06.02.2021

Digital Policy Breakfast: COVID-19 & the 2nd Lockdown in Kigali "What are the economic implications for Rwanda?"

On Friday 29th of January 2021, the FES Rwanda in partnership with EPRN held their first policy breakfast meeting this year 2021.

The “digital breakfast” brought together policy experts, economists, academics, trade unionists, youth representatives as well as journalists, to discuss the economic implications of COVID-19 and the second lockdown in the Rwanda's capital of Kigali. 

The virtual meeting came at the tail end of the second lockdown, which this time looked at only Kigali, but nevertheless has had far reaching ramifications to the social and economic lives of people across the country. 

The second lockdown was administered as the last option to control a resurgent COVID-19 towards the end of 2020, which saw cases spike sharply due to what government said was a lax in observance of COVID-19 protocols. 

The breakfast meeting started with a presentation from Mr Jonas Munyurangabo, the Director General of Planning, Monitoring and Evaluation at the Ministry of trade and Industry (MINICOM), who was also the key discussant. 

In his presentation, he compared last year's lockdown and the current one, highlighting the similarities and differences between the two, for instance the fact that in both only essential service providers are permitted to operate.

He pointed out that the key difference is the fact that the second one is partial, only applying to Kigali, while last year's lockdown was nationwide, where even high value amenities and services like the airport, tourism, hotels were at a total standstill.

He also noted that different from the first one, people now have some experience which comes handy in coping with the COVID-19 lockdown. 

It was also observed that as a result of lessons from last year's lockdown, during this one there has been a sharp improvement in the usage of online platforms to overcome mobility limitations.

Despite being limited only to Kigali, it came out clearly that this year's lockdown still had a serious effect on trade and business in general, due to its position as the epicenter of economic activities. Save for 5 Districts, the rest have a direct trade connection to Kigali.

Coming from a serious economic contraction last year, which saw Rwanda's GDP declining by 12.4 per cent, where services dropped by 16 per cent, industry by 19 percent, as the pandemic hurt the economy, the negative growth is expected to continue into 2021 largely due to lockdowns and other restrictions.

Although it is still too early to predict the impact of the lockdown, a subdued growth is expected across the services, industry sectors, as well as job losses and logistical glitches, which will further inhibit the flow of goods and increase the cost of trade. 

Participants took to the digital chat platform to ask what the impact of the Economic Recovery Fund (ERF) has been, to which Jonas responded that the loan restructuring for distressed businesses has been highly adopted, but it is not the case with other windows of the fund. 

Although the extent at which the proliferation of E-commerce platforms will mitigate business losses during the lockdown is not yet known, it was said that up to 35 E-commerce platforms now active during the lockdown will go a long way to help minimize losses.  

It was pointed out that the pandemic will without doubt worsen the country's already widening gap between the rich and the poor, and further perpetuate income inequality. 

The pandemic and all its containment measures, which include lockdowns, has left hand-to-mouth workers as well as members of the informal sector in general without work for months, while others lost their jobs for good.

This has left poor households even poorer and decimated livelihoods, which will exasperate household poverty, something participants said raises questions around reviewing existing social protection policies going forward.

It was pointed out that the pandemic has plunged vulnerable groups into further vulnerabilities, asking government and its development partners to implement targeted interventions to minimize these vulnerabilities. 

One participant raised a concern of how government remains silent on offering tax cuts to businesses, yet many are struggling to survive, to which the expert said, ordinarily government doesn't tax businesses that are loss making, and that even the burden of VAT falls on the consumer not on the business.

As the two weeks of lockdown come to an end many people remain largely uncertain of whether it will be extended or not, but whether it is extended or not, the COVID-19 pandemic has changed many peoples lives forever.

Friedrich-Ebert-Stiftung
Rwanda

House KG 13 Ave, 14, Nyarutarama, Gasabo district - Remera sector
Kamashashi cel
Kigali – Rwanda

+250 7869 500 20
info(at)fes-rwanda.org

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