By: Rutazigwa Alphonse
Agriculture as a baseline for Rwanda’s economy should be earmarked for a quick intervention, to spearhead the economic growth, since it employs a substantial large percentage of Rwandans, (61.7%), according to the World Bank Collection of Development Indicators, which were compiled from officially recognized sources, thus expanding the economic baseline of the national Gross Domestic Product (GDP). It’s therefore in this context that the economic recovery fund will play unmistakable role in empowering the economy, hence enabling in the creation of employment opportunities, which will in turn spur the purchasing power of the ordinary citizen.
This will lessen the negative economic impacts, which were caused by Covid-19 pandemic, lest acting as a precursor to the national development, most importantly helping to reinvigorate most economic activities, which are the back bone of the economy.
The Fund will ease the hardships which were caused by Covid-19, by boosting businesses, creation of jobs, and increasing the purchasing power of the clients, however, all these are attributed to the proper implementation of Covid-19 Protocols, and accessibility to vaccines and other methods which are relevant to the fight/prevention of Covid-19 pandemic. The essence of the Fund was to speed up the recovery of hardest hit businesses, and to increase production in general.
Having necessitated the tough measures regarding countering the pandemic’s effects, it implies that expenditure had been drastically reduced, so as to meet the domestic demands, be it on household level as well as the national level, as a result, the economy had to shrink, it’s in this regard that the Fund had to be established, so as to cement the loophole which had been caused by Covid-19, such as feeding the citizens who could hardly support themselves during the lock-down periods and the provision of other covid-19 prevention logistics.
The prerequisites of accessing the Fund, banks are to be used as conduits of the money on a loan basis; this means that that it will have to be paid back, having cushioned the disaster that had been caused by pandemic.
The facilitation in the combat against Covid-19 and the negative effects attributed to it, purposely to massage the negative impacts, thereby reactivating the economy through the financial sector, lest boosting the national economy, through the banking system. The Economic Recovery Fund (ERF) was established by the Government of Rwanda to support the recovery of businesses hardest hit by COVID19 so that they can survive, resume operations and safeguard employment, thereby cushioning the economic effects of the pandemic. National Bank of Rwanda was appointed as the Fund Manager.
To ensure that funds are used appropriately to achieve the impact expected, the Economic Recovery Fund Technical Steering Committee will govern the fund. It will review the performance of the Fund on a monthly basis and report to the Economic Recovery Fund High Level Steering Committee of Ministers, NBR Governor and CEOs (RDB and PSF).
The technical steering committee is composed of Ministry of Finance and Economic Planning, Ministry of Trade and Industry, Rwanda Development Board, National Bank of Rwanda, Private Sector Federation, Rwanda Bankers’ Association, Association of Microfinance Institutions of Rwanda and Business Development Fund.
Main objective: support businesses in the sectors hit hardest by the pandemic so they can survive, resume work/production and safeguard employment. To expand domestic production of essential goods during the COVID-19 and post-COVID-19 period (e.g. medical equipment like masks, gloves, sanitizers, disinfectants, and others that may be deemed necessary during this period).
Sectors eligible for this support include; All businesses highly impacted by the restrictions put in place to prevent the spread of the virus, and exposed to consumer discretionary spending, and those with global supply chains that have been disrupted. These include but not limited to Tourism, Manufacturing (including Agri-processing), Transport and Logistics and SMEs linked to domestic and global supply chain.
Micro and Small Enterprises (MSEs)/Informal sector: COVID-19 fiscal and monetary responses in place don’t reach the informal economy while the strain on incomes resulting from the lockdown and decline in activities/consumption will devastate informal workers (and their families) close to the poverty line. To protect those business/jobs and stimulate consumption of households, the Fund will create a window to support MSEs via MFIs and provide credit guarantee through BDF.
All you need to know about the Economic Recovery Fund.
Likewise, South Korea’s stance to Covid-19 economic recovery has been enabled it to resist the economic shock, because of the appropriate measures, that had been put in place to contain covid-19 pandemic, as a result, the negative effects, were relatively low, and surprisingly, the post pandemic employment index currently surpasses the pre pandemic period, in the context of employment, because today, more older people are being employed more than it used to be before the pandemic priod, though the stimulus package S Korea injected in vis-à-vis other G-20 countries, in terms of both short and long term basis.
Back to Rwanda’s context, the resolute and competent management of the pandemic, enabled Rwanda to counter massive economic shocks, partly because of early intervention measures, such as tracking and tracing of positive cases, and social distancing measures that checked Covid-19 cases to low levels, and relatively low mortality rate. The country’s containment strategy prevented major out breaks of Covid-19, hence playing a significant role in avoiding a general economic lockdown.
