The African continent, a beacon of African growth, remains one of the fastest-expanding economies globally. Despite this promising trajectory, the economic foundation of many African nations is still predominantly tethered to commodity production and exportation, especially crude oil, underscoring a critical need for diversification and development of internal value-added operations. Oil is a natural resource that commonly attracts a high amount of foreign investment and boosts the main economic indicators of a country. It can be easily used as a proxy for natural resource based economies. Moreover, due to the current commodity crisis for certain economies, with the barrel price sinking in 2014-15 to its lowest level since 2003[1], it is easier to highlight some differences in performance between oil producing and non-oil producing African countries. It is also important to highlight such differences since it provides an opportunity to assess the convenience and sustainability of a development process based on these natural resources. Oil and Non-oil Producing Countries Nineteen of the 54 African countries are currently oil producers, however, it is worth noting the number of produced barrels can considerably vary from one country to another. Those countries are home to about 56% of the African population.[2] Fig.1 - African crude oil producing countries[3] In terms of wealth, the gap between the two groups of countries is evident, when it comes to GDP and GDP per capita. Nevertheless, the growth rates for both indicators show how the recent trends are not necessarily related to the oil economy. In relative values, the non-producing countries show better performance than the producers, but the progress of the two groups of countries can be reasonably compared over the years. Fig. 2 – GDP in USD bln[4] Fig. 3 – GDP growth[5] Fig. 4 – GDP per capita in USD[6] Fig. 5 – GDP per capita growth[7] It is easy to identify the higher impact that the 2014-15 price crisis had on oil-producing countries, whose overall GDP and GDP per capita fell by 10.0% and 12.2% respectively in 2015. The same crisis could have also been an important factor in the good export dynamics. As the following chart shows, the oil-producing countries’ export precipitated in 2015 (-49.0%), as a result of a negative trend during the last five years. Even the export from non-oil producing countries fell during the same period, but the overall decrease is moderate (-2.0%). Fig. 6 – Export of goods in USD bln[8] Fig. 7 – Export of goods growth (decrease)[9] In terms of attractiveness, the oil economies continue to attract the most attention from foreign investors, despite the fall in oil prices. The producing countries received increasing FDI (+4,7%) with a fluctuating trend in the course of the years. In the last years, the oil-free countries received around 21% to 56% fewer inflows compared to the oil producers, yet still showing an overall +1.0% growth. Fig. 8 – FDI inflows in USD bln[10] Fig. 9 – FDI inflows growth[11] Beyond indicators strictly related to the economy, it is interesting to recognise how the richer oil-producing countries are on average more developed than the others. With reference to human development aspects such as life expectancy, education, and income per capita (enclosed in the elaboration of the Human Development Index), the African oil producing countries show better performance than non-producers. The following chart shows this gap, despite the fact that HDI growth trends are comparable among the two groups of countries. Fig. 10 – Human Development Index[12] Consequences and Recommendations The recent crash in oil markets and commodity prices has harshly affected the global economy, with no immunity offered to developing countries. Saudi Arabia for instance, once thought immune to the downturn in oil prices, was recently declared at the verge of bankruptcy and forced to make its first international bond sale[13] to bring in necessary cash. In Nigeria, the falling oil prices have been claimed to have “a painful effect” on the country’s economy, with the necessary slowdown of the production and a negative impact on the rest of the industry[14]. In Angola, the oil crisis is believed to have unmasked how poorly managed the country really was in the last decade, giving visibility to all the economic and social deficiencies that were concealed by the high growth percentages[15]. Even some non-producing countries have been affected by the negative situation. For example, in Mozambique the realisation of various large projects aiming to benefit from the country’s natural gas resources, whose selling price is strictly related to oil price, has been continuously delayed these past years. This conjuncture created a series of erroneous expectations leading the country into a major economic downturn, with the government taking on more debt assuming an easy repayment, once revenue from LNG started flowing[16]. The IMF pointed out how most of the African countries where energy and mining exports accounted for a larger share of GDP will need to make “sizeable adjustments” to their domestic spending. On the other hand, countries that have invested in infrastructure and strengthened domestic consumption are all expected to grow at rates between 6-7% and more in the next few years. This is the case for the Ivory Coast, Kenya, Rwanda, Senegal and Tanzania[17], leading to the clear but not so obvious conclusion that diversification is an inescapable factor for sustainable growth. Antonio Pilogallo, Associate at Infomineo. Learn more about Antonio. [1] Source: http://www.bbc.com/news/world-35345874. [2] Source: Infomineo analysis on WB data [3] Source: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2241rank.html. Given the very small amount of crude oil production, Morocco has been considered as a non-producing country. [4] Source: Infomineo analysis on WB data [5] Source: Infomineo analysis on WB data [6] Source: Infomineo analysis on WB data [7] Source: Infomineo analysis on WB data [8] Source: Infomineo analysis on UN Comtrade data [9] Source: Infomineo analysis on UN Comtrade data [10] Source: Infomineo analysis on UNCTAD data [11] Source: Infomineo analysis on UNCTAD data [12] Source: Infomineo analysis on UNDP data [13]Source: http://www.forbes.com/sites/timdaiss/2016/10/23/we-are-doomed-to-bankruptcy-unless-changes-made-says-saudi-official/#6e9b68d24471 [14] Source: http://www.bbc.com/news/world-35345874 [15] Source: https://www.washingtonpost.com/news/worldviews/wp/2016/08/02/how-the-crash-in-oil-prices-devastated-angola-and-venezuela/?utm_term=.816db1e8ab7d [16] Source: http://ww2.frost.com/frost-perspectives/impact-oil-and-gas-price-slump-mozambiques-economy/ [17] Source: https://www.weforum.org/agenda/2016/04/10-things-the-imf-wants-you-to-know-about-africas-economy
In the wake of its historical challenges, Rwanda’s economy stands today as a testament to remarkable resilience and growth. Once overshadowed by the tragedy of the 1994 genocide, this vibrant East African nation now showcases a unified effort towards substantial political, social, and economic progress. Rwanda ICT Sector Information and Communication Technology is an essential element to drive the transformation of Rwanda to a knowledge-based economy. Rwanda is among the fastest growing African countries in several fields of ICT: e-commerce and e-services, mobile technologies, applications development and automation. The first factory unit of hardware is installed in Rwanda “Positivo” and has started operations. So, it should not be surprising if you see, in the near future, laptops, tablets and other electronic devices with a label made in Rwanda. In addition, Rwanda is considered a regional center for the training of professionals and researchers on communication technologies. Quick Facts Government Support Projects in ICT Kigali Technopole: a center dedicated to ICT development and research in Africa with a focus on applications relevant to the African markets. The center is driving Rwanda into a modern knowledge-based economy. It provides ICT solutions beyond borders in Africa and the rest of the world. Technopole is expected to attract skilled ICT professionals and worldwide companies. KLab (knowledge Lab): is an open technology hub in Kigali where students, fresh graduates, entrepreneurs and innovators come to work on their ideas and projects to turn them into viable business models. The aim of the project is to encourage young entrepreneurs to develop their technology-oriented ideas into products and future companies. 4G (LTE): The Rwandan Government, in partnership with the South Korean telecommunications provider KT Corporation, is rolling out a high-speed 4G (LTE) broadband network across the country. The network is expected to cover 95% of the population within three years. ICT : A Real Driving Force for the Economy The government relies on the development of the ICT sector, not only to bring investment and create jobs but also to enable the advancement of Rwandan public services including education, health care, and Finance. Education: Rwanda has taken a step ahead to improve its education system and now stands as a model in Africa. The government implemented the One Laptop per Child (OLPC) program which has played a key role to introduce technology in primary schools. It also allows primary schools’ students early access to computer skills and computer science while expanding their knowledge on specific subjects like science, mathematics, languages and social sciences through online research or server-hosted content. According to the Ministry of Education, 56% of primary schools have access to computers, while 8% of them have access to internet. Healthcare: Rwanda Health Management Information System (R-HMIS) has covered over 500 health facilities in the past two years. Many modules have been added to the system such as death audit reporting for all maternal, Neonatal, and child deaths, Community Health Information System, eTB-a patient level system for tracking MDR (multi-drug resistant) to patients as well as the HIV reporting and disease surveillance system which is currently being transitioned. According to the Ministry of Health, the percentage of health centers connected to internet reached 93.8%. The number of clinical emergencies supported through RapidSMS is 25%, while number of patients at community level tracked using RapidSMS reached 173,131. Finance: Mobile money subscribers across all networks have reached 6,480,449 which was more than twice the number of subscribers in the previous year. The number of mobile money transactions reached USD 824.6 million compared to USD 394 million amount transacted in the year before. (Data & Statistics 2014) Younes Baidada, Senior Analyst at Infomineo. References [1] Ministry of Youth and ICT, Rwanda ICT Highlights 2014, (Mar 2015) Link: http://www.myict.gov.rw/press-room/latest-news/latest-news/?tx_ttnews%5Btt_news%5D=216&cHash=3ab7393897aff0a46d7f29612935c05e [2] Ministry of Youth and ICT, Rwanda ICT Sector-Profile 2014, (Mar 2015) [3] National Bank of Rwanda, Foreign Private Capital in Rwanda, (2015) [4] Press: The New Times, Rwanda Powering Ahead with ICT, (Feb 2016), link: http://www.newtimes.co.rw/section/article/2016-02-04/196744/ [5] Press: CIO East Africa, Rwanda Leads the Way in Demonstrating How ICT Can Fund Development, (Aug 2016), link: http://www.cio.co.ke/blog/rwanda-leads-the-way-in-demonstrating-how-ict-can-fund-development [6] Press: The New Times, Korea Pledges More Support Toward Rwanda’s ICT Sector, (Oct 2016), link: http://www.newtimes.co.rw/section/article/2016-10-05/204184/ [7] Press: The New Times, Kigali Trade Zone to Host ICT Park, (Jan 2013), link: http://www.newtimes.co.rw/section/article/2013-01-15/61849/ [8] Press: The New Times, Why this South American Company is Making Laptops in Rwanda, (Jul 2016), link: http://www.newtimes.co.rw/section/article/2016-10-05/204184/
After a four-year civil war that ended in 1994 and that has thrown Rwanda into a deep crisis, the country is engaged in a new momentum of economic development. In fact, the government has launched in 2000 a long-term development strategy “Rwanda 2020”. The goal of this program is to transform the country from a low-income agrarian economy to a medium income export-oriented and knowledge-based economy. So far, some reassuring economic signals are showing that the Government is engaged in a growing path: (more…)