Rwanda moves to protect the business community from COVID-19 shocks

The Government of Rwanda is taking swift action to protect businesses and small to medium enterprises (SMEs) from the economic fallout of the COVID-19 pandemic. By tomorrow, the Rwanda Revenue Authority is set to disburse 13 billion Rwandan francs, roughly $13.5 million, in Value-Added Tax (VAT) refunds to businesses. This move is part of a series of measures implemented by the government to mitigate the adverse effects of the crisis on the business sector. To gain further insight into the economic landscape of Rwanda amid the pandemic, CNBC Africa engaged economist Professor Alfred Bizozah in a recent interview. In the discussion, Professor Bizozah highlighted the challenges faced by various sectors of the economy and underscored the need for continued support to bolster recovery efforts. One of the sectors significantly impacted by the pandemic is tourism. With the government's decision to halt all tourist activities, businesses in this industry, including hotels, restaurants, and bars, are bearing the brunt of the downturn. Professor Bizozah pointed out that while concrete statistics on the economic impact of COVID-19 are still forthcoming, preliminary signs indicate a noticeable decline in certain sectors. The postponement of the Commonwealth Heads of Government Meeting (Chogum) in Rwanda, for instance, while not directly impacting the economy, has disrupted planned activities and investments. However, once the event is rescheduled post-pandemic, the country stands to benefit from the preparations already in place. Beyond the tourism sector, the government has introduced several initiatives to alleviate the financial strain on businesses. For example, the central bank's measures to allow loan restructuring, reduce interest rates, and expedite VAT returns aim to provide immediate relief to companies facing liquidity constraints. While these short-term measures are crucial in the current climate, Professor Bizozah emphasized the importance of additional support, particularly for SMEs, to facilitate long-term recovery. He suggested that the government is likely developing further programs to aid the SME sector as part of a comprehensive strategy to bolster economic resurgence. As Rwanda navigates the challenges posed by the global health crisis, the collaborative efforts of policymakers, economic experts, and businesses will be essential in fostering resilience and driving sustainable growth in the post-pandemic era.