Rwanda workforce economically viable, says World Bank

The World Bank has revised its projections of Rwanda’s workforce impact on the economy following a drastic drop in fertility rate of Rwandan women. Rwanda’s fertility rate dropped from six-plus children per woman to four-minus, one of the highest drops in the world, and the Bank projects that workforce numbers will go up tremendously, while that of dependents (the old and the under 15) will fall. To this effect, the Bank says government should devise policies and support mechanisms to harness and benefit from its growing labour force. According to the World Bank Rwanda Economic Update (Edition 5) report, released yesterday in Kigali, the country’s labour force presently accounts for 53 per cent of the total population and is expected to increase to between 64 per cent and 67 per cent by 2050. This presents a great opportunity for the country’s growth, especially if government puts in place supportive policies, and the labour force is skilled. “A larger labour force is associated with higher income levels and projections in the Rwanda Economic Update hint at substantial increases in income levels over the coming decades. To cash in on this population shift, it is imperative to have a conducive policy framework. I am happy to note that many elements of Rwanda’s current policy framework are conducive to realising a demographic dividend,” said Carolyn Turk, World Bank country manager. She added that up to one-third of ‘East Asia Miracle’–the Asian Tigers–can be explained by changes in the region’s demographics. “We saw a more impressive performance of macroeconomic policy in Africa, especially Rwanda. We are confident that high income growth, strong fiscal buffers and increased capital formation will be a bright spot for Rwanda,” Sanghi Apurva, a World Bank economist, said. He urged the country to position itself to tap into the opportunities emerging from the growing Chinese and European economies through export promotion and diversification. Rwanda hailed Marc Pecsteen, the Belgian ambassador to Rwanda, said though the country has developed at an impressive rate in the past few years, it needs to further reduce the cost of doing business to enable the private sector to engage improve productive investment. “There is need to invest more in technical vocational education and training (TVET) programmes for quality and productive labour force,” he said. Kampeta Sayinzoga, the permanent secretary in the Ministry of Finance and Economic Planning, said the sluggish economic performance during the third quarter of 2013 provides a strong case for the second Economic Development and Poverty Reduction Strategy (EDPRS2) to be fast-tracked. “We are working hard to increase our reserves and build the capacity of the exports sector to raise the country’s foreign reserves. We are also seeking to create productive employment opportunities for our labour force, which will increase tax collections and raise funds to finance productive sectors of the economy,” Sayinzonga said. Growth to peak at 7.2 per cent Like the previous reports and forecasts, the report indicated that Rwanda’s growth would be better than last year. It projected that the country would grow by 7.2 per cent this year, an improvement compared to last year’s performance. Last year, the economy grew by 5.9 per cent and 5.7 per cent in the first and second quarters, respectively, before inching up to 6 per cent in the third quarter. This sluggish growth compares poorly with 7.7 per cent growth rate in 2012. The government and IMF projected the economy would grow by 7.5 per cent this year, but some analysts say it will peak at 6.5 per cent. “The effect of the aid shock to the economy was extended to the third quarter of 2013 and achieving the 6.6 per cent growth projection in 2014 will be challenging,” Peace Aimee, a WB economist, said.

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Rwanda workforce economically viable, says World Bank