May 9, 2020

60% Rwandans Lose Livelihoods Due to COVID-19 Lockdown, and Need Urgent Help

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Food distribution has been ongoing in Kigali, but reached less than 20% of all households who needed food in Kigali, according to the government’s own admission

At least seven million Rwandans will need help for months to come even if the COVID-19 partial lockdown is lifted next week, government says in its plan to deal with the repercussions of the pandemic.

The situation is so dare that people considered to be in the middle class (or Ubudehe category 3) also need help, after loosing everything during the lockdown which has been ongoing since March 14.

However, for the first two weeks of March, although the country was not in lockdown, some control measures had been introduced such as suspension of gatherings and hand washing everywhere.

Now, in a policy plan to deal with impact of the local and global lockdown, government is planning to continue distributing food, generate jobs and give direct cash transfers. Government is also planning to cut taxes, hoping cost of business operations will reduce and possibly encourage investment.

Based on data shared by the DFID, the UK government international development agency, the figures of the needy in Rwanda is staggering.

According to a DFID study, the lockdown will reduce earnings/consumption for the most heavily impacted groups by almost 100%. This involves 60% of the population (in both urban and rural areas) – meaning at least 7m of the 12m Rwandans are affected and urgent help.

According to this analysis, the most heavily impacted groups are not entirely the same as those who suffer from extreme or chronic poverty normally; those reliant on casual wage labour and household enterprises for large portions of their income will be the ones mostly affected.

The worst affected by the lockdown are workers in the areas of tailoring, carpentry, hair cutting, lady saloon, knitting, electricity, hospitality and tourism, plumbing, welding, ordinary farmers, small trade, traditional healer among others.

According to the government’s thinking, these people above need a combination of direct food supplies and cash transfers.

For example, as of April, food distribution had reached 55,272 households in Kigali alone. However, the number of homes that need direct food deliveries are 212,882 households.

In Rwanda, everyone is placed in a one of four socioeconomic categories called Ubudehe. Category one are extremely poor and depend on direct handouts from government and wel-wishers. They account for al least 34% of population.

Category 2 have some level of what they need. Category 3 are said to be the country’s middle class. Together with category 4, the wealthy Rwandans, category 3 are actually supposed to pay for their own university education. They do not get government scholarships.

However, in the era of COVID-19, the difference between these categories is more blurred than ever before. Apart from the wealthy, nearly everyone else now needs help from government.

Here is how President Kagame and his team view their people: “The current COVID-19 crisis affects many households, as the opportunities to supplement household incomes by casual labour are not available or limited during the lockdown and later until the national economy is back on its normal growth track. Additionally, raising staple food prices put an additional burden on the vulnerable households. This implies that households that were in a vulnerable situation even before the COVID-19 (Ubudehe category 1 and 2) are now in a more insecure situation than before. It also implies that households that were not yet living below the poverty threshold before the COVID-19 (Ubudehe category 3) will be negatively affected by the lockdown and by social distancing and prevention measures in the transition phase after the lockdown.”

Since May 4, the country is somehow opened up, but many economic activities remain closed such as bars and moto transport, both sectors that employ thousands of women and men. Markets only receive 50% of traders.

Public buses carry less than half the original number of passengers. The tourism industry is all but dead, leaving more thousands out of work. Exports are also down and transporting them is ever more costly. The country is also on an 8pm to morning curfew.

As a response to cushion the whole economy, the government is planning to pump at least Rwf 133.6billion to be invested in buying food, agricultural inputs, direct cash and job creation. The economic plan covers up to December 2021.

One of the interventions is monthly payments to the most poor, which have been around for years before, but have this time been increased by 33%. This money, whose amound depended on number of family members, and was for only ubudehe category 1. It will be extended to category 2 as well.

The cash transfers (known as Direct Support) will be increased as follows:

● Single member HH: from 7,500 FRW to 10,000 FRW per month
● Households with 2 members: from 12,000 FRW to 15,000 FRW per month
● Households with 3 members: from 15,000 FRW to 18,000 FRW per month
● Households with 4 members: from 18,000 FRW to 21,000 FRW per month
● Households with 5 members and above: from 21,000 FRW to 25,000 FRW

To pump money into the economy, government has agreed to “Fast-track” government procurement. procurement involves time-consuming processes that take between 6 to 9 month.

“…there will be a high need for GoR to adopt a fast-tracked process of key projects, activities to support injection of liquidity into the economy,” says the government’s plan.

There will also be fast-tracked private sector payments, including VAT refunds: This measure is already being implemented. Recently, Rwanda Revenue Authority paid a VAT Refund of Frw 10 billion to support businesses with cash.

Since international tourism is gone, government wants local Rwandans to begin to travel around their country. To encourage local tourism, many incentives are going to be implemented including cutting ticket prices by up to 50%.

Government is also going to implement huge infrastructure projects both in urban and rural areas such as roads, schools and housing – all aimed at pumping money into pockets of ordinary Rwandans.

Government is planning to cut tax on internet to increase usage of data for learning and economic opportunities. Costs of gadgets like phones and computers are going to be looked into, so that prices can go down, allowing many to have smartphones.

Most of the plans in the 61 page document are being implemented beginning this May.

This a portion of the government’s economic recovery plan

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