As the 2020 chapter finally drew to a close, a new year has just begun with much promise of hope and optimism. There is no doubt that the recovery from 2020 will not be automatic and much uncertainty still exists especially after a much-feared new global spike post-festivities. As vaccination programmes start being rolled out, one can only hope that this will at least start ushering in a new sense of optimism and hope. In fact, despite the prevailing risks, a number of priorities for the year ahead can be highlighted.
Prioritizing health
The Covid battle as still not been won. Rates in Europe are picking up again and governments expect these to gain more momentum following the festive season. It is therefore important for any government to ensure that protective measures remain in-force as otherwise a surge in numbers can derail the recovery. In addition, mass vaccination programmes and their success will be central to ensuring that we can start building back better.
Sustaining the recovery
There is no doubt that the recovery that needs to happen in 2021 needs to be sustained through the interplay of timely, targeted and temporary incentives. Measures to sustain private demand and private investment are going to be critical for economies going forward. Investment, both by the private and public sectors, will be an important lynchpin for economic activity to kick-off and to also contribute to the long-term potential.
Digital transformation
Covid has highlighted the role of digital transformation and the importance of the digital economy. The priority should be the continued development of a smart Rwanda, where people will be more empowered to live meaningful and fulfilled lives, enabled seamlessly by technology, offering exciting opportunities for all. It is where businesses can be more productive and seize new opportunities in the digital economy.
Enhancing resilience
Covid has shown how fragile the global economy is. Governments should support companies in becoming more resilient through support aimed at enhancing business recovery plans, diversification, enhanced supply chain management and digitalization. On the other hand, national economic resilience needs to be prioritized through economic diversification, public finance management and enhancing long-term growth potential.
Greening the economy
Economic resilience and opportunity are very much connected to the green economy as it can usher in new technology-based start-ups, promote innovation and inclusivity whilst supporting key natural ecosystems. Rwanda has already championed the green economy and I truly believe that the benefits of further greening the economy; unleashing innovation and integrating technology and education can propel new economic sectors.
Financial innovation
As technology continues to revolutionize numerous sectors, the financial sector and payment services are protagonists of this change. Financial innovation is a key driver for inclusion and social development. The deepening of digital payments, the possibility of digital currencies for international trade and new financial intermediation products and services can all sustain the next phase of economic and social development.
Tax reform and simplification
The complexities of the digital economy and the freedom of movement capital and people make tax a critical element in a country’s competitiveness and investment attractiveness. Tax reform and its simplification, as well as its power to support economic activity and yield revenues, need to be a constant priority for a government.
Education & skills
Education remains a key development, social and economic policy tool. Investing in the skill set of a population, students and workforce will also enhance a country’s investment attractiveness and as the country continues moving up the value-chain, new skill sets will be required.
Regional and global integration
2021 will be an important year for Rwanda as it continues to build its regional and global status. The rolling out of the African Continental Free Trade Area will usher in new challenges and opportunities, but if embraced, can lead to becoming an important catalyst for future growth, development and inclusion. Also, Rwanda will be hosting the CHOGM meeting in June, postponed from 2020 due to the pandemic, and this will also support the country in positioning itself as a champion in building a future-proof economy.
2021 is expected to be the year in which the recovery starts. The risks are manifold and all to the downside therefore vigilance and prudence are the order of the day. However, if the recovery is set on the right foundations and tracks; it can serve an important purpose of redirecting and rebuilding both the economy and society in a better and more resilient manner. Cheers to the new year!
JP Fabri is an economist and co-founding partner of Seed Consultancy, a boutique research-driven advisory firm.
jp@seedconsultancy.com |
www.seedconsultancy.com