{{After a slowdown in real GDP growth (2.5%) in the second half of 2012, the world economy has shown signs of rebound in the first quarter of 2013 growing by 2.8% on annual basis. }}
However, this performance was less than the April 2013 IMF forecast due to lower than expected growth in some emerging economies, recession in the euro area and fiscal contraction in the USA.
IMF estimates in July 2013 revised down the global economic growth to 3.1% in 2013, the same level as in 2012. Economy in 2013 is expected to grow by 5.0% in emerging and developing countries and by 1.2% in developed economies.
In Sub-Saharan Africa, economic activity remained dynamic, projected to grow by 5.1% in 2013 from 4.9% in 2012, however, lower than 5.6% indicated in April 2013 forecasts as a result of lower commodity prices, resurging political tensions in the Middle East and Africa and weaker external demand.
Despite these challenges, the Rwandan economy continued to perform well, in line with the annual real GDP projections. The real economic growth was 5.9% in the first quarter 2013 on annual basis, and non-agriculture activities continued to perform well in the second quarter 2013.
The National Bank of Rwanda Composite Index of Economic Activities (CIEA) increased by 12.25% on annual basis in June 2013 and total turnovers in industry and services sectors increased by 10.9% in the second quarter 2013 compared to the first quarter of 2013.
The export sector also continued to record good performance. In the first half of 2013, exports value amounted to USD 289.92 million, which is a growth of 46.3%, against 8.5% for imports. The imports cover by exports improved to 25.5% in the first half of 2013 from 18.9% in the corresponding period of 2012. Including informal cross border trade, exports covered 30.2% of imports from 23.6% in the first half of last year.
In response to persistent uncertainties in international and regional environment, the Central Bank maintained a prudent monetary policy stance in order to anchor inflation expectations by keeping the policy rate at 7.5% before revising it down to 7% in June in order to stimulate further economic financing in the second half of 2013.
As a result of prudent monetary policy, coordination of economic policies and good economic performance, the inflation rate has been maintained at low levels in the first half of 2013. Annual headline inflation fell to 3.7% in June 2013 from 5.9% and 3.9% recorded in June and December 2012 respectively.
With regard to exchange rate policy, the BNR continues to maintain a flexible exchange rate regime intervening on domestic foreign exchange market by selling foreign exchange to banks to smoothen FRW exchange rate volatility.
After a depreciation of 4.5% in 2012 due to uncertainties around donors’ support, FRW has regained its stability in the first half of 2013 depreciating only by 1.8% as a result of improved external capital inflows.
For the remaining of the year 2013, the National Bank of Rwanda will continue to implement a prudent monetary and exchange rate policy to ensure that the liquidity in the banking sector is within the desired level consistent with the financial needs of the economy and limiting monetary inflationary pressures.
The Rwandan financial sector continued to be sound and stable throughout the first half of 2013. The banking sector, which dominates the Rwandan financial sector, grew by 10.7% in assets.
The banking industry has been profitable, liquid and well capitalized to sustain growth but also resilient to external shocks as a result of strengthened legal, regulatory and supervisory framework.
For instance, the Capital Adequacy Ratio (CAR) stood at 23.1%; well above the minimum required Capital Adequacy ratio of 15%, and the non-performing loans (NPL) ratio stood at 6.9% end June 2013.
The microfinance sector recorded a positive performance with 20.8% asset growth from end December 2012 to end June 2013. By end June 2013, the sector registered an increase in deposits (26.6%) and gross loans (7.9%) from FRW 54.5 billion to FRW 68.9 billion and from FRW 59.2 billion to FRW 63.9 billion, in the same period respectively. Additionally, the SACCOs continued to play a significant role in expanding financial access.
The insurance sector recorded good performance as well, with total assets for the sector as of end June 2013 increasing by 26%, from FRW 176 billion end June 2012 to FRW 222 billion. The gross premiums increased by 18% from FRW 33 billion end June 2012 to FRW 39 billion end June 2013.
This performance was achieved as a result of two new licensed insurance companies. The liquidity position of the insurers was strong with the current ratio of 350% from 267% as of end June 2012 and this reflects the insurers’ ability to pay claims and other current obligations as and when they fall due.
The pension sector performed well during the period under review increasing by 20% in assets, 29% in contributions received from members, and 18% in benefits paid. The sector stands the chance of developing further after the enactment of the pension draft law that is currently in Parliament.
Much progress has been achieved in payment system area. There has been remarkable improvement in the use of Rwanda Integrated Payments Processing System (RIPPS) which allows automatic gross settlements in real time. Retail payment system has also improved.
The Automated Teller Machines (ATMs) availability and interoperability were 91% and 86% respectively at the end of June 2013. Japanese Credit Bureau and American Express cards have been introduced on market.
The number of ATMs and Points of Sales devices has increased from 292 and 666 to 313 and 797 respectively from December 2012 to June 2013, and debit & credit cards have increased from 389,269 and 418 to 440,875 and 1,179 respectively.
BNR
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