Rwanda: Five Key Highlights From Latest Central Bank Economic Update

The Central Bank, on September 22, shed light on how the economy performed in the first six months of 2022 and gave an outlook for the remaining period through the Monetary Policy and Financial Statement released twice-yearly.

Below are some key highlights.

1.Rwanda registered growth in export revenue

Revenue generated from exports increased by 37.2 percent in the first six months of 2022 to $708.3 million from $516.2 million a year before.

This is mainly attributed to the rise in global commodity prices and value addition in minerals, as well as an increase in exported manufactured goods.

Traditional exports (minerals, coffee, tea, pyrethrum, hides) amounted to $182.9 million, an increase of 39.4 percent from $131.2 million.

Export earnings from cassiterite, coltan and wolfram increased by 101.5 percent, 54.1 percent and 66.5 percent respectively.

Non-traditional exports (manufactured goods and horticulture) rose by 25.2 percent, amounting to $152 million from $121.4 million in the previous year.

On the other hand, Rwanda made payments in imports worth $1.8 billion, an increase of 22.5 percent from $1.4 billion in the period under review, mainly due to the recovery of domestic economic activities which increased the demand for imports on an international market facing high commodity prices.

John Rwangombwa, Central Bank Governor delivers remarks during the presentation of Monetary Policy and Financial Stability Statement in Kigali, on September 22. Photo: Dan Nsengiyumva.

The value of intermediate goods imported into the country such as industrial products, construction materials and fertilizers increased by 28.9 percent to $510.2 million from $ 395.8 million.

Import of energy and lubricants, dominated by petroleum products, rose by 99.2 percent in value following the rising global oil prices

As a result, the export-to-import ratio has widened by 13.7 per cent to $1.1 billion from $978.7 million.

2.Banks’ lending weakened in first six months

The first half of the year noted weak lending from the banks with total new approved loans amounting to Rwf586 billion, which is Rwf45 billion less than the Rwf631 billion loans that were approved in the year earlier.

This contributed to the deceleration of the growth of outstanding loans in addition to the non-performing loans written off by banks.

However, lending improved in different sectors including manufacturing, public works, residential real estate, transport and communication as economic activities continued to recover.

Overall, the financial sector continued to grow with total assets that increased by 17.5 percent to Rwf8,145 billion in June 2022 from Rwf6,933 billion in June 2021.

3.Mobile technology continues to drive cashless payments

The value of e-payment in the economy continued to increase from 95.5 per cent to 111.9 percent during the period under review.

This increase is mainly associated with significant use of digital channels which are mainly dominated by mobile payment and internet banking services contributing 67.1 percent and 34.9 percent to the economy respectively.

Mobile payment was boosted by the removal of charges on wallet-to-bank and bank-to-wallet transactions.

Rwangombwa also noted that the past three months since the operationalisation of Airtel-MTN mobile money transactions have so far yielded good results.

4.Prospects for inflation to decelerate by next year

The soaring commodity prices attained 9 percent in the first half of 2022 and the trend is expected to continue throughout the second half to an annual average of 12.1 per cent, Central Bank stated.

The country is dealing with imported inflation from increased demand for products which tightened supply chains as economies continue to open up, as well as effects of the war in Ukraine.

This is in addition to domestic price increases given the underperformance of food production caused by unfavourable weather conditions coupled with fewer fertilizer inputs that hindered the agricultural produce in both seasons, according to Rwangombwa.

However, he pointed out that they are confident that prices will oscillate back within the Central bank’s range between 2 and 8 percent against a benchmark of 5 percent by the second half of 2023.

5.Economic recovery remains on a stable path

Rwanda’s economy grew by 7.7 per cent in the first six months, but the projected economic performance of the entire year will be 6 percent although this represents a slowdown compared with 10.9 percent registered in 2021.

However, Rwangombwa noted that there is a likelihood to revise the projected annual economic growth depending on how the remaining quarter of the year will perform.

“We might revise these numbers in line with the realities we are living,” said Rwangombwa.


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