UR don calls for more innovative actions to save Rwanda’s economy from COVID-19

The call was made in a research paper “Indicative Socio-Economic Impacts of the Novel Coronavirus (COVID-19) Outbreak in Eastern Africa : Case of Rwanda” by Prof Alfred R. BIZOZA, a University of Rwanda staff and Simeon SIBOMANA as co-author. The paper discusses the potential effects of COVID-19 on international trade, small and medium enterprises (SMEs), and agriculture in Rwanda and proposes some policy actions to address short to medium socioeconomic impacts in these particular sub-sectors.

The paper is among the fewer emerging case studies for Africa and addresses the case of Rwanda. It documents the on-going policy response measures and the anticipated short to medium socioeconomic impacts of COVID-19 with a focus on external merchandise trade, small and medium enterprises (SMEs), and agriculture.
Results indicate that despite promising stepwise policy measures taken by the government of Rwanda and how the population is positively responding to these measures, these sub-sectors will be negatively affected by the COVID-19 though at different levels. The external merchandise trade and SMEs are expected to be more affected than the agriculture sector .

“The policy response will need more innovative actions beyond monetary and fiscal measures addressing immediate effects such as liquidity constraints but seed for resilience of long-term effects of the pandemic as well as the recovery of the entire economy in Rwanda” the research observed

The paper provides a narrative description of some of the proactive and stepwise policy responses to COVID-19 by the government of Rwanda and the short-term impacts of these measures in order to reflect on possible entry points for the recovery period after the pandemic. These measures include monetary and fiscal measures, health treatment, social protection measures for people affected by the pandemic, and other measures meant to contain the negative impacts of the spread of COVID-19.

Small and Medium Enterprises are supposed to be affected in terms of labor productivity, offset of salaries and wages, and increased financial burden for loan repayment after the pandemic because of the closure of businesses.The paper demonstrates that the measures taken so far by the government are in line with monetary and fiscal facilitation for operating businesses will provide short term response.

According to the research, the government in collaboration with partners will need both protective and capital enhancing policies such as highly subsidized financial credits, tax-basedd subsidies during the recovery period, and other innovative policy incentives to support SMEs recover quickly and re-employ more people which in turn would reduce the potential social burden for the government as a result of potential employment chocks.

For more about the reseach paper, visit the link