29 May 2012

Rwanda: AfDB Names Top Growth Performers

Photo: http://www.afdb.org/en/annual-meetings/
Developing Africa.

Rwanda was ranked by the African Economic Outlook among top ten growth performers last year, a move attributed to its efforts towards macroeconomic management.

The AEO 2012 report indicates Rwanda, Ghana, Ethiopia, Nigeria, Mozambique, Liberia, Zambia Equatorial Guinea, Zimbabwe and Botswana as Africa's top-ten performers of 2011.

This was mentioned in Arusha Tanzania during a session of 2012 AEO report launch and press briefing which is part of the AfDB annual meetings.

According to Prof. Mthuli Ncube, Chief Economist and Vice President in African Development Bank, Rwanda focused on skills development and managed to control its macroeconomic sector, a move that contributed to low inflation rates and stable prices.

"Inflation in East Africa is not only caused by macroeconomic issues, it's also caused by structural issues like lack of infrastructure," he said.

The central bank has been tightening and loosening the monetary policy by increasing the Key Repo Rate in a bid to contain external pressure, mitigate inflation while ensuring economic growth.

Prof. Ncube, however, clarified that even though other countries are trying to control inflation, Rwanda is doing it better.

He pointed out that lack of infrastructure means that food which is the largest cause of inflation, does not move easily from one region to.

"Rwanda is among the top performers growth wise because it's a well run economy and with a very focused macroeconomic policies," said Ncube in an interview.

"Rwanda is doing all the right things that I think will sustain growth this year and going forward."

The economy is projected to grow by 7.7 per cent this year, lower than last year where it grew by 8.6 per cent targeting 11.5 per cent if it's to attain middle income status.

The professor suggested that Rwanda should again focus on Foreign Direct Investment, and more domestic direct investment, targeting areas that create jobs, support local level of entrepreneurship and private sector activities.

Agriculture, which is the main pillar of the economy, has got heavy investment from government and other development partners and this year it's expected to grow at 6.4 per cent.

It predicts that Rwanda's growth registered last year will be maintained this year and the next, along with other four African countries.

"I caution about hubris and exuberance because there are many issues we have to look at very carefully to avoid those kind of surprises around the corner," said the president of the AfDB Donald Kaberuka.

He also cautioned about the situation in Euro zone and other rich countries, saying the length it will take is not known.

"In my own assessment and quoting an article by a former chief Economist and now a teacher in Chicago, it's not only the excess debts but it's a structural problem and we have to be extra cautious," Kaberuka said.

He noted that Africa needed to get the right policies and move from economic growth to economic transformation.

For Africa, the Euro zone crisis could cause lower earnings from exports and tourism, negative effects on African banks, lower inflows of official development assistance, foreign direct investment and workers' remittances.

"How do we get the inherited resources and transform them into quality education and infrastructure, if we can do that across Africa, its one of the responses towards what's happening in the Euro zone" Kaberuka suggested.

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