World Bank rises Rwanda growth rates, up to 7.5%

Tea plantation in western Rwanda

KIGALI, February 25, 2015–Rwanda’s economy recovered in the first three quarters of 2014 growing to 7.1 percent and is expected to continue momentum with projected growth of 7.5 in 2015 and 7.7 percent in 2016, according to the latest Rwanda Economic Updatepublished by the World Bank Group.

“Managing Uncertainty for Growth and Poverty Reduction”, the seventh edition of the economic update attributed the robust growth in 2014 mainly to strong growth in the services, supported by increased government spending and agriculture along with falling oil prices.

“Falling oil prices are expected to contribute to lower inflation but also to a more stable exchange rate, an improved balance of payments, and smaller electricity subsidies.  Moreover, economic stability in turn increases policy flexibility,” said Carolyn Turk, the World Bank’s Country Manager for Rwanda.

The updated focuses on Rwanda’s agriculture and its impressive gains over recent years. However, it describes how risks such as pests, adverse weather, plant diseases, and price volatility have created significant economic losses that could have been avoided.

The section titled, Rwandan Agricultural Sector Risk Assessment, notes that agricultural production almost doubled between 2000 and 2012 due to the Government National Agricultural policy in 2004 supplemented by Strategic Plan for the Transformation of Agriculture in Rwanda with the support of Comprehensive Africa Agriculture Development Program (CAADP1).  However, it also highlights that to achieve the countries’ targets it is important to identify lessons learned and remaining risks from previous programs.

“Agricultural risks are low in Rwanda compared to neighboring countries. Nevertheless, they can have important consequences for sector productivity, growth, and the government’s efforts to transform the sector. Risks to the agricultural sector caused production losses worth US$1.2 billion between 1995 and 2012, about 2.2 percent of Rwanda’s total annual agricultural production.” said Toru Nishiuchi, the World Bank’s Economist and the Task Team Leader for the Economic Update. “These risks do not have to turn into losses – identifying these risks allows the Government to manage them effectively through a set of prioritized interventions”