Rwanda's economy shows strong growth amid Global slowdown

Rwanda's real GDP surged by 9.7 per cent in the first quarter of 2024, surpassing last year’s growth rate of 8.2 per cent, according to the newly released Rwanda Economic Update (REU).

This remarkable performance emphasises the country’s resilience in the face of a global economic slowdown, with robust consumer spending propelling growth in key sectors such as services and industry.

The labour market has also demonstrated significant recovery, with over half a million new jobs created in the fourth quarter of 2023—the largest drop in unemployment since the Covid-19 pandemic.

“The labour market expansion in Rwanda was broad-based, with women benefiting slightly more than men. To leverage its youth demographic, Rwanda needs to expand labour force participation, as only 2.8 million out of 8.1 million working-age individuals are employed full-time,” said Calvin Djiofack Zebaze, World Bank Senior Country Economist for Rwanda.

“The World Bank supports Rwanda to leverage its predominantly young population through improved education, training, and dignified employment opportunities to drive future growth,” he added.

The 23rd edition of the REU, titled Accelerating Skills Development to Foster Private Sector Growth in Rwanda, also reported a significant decline in inflation. After peaking at over 21 per cent in 2023, inflation moderated to 5.0 per cent year-on-year by August 2024, thanks to tighter monetary policies and reduced food prices due to better supplies of fresh produce.

The report emphasises the critical role of skills development in driving private sector growth, highlighting that an inadequately educated workforce remains a major obstacle for many firms in Rwanda.

#Rwanda’s economy has shown resilience and adaptability despite a challenging economic environment.
— Calvin Zebaze Djiofack, Senior Country Economist @WB_Rwanda#RwandaEconomicUpdate pic.twitter.com/UqbyB8UpGa

— WB_Rwanda (@WB_Rwanda) September 17, 2024

It calls for enhanced job matching, increased public investment in education—especially in Technical and Vocational Education and Training (TVET) and higher education—and better alignment between educational outcomes and labour market needs.

Sector audits in areas such as energy, agriculture, and manufacturing reveal an urgent need for skills enhancement.

“Skills development is critical to achieving Rwanda’s Vision 2050 goals. By building a comprehensive system focused on sector-specific skills, Rwanda can cultivate a workforce equipped to meet its growth and economic objectives,” stated Sahr Kpundeh, World Bank Country Manager for Rwanda.

He noted that the report’s release aligns with the approval of the $200 million Rwanda Priority Skills for Growth and Youth Empowerment Project, aimed at providing 200,000 vulnerable youths with market-demanded skills.

The REU further recommends strengthening mechanisms for identifying skills gaps, improving the quality of technical and vocational education, increasing access to scholarships for disadvantaged students, enhancing digital literacy, and fostering partnerships between academia and employers.