Rwanda GDP growth projected to hit 7.6% 2024-2026

Rwanda's economy is set to experience a remarkable growth of 7.6 per cent in GDP, according to the latest report released by the World Bank. The growth is attributed to key sectors such as private sector investment, tourism, and improved agricultural earnings. Despite these positive projections, challenges in human capital development remain a concern for the country. In an exclusive interview with CNBC Africa, World Bank's Senior Country Economist for Rwanda, Calvin Djiofack Zebaze, shed light on the factors contributing to Rwanda's economic growth and the importance of closing the skill gap to sustain this growth. The robust growth experienced by Rwanda in 2023 and early 2024 was primarily driven by the strong performance of the service, manufacturing, and construction sectors. Recovering swiftly from the tourism crisis during the COVID-19 pandemic, Rwanda witnessed a significant increase in tourist arrivals and earnings, showcasing the resilience of its tourism industry. Zebaze highlighted the substantial improvement in the labor market, with the unemployment rate decreasing by over five percentage points to around 15 per cent. The employment rate in Rwanda is now three percentage points higher than pre-pandemic levels, indicating positive growth in the labor market. However, the report underscores the critical importance of addressing the skill gap in Rwanda. Currently, around 80 per cent of the labor force has only basic education up to primary or lower secondary school level, necessitating further efforts in skill development. The World Bank Enterprise Survey revealed that the skill gap is a significant constraint for business growth in the country. While Rwanda has made considerable investments in education, including attracting renowned universities like Carnegie Mellon, more initiatives are needed to enhance skill development and human capital. The service sector is poised to play a significant role in Rwanda's economy, constituting nearly 50 per cent of the GDP, up from 30 per cent two decades ago. Industries such as hospitality and ICT services have been key contributors to employment, particularly benefiting women in the workforce. The growing ICT sector in Rwanda presents opportunities for diversifying services and driving economic growth. Addressing potential risks to Rwanda's economic outlook, Zebaze highlighted external factors such as global economic recovery, crises in regions like Europe and the Middle East, and climate change impacts as key challenges. Ensuring a quick international economic recovery, navigating energy market disruptions, and enhancing resilience to natural disasters are crucial strategies for mitigating risks. Diversifying trade partners and investing in agricultural techniques for enhanced food production are imperative for Rwanda's economic stability. By addressing the skill gap, strengthening the service sector, and proactively managing risks, Rwanda aims to sustain its impressive economic growth trajectory and achieve its vision of becoming a high-income country by 2055.