Rwanda’s economy is projected to grow to seven per cent in 2024, ranking first in East Africa and third among African countries with high economic growth prospects, according to a new UN report.

In the latest United Nations ‘World Economic Situation and Prospects 2024,’ report, global economic growth is projected to slow down to 2.4 percent in 2024 from 2.7 percent in 2023, implying limited external financing opportunities for Africa.

The report, however, indicated that East Africa is projected to experience a moderately improved economic growth of 5.5 per cent in 2024, up from five per cent in 2023.

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Among the top 10 African countries expected to register high economic growth in 2024, it mentioned Rwanda as third after Libya and Senegal with 7.6 and 9.2 per cent, respectively, and first in East Africa followed by DR Congo, Uganda, and Tanzania.

Economic growth as a measure of Gross Domestic Product (GDP) considers the total market value of all the finished goods and services produced within a country in a specific period and is a scorecard of a country’s economic health.

Angello Musinguzi, a Senior Manager at KPMG Rwanda, part of a global network of professional firms providing audit, tax and advisory services, pointed at the service sector as the key factor contributing to the expected economic growth in 2024.

After recovering from the Covid-19 pandemic, Rwanda continues to see a growing tourism and meetings, incentives, conferences, and exhibitions (MICE) industry.

The country is, among other things, intensifying efforts that will put a focus on sports as an avenue to accelerate economic growth, by diversifying tourism offerings.

According to Musinguzi, the country will continue to generate revenue from hosting major regional and global conferences and other events in the MICE industry as was the trend over the past two years.

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Additionally, Musinguzi said, manufacturing activities are expected to boom in 2024 with export diversification from traditional coffee and tea products, to further increase non-traditional goods, steaming from efforts in promoting value addition locally.

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"We still have a wide trade deficit gap but it is something that can be gradually bridged by improving on our manufacturing capacity and diversification of products.”

In February 2023, the Government extended, by two years, the Manufacturing and Build to Recover Programme aimed at fast-tracking private sector investments in manufacturing and construction and boosting economic recovery from Covid-19 efforts.

In the same year, exports grew by 29.8 percent to more than $2.4 billion while imports grew to more than $5.1 billion, resulting in an expanded trade deficit of 29.7 percent.

Meanwhile, the UN report indicated that a shift in consumer spending from goods to services, monetary tightening, a strong US dollar, and geopolitical tensions impeded global trade, leaving developing economies suffering setbacks in exports because of weakening demand from developed countries and limited trade financing.

It noted an emerging trend of realignment in international trade relations, with countries seeking to secure supply chains closer to home or from more resilient sources.

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Reiterating the performance expectations from manufacturing, Christian Manishimwe, the Principal Economist at National Bank of Rwanda (BNR), noted that construction has been a major sector that continues to grow and there are still various infrastructure projects in the pipeline that will greatly impact economic growth.

Besides that, he said that if weather conditions prove to be favourable, the country will record growth from this sector which is relied upon by many Rwandans, following the recent good performance of agriculture season A that slowed inflation in December 2023.

Manishimwe added that the overall macroeconomic policies and government incentives in place to attract investors and foster an enabling business climate propel economic performance.

"When you trace our economic growth trend over the past 20 years, it has been moving upward, despite the Covid-19 hiccup, and we are recovering across sectors.”

Asked whether BNR will consider lowering the key repo rate given the decelerating curve of consumer prices on the market, to now being within the central bank’s target band at 6.4 percent in December 2023, Manishimwe said it would be too early to determine.

"The policy may be maintained or revised downward depending on market data analysis and risks involved.”

Straton Habyarimana, an economic analyst and professor at University of Kigali, noted that Rwanda, despite being a landlocked economy managed to attract foreign investors across sectors, allowing it to be competitive regionally.

"The more we mobilize investments, the more production increases, thus notable economic growth. Buoyed by the works of Kigali International Financial Centre, 2025 will even be better.”

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The three-year-old Kigali International Financial Centre (KIFC) is an initiative spearheaded by the Rwanda Finance Limited (RFL), that aims at, among others, transforming Kigali into a regional financial hub capable of attracting foreign investments as well as encouraging the creation of highly skilled jobs in the sector.

In 2022, KIFC launched a seven-year sustainable finance roadmap to elevate Rwanda’s sustainable green investments.