Rwanda's economic growth projections

Rwanda's economy has been on a steady growth trajectory, with a notable 7.6 percent growth in the first three quarters of 2023 and a projected 7.2 percent growth expected in 2024. Teddy Kaberuka, an Economic Analyst and CEO of M4Progress Ltd., shed light on the key drivers of this economic momentum in a recent interview with CNBC Africa. One of the primary factors contributing to Rwanda's economic acceleration is the service sector, which continues to play a significant role in the country's revenue generation. While agriculture and manufacturing sectors also contribute to the growth, there is a noticeable shift towards the service industry. This trend is expected to continue as Rwanda aims to achieve a 7.2 percent growth rate in 2024, with a focus on sectors like construction and finance. External factors, such as global economic trends and regional trade dynamics, play a crucial role in shaping Rwanda's growth outlook. The country's reliance on imports makes it vulnerable to fluctuations in commodity prices and disruptions in international trade. However, current trends suggest stability in external factors, providing a favorable environment for Rwanda's economic growth projections. Rwanda's emphasis on skills development and domestic mobilization underscores the government's commitment to driving private sector growth. By transitioning to a knowledge-based economy, Rwanda aims to enhance human capital, boost productivity, and improve competitiveness in key sectors like technology services and manufacturing. Investing in skill development is seen as a strategic move to create job opportunities, increase tax revenue, and stimulate economic growth. In terms of investment and capital market development, Rwanda is actively seeking to attract foreign direct investment and support local entrepreneurship. While foreign direct investment levels are not yet optimal, there is a push to increase investments from various sources, including diaspora, international investors, and multinational corporations. The capital market presents opportunities to mobilize resources, but there is room for growth, particularly in sectors like mining that require significant investment. Despite the positive economic outlook, Rwanda faces challenges that could potentially derail its growth trajectory. Issues related to stabilisation, legal frameworks, and sectoral risks pose notable hurdles. Additionally, the high cost of financing remains a significant challenge for the country. Addressing these challenges will be crucial in sustaining Rwanda's economic momentum and achieving its growth projections. As Rwanda continues to navigate its path towards economic prosperity, a strategic approach to addressing key challenges and leveraging growth opportunities will be essential in realizing its full potential.