Rwanda: ‘RwandAir not profitable, but catalytic for economy’ – finance minister

Rwanda is pumping money into the tourism sector, which has badly been hit by Covid-19 says Minister of Finance and Economic Planning Uzziel Ndagijimana. He believes the partnership between RwandAir and Qatar Airways will help put the country in a better place to benefit from the post-Covid economic upswing.

While the impact of Covid-19 has been felt in all sectors, says Uzziel Ndagijimana in a video interview with The Africa Report, some have been hit harder than others. Tourism, in particular, has been knocked sideways by the coronavirus pandemic.

Having bet big on the sector over the past few years – the Rwandan government underwrote the creation of the Kigali Convention Centre – the collapse of tourist numbers has been tough.

As part of its Covid response, the government is pumping $100m over the next two years into the private sector. “And we plan to double this,” says Ndagijimana.

At least $50m will go on financial help to hotels. “We gave permission to the banks to restructure the loans, to increase the maturity up to 15 years and provide three years of grace period and reduce the interest rate”, he says.

The government is also pumping additional money into the national carrier, RwandAir, RWF145bn ($145m) in the 2020/2021 budget, up from RWF122bn in the previous year.

Ndagijimana says that transport was one of the worst-hit sectors, and that while RwandAir “is not profitable, it has played a catalytic role in our development”. The tourism industry was booming before the pandemic, “but it also helps trade, helps export some light manufactured items and took horticulture products to Europe.”

And even when passengers stopped flying, RwandAir helped in importing strategic medical supplies, like protective equipment and testing kits.

The imminent partnership between RwandAir and Qatar Airways should help shelter the airline from the tough times faced by Kenya Airways or South African Airways. “We are in final negotiations, the company will be stronger with a larger fleet and more resources,” says Uzziel, who declines to give a date on when it may be signed and confirms the government will remain the majority shareholder.

Qatar Air is also investing in the new Kigali International Airport.

The construction project has kept going despite the pandemic, in part to be able to meet the logistics requirements of the Commonwealth Heads of Government meeting taking place in June 2021. By 2022, the new airport should have the capacity to handle seven million passengers per year, compared to the nearly one million available today.

RwandAir meanwhile continues its expansion, and recently became the first African airline to trial the international IATA vaccine travel pass, part of a scheme airlines hope will convince governments to open up borders.

The economic recovery does not just depend on tourism, however, says Ndagijimana. Back in 2020, when Rwanda locked down the country starting in March, the second quarter’s GDP growth figure was -12.4%. “We have never had that except during the genocide,” he says. A progressive recovery was seen in manufacturing and trade, with -3.4% growth in in the third quarter. “We don’t have figures for the final quarter, but we expect another improvement, says the finance minister.

One immediate priority – aside from putting money into the private sector – is to ensure food security, with money pumped into agricultural production. The government has bolstered the social security net “to help people falling into poverty after the sudden close of activity, providing for basic needs, foods and so on”, says Ndagijimana. The national budget also has extra funds for the health sector.

All this requires extra cash: Ndagijimana asked parliament to increase the budget nearly 7% to RWF3.4trn. Having tapped $28m in debt service relief from the IMF in 2020, the government is targeting a rebound to 5.6% growth in 2021.

 Source: The Africa Report