Service sector recovers from shocks, boosts GDP growth

Saturday April 02 2022

Service sector has recovered from challenges caused by Covid-19 to boos growth of GDP. PHOTO | FILE

By Ange Iliza

Service sector has grown to become the biggest contributor to gross domestic product despite challenges posed by Covid-19. According to the National Institute of Statistics, the sector contributed 48 percent to the GDP from 10.8 percent in the previous year.

The growth in the service sector was due to a 12 percent growth in wholesale and trade activities, 20 percent in hotels and restaurants and 15 percent in transport services. This comes as Rwanda looks to position itself as a hub for financial services to promote investments by 2024.

Financial services increased by 18 percent, with telecommunication services increasing by 19 percent. Rwanda’s GDP grew by 10.9 percent in 2021 after com-
pressing to 3 percent in 2020. Central bank had projected a 10.2 percent growth in November last year.

According to the NISR data, the service sector has also grown to be among the sectors with increased average salaries to employees. The latter increased from Rwf103,694 in 2019 to Rwf104,749 in 2020 when the pandemic hit. This was while the average amount of money earned from paid employment decreased during the last two years from Rwf57,878 in 2019 to Rwf57,306 in 2020.

Experts say the quick turnaround in the service industry could work as an attraction to more employment and investment. The sector, however, lost 5 per-
cent of its employees in 2020.

“The service sector was among the hardest hit by the pandemic. Some small scale employees lost their jobs but when the economy started recovering, efforts and resources were directed to the sector. The recovery in the service sector is significant for the economy and employment,” said James Byrirngiro, an economic statistician at the National Institute of Statistics of Rwanda.

The NISR data also noted 4 percent in the number of people employed in market oriented agriculture in 2020 and that the sector gained more employees. Mr Byiringiro said people who lost jobs in other sectors turned to agriculture as an alternative.


Rwanda’s employment to population ratio is currently 46 percent while the unemployment rate stands at 21 percent. Since mid-March, businesses started working 24 hours again after the government lifted a Covid-19-incurred curfew that had been in place for two years.

As the economy fully recovers, the government has announced plans to add $150 million to the Economic Recovery Fund adding to the initial $100 million to accelerate economic recovery.