Rwanda has unveiled an additional $150 million in funding for businesses to stimulate growth and
mitigate the prolonged impact of the coronavirus pandemic on the economy.
The funds drawn from its $250 million Economic Recovery Fund launched in June 2021 have been earmarked for the private sector specifically manufacturing to boost production locally as it seeks to contain rising prices and reduce imported inflation.
The first phase prioritised hard-hit sectors by the pandemic including the hospitality industry. During the official launch of the second phase on May 18, Prime Minister, Dr Edouard Ngirente said this will help the country confront the current inflationary pressures and price hikes.
“Global inflation is heavily impacting our economy [...] the government has invested in subsidies and attracted investors to the manufacturing sector to boost local production and reduce our dependence on imports,” Dr Ngirente said.
The government will also continue to raise subsidies to essential commodities such as fuel to ease the burden of hiking prices. Since last year, the government has subsidized fuel and transport making transport prices less burdening to the public.
Rwanda heavily depends on imports with a trade deficit of $216.43 million in 2021, according to the
National Statistics of Rwanda. Special purpose loans Rwanda’s development bank - BRD will disburse the funds at low interest rates that can be paid in five to 15 years with half of the needed guarantee.
Women, people living with disability, and youth will benefit from special purpose loans that do not require any guarantee. Rwanda saw an increase in prices of 5 percent in the first three months of 2022 compared with 2 percent in 2021. The increase was striking in some essential foods such as oil and sugar.
Some of the priority areas include agro-processing, manufacturing construction materials, light manufacturing, and packaging materials. In 2021, manufacturing and real sectors were among the lead investment attractions for Rwanda leading the recovery path.
The growth of investments in real estate and manufacturing sectors was attributed to tax incentives to investors, complemented by fiscal and non-fiscal incentives.