In the first half of this year, Rwanda’s exports improved, driven by non-traditional exports despite a fall in commodity prices on the global market.
According to information from the central bank published yesterday, exports risen by 7.5 percent, outweighed by 18 percent increase in imports, resulting in a wider trade deficit.
“Traditional exports – minerals, tea and coffee are performing negatively, but we see good performance on the non-traditional exports and this is linked to Made in Rwanda programme,” John Rwangombwa, the Governor of the National Bank of Rwanda, told the press after their quarterly economic review.
In particular, due to enhanced storage ability, Rwanda recorded an rise in foreign exchange receipts from foodstuffs as well as re-exports, particularly petroleum products.
‘Rwanda is keen on becoming a source of re-exports in the region as it also positions itself as a trade logistics hub’, the Governor said.
The Bank claims Rwanda shipped in more intermediate and capital goods during the period under review, which increased the value of imports.
The rise in the import bill for intermediary and capital products represents continuing economic investment, especially enormous outlays on projects such as the Kigali Arena and the Hakan peat-to-power plant whose development started last year in the district of Gisagara.
“There is a big growth of capital goods by 40 per cent in the first six months. We also see big growth of intermediary goods that grew mainly in construction and manufacturing,” the Governor noted.
Financial sector performance
Meanwhile, the central bank has chosen to keep the main repo rate at 5 percent, stating that its assessment of global and domestic economics as well as financial trends represents a favorable economic outlook.
The decision, they say, was also based on the positive trends realized in the first half of 2019 and is aimed at continuing to support growth in the private sector.
Outstanding private industry loan in the first half of the year rose by 8.2% from 1.8% in the same period last year.
In the same era, authorized loans also rose by 36.8% from adverse 3.3%.
That represents a strong financial output, according to the Bank, which is anticipated to be maintained throughout the year.
Headline inflation, including food and power prices, declined from 1.8% in the same span last year to 0.7% in the first half of this year. A decrease in food and power prices caused the decrease.
Core inflation fell from 1.8% in the same era last year to 1.6%.
The Governor outlined their choice to keep the repo rate expected to assist the central bank continue to promote the economy’s funding and aggregate demand enhancement.
He said expectations of small inflation rates and mild exchange pressures were expected.
Financial sector performance
During the period under review, the financial sector also recorded growth due to the growth in assets and profits of commercial banks, micro-financial institutions and insurance companies.
Financial sector assets increased, driven by deposit growth, institution capitalization, as well as profits.
Financial sector total assets expanded by 14 percent to Rwf4.919 billion, representing 56.9 percent of gross domestic product, up from the 12 percent growth recorded in the same period.
In particular, banks and MFIs increased their lending pace in the first half of 2019, reflecting a stronger demand for credit.
Outstanding private-sector credit increased in the first half by 16.6 percent to Rwf2.008 billion, compared to the 9.1 percent growth recorded in the same period last year.
Microfinance institutions ‘ loans increased by 14 percent to Rwf162 billion, compared to last year’s 11 percent growth recorded in the same period.
Bank net profits increased from Rwf22.9 billion in the first half of 2018 to Rwf26.2 billion in the second half of 2019.
Microfinance institutions ‘ profits increased from Rwf3.3 billion to Rwf7 billion, while insurance sector profits increased from Rwf20.7 billion to Rwf23.2 billion.
Increased lending for banks and microfinance institutions, as well as recoveries from non-performing loans and written-off loans, increased profits.
According to the central bank, the improvement in insurance sector profits was mainly supported by improved motor insurance product performance in terms of both written premiums and claims management.