Category: Business

Besides heightening competitiveness in tourism, wildlife conservation and emerging among the top ‘Doing business Reformers, Rwanda is most attractive destination for workers from the East African Community (EAC) compared to the 4 member states of the bloc, a new study has shown.

According to the study, conducted by M.A Consulting Group, Rwanda has the highest labour market efficiency, the survey carried out in 2009 to assess the impact of the EAC Common Market protocol on an economic comparative study in terms of conduciveness to the labour force.

The other significant aspect is the attractive professional remunerations and timely payment by the Rwandan employers in both public and private institutions compared to the other member states where demoralized workers repeatedly demand for arrears in vian.

According to the Minister in charge of East African Affairs Monique Mukaruriza, The findings in the report will enable government to initiate development strategies to guide negotiations on the regional market protocol.

The minister said this while making keynote at the validation meeting of the final report where she emphasized the need to prepare the Rwandan labour market for competition against their counterparts from neighboring states.

“Workers in the services sector should become innovative and tap the better skills from the other EAC partner countries,” Mukaruliza observed.

The study highlighted the impact of the Common Market Protocol on other sectors, especially free movement of goods, services, capital within the regional five member states, a bloc that analysts believe has a serious socio-economic development potential.

The report also indicates that EAC trade regime has a net positive welfare effect on the Rwandan economy compared to the other members.

The Minister in charge of Trade and Industry Francois Kanimba who is former Governor of Central Bank said that much emphasis should focus on diversifying domestic production to widen export base as member countries advocate for free movement of goods and services.

The Common Market Protocol was signed by the EAC Heads of State on 20 November 2009 but economic pundits believe the common market protocol is taking snail’s pace to due to unnecessary bureaucracy.

Information reaching Igihe.com indicates that Consumer prices in country’s urban areas rose to 7.14% in July as food prices climbed, especially in vegetables, meat and non-alcoholic beverages. The Inflation accelerated from 5.82% in June.

According to a consumer index report issued by the National Institute of Statistics of Rwanda (NISR) today, Food and non-alcoholic beverage prices rose by 1.14%, while transport and education costs went up during the period as well.

It is also noted that the increase of 1.14% in prices of Food and non-alcoholic beverages is primarily attributable to the price increase of 1.87 per cent of vegetables, 2.5% of Non-alcoholic beverages and 0.45% of meat.

“Local goods increased by 6.62% on annual change with a monthly change of 0.47%, while prices of the imported products increased by 9.20% on annual change with a monthly change of 0.12%, while prices of the fresh products had a positive annual change of 8.25% between July 2011 and July 2010,”according to the report.

The majority of economic analysts point the sharp rise of Inflation to poor food harvests and higher prices of oil in the region.

By:Igihe.com Reporter

A Monetary Policy and Financial Stability Statement released recently by the central bank indicates that there has been an increase in Rwanda’s exports and imports both in volume and value in this year’s first half.

According the 34-pages statement, exports and imports are key indicators of economic activities that have contributed to the country’s economic growth and believed to keep it stable despite the prevailing uncertainties in the regional economy.

The region has faced Fuel and food inflation and prolonged drought that have drastically reduced production.

“Export volume and value recorded a significant increase of 58.2% and 48.1% respectively while imports volume and value increased by respectively by 13.2% and 14.6%,” the statement reads in parts.

However, despite the strong increase in exports, the trade deficit deteriorated to US $ 587.5 million against US $ 543.7 million recorded at end of June 2010. However,the coverage of imports by exports has increased to 20.9% end June 2011 from 16.2% end June 2010.

It is believed that when informal cross border trade is included, this coverage rate of imports by exports rises to 25%.

The main Rwanda export commodities remain the traditional ones such as coffee, tea and minerals representing 72% of total export values during the first half of 2011.

The monetary policy and financial stability statement released and distributed by central bank (National Bank of Rwanda),indicates that Tea exports recorded good performance with an increase of 4.1% in volume from 12,811 tons in January-June 2010 to 13,331 tons in January-June 2011 and an increase of 10.1% of value.

The mining sector has also contributed to growth both in economy and increase in exports as it continues to grow till this first half of 2011 recording an increase of 54% to 163.2 % in value reaching USD 72.5 million from USD 27 million respectively due to a significant increase in global prices by more than 70% in average.

Non-traditional export products have also shown a good performance, mainly due to the increase in export of live animals, vegetables, mineral water, beer, cosmetics products and textile products.

It is indicated that major part of these non-traditional exports went to DR Congo and Burundi except handcrafts that are mainly exported to developed countries like USA and UK.

Rwanda’s informal trade balance is said to be overall in surplus dominated by DR Congo on export side and Uganda on import side.

Rwanda’s import products are dominated by agriculture and animal products while imports are dominated by products such as maize flour, sugar, onion, banana for cooking, ground nuts, soap products, cleaning products, cement to mention but a few.

Rwanda’s total trade value with its neighboring countries recorded an increase from US $ 278 million to US $ 567.5 million in 2010, driven mainly by imports.

On the other hand this year’s imports seem to have slowed down due to a decline in imports of cereals and vegetables resulting from the drought that affected the region, and the increase in the domestic production.

It has been projected that Rwanda’s economy is likely to rise beyond the initial projection despite the expected adverse impact of rising fuel and food prices.

According to the IMF estimates of June 2011, the global economy continues its recovery process led by emerging and developing countries while developed countries, economic activity remain sluggish.

This year the global economy is expected to grow by 4.3% down from 5.1% in 2010 and in developed countries, economic growth is projected at 2.2% while in the emerging and developing economies it is expected to reach 6.6%, as compared to 3.0% and 7.4% respectively in 2010.

Rwanda will host the 7th Africa Budget Reform Initiative (CABRI) on August 17 at Serena Hotel.

The seminar will bring together senior budget officials from across Africa to share knowledge on common challenges of budget implementation on the continent.

Elias Bayingana, the Director of National Budget in the ministry of finance and economic planning noted that Rwanda was chosen as the host country due to its progress in the implementation of budget.

“The big change has been due to the implementation of the public finance management reform in 2006 which mainstreams gender and ensures that programs are at the grass root level are also financed,” said.

And even though Rwanda has achieved remarkable progress in public finance management in a relatively short period, there are still a number of challenges and this seminar will provide an opportunity for experience sharing among the peers, especially in addressing the difficulties.

“We have a problem of lacking professional personnel but we do our best to improve delivery through conducting capacity building trainings” the director stressed.

Other challenges on the implementation of budget reforms and execution are that: “African public financial management (PFM) systems generally suffer from an implementation deficit; laws and processes may be in place but seldom affect actual behavior,” Matt Andrews had said in last year’s conference in Tunis.

The 7th CABRI Annual Seminar will explore the reasons and identify possible solutions for the implementation deficit.

The focus will be on three implementation challenges in particular, how to create organizational structures that are most conducive to help pubic financial management.

CABRI events provide an opportunity for senior budget officials to connect and exchange experiences and knowledge with their African peers. More than 32 African countries participate regularly in CABRI events.

Rwanda is one of the CABRI founding members and sits on the Management Committee.

The African Development Bank (AFDB) group and its partners have produced two reports showing Africa’s growth potential if the countries formed cross-border ties to deal with traditional and emerging partners like China, India amongst others.

The African Economic Outlook and the African Competitiveness reports are aimed at sensitizing African countries on areas requiring improvement in order to sustain their economies.

However, there challenges affecting the growth like the recent political events in North Africa, high food prices and the hike in fuel prices are likely to slow the continents growth down to 3.7% this year.

Due to the ongoing better performances in some economies, the report predicts that sub-Saharan Africa will grow faster than the North part of the continent at rebound of 5.8% in 2012.

On Rwanda, the report reveals that the country’s economic prospects for the medium term remain positive in spite of some challenges. Yet in the absence of major adverse effects from the global economy, the forecast is a real Gross Domestic Product (GDP) growth rate of 7.0% this year and 6.8 % for next year.

The director of general planning, in the ministry of finance and planning, Leonard Rugwabiza affirmed that the rebound is driven mainly by increased exports, expansion in the growth of services and construction sector.

However, the country’s continued dependence on a few export commodities represents serious constraints and the mobilization of domestic resources to finance investments remains low.

“This is why we need to concentrate more on other sectors like tourism and mining that have more potential’,” he remarked.

AFDB resident representative Negatu Makonnen noted that he was hopeful of the continents economic growth despite a small dip in growth during the global financial crisis.

“Africa staged a quick and strong comeback between 2001 and 2010 growth in averaged GDP of 5.2% annually,” he said.

Nevertheless, Makonnen added that the key challenge for the continent is turning the ongoing recovery into strong sustained and shared growth that will lead to notable improvements in people’s lives.

One of the ingredients is a country’s ability to seize opportunities from the global economy. “African economies must continue developing economic environments that are based on productivity enhancements enabling national economies and ensuring solid economic future.”

This means keeping a clear focus on strengthening the institutional, physical and human capital prerequisites for a strong and competitive private-sector-led development.

In order to achieve this, countries are required to focus in particular on policies and interventions that open up opportunities for entrepreneurship and employment for all members of society.

Governments on the other hand have a role to play especially in creating an enabling environment as well as indentifying and removing obstacles to high potential sectors and industries.