The COVID-19 pandemic has pushed the Rwandan economy into recession, with huge implications of reversing gains already made in its poverty reduction schemes.
This was disclosed in the 16th edition of the World Bank Rwanda Economic Update, with the country’s gross domestic product (GDP) estimated to have dropped by 0.2 percent in 2020, compared to a projected expansion of 8 percent before the COVID-19 outbreak.
According to the update report:
- “This dire economic effect has severely adverse implications for households, as thousands are facing unemployment, revenue losses and increased consumption prices are pushed into poverty.
- “The Economic Update estimates that, because of the lockdown, social distancing, and increased costs associated with the pandemic, the poverty headcount is likely to rise by 5.1 percentage points (more than 550,000 people) in 2021, with more than 80 percent of the new poor in rural areas.
- “In the absence of decisive actions, the adverse effects on education and health, have the potential to reduce long-term productivity and slow down the country’s long-term growth potential. The long closure of schools and lower household income are likely to reduce school enrollment, as many students seek employment.
- “An estimated 3.5 million students have been out of school, and statistics indicate that the share of students in total employment increased from 3.4 percent in February 2020 to 8.8 percent in August 2020.”
What they are saying
According to Calvin Djiofack, the World Bank Senior Economist:
- “The severity of the effect is due at least in part to the fact that the crisis hit where it hurt the most, travel and hospitality services, which are the sectors for which the country has invested massively in recent years through its the MICE (Meetings, International Conferences, and Events) strategy.
- “The crisis calls for the rebalancing of the growth strategy, with more emphasis on rural related activities and greater emphasis on regional integration to reduce vulnerability to international shocks.”
According to Rolande Pryce, the World Bank Country Manager for Rwanda:
- “The unprecedented impact of the crisis heightens the urgency of ensuring the availability of strong and adaptable programs and policies to mitigate poverty, and to safeguard the health, schooling, and employment of the population.
- “By further expanding the coverage of well-targeted safety net interventions and prioritizing investments in human capital, Rwanda can quickly and effectively mitigate the effects of the shock and lay the groundwork for future resilience.”
What you should know
- The Government of Rwanda had earlier initiated a swift and robust response to the pandemic, with the adoption of the Economic Recovery Plan (ERP) estimated at US$900 million over the two fiscal years 2019/20 and 2020/21.
- The recovery plan is aimed at scaling up the social safety net programs for the most vulnerable, develop key infrastructures as well as support strategic enterprises, including small and medium-sized enterprises.
- With the social safety nets programs, poverty rate has already been reduced by 1.2% point in 2020 and is expected to reduce by 1.7% points in 2021.
- According to the report, the following action plans were proposed by the Rwanda Economic Update to protect and improve human capital in Rwanda: “Accelerating deployment of COVID-19 vaccines to contain the pandemic, combating the poverty impact of the pandemic by expanding coverage of social safety nets, improving targeting accuracy to make social safety nets more cost-effective, and expanding social insurance to the informal sector, and reducing learning losses through optimization of remote education due to the COVID19 disruptions, improving skills and strengthening accountability in education”.
CBN extends Covid-19 forbearance for intervention loans by another 12 months
CBN will continue to charge an interest rate of 5% for its intervention loans for another 1 year.
The Central Bank of Nigeria has announced an extension of its regulatory forbearance for the restructuring of its intervention facilities by another 12 months.
In a circular signed by Dr. Kevin Amugo, the Director of Financial Policy and Regulatory. the apex bank said it will continue to charge its borrowers an interest rate of 5% per annum as against the 9% originally offered. The CBN had on March 20th reduced the interest rates on its intervention loans from 9% to 5% as part of its response to the economic crunch brought on by Covid-19 induced lockdowns.
The CBN also offered to rollover moratorium granted on all principal payments on a case by case basis. All credit facilities had been granted a one-year moratorium starting from march 1, 2020 when the pandemic first gripped Nigeria.
See excerpt from Circular
“The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from 9% to 5% per annum for one-year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 Pandemic on the Nigerian economy.”
Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.
Following the expiration of the above timelines, the CBN hereby approves as follows:
1) The extension by another twelve (12) months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities;
2) The roll-over of the moratorium on the above facilities shall be considered on a case by case basis.
What this means
Companies who secured intervention funds from the CBN or through any of its on-lending banks will continue to service the loans at an interest rate of 5% per annum instead of 9%.
- They can also get another year of not needing to pay back the principal sum collection. However, they will need to apply.
- Whilst this move helps the small businesses continue to manage their cash flow, it means the CBN will record a reduction in its income extended under such facility.
- Regulatory forbearance is a widely adopted concept during an economic crunch and it is meant to help stimulate businesses. These pronouncements if implemented will only affect those who borrow from the CBN or BOI but those who do not will miss out.
- Download the circular here.
Senate endorses ex-Service Chiefs as Non-career Ambassadors
The Senate has confirmed President Buhari’s nomination of the immediate past service chiefs as non-career ambassadors.
The Nigerian Senate has endorsed the nomination of the past serving Military Service Chiefs as Non-career Ambassadors.
This was confirmed during Tuesday’s plenary session and announced in a social media statement by the Nigerian Senate.
Their confirmation follows the consideration of the report of the Senate Committee on Foreign Affairs, Chaired by Senator Adamu Bulkachuwa.
According to reports, the Senate Minority Leader Enyinaya Abaribe, however, questioned the nomination and confirmation of the ex-service chiefs when the Senate had on 3 different occasions called for their sack.
Senator Abaribe also raised issues on the petitions against the former service chiefs and questioned why they were dismissed without explanations.
But Senate President Ahmad Lawan dismissed Senator Abaribe’s concerns, ruling that the nomination of the former service chiefs cannot be nullified simply because the upper chamber had called for their sack, noting that this is totally a different assignment.
In his concluding statement, the Senate President, Senator Lawan added that these nominees that have just been confirmed have served this country to the best of their abilities. He appealed to the executive to make sure they use their experience as military men to the best.
“These nominees that we have just confirmed are nominees that have served this country to the best of their ability. Our appeal to the Executive is to make sure they use their experiences as military men to the best,” Lawan said.
Lawan, on behalf of the senate, wished them a very successful career in their capacity as Non-Career Ambassadors.
What you should know
- Recall Nairametrics reported earlier this month that President Muhammadu Buhari nominated ex-Service Chiefs for Senate approval as non-career Ambassadors-Designate.
- Their appointment came barely a week after their retirement as service chiefs and their replacement with new ones.
- This led to a spate of criticisms from some Nigerians who felt that the nation’s security situation got worse under their watch.
- They were reported to have tendered their resignation from their positions amid heightened calls that they should be sacked due to the increasing rate of insecurity across the country.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Seplat falls into a loss in FY 2020
- 2020 FY Results: Cornerstone Insurance Plc reports a 61.1% decline in profit
- Ellah Lakes increases operating expenses by 33.36% in HY 2020
- 2020 FY Results: Nigerian Breweries reports a 54.3% decline in profits in 2020
- Abbey Mortgage Bank projects N51.08 million profit in Q2 2020.