Rwanda is on track to become a middle-income economy by 2020, and the government’s investment into its tourism and aviation industry could make the country one of east Africa’s leading holiday destinations by the end of the decade, Claver Gatete, Rwanda’s minister of finance, told fDi Magazine during the International Monetary Fund summit in mid-October. In an interview with fDi Magazine, Mr Gatete said Rwanda’s debut $400m Eurobond in April this year, which was oversubscribed and raised $3.5bn in offers, offered the government significant cash reserves to renovate its high-end hotels as well as expand Rwanda’s second international airport.
As a result, the country’s tourism sector has become one of Rwanda’s fastest growing industries, growing from being worth $252m in 2011, to $340m this year. In addition, the government’s investments into its information and communications technology (ICT) infrastructure as well as its tertiary education system, has successfully drawn international academic institutions, including the US-based Carnegie Mellon University, and this will enable the country to achieve middle-income economy status by 2020.
“Our GDP per capita currently stands at $644 and I believe that by 2020 we will become a middle-income economy, with $1240 GDP per capita,” said Mr Gatete. “The Eurobond we issued was important. It was over subscribed and we received $3.5bn in offers from investors in New York, Boston, London, Germany, Singapore and Hong Kong. Part of the money we raised was to construct the Radisson Hotel in order to promote tourism inflows. We are also constructing a second airport, which, once complete, will be modern in design and architecture, and it will be larger in size than South Africa’s Johannesburg airport.”
Rwanda has embarked on an extensive drive to upgrade its infrastructure and Mr Gatete maintained that this has been part of the government’s five-year economic strategy, which aims to develop and integrate several industries including tourism, transport, logistics, ICT and education. Pointing to a joint venture established with the South Korean telecommunications provider, SK Telecom, to develop a fiber-optic cable that covered the entire country, Mr Gatete said that the completion of this project in 2010 enabled the evolution of the country’s financial services sector.
“This fiber-optic cable has spurred significant benefits to other sectors,” explained Mr Gatete. “Rwanda has one of the world’s fastest integrated payment systems. When you look at banking, on the macro level, the central bank, the central depository and the capital markets have been linked, and on the micro level, cash ATMs and mobile payments systems are highly connected.”
Although Rwanda’s GDP growth is expected by the African Development Bank (AfDB) to slow from 7.7% in 2012, to 7.1% in 2013, the country’s service and industry sectors have been growing robustly. Yet the AfDB noted that despite the country’s efforts to diversify its economy, Rwanda is highly dependent on foreign aid, and the government’s revenues are heavily tied to the performance of its natural resources sector. But, Mr Gatete argued that the country’s structural reforms mean its smaller industries such as its tourism and ICT sectors, will become entrenched in coming years.
“We have done quite a lot as a government and we have succeeded in achieving macro economic stability,” said Mr Gatete. “Last year, when the donor countries delayed the aid payments to Rwanda, we still grew by 7%. That could only happen if you have a strong macro economic stability. We are very proud of our business environment – we consistently rank number three in Africa, behind South Africa and Mauritius in the World Bank’s ‘Doing Business’ indicators, and we were the second fastest global reformer in this respect, last year. We have come a long way since 1995 [after the genocide], and the economy has reached a sustainable level of development.”