The COVID-19 pandemic has heavily impacted Rwanda to the point that new plans have to be put in place, otherwise the country will not achieve the UN’s development goals.
A study commissioned by the IMF points out that the pandemic has had adverse impact on the economy, setting the country back several years. To get back on course, says the report, Rwanda needs a huge amount of money plus radical new policies.
The study ‘SDG Financing Options in Rwanda: A Post-Pandemic Assessment‘ looked at what was going on with the sustainable development goals (SDGs).
The SDGs were adopted in 2015 by the UN General Assembly. Rwanda had been celebrated as one of the star achievers of the previous millennium development goals (MDGs). The target was set at 2030.
So far, things were going well with some targets like SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth) and SDG 13 (Climate Action).
Given the SDGs progress in Rwanda, the SDG Centre for Africa was established in Rwanda’s capital city of Kigali in 2016.
The Africa SDG Index and Dashboard Report 2018 compiled by the Institute top ranked Morocco at 66.1per cent, while Rwanda was ranked 11th (out of 51) with 57.9 per cent and the lowest was Central African Republic with a score of 35.8 per cent.
Government’s plans enshrined in Vision 2050 involves achieving upper-middle-income status by 2035 and high-income status by 2050. What this means essentially is that by that time, more than 70% of Rwandans will be living in sprawling cities – a very ambitious target.
All was going according to plan, until the COVID-19 virus came knocking. It emerged globally in late 2019, but first case was identified in Rwanda in March 2020. Since then, the country has come to a virtual halt.
The government’s own data released in June last year showed at least 60% of the population or nearly 8m people, had lost entire livelihoods. The World Bank said this past February that by end of 2020, at least 550,000 more people may fall into poverty.
In June last year, government pumped Rwf 100billion into the economy to basically subsidise key sectors. The Prime Minister Dr Edouard Ngirente told Parliament in March this year that Economic Recovery Fund would be expanded to Rwf 350billion by year-end.
However, according to models in the new IMF study, the financing being touted by government is just a drop in the ocean.
Under current policies, say the authors, Rwanda would meet its SDGs right after 2050. “Active policies that combine fiscal reforms and higher private sector participation could fulfill more than one third of Rwanda’s post-pandemic SDG financing gap, enabling the country to meet its SDG targets by 2040. For Rwanda to meet its SDGs by 2030, active policies would need to be complemented with about 13¾ percentage points of GDP in additional resources annually until then.”
The study models suggest that the country will need financing every year of about 22 percent of GDP or more than $2.2bn, going by the current GDP of $10.2bn.
Donors currently fund about 14% of the national budget of about $3.3bn – the rest coming from local taxes, domestic borrowing and international loans.
The IMF modelling says financing Rwanda’s SDGs cannot be achieved without additional support from development partners (donors), including by securing additional concessional resources from bilateral and multilateral donors, leveraging existing resources to finance de-risking initiatives (blended finance), and unlocking untapped resources from institutional investors (e.g. pension and mutual funds, insurance companies) and private philanthropies.
The study notes: “Polices to attract private investment should aim at continuing to strengthen Rwanda’s business climate and governance, developing a solid pipeline of ‘bankable” infrastructure projects, generating an attractive risk-return profile for the private sector on a project-by-project basis through public-private partnerships, and providing government guarantees (“de-risking”) with due regard to fair and proportional distribution of risk and return among public and private participants.”