Service and industrial sectors registered sluggish growth in the second quarter of this year even though the overall performance of the economy is on track to achieve the projected 6.5 per cent.

Service and industrial sectors recorded turnover of 6 per cent in the second quarter of this year compared with 20.1 per cent recorded over the same period last year.

According to the August Monetary Policy and Financial Stability statement, the service sector showed a slow-paced growth of 1.1 per cent in the second quarter of this year compared with a 22.4 per cent registered over the same period last year.

Industries

The sluggish growth in the service sector, the statement said, impacted the performance of goods producing industries, which grew to 18.3 per cent from last year’s 14.6 per cent.

Experts have observed that although the service sector has proved to be a key driver of economic growth, contributing up 47 per cent of gross domestic product, the sector still lacks the needed knowledge and skills to support it.

Experts further noted that to optimise value from the industries, there is a need for specialised skills and technology to drive industrialisation. The increase in industrial sector was mainly due to the good performance in construction, manufacturing and energy, sub sectors.

“Despite the high increase in turnovers for trade services and for banks and insurance companies, turnovers in the services sector in 2015 second quarter recorded low performance mainly due to the fall in international oil prices” said John Rwangombwa, central bank Governor.

“Following the downward revisions of local pump prices resulting from the fall in international oil prices, total sales of petroleum companies declined by 10.9 per cent in 2015 quarter two compared with an increase of 3.3 per cent recorded in 2014 quarter two,” he added.

He said the gap between this quarter’s performance and last year’s quarter’s has been further widened by the fact that last year, the post and telecommunications recorded high sales.

Terror attacks

Terrorism incidents in the region and the Ebola epidemic, which ravaged West Africa, caused a major decline in growth of tourism and hospitality industries. This partly explains the decline in the service sector.

Under the Single Tourist Visa, Northern Corridor is sold as a single tourist destination, therefore recent terrorist attacks in Kenya directly affected Rwanda’s hospitality and tourism sectors.

Despite this, the country’s economy has continued to perform well in 2015 as the real GDP grew 7.6 per cent in quarter one from 6.5per cent in last quarter of 2014.

The growth has been partly attributed to positive performance of private sector.