Rwanda's Economy Registers Strong Growth in Early 2024 Despite Persistent Challenges
Kigali, September 17, 2024 – Rwanda's real GDP grew by 9.7% in the first quarter of 2024, exceeding the previous year's growth rate of 8.2%. The latest edition of the Rwanda Economic Update (REU), launched today, highlights that despite the global economic slowdown, Rwanda has shown remarkable resilience, driven by strong consumer spending in key sectors such as services and industry.
Despite ongoing challenges, Rwanda’s labor market experienced a strong recovery, with over half a million new jobs created in the fourth quarter of 2023, marking the most significant reduction in unemployment since the COVID pandemic.
"The labor market expansion in Rwanda was broad-based, with women benefiting slightly more than men. To leverage its youth demographic, Rwanda needs to expand labor force participation, as only 2.8 million out of 8.1 million working age individuals are employed full time," said Calvin Djiofack Zebaze, World Bank Senior Country Economist for Rwanda. "The World Bank supports Rwanda to leverage its predominantly young population through improved education, training, and dignified employment opportunities to drive future growth."
According to the 23rd edition of the REU titled Accelerating Skills Development to Foster Private Sector Growth in Rwanda, inflation peaked at over 21% in 2023 but has since moderated due to tighter monetary policies and lower food prices reflecting improved supplies of fresh produce. By August 2024, headline inflation had slowed to 5.0% year-on-year within the National Bank of Rwanda’s target range.
The REU emphasizes that skills development is crucial for private sector growth and notes that an inadequately educated workforce is a major obstacle for firms' growth in Rwanda. The report stresses significant efforts are required to improve job matching and increase public investment in education—particularly Technical and Vocational Education and Training (TVET) and higher education—to ensure better alignment between education and the labor market. Sector audits highlight urgent needs for skills enhancement across energy, agriculture, manufacturing, mining, urbanization sectors as well as Meetings Incentives Conferences Exhibitions (MICE).
"Skills development is critical to achieving Rwanda’s Vision 2050 goals. By building a comprehensive system focused on sector-specific skills, Rwanda can cultivate a workforce equipped to meet its growth and economic objectives," said Sahr Kpundeh World Bank Country Manager for Rwanda. “This report launch coincides with the recent approval of the $200 million Rwanda Priority Skills for Growth and Youth Empowerment Project which will address challenges identified in the report by increasing opportunities for 200000 vulnerable youths to acquire market-demanded skills.”
The REU recommends strengthening institutional mechanisms for identifying skills gaps and market opportunities while continually improving technical vocational education quality. The report also calls for greater access to scholarships financial aid particularly disadvantaged students enhancing digital literacy reinforcing partnerships between academia employers.