Your Excellency Dato’ Sri Najib Tun Abdul Razak, Prime Minister of Malaysia & Patron of the WIEF Foundation
Hon. Tun Musa Hitam, Chairman, WIEF Foundation
Excellences Heads of Delegations
Distinguished Delegates, Ladies and Gentlemen
All protocol observed
I take delight and great pleasure in bringing to you warm greetings from H.E. President Paul Kagame and the People of Rwanda, as well as appreciation of the invitation for our country to be represented at this, the 11th annual meeting of the World Islamic Economic Forum.
On behalf of H.E President Paul Kagame, I would like to congratulate His Excellency Dato Sri Mohd Najib, the Prime Minister, the Government and the people of Malaysia for organizing such an opportune event.
This year’s theme of “Building Resilience for Equitable Growth” is particularly relevant given the current global economic conditions that we find ourselves faced with, and together, I am sure that we will all be able to gain from this sharing of experiences and lessons learnt.
Excellences, Distinguished delegates, Ladies and Gentlemen,
I had the honour of participating in the launch of the new Sustainable Development Goals that took place at the UN General Assembly in September, and the concept of inclusive growth is clearly identified in these new global objectives. But plans and targets are one thing, implementation and ensuring inclusiveness is another.
At a national level, Rwanda has made great strides in implementing a supportive environment for broad-based growth that has a real impact on the poorest in our country.
As a result of this concerted effort, GDP per capita has nearly tripled from USD 211 in 2001 to USD 718 in 2014 and this has been accompanied by a fall in the poverty rate from 58.9% to 39.1% over the same period.
Improvements in income inequality have also been experienced with reductions in the GINI coefficient.
Furthermore, we have created on average 146,000 new off-farm jobs per year since 2011 and have seen the share of industry and services in the economy increase.
Equally important, our women and girls have benefited too through the mainstreaming of gender in all of our national policies and programmes. This progress is concisely captured by the fact that Rwanda has achieved the Millennium Development Goals.
Our achievements with respect to promoting equitable and inclusive growth have been driven by our focus on Small and Medium Enterprises (SMEs), which are the backbone of job creation and entrepreneurship development in Rwanda.
Through our policies to promote a supportive business climate, the number of registered firms increased by around 150% between 2010 and 2014, while loans to SMEs by banks more than doubled during this time.
Rwanda has been consistently named as one of the top-performers in the world according to the World Bank’s Doing Business survey and is ranked 1st in East Africa region and 2nd best in Africa.
We are now considered the 2nd easiest country in which to get credit in the whole world after New Zealand.
Excellences, Distinguished delegates, Ladies and Gentlemen,
At a region level, the shocks that are affecting African economies are largely determined far from our borders and as a result we have little control over them.
However, the East African region is continually working to enhance regional integration and to strengthen our mutually beneficial economic ties.
In this respect, we view the recent initiative of the Northern Corridor Integration projects (NCIP) championed by the Heads of State of Kenya, Rwanda and Uganda now bringing on board the Democratic Republic of Congo, South Sudan, Burundi and Ethiopia, as a game-changing strategy to support businesses in the region to fully capitalise on the regional growth prospects.
This Northern Coordinator integration initiative characterised by a high level of political will at the Heads of State level, is testimony to what regional concerted efforts towards deepening integration mean for the growth of our economies.
Allow me to showcase a few of the recent achievements:
- The establishment of the Single Customs Territory has allowed goods to be cleared at the first port of entry, most non-tariff barriers removed and customs procedures harmonised, goods can now move from the port of Mombasa to Rwanda within 6 days, down from the 21 days that was previously experienced.
- Free Movement of People using ID as travel documents has made cross border trade much easier.
- The One network area has removed roaming charges on voice calls; this is now being extended to sms and data. As a result telecoms traffic has grown more than eight fold in some instances.
- The EAC Single Tourism Visa allowing tourists to apply for pay for one visa for the three countries has increased tourism inflows.
- A number of joint infrastructure projects are at varying stages of development. These include the standard gauge railway, power generation, transmission and interconnectivity facilitating power trade, oil refinery and pipeline projects to mention a few.
These reforms and regional connectivity projects are facilitating trade and are likely to have a positive impact unlocking the regional economic potential, boosting intra-regional trade and growth in general. More to this, cooperation in peace and security will enhance stability in the region.
Excellences, Distinguished delegates, Ladies and Gentlemen,
For the continent of Africa, the picture is a mixed story, despite fluctuations in the global economy over recent years, Africa remains rich in natural resources and this continues to form the basis for advancing our economic growth and development.
Sub-Saharan Africa, like other developing countries faces a turbulent future – the IMF’s recent Regional Economic Outlook has forecast ‘stormy weather’ ahead.
The fall in world commodity prices, the slowdown in Chinese growth, as well as the increased cost of credit on international markets has all had a detrimental impact on African economies, and this is likely to persist in the near term. To paint more of a detailed picture:
- After a steady rise in prices since the early 2000s, the decade-long cycle in commodity prices seems to have come to an end. Over the last two years, the prices of many commodities exported by the region have fallen by some 40-60 percent. This decline has been underpinned by the rapid and persistent weakening of the global demand for raw materials combined, in some cases, with an increased supply.
- The fall in commodity prices has thus compressed the fiscal and export revenues of many sub-Saharan African countries that are substantial commodity exporters.
- Global financial conditions are gradually tightening. The expected monetary policy normalization in the United States and the reassessment of global risks over the last few months have already altered the environment of abundant liquidity and low borrowing costs experienced by emerging and frontier market economies over the last few years.
- This trend is also visible in sub-Saharan Africa, even if this region remains, financially, relatively less integrated than other parts of the world.
- After two years of record Eurobond issuances, few countries in the region have tapped the international sovereign bond market this year, and market yields have risen.
- Against this adverse backdrop, countries generally have only limited buffers to offset the downward pressure on activity.
- In many cases, savings from the recent period of rapid growth have been limited. Many countries, especially oil exporters and frontier markets, are entering this period with larger fiscal and external deficits that at the onset of the global financial crisis in 2008.
- Public debt has risen in most countries, and the positive dynamics that in the recent past have put a relative lid on the expansion of public debt could rapidly reverse, amid lower growth and higher interest rates.
- In frontier markets, debt levels are becoming increasingly at par with emerging markets, and the headroom to finance necessary development needs is rapidly disappearing. Rising spreads and yields signal that investors are re-pricing bonds to account for these growing vulnerabilities.
- Some central banks have intervened to contain exchange rate volatility, and others, most notably among oil exporters, have drawn on their reserves to smooth the adjustment to low commodity prices.
- Some countries, such as Angola and Nigeria, have also introduced administrative measures to stem the demand for foreign currency, significantly hampering the conduct of private sector activities in the process.
- Substantial risks still face African economies in the future, specifically:
- Security-related risks still prevail in a number of countries; the acts of violence perpetrated by Boko Haram and other groups in a region spanning Cameroon, Chad, Niger, Nigeria, Mali and Kenya, are causing tragic loss of life and widespread human suffering, and are also weighing on economic activity, straining fiscal budgets, and diminishing the prospects of foreign direct investment.
- In South Sudan the civil war continues to take a heavy toll, and the recent developments in Burundi and Burkina Faso are reminders that political cycles can still cause turmoil.
- On the external front, given the specific role that China plays as trade and financing partner in sub-Saharan Africa, a more rapid slowdown in this country would intensify strains in the region though a variety of channels.
- For a start, it would put additional pressures on commodity prices. Moreover, it could trigger a broader risk retrenchment from emerging markets. Lower Chinese growth could also exacerbate the global slowdown in manufacturing and trade, with wider repercussions on the region’s external demand.
- A sharp global reallocation of financial assets could lead to rapid capital outflows from the region’s frontier markets and exacerbate current exchange rate pressures.
- However, with all that I have highlighted above – and admittedly, it does paint a gloomy picture – as a result of improvements in policies and institutions that have been made over the last decade, as well as significant capital inflows, the growth forecast still looks relatively robust for sub-Saharan Africa at an average of 4-5%.
That being said, this is not a time for complacency and going forward it will be increasingly challenging for governments in the region, in fact across the world, to maintain robust macro-fiscal positions and adequate reserves of foreign exchange.
So we must prepare. We must look to strengthening our domestic revenue mobilisation; we must ramp up our competitiveness; strengthen regional integration; and crucially, we must ensure growth is inclusive.
Excellences, Distinguished delegates, Ladies and Gentlemen,
As I conclude, I would like to highlight the cordial relations that Rwanda enjoys with a number of Islamic countries, both politically and economically.
We’ve hosted numerous delegations that have visited our country to explore investment opportunities, and which have yielded tangible relationships with a number of our businesses.
The current focus on inclusive and equitable growth must sound like an old story to Islamic countries, where your economic practices have been driven by these critical concepts.
Whilst, I do not admit to being an expert on Islamic economics, I do realize that there is much that we can learn from this model.
For instance, the idea of taxing wealth, but not trade, as well as reducing the risk associated with lending, are all ideas that have relevance for my country, as well as others in the sub-Saharan region.
As such, I look forward to learning more about this model during my participation in this conference.
Finally, indeed in Rwanda we understand that ensuring sustainable growth means forging frameworks of cooperation, that benefit all parties – specifically, increasing trade, and encouraging greater flows of capital, technology and knowledge.
- To that note, I encourage the Islamic Business Community to take advantage of existing investment opportunities in Rwanda, as we remain an ideal investment location due to our security, enabling policy and infrastructure environment, as well as the provision of focused investment incentives.
- On that note, I wish to end here and again thank you for the cordial and hospitable welcome that I have received since arriving in Malaysia. I wish all here today, fruitful and productive discussions so that together, we may be able to forge ahead in these uncertain times.
Thank you.