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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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Partnership with Private Sector is Key in Closing Rwanda’s Infrastructure Gap

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The COVID-19 (coronavirus) pandemic has pushed the Rwandan economy into recession in 2020 for the first time since 1994, according to the World Bank’s latest Rwanda Economic Update.

The 17th edition of the Rwanda Economic Update: The Role of the Private Sector in Closing the Infrastructure Gap, says that the economy shrank by 3.7 percent in 2020, as measures implemented to limit the spread of the coronavirus and ease pressures on health systems brought economic activity to a near standstill in many sectors. Although the economy is set to recover in 2021, the report notes the growth is projected to remain below the pre-pandemic average through 2023.

Declining economic activity has also reduced the government’s ability to collect revenue amid increased fiscal needs, worsening the fiscal situation. Public debt reached 71 percent of GDP in 2020, and is projected to peak at 84 percent of GDP in 2023. Against this backdrop, the report underlines the importance of the government’s commitment to implement a fiscal consolidation plan once the crisis abates to reduce the country’s vulnerability to external shocks and liquidity pressures.

“Narrowing fiscal space calls for a progressive shift in Rwanda’s development model away from the public sector towards a predominantly private sector driven model, while also stepping up efforts to improve  the efficiency of public investment,” said Calvin Djiofack, World Bank’s Senior Economist for Rwanda.

According to the Update, private sector financing, either through public-private partnerships or pure private investment, will be essential for Rwanda to continue investing in critical infrastructure needed to achieve its development goals. The analysis underscores the need to capitalize further on Rwanda’s foreign direct investment (FDI) regulatory framework, considered one of the best in the continent, to attract and retain more FDI; to foster domestic private capital mobilization through risk sharing facilities that would absorb a percentage of the losses on loans made to private projects; and to avoid unsolicited proposals  of public–private partnership (PPP) initiatives; as well as to build a robust, multisector PPP project pipeline, targeting sectors with clearly identified service needs such as transport, water and sanitation, waste management, irrigation, and housing.

While the report findings establish clearly the gains of public infrastructure development for the country as whole, it also stressed that these gains tend to benefit urban and richer households most.

 “Rwanda will need to rebalance its investment strategy from prioritizing large strategic capital-intensive projects toward projects critical for broad-based social returns to boost the potential of public infrastructure to reduce inequality and poverty,” said Rolande Pryce, World Bank Country Manager for Rwanda. “Any step toward the Malabo Declaration to allocate 10 percent of future infrastructure investment to agriculture, allied activities, and rural infrastructure, will go a long way to achieving this goal.

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Greenpeace Africa responds to the cancellation of oil blocks in Salonga National Park

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© Kim S. Gjerstad

On Monday the UNESCO World Heritage Committee decided to remove Salonga National Park in the Democratic Republic of the Congo from the List of World Heritage in Danger. The decision follows clarification “provided by the national authorities that the oil concessions overlapping with the property are nul[l] and void and that these blocks will be excluded from future auctioning.”

Oil blocks overlapping with Salonga were awarded by President Joseph Kabila in the twilight of his regime. Greenpeace Africa has repeatedly demanded their cancellation, while local leaders voiced their opposition to the project in light of its impacts on communities. 

“A decision by President Felix Tshisekedi to cancel all oil blocks in Salonga Park must be followed by a decision to cancel oil blocks in Virunga Park and across the Cuvette Centrale region. These are vast areas rich in biodiversity that provide clean water, food security and medicine to local communities and which render environmental services to humanity,” says Irene Wabiwa Betoko, International Project Leader for the Congo Basin forest. 

The Salonga National Park, which is Africa’s largest tropical rainforest reserve, was inscribed on the World Heritage List in 1984. The park plays a fundamental role in climate regulation and the sequestration of carbon. The park is also home to numerous endemic endangered species such as the pygmy chimpanzee (or bonobo), the forest elephant, the African slender-snouted crocodile and the Congo peacock. Salonga had been inscribed on the List of World Heritage in Danger in 1999, due to pressures such as poaching, deforestation and poor management. The government of DRC later on issued oil drilling licences that encroached on the protected area, posing a threat to the wildlife-rich site.

“DRC’s auctioning of oil blocks has not only been scandalously lacking transparency and menacing for particularly sensitive environmental areas – they neither benefit Congolese people nor the planet. Instead of privileging a small group of beneficiaries of the toxic fossil fuels industry, diversifying the DRC’s economy should be done through renewable energy investments that will make energy accessible and affordable for all,” Irene Wabiwa concluded.

Greenpeace Africa urges full transparency from both UNESCO and the DRC government and calls for the publication of all supportive documents regarding the decision to cancel the aforementioned oil blocks, as well as the map of the nine oil blocks that are still being auctioned in the Cuvette Centrale region.

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Domestic violence, forced marriage, have risen in Sudan

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photo: UNDP/Ahmed Alsamani

Deteriorating economic conditions since 2020 and the COVID-19 pandemic have fuelled an increase in domestic violence and forced marriage in Sudan, a UN-backed study has revealed. 

Voices from Sudan 2020, published this week, is the first-ever nationwide qualitative assessment of gender-based violence (GBV) in the country, where a transitional government is now in its second year. 

Addressing the issue is a critical priority, according to the UN Population Fund (UNFPA) and the Government’s Combating Violence against Women Unit (CVAW), co-authors of the report. 

“The current context of increased openness by the Government of Sudan, and dynamism by civil society, opens opportunities for significant gains in advancing women’s safety and rights,” they said

Physical violence at home 

The report aims to complement existing methods of gathering data and analysis by ensuring that the views, experiences and priorities of women and girls, are understood and addressed. 

Researchers found that communities perceive domestic and sexual violence as the most common GBV issues. 

Key concerns include physical violence in the home, committed by husbands against wives, and by brothers against sisters, as well as movement restrictions which women and girls have been subjected to. 

Another concern is sexual violence, especially against women working in informal jobs, but also refugee and displaced women when moving outside camps, people with disabilities, and children in Qur’anic schools.  

Pressure to comply 

Forced marriage is also “prominent”, according to the report. Most of these unions are arranged between members of the same tribe, or relatives, without the girl’s consent or knowledge. 

Meanwhile, Female Genital Mutilation (FGM) remains widespread in Sudan, with varying differences based on geographic location and tribal affiliation.  Although knowledge about the illegality and harmfulness of the practice has reached community level, child marriage and FGM are not perceived as key concerns. 

Women’s access to resources is also severely restricted.  Men control financial resources, and boys are favoured for access to opportunities, especially education. Verbal and psychological pressure to comply with existing gender norms and roles is widespread, leading in some cases to suicide.  

The deteriorating economic situation since 2020, and COVID-19, have increased violence, especially domestic violence and forced marriage, the report said. Harassment in queues for essential supplies such as bread and fuel has also been reported.  

Data dramatically lacking 

Sudan continues to move along a path to democracy following the April 2019 overthrow of President Omar Al-Bashir who had been in power for 30 years.  

Openly discussing GBV “has not been possible for the last three decades”, according to the report.   

“GBV data is dramatically lacking, with no nation-wide assessment done for the past 30 years, and a general lack of availability of qualitative and quantitative data,” the authors said. 

To carry out the assessment, some 215 focus group discussions were held with communities: 21 with GBV experts, as well as a review of existing studies and assessments. 

Research was conducted between August and November 2020, encompassing 60 locations and camps, and the data was scanned through a software for qualitative analysis, followed a model first used in Syria. 

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