Rwanda's Economy Grows by 9.7% in Early 2024, Focus on Skills Development to Drive Future Growth

Despite global economic headwinds, Rwanda's resilience has been driven by robust consumer spending in key sectors like services and industry.

Rwanda’s real GDP grew by 9.7% in the first quarter of 2024, surpassing the 8.2% growth rate from the same period last year, as highlighted in the latest Rwanda Economic Update (REU). Despite global economic headwinds, Rwanda's resilience has been driven by robust consumer spending in key sectors like services and industry.

Rwanda’s labor market saw a strong recovery, with over 500,000 new jobs created by the end of 2023. This marked the most significant reduction in unemployment since the COVID-19 pandemic, with women benefiting slightly more than men from the job market expansion.

Calvin Djiofack Zebaze, World Bank Senior Country Economist for Rwanda, noted, “To fully leverage Rwanda's youth demographic, the country needs to expand labor force participation. Currently, only 2.8 million of Rwanda’s 8.1 million working-age individuals are employed full-time.” He emphasized the importance of improved education, training, and dignified employment opportunities for Rwanda's future growth.

The 23rd edition of the REU, titled Accelerating Skills Development to Foster Private Sector Growth in Rwanda, revealed that inflation, which peaked at over 21% in 2023, had slowed to 5.0% by August 2024, within the National Bank of Rwanda’s target range. This was due to tighter monetary policies and lower food prices, driven by improved supplies of fresh produce.

The report underscores the importance of skills development for private sector growth, noting that an inadequately educated workforce remains a major obstacle for businesses. It calls for increased public investment in education, particularly in Technical and Vocational Education and Training (TVET) and higher education, and better alignment between educational programs and the labor market.

"Skills development is critical to achieving Rwanda’s Vision 2050 goals," said Sahr Kpundeh, World Bank Country Manager for Rwanda. "The newly approved $200 million Rwanda Priority Skills for Growth and Youth Empowerment Project will address challenges identified in the report, providing 200,000 vulnerable youths with market-demanded skills."

The REU recommends strengthening institutional mechanisms to identify skills gaps and market opportunities, improving the quality of technical and vocational education, and increasing access to scholarships and financial aid for disadvantaged students. Additionally, the report emphasizes enhancing digital literacy and fostering stronger partnerships between academia and employers to create a workforce capable of meeting Rwanda’s growth objectives.