At least 550,000 Rwandans are at the risk of falling back into poverty this year due to the prolonged impact of the pandemic on the economy.

Restrictions on movement of people to contain the pandemic has affected economic activities with many losing a source of income.

As a result of a general slowdown in demand and consumption of goods and services, experts are now predicting that growth will slowdown as the country faces the worst economic recession in the past 25 years.

Experts at the World Bank say Rwanda lost more than 8 percent GDP loss in 2020, making it among the most hit countries by Covid-19 in Africa.

According to the 16th edition of World Bank Rwanda Economic Update released on February 9, the poverty headcount is likely to rise by 5.1 percentage points or more than 550,000 people in 2021, with more than 80 percent of the new poor in rural areas.

The report says women and girls are the most affected. “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,” said Rolande Pryce, the World Bank Country Manager for Rwanda.

“By further expanding the coverage of well targeted safety net interventions and prioritising investments in human capital, Rwanda can quickly and effectively mitigate the effects of the shock and lay the groundwork for future resilience.”

Households both in rural and urban areas have been severely hit by stringent Covid-19 measures.

However, the report noted that the government initiated a swift and robust response to the pandemic, with the adoption of the Economic Recovery Plan (ERP) estimated at $900 million over the two fiscal years — 2019/20 and 2020/21.

The recovery plan aims to scale up social safety net programmes for the most vulnerable, build key infrastructures, and support strategic enterprises, including small- and medium-size enterprises.

Socialprotection programmes have already reduced poverty by 1.2 percentage point in 2020, the report says, and could reduce poverty by 1.7 percentage points in 2021 if the government undertakes the expansion planned in the ERP.

The crisis has hit where it hurts most, travel and hospitality services, which are the sectors for which the country has invested massively in recent years through its Meetings, International Conferences and Events strategy.

The sector fell by 40 percent and the tourism sector’s growth is expected to be slow.

“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,” said Calvin Djiofack, the World Bank Senior Economist presenting the report.