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COVID-19 Pandemic Pushes Rwanda into Recession, Severely Impacts Human Capital

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The Rwandan economy has fallen into its first recession due to the COVID-19 (coronavirus) pandemic and could potentially compromise years of gains in poverty reduction.

Released today, the 16th edition of the World Bank Rwanda Economic Update, Protect and Promote Human Capital in a post-COVID-19 World, says the country’s gross domestic product (GDP) is estimated to have dropped by 0.2 percent in 2020, compared to a projected expansion of 8 percent before the COVID-19 outbreak.

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.

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

The report notes that the Government of Rwanda 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 aims to scale up social safety net programs for the most vulnerable, build key infrastructures, and support strategic enterprises, including small- and medium-size enterprises.

Social safety nets programs 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 report points out that, 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.  

The report acknowledges that the government’s swift and efficient response to the pandemic has largely mitigated the potentially significant negative impact on essential health and nutrition services. Rwanda has experienced some disruptions in the delivery of health services, but, the report notes, these appear to be largely transitory. However, continued efforts to ensure coverage of nutrition and health services to vulnerable households are essential to avoid a deterioration in the productivity of future workers.

The 16th edition of the Rwanda Economic Update also recognizes that the impact of the pandemic disproportionately affects women, in part because (according to the recent labor market survey) women are more likely to be seasonal workers (44 percent versus 31 percent of men) and are more likely to be taking care of a sick relative (4 percent versus 1 percent).

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 prioritizing investments in human capital, Rwanda can quickly and effectively mitigate the effects of the shock and lay the groundwork for future resilience.

Some of the actions proposed by the Rwanda Economic Update to protect and improve human capital in Rwanda include 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.

* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.6 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $21 billion over the last three years, with about 61 percent going to Africa.

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Africa Today

EU to support COVID-19 vaccination strategies and capacity in Africa

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The President of the European Commission, Ursula von der Leyen, has announced today €100 million in humanitarian assistance to support the rollout of vaccination campaigns in Africa, which are spearheaded by the Africa Centres for Disease Control and Prevention (Africa CDC). Subject to the agreement of the budgetary authority, this funding will support the vaccination campaigns in countries with critical humanitarian needs and fragile health systems. The funding will, among others, contribute to ensuring the cold chains, roll-out registration programmes, training of medical and support staff as well as logistics. This sum comes on top of €2.2 billion provided by Team Europe to COVAX.

President of the European Commission, Ursula von der Leyen said: “We’ve always been clear that the pandemic won’t end until everyone is protected globally. The EU stands ready to support the vaccination strategies in our African partners with experts and deliveries of medical supplies at the request of the African Union. We are also exploring potential support to boost local production capacities of vaccines under licensing arrangements in Africa. This would be the fastest way to ramp up production everywhere to the benefit of those that most need it.”

Janez Lenarčič, Commissioner for Crisis Management, said: “International vaccine solidarity is a must if we are to effectively address the COVID-19 pandemic. We are looking at ways to use our humanitarian aid and civil protection tools to help in the rollout of vaccination campaigns in Africa. Ensuring equitable access to vaccines for vulnerable people, including in hard-to-access areas, is a moral duty. We will build on our valuable experience in delivering humanitarian aid in a challenging environment, for example via the Humanitarian Air Bridge flights.”

Commissioner for International Partnerships, Jutta Urpilainen, added: “Team Europe has stood by the side of our African partners from the onset of the pandemic and will continue to do so. We have already mobilised more than €8 billion to tackle the COVID-19 pandemic in Africa. We are strengthening health systems and preparedness capacities, which is absolutely key to ensure effective vaccination campaigns. And we are now exploring support through the new NDICI and how to leverage investments in the local production capacities through the External Action Guarantee.”

The EU also has a range of instruments at its disposal, such as the EU Humanitarian Air bridge, the EU Civil Protection Mechanism, and the EU’s humanitarian budget. These tools have been used extensively in the context of COVID-19 to deliver crucial material and logistical assistance to partners in Africa.

The Commission is also currently exploring opportunities to support African countries in the medium term to establish local or regional production capacity of health products, in particular vaccines and protective equipment. This support will come under the new Neighbourhood, Development and International Cooperation Instrument (NDICI) and the European Fund for Sustainable Development plus (EFSD+).

Background

The EU has been scaling up its humanitarian engagement in Africa since the onset COVID-19 crisis. A key of part of these efforts is the EU Humanitarian Air Bridge, which is an integrated set of services enabling the delivery of humanitarian assistance to countries affected by the coronavirus pandemic. The air bridge carries medical equipment, and humanitarian cargo and staff, providing humanitarian assistance for the most vulnerable populations where the pandemic imposes constraints on transport and logistics. The air bridge flights are fully funded by the EU. So far, almost 70 flights have delivered over 1,150 tons of medical equipment as well as nearly 1,700 medical and humanitarian staff and other passengers. Flights to Africa have aided the African Union, Burkina Faso, Central African Republic, Chad, Côte d’Ivoire, Democratic Republic of Congo, Guinea Bissau, Nigeria, São Tomé and Príncipe, Somalia, South Sudan, Sudan.

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Africa Today

20th International Economic Forum on Africa

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The global economic recession triggered by COVID-19 is hitting African countries hard. In 2020, 41 African economies experienced a decline in their gross domestic product (GDP). Although situations vary across the continent, this crisis has made clear that post-COVID strategies need to tackle two major obstacles to Africa’s long-term sustainable growth: dependence on external markets, and the incapacity of the formal economic sectors to create enough quality jobs.

The African Continental Free Trade Area (AfCFTA), now open for business, provides a platform to accelerate productive transformation, create regional value chains and spur continental integration. Its effective implementation, however, depends on African economies’ capacity to create fiscal space and boost private investment in quality infrastructure and sustainable projects.

What are the key priorities for implementing the AfCFTA and accelerating Africa’s productive transformation? How can African governments strengthen their borrowing capacity and improve their debt management? How can bilateral and multilateral co-operation facilitate the process? The 2021 edition of the Forum will gather all key actors to share their views and solutions for action.

The Forum hosts Europe’s largest annual conversation on Africa’s ongoing, formidable transformation. It invites African and OECD policy makers, investors, academics, civil society and international organisations to share their views, and discuss how better policies can improve development outcomes for Africans and the world.

To host the Forum, the Government of Senegal, is teaming up with the Development Centre of the Organisation for Economic Co-operation and Development; and the African Union, along with partners Casa Africa, le Cercle des Economistes, the French Development Agency (AFD) and the Sahel and West Africa Club (SWAC).

The debates will build on the findings of the recently launched Africa’s Development Dynamics 2021, a report by the African Union Commission, produced in collaboration with the OECD Development Centre.

Honourable speakers include:

  • Macky Sall, President of the Republic of Senegal
  • Andry Rajoelina, President of the Republic of Madagascar
  • Toshimitsu Motegi, Minister for Foreign Affairs of Japan
  • Angel Gurría, Secretary-General, Organisation for Economic Co-operation and Development
  • Moussa Faki Mahamat, President, African Union Commission
  • Ibrahim A. Mayaki, Chief Executive Officer, African Union Development Agency (AUDA/NEPAD)
  • Arkebe Oqubay, Senior Minister and Special Adviser to the Prime Minister of Ethiopia
  • Wamkele Mene, Secretary-General, AfCFTA Secretariat
  • Jean Hervé Lorenzi, President, Cercle des Economistes
  • Rémy Rioux, Director-General, Agence Française de Développement

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Africa Today

DR Congo: Lives and futures of three million children at risk

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Internally displaced persons, including children, collect water from a broken water main in Uvira, South Kivu, DRC. Waterborne diseases such as cholera are a major threat to displaced populations. UNICEF/Patrick Brown

The United Nations Children’s Fund (UNICEF), on Friday, highlighted the dire situation of some three million displaced children in the Democratic Republic of the Congo (DRC) who face brutal militia violence and extreme hunger. 

 Whole villages have been set ablaze, health centres and schools ransacked, and entire families – including children – hacked to death, in a series of merciless attacks in eastern DRC by fighters using machetes and heavy weapons, UNICEF said in a news release. Communities have been forced to flee with only the barest of possessions. 

“Displaced children know nothing but fear, poverty, and violence. Generation after generation can think only of survival”, Edouard Beigbeder, UNICEF Representative for the DRC, said.

“Yet the world seems increasingly indifferent to their fate. We need the resources to continue helping these children have a better future.”

There are some 5.2 million displaced people in the DRC, about half of whom were displaced in the last twelve months, according to UN data. The overall figure includes about three million children. 

Families forced from their homes and villages are compelled to live in crowded settlements lacking safe water, health care and other basic services. Others are taken in by impoverished local communities. In the most violence-afflicted provinces of Ituri, North Kivu, South Kivu and Tanganyika, more than 8 million people are acutely food insecure.

Sharp rise in violations against children

UNICEF’s report Fear and Flight: An uprooted generation of children at risk in the DRC, released on Friday, underscores the gravity of the crisis. 

The report recounted testimony of children who have been recruited as militia fighters, subjected to sexual assault, and suffered other grave violations of their rights – abuses that registered a 16 per cent increase in the first six months of 2020 compared to the previous year.

However, delivering relief assistance to populations who have been displaced is complex, and often hampered by insecurity and a weak transport infrastructure. 

A rapid response programme directed by UNICEF with partner NGOs offers a temporary solution, providing tarpaulins, cooking utensils, jerrycans and other essentials to nearly 500,000 people in 2020, said the UN agency.

According to Typhaine Gendron, the Chief of Emergency for UNICEF in DRC, such emergency distributions help deal with the “immediate shock” of being displaced. They are also part of an integrated response that looks to address a family’s broader needs in health, nutrition, protection, water and sanitation (WASH), or education, she added.

Additional funds desperately needed

While the volatile security situation is a major concern for aid workers and UNICEF personnel engaged in the humanitarian response, additional funds are also desperately needed. UNICEF’s 2021 humanitarian appeal for the country, amounting to about $384.4 million is only 11 per cent funded.

Without timely and adequate funding, UNICEF and its partners will not be able to provide critical services addressing the acute humanitarian needs of almost three million Congolese children and their families and protect and promote their rights, the agency warned. 

UNICEF Representative Beigbeder stressed the urgency, “without sustained humanitarian intervention, thousands of children will die from malnutrition or disease, and displaced populations will not receive the basic lifesaving services they depend on.” 

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