 per cent growth rate registered in the first quarter, which had caused concerns on the feasibility of the targeted 6.2 per cent growth rate for the year 2017.
Agriculture sector grew by 6 per cent in the second quarter owing to good harvest season, according to figures released by National Institute of Statistics of Rwanda (NISR).
A good harvest enabled a 22 per cent increase in export crops dominated by coffee and tea.
The services sector posted an even stronger growth rate of 7 per cent thanks in large part to the hotels and restaurants subsector which grew by 9 per cent.
The services sector also received a boost from administrative and support services which increased by 20 per cent as well as professional, scientific and technical activities which increased by 21 per cent.
The industry sector maintained a sluggish growth pace of 1 per cent largely mainly due to a drop in construction activities – by 4 per cent – compared to the same period last year.
NISR director general Yusuf Murangwa attributed the decline to completion of major infrastructure projects in the country such as the Kigali Convention Centre and Kigali Marriot Hotel.
In the industry sector, beverages and tobacco dropped by about 10 per cent with the largest decline registered in the alcoholic beverages.
Rwanda’s largest brewer Bralirwa recently reported that their half-year profits had dipped by 3.8 per cent to Rwf41.3 billion from Rwf43 billion in the same period last year.
The sales volumes dropped by about 15.4 per cent during the period this year.
The wholesale and retail trade decreased by 6 per cent which was explained as a consequence of overall reduction in imported products driven by a drop in imports of secondhand clothing.
According to Finance and Economic Planning minister Amb. Claver Gatate, there is every reason to maintain optimism in attaining the earlier projected growth rate of 6.2 per cent this year considering the recent trends across various sectors.
He said that recent commencement of construction of the proposed Bugesera International Airport in Bugesera District would see slow growth in the construction sub-sector recover.
He noted that there were multiple road construction projects across the country that would be underway in the 3rd and 4th quarter which were likely to spur the sector’s growth.
“Some of the bumps that were there in the first two quarters of the year have since been phased out and we expect positive performance in the remaining half of the year,” he said.
The minister, however, said that they will be meeting with officials from the International Monetary Fund next month to review the country’s economic status and decide whether or not to revise the growth projections for this year.
The key drivers of growth in the remaining half of the year include services sector driven by hotels and conferences, financial services, ICT sector and real estate, he added.
“We also expected performance from industries in the context of Made-in-Rwanda products which has increased with the rise of industrial parks. We are counting on local industry and are increasingly seeing substitution of imports,” he said.
To ensure that exporting firms operate sustainably, Gatete said the government was promoting concentration of exporting firms in industrial parks (eight – one in City of Kigali as well as in each of the six secondary cities across the country and in Bugesera District) so as to be able to provide them with necessary infrastructure at subsidised costs.
A recent World Bank report indicated that the country’s small export firms were experiencing challenges that threatened their sustainability.
Addressing this issue, Gatete said the government had launched a programme to improve entrepreneurial skills for traders in the export business to improve the survival rate of their business.
He added the government was also somewhat concerned with the fact that agriculture sector remained largely informal.
Gatate said this was being addressed through distribution of quality seeds and fertiliser as well as ensuring financing of the entire agriculture value chain.