By David Himbara
Before the Covid19 struck in December 2019, Rwanda was the poorest country in the East African Community, except for Burundi. In Kenya, 37.1% of the population lived under the international poverty line of US$1.19 a day versus 41.5% in Uganda; 44.7% in South Sudan; 49.1% in Tanzania; 56.5 for Rwanda, and 72.8% in Burundi.
Before the Covid19 pandemic, Rwanda was already the one of the 10 poorest countries in the world, as measured by the international poverty line of the population living on less than US$1.90 a day. The percentage of the population living on less than US$1.90 a day in Rwanda was 56.5 percent, making Rwanda the 146th poorest country in the world out of 155 states. According to the World Bank’s January 2021 Rwanda Economic Update, poverty increased by up to 5.7 percent due Covid19-related economic difficulties. This is how the World Bank explains the Rwandan situation:
“Recent developments, including the continued GDP decline in Q3 of 2020, and the increasing COVID-19 spread resulting in a lockdown, in Kigali in January 2021, may indicate that the pessimistic scenario is playing out. Under this scenario, the overall increase in the poverty headcount is 5.7 percentage points, indicating an estimated additional 625,500 people falling into poverty.”
With the 5.7 percent increase above 56.5 percent of the existing poverty rate, 62.2 percent of Rwandans are poor. What are the circumstances that led to this pessimistic scenario? The World Bank’s January 2021 Economic Update shows how the Covid19 pandemic ravaged Rwanda’s low-income economy, including the following factors:
- Between February and May 2020, aggregate employment fell by nearly 370,000, or by about 10 percent.
- Unemployment soared over this same period to 22 percent of the labor force.
- Nearly 60 percent of workers who kept their jobs through the lockdown reported receiving lower salaries during the lockdown.
How will Rwanda recover from these harsh realities? One thing is for sure. As the World Bank’s January 2021 Economic Update shows, Rwanda is resorting to foreign aid. Aid grants doubled in the second quarter of 2019, a rise of 83 percent in real terms. Stay tuned.
