Chapter IV: DATA
PRESANTION, INTERPRETATION, AND ANALYSIS
4.1. Description of
economic environment of Rwanda
In the effort to analyze the role of SUT/I-O Table in the
process of economic development of Rwanda, it is necessary to proceed with the
examination of economic environment of Rwanda. Economic environment of Rwanda
is permanently changing due to its structure composed by political and social
framework, technology, market structures, which in somehow indicate the
progress to development of Rwanda.
4.1.1. Physical
characteristics of Rwanda
Rwanda is a land locked eastern African nation in the Great
Lakes region. It shares international borders with Uganda, Burundi, Tanzania
and the Democratic Republic of Congo. Despite lying on the equatorial belt, the
country enjoys a cool climate due to the presence of lower mountains and a huge
forest region. Rwanda is home to abundant wildlife. Mountain gorillas are one
of the most sought after endangered species found in the region. Wildlife
tourism has become a significant addition to Rwanda's economy. Rwanda has a
population above 10 million, based on 2009 estimates 57% of the population
lives below the international poverty line (Republic of Rwanda, NISR:
Statistical Yearbook 2009 Edition, 2).
4.1.2. Economic Environment of
Rwanda
Rwanda's economy primary depends on agricultural productivity.
Almost 90% of the population thrives on farming and livestock rearing. Unlike
other Africa nations, Rwanda does not have mineral deposits or measurable
natural resources. The industry and Service sectors are not entirely developed
to push towards higher growth.
The Rwandan economic profile suffered a serious setback during
the 1994 genocide. The genocide resulted in the destruction of the emerging
industrial sector. It caused widespread unemployment and population
displacement. It also hampered the efforts towards attracting foreign
investment. In the early 2000s, the economy began to revive. According to 2009
figures, Rwanda has an annual GDP (Purchasing power parity) of US$10.39
billion.
The budget of Rwanda is still being dependent on donors and
the public debt constrains the development of Rwanda. Moreover the GDP Deflator
base year 2006 shows that it has increased from 62% in 1999 to 137% in 2009.
This disparity shows also the trend of general prices on the market in Rwanda
(NISR: Statistical Yearbook 2009 Edition, pp 94-142).
|
GROSS DOMESTIC PRODUCT BY KIND OF ACTIVITY DEFLATORS
(2006=100) (in Billion of Frw)
|
|
YEARS
|
GDP
|
Agriculture
|
Industry
|
Services
|
Adjustments
|
|
1999
|
62
|
51
|
68
|
71
|
54
|
|
2000
|
63
|
52
|
69
|
74
|
51
|
|
2001
|
64
|
53
|
70
|
73
|
56
|
|
2002
|
61
|
46
|
69
|
73
|
60
|
|
2003
|
74
|
64
|
76
|
82
|
76
|
|
2004
|
84
|
77
|
87
|
87
|
89
|
|
2005
|
92
|
86
|
96
|
94
|
96
|
|
2006
|
100
|
100
|
100
|
100
|
100
|
|
2007
|
111
|
108
|
111
|
113
|
114
|
|
2008
|
125
|
116
|
129
|
129
|
139
|
|
2009
|
137
|
130
|
143
|
139
|
144
|
Source: Republic of Rwanda, NISR, GDP Annual
Estimates for 2009 based on 2006 benchmark.
The period of the study shows that if nothing is done, the GDP
Deflator will continue to grow (2006=100), this grow in GDP Deflator will cause
a obstacle to policymakers due to price fluctuation. The following graph states
GDP deflator trend within the period of the study and 10 years beyond the
period of the study.
Regardless those constraints, public investment and saving
have increased from 1999 to 2009 but it is still low, and this constraint
hindering economic progress; a part from public investment and saving, private
activities and investment in Rwanda are progressing on low rata. Most of the
private activities are concentrated in service and construction sectors.
Industrial activities are mainly Import-Substitution oriented
towards the local markets for basic products. Even though, industries like
Nyabisindu, Inyange, Nirangarama and others alimentary industries Food
Processing is particularly weak compared to the opportunities available in
Rwanda.
The role of development of private sector has been to
establish the relevant legal and commercial framework, by promoting foreign
investment and delivering necessary infrastructures for competitive private
activities. Concerning natural resources, in Rwanda there is scarcity of
natural resources that are necessary for the industry, and those available are
not economical exploited. Cassiterite, Colombo-tantalite and Wolframite are the
main extracted resources but at a low quantity and without any value added. The
export of these mining goods brought US$1 million in 1999; say 1% of the total
exports.
Wood however remains the main natural resource. Rwanda has
about 90 ha of wood that make Nyungwe forest. Wood provides 97% of source of
energy in Households. But it serves in artisan and in bricks processing.
Another natural resource is the Gas Methane found in KIVU
Lake. This gas is estimated to be 55 billion of cm3 and represents
US$156 billions, which makes it one of the most prominent in Rwanda. If it were
rationally exploited, this gas could solve the problem of energy scarcity for
Rwanda by increasing the capacity of industries oriented to the export, and as
the export is improved the SUT also is improved. The improvement of SUT in this
case is viewed where the trade balance tends to be balance but at low sped.
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