IGIHE

Category: Economy

  • Govt to increase spending by Rwf106.4 billion in revised budget

    Minister Ndagijimana announced that the proposed budget revision will increase the Government spending by Frw 106.4 billion, a 2.3% increase to Frw 4,764.8 billion from Frw 4,658.4 billion announced in the original budget in June, 2022.

    This revised budget will support continued economic recovery, supplement job creation efforts and continue to facilitate businesses to recover from covid-19 impact. Additional Investments in education, healthcare, ICT, and agriculture will be at the forefront of the ongoing government effort to invest in Rwanda’s future, through the National Strategy for Transformation (NST1).

    “Despite persistent challenges stemming from COVID-19 effects, global supply chain issues, inflationary environment and impact of climate shocks, our economy continues to show strong signs of recovery. Over the first three quarters of 2022, the economy registered an 8.5% growth, with signs of beating projections. This budget revision reflects these successes, and the effectiveness of the economic recovery plan in keeping businesses afloat, encouraging new investments, creating jobs, and maintaining strong social protection for vulnerable citizens”, Minister Ndagijimana said.

    {{Key changes in the 2022-2023 Revised Budget}}

    {{Resources}}

    The proposed revised budget contains several important adjustments, such as an increase of domestic revenues by Frw 115.2 billion from Frw 2,372.4 billion in the original budget to Frw 2,487.6 billion – a 5 % rise, while domestic financing increased by Frw 39.4 billion from Frw 282.6 billion in the original budget to Frw 322 billion.

    A stronger recovery has increased government revenues, including Frw113.2 billion increase in tax revenue from Frw 2,067.7 billion in the original budget to Frw 2,180.9 billion representing 5.1% increase. Furthermore, non-tax revenue is expected to increase by Frw 2 billion from Frw 304.6 billion to Frw 306.7 billion, thanks to the continued recovery through increased internally generated revenue streams.

    {{Expenditure }}

    In the revised budget Government expects to increase spending by Frw 106.4 billion from Frw 4,658.4 billion to Frw 4,764.8 billion. The expenditure envelope has been revised to reflect the changes for some items under recurrent spending, capital expenditure and net lending outlays.

    {{Recurrent Expenditure}}

    On the original budget estimate of Frw 2,543.2 billion is being raised to Frw 2,705.5 billion showing a net increase of Frw 162.3 billion, while on capital expenditure, there will be a decrease in capital spending of Frw 66.5 billion from Frw 1,847.2 projected in the original budget to Frw 1,780.8 billion to support key recurrent expenditures, such as increase of the number of teachers and their salaries, supporting universal school feeding program, and additional fertilizers to boost coffee production.

  • Rwanda’s economy grew by 10% in third quarter of 2022

    The figures released on Monday 19th December 2022 show that the country’s GDP in the third quarter was estimated at Rwf3,583 billion up from Rwf2,758 of the same period last year.

    In this quarter, services contributed 47 percent, Agriculture contributed 24 percent, Industry contributed 21 percent of GDP and 8 percent was attributed to adjustment for taxes and subsidies on products.

    {{Sectors’ performance}}

    {{Agriculture}}

    In agriculture, the overall growth was 1 percent and contributed 0.3 percentage points to overall GDP growth. Within agriculture, the production of food crops decreased by 1 percent and the production of export crops decreased by 1 percent.

    {{Industry}}

    In industry, the overall production decreased by 1 percent and contributed negative 0.2 percentage points to overall GDP growth. The decrease of industrial activities is mainly due to a drop of 17% in construction activities.

    Other activities in industry sector increased as follows: Manufacturing activities increased by 9 percent, Mining and Quarrying activities increased by 5 percent while electricity production increased by 13 percent and the production of water and waste management increased by 3 percent.

    According to NISR, the growth in manufacturing activities is due to an increase of 11 percent in food processing, 9 percent increase in production of Beverages, 8 percent increase in production of Wood and paper; printing, 21 percent in production of Chemicals and plastic products and 24 percent in production of Textiles.

    {{Services}}

    The Service sector increased by 17 percent and contributed 7.9 percentage point to overall GDP growth. Within Services sector, Wholesale and retail trade increased by 20 percent while Transport activities increased by 26 percent.

    Among other services, Hotel and restaurants increased by 90 percent, Financial services increased by 8 percent, while Telecommunication services increased by 34 percent. Public Administration increased by 21 percent; Health services increased by 13 percent while Education services increased by 26 percent.

    The bird view of Kigali Special Economic Zone. Industries contributed 21 percent of GDP.

  • France, Germany call for taxation of multinationals at EU level

    “As our citizens are heavily hit by the inflation and the energy crisis, we are determined to ensure tax justice, in order for companies to pay their fair share,” France’s Minister of Economy and Finance Bruno Le Maire and visiting German Finance Minister Christian Lindner said in a joint statement on Thursday.

    Le Maire and Lindner said that the two countries “share the view that our common European fiscal framework has a critical role to play in helping both rebuild fiscal buffers in Europe and promote investment in the climate and digital transitions.”

    They stressed the importance of “resilient and sustainable growth” in guaranteeing long-term fiscal sustainability.

    Speaking of the current energy crisis, the two finance ministers pointed out the need for investments in Europe in order to reduce the EU’s energy dependencies, and tackle the energy, climate and digital transitions.

    “We will keep on working jointly to reap the full potential of EU growth capacities, thus increasing our economic resilience and reducing our carbon footprint,” they said.

  • High inflation widens social, economic gap in Germany: economic expert

    “The social gap is widening at the moment, and even more than during the pandemic,” Fratzscher told German media.

    Since people with low incomes are spending a majority of their income on basic supplies such as energy and food, they are feeling the effects of inflation three times as strongly as those on high incomes, Fratzscher stressed.

    A similar trend can also be seen among German companies. “Some of the big players are making big profits even in these times, while many medium-sized companies (…) are barely surviving,” Fratzscher said.

    A study also published on Thursday by the Institute of Economic and Social Research at the Hans Boeckler Foundation found that the financial gap between households below the poverty line and the median income had already grown significantly before the start of the COVID-19 pandemic.

    This development was an “extremely poor starting position for the continued social stress tests” caused by the ongoing pandemic, the Russia-Ukraine conflict and record inflation, the foundation said.

    Inflation in Germany climbed to 10.4 percent in October, the highest level since 1990, according to the Federal Statistical Office. The development was mainly driven by rising energy and food prices, which were up by 43 percent and 20 percent year-on-year, respectively.

    Customers shop at a supermarket in Frankfurt, Germany, on Aug. 1, 2022. (Xinhua/Shan Weiyi)

  • Rwanda’s inflation increases by 20.1%

    The urban CPI is calculated based on approximately 1622 products in twelve urban centers of Rwanda.

    The increase was mainly driven by skyrocketing prices of food and non-alcoholic beverages.

    Hiked prices continue to be an issue of global concern owing to effects of COVID-19, the war between Russia and Ukraine as well as low agricultural produce.

    In October 022, Food and non-alcoholic beverages increased by 39.7 percent on annual basis and increased by 5.3 percent on monthly basis.

    Housing, water, electricity, gas and other fuels increased by 8.9 percent on annual basis and increased by 1.3 percent on monthly basis.

    According to NISR, transport increased by 13.6 percent on annual basis and decreased by 0.4 percent on monthly basis. Restaurants and hotels increased by 18.6 percent on annual change and increased by 0.9 percent on monthly basis.

    The data also show the local products increased by 20.1 percent on annual change and increased by 3.4 percent on monthly basis, while prices of the “imported products” increased by 20 percent on annual basis and increased by 0.6 percent on monthly basis.

    The prices of fresh products increased by 42.4 percent on annual change and increased by 7.5 percent on monthly basis.

    Meanwhile, prices of energy increased by 22.3 percent on annual change and increased by 2.4 percent on monthly basis.

    Among others, the prices of the “general Index excluding fresh products and energy” increased by 14.4 percent on annual change and increased by 1.4 percent on monthly basis.

    The prices of fresh products increased by 42.4 percent on annual change and increased by 7.5 percent on monthly basis.

  • Rwf6.6 billion transferred through mobile payment channels in 2021/22: A glance at cashless transactions in Rwanda

    Latest figures from NBR’s report for the year 2021/2022 released on 31st October, shows that the country’s Gross Domestic Product (GDP) grew by 8.9% in 2022 from 4.4% of the previous year registered in June 2021.

    The report also indicates that Rwandan franc depreciated by 3.8% in June by the end of June 2022, compared to 5.3 percent depreciation recorded in the corresponding period of 2021.

    On another note, the banking sub-sector’s aggregate net profits increased by Rwf18.5 billion to Rwf74.4 billion during the first half of 2022 from Rwf55.9 billion during the first half of 2021.

    BNR indicates that transfers through mobile banking channels increased by 35 percent from 6 million to 8 million transactions and the value of transactions increased by 140 percent from Rwf917 billion to Rwf381 billion.

    Meanwhile, funds transfers through internet banking increased by 42 per cent from 1,552,080 to 2,205,107 transactions and the value of transactions increased by 57 per cent from Rwf2,672 billion to Rwf4,200 billion.

    The number of mobile banking subscribers increased by 18 per cent from 2,080,549 in June 2021 to 2,244,652 and Internet banking subscribers increased by 32 per cent from 106,312 to 140,662 in June 2022. Active mobile payment subscribers also increased by 9 percent from 5,079,232 in June 2021 to 5,528,109 in June 2022.

    Among others; the number of card based Point-Of-Sales (POS) increased by 14 percent from 4,635 POS in June 2021 to 5,263 POS in June 2022 while the number of mobile POS increased to 49,975 in June 2022 from 45,627 in June 2021. On the other hand, Virtual POS (QR based POS) moderately increased from 4,280 in June 2021 to 4,295 in June 2022.

    The number of agents providing banking services increased by 33 percent from 6,555 to 8,720 agents while mobile payment agents slightly increased by 2 percent, from 144,250 to 146,930 agents. The number of automated teller machines (ATMs) remained stable with only 1 percent of increase from 338 to 344 ATMs at end June 2022.

    {{Overall performance}}

    As per released report, the overall value of retail e-payment to GDP increased by 16.4 percent during the period to reach 111.9 percent.

    The usage was dominated by mobile payment (transfer and acquiring services) and internet banking services, which account for 67.4 percent and 35 percent of the GDP respectively.

    Transfers through mobile payment channels occupied the largest share of the total number of cashless transactions with 70 percent followed by transfers via mobile banking with 26 percent.

    In terms of value, transfer through mobile payment represented 51 percent followed by internet banking with 32 percent of total value of transactions.

    Over Rwf6 billion were transferred through mobile banking channels in Rwanda in the fiscal year 2021/22.

  • Rwanda’s economy grows by 7.5% in second quarter of 2022

    According to NISR, in the second quarter of 2022, Gross Domestic Product (GDP) at current market prices was estimated at Rwf3,279 billion, up from Rwf2,668 billion in the second quarter of 2021. Services contributed 47%, Agriculture 25%, Industry 21% while Net direct taxes accounted for 8 % of GDP.

    Addressing reporters after the announcement of growth figures, the Minister of Finance and Economic Planning, Dr. Uzziel Ndagijimana noted that despite global supply bottlenecks and inflation, the economy has continued to grow a strong indicator that that overall recovery.

    “For the first two quarters the economy has registered over 7% growth. At this rate our 6% growth projections for 2022 is achievable,” Minister Ndagijimana said.

    {{Performance by Sectors}}

    In terms of sector performance, overall, agriculture grew by 2%. This growth was due to an increase of 17% in the production of export crops boosted by 19% increase in coffee production and 2% in tea production. Food crops decreased by 1% due to a decrease in the harvest of season A 2022 when compared to season A of 2021.

    The industry sector registered a 6% growth. industry increased by 6% while services increased by 12%. Mining and quarrying grew by 9%. Manufacturing grew by 10% boosted by 8% increase in food processing, 14% increase in beverages, 18 increase in textiles, 10% increase in wood manufacturing and 21% increase in manufacturing of non-metallic mineral products. Given the high growth in construction during the second quarter of 2021 (33%), the sector did not grow further in the second quarter of this year.

    The overall service sectors performance was 12%. Within services, wholesale and retail trade increased by 17%; transport activities increased by 27% with 119% and 13% growth in air transport and land transport respectively. Among other services, hotel and restaurants increased by 193%, financial services increased by 10%, telecommunication services increased by 8%, Professional and Scientific Services increased by 2%. Health Services increased by 4% while Education Services increased by 14%.

    Minister Ndagijimana expressed optimism that the growth projection for 2022 is achievable.

  • BNR increases lending rate to 6 percent to reduce inflationary pressures

    The revision of the repo rate is part of resolutions of the quarterly Monetary Policy Committee (MPC) meeting held on 9th August 2022.

    Repo rate is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds. It is used by monetary authorities to control inflation.

    According to BNR, the increase in lending rate was reached following an analysis by the MPC which pointed out high inflationary pressures driven by global supply challenges as well as lower domestic agriculture output.

    Others include the increase in prices for key commodities such as oil, gas and food as well as the war between Russia and Ukraine which are two major producers and exporters of oil, gas, fertilizers, metals, cereals and son-flower seed oils.

    Domestically, lower domestic food supply linked to climate constraints and increased prices of inputs have led to increased food prices.

    In line with the above, Rwanda’s economy is projected to grow by 6% while the headline inflations is projected to average around 12.1% in 2022.

    “Given these developments and the outlook, the MPC decided to increase the Central Bank Rate [CBR] by 100 percent basis points from 5.0 to 6.0 percent, with the aim to reduce inflationary pressures and therefore preserve the purchasing power of consumers.

    Consistent with the monetary policy and other measures, inflation is expected to decelerate towards the 5 percent benchmark in the second half of 2023,” reads a statement from BNR.

  • China’s foreign trade of goods up 10.4 % in first 7 months

    Exports rose 14.7 percent year on year to 13.37 trillion yuan, while imports increased 5.3 percent from a year ago to 10.23 trillion yuan, according to the General Administration of Customs (GAC).

    During the period, China’s trade with the Association of Southeast Asian Nations, the European Union and the United States, expanded by 13.2 percent, 8.9 percent and 11.8 percent from a year ago, respectively.

    From January to July, China’s trade with Belt and Road countries and other members of the Regional Comprehensive Economic Partnership (RCEP) soared by 19.8 percent and 7.5 percent year on year.

    In July, trade with RCEP partners reached 1.17 trillion yuan, up 18.8 percent year on year, boosting the overall foreign trade growth by 5.6 percentage points, said Li Kuiwen, spokesperson for the GAC.

    Aerial photo taken on June 23, 2022 shows a cargo train, which marks the 10,000th trip made by China-Europe freight trains operated by the China-Europe Railway Express (Chongqing), waiting for departure at Tuanjie Village Central Railway Station in Chongqing, southwest China. (Xinhua/Huang Wei)

  • Rwanda’s GDP grows by 7.9 percent

    As per figures released by the National Institute of Statistics (NISR) for the quarter ended on 31st March 2022 , agriculture registered 1 percent growth in the first quarter, industries grew by 10% while the service sector grew by 11%.

    Overall, services sector remained the main contributor with 47 percent of GDP, agriculture sector contributed 23 percent, industry sector contributed 22 percent while net direct taxes accounted for 8%.

    Agricultural activities grew by 1 percent and contributed 0.6 percentage points to overall GDP growth. Within agriculture, the production of food crops decreased by 1 percent and the production of export crops increased by 14 percent too.

    In the industry sector, the main contributors were construction activities which grew by 6 percent, manufacturing activities which grew by 11 percent. Mining and quarrying activities also increased by 16 percent.

    The growth in manufacturing activities is due to an increase of 6 percent in food processing, 12 in beverages and tobacco, 20 percent in wood and paper; printing, 19 percent in production of chemicals and plastic products and 22% in textiles.

    Within services sector; information and communication services increased by 17 percent, professional, scientific and technical activities increased by 5 percent, real estate activities increased by 5 percent while education increased by 2 percent.

    NISR also shows that Human health and social work activities increased by 22 percent, hotel and restaurant services by 80 percent, administrative and support services by 6 percent and public administration and defense; compulsory social security by 7 percent.

    The Deputy Director General of NISR, Ivan Murenzi has said that the global economy is currently facing issues related to the supply chain and effects of the war between Russia and Ukraine.

    He attributed the GDP growth to expended efforts including vaccination campaign to inoculate a large number leading to eased COVID-19 restrictions for businesses to resume.

    Rwanda’s GDP has grown by 7.9 percent in first quarter of 2022.