Rwanda's GDP drops by 3.4% as COVID-19 takes its toll

The Gross Domestic Product (GDP) of Rwanda in 2020 experienced a significant decline of 3.4% compared to the previous year, as reported by the National Institute of Statistics of Rwanda. This drop was primarily attributed to the impact of the COVID-19 pandemic on various sectors of the economy. In an exclusive interview with CNBC Africa, Ivan Murenzi, the Deputy Director General of the National Institute of Statistics of Rwanda, shed light on the factors contributing to this economic contraction. Murenzi highlighted that the challenges posed by the pandemic were not exclusive to Rwanda but were felt globally, affecting economic activities across industries. The services and industry sectors bore the brunt of the decline, with services accounting for 46% of the GDP, agriculture 26%, industry and net delegated services 19%, and other sectors 8%. The services sector, encompassing tourism, hospitality, transport, and more, witnessed significant contractions as a result of the pandemic. For instance, transport suffered a 19% decline, while the hotel and restaurant industry experienced a contraction of 44%. Similarly, the administration and support services sector reported an 11% contraction. This trend extended to the industry sector, which overall contracted by 4%, although agriculture managed a 1% growth. Despite the overall growth in agriculture, exports of agricultural products saw a decline of 9%, reflecting the widespread impact of the pandemic on various economic facets. The interview also delved into the issue of Rwanda's reliance on the services sector, which holds a substantial share in the country's GDP. Murenzi addressed concerns regarding the overdependence on services, emphasizing the diverse components within the sector that support the livelihoods of many Rwandans. He noted the ongoing global shift away from agricultural dominance, highlighting services as a critical sector for economic development. Given the resilience of service-oriented activities, Murenzi expressed optimism that these sectors could rebound swiftly once normalcy is restored. Reflecting on sectors that displayed growth amidst the pandemic-induced downturn, the Information and Communication Technology (ICT) sector emerged as a standout performer with close to a 30% increase. Murenzi attributed this growth to the surge in remote work and heightened internet usage during lockdowns, bolstering the demand for online services. Remarkably, the agriculture sector in Rwanda also recorded a 1% growth despite the challenges posed by the pandemic. In contrast to many countries experiencing disruptions in agricultural activities, Rwanda's strategic approach, allowing farmers to continue their operations, enabled a positive outcome. Murenzi underscored that while there were constraints on movements and trade activities, the commitment of subsistence farmers to their fields contributed to the sector's resilience. As conversations veered towards economic recovery, Murenzi expressed cautious optimism, suggesting that with ongoing global immunization efforts and reopening of economies, a rebound could be anticipated by the end of the year. The Deputy Director General emphasized that as vaccination programs progress worldwide, economic activities are poised to revive, offering a brighter outlook for Rwanda and the global economy.