* Central bank sees Rwanda’s 2009 growth at 7-8 percent
* Inflation to slow to 5-8 percent by end 2009
* Export earnings to grow, but at slower pace than 2008
* Government capital expenditure to maintain growth momentum
By Hereward Holland
KIGALI, Feb 25 (Reuters) - Rwanda’s economy should grow by 7-8 percent this year, after expanding by 11.2 percent in 2008, the fastest pace in five years, the country’s central bank governor said on Wednesday.
Francois Kanimba, governor of the National Bank of Rwanda, said the economy had been bolstered by a booming agricultural sector, which constitutes around 38 percent of the economy, and that public investment would help maintain growth momentum.
“My expectation is perhaps we aren’t going to achieve double digit growth again like last year,” Kanimba told Reuters in a telephone interview. “The growth rate we expect, based on our medium-term strategy ... is in the range of 7-8 percent.”
The Rwandan economy is being rebuilt following the 1994 genocide of 800,000 ethnic Tutsis and politically moderate Hutus. The government has focused on restructuring the tea and coffee sectors and financial system, while investing in energy, transport and telecommunications infrastructure.
Favourable weather and a “green revolution” in farming practices helped the sector grow 15 percent last year, up from 0.7 percent in 2007, according to a central bank report seen by Reuters on Wednesday.
The government has been helping the agricultural sector by giving out new fertilisers and seeds, while consolidating plots to make the use of the country’s fertile land more intensive.
Kanimba said the global slowdown may hit export earnings in 2009, after huge increases last year. In 2008, tea earnings rose 26.9 percent, coffee climbed 32 percent, minerals were up 34.8 percent and tourism earnings leapt 55.1 percent.
“They will continue to grow, perhaps not at the same speed like last year, but I don’t expect a very big recession in these industries,” the central bank governor said.
Kanimba said the landlocked central African country would benefit from the drop in international oil and imported food prices. He said this should slow the inflation rate to 5-8 percent by the end of this year.
Rwanda’s headline inflation rate eased to 20.38 percent in January from 22.32 in December. In 2008, the average inflation rate was 15.4 percent in 2008, up from 9.1 percent in 2007.
President Paul Kagame is praised for soliciting foreign investment, nurturing robust growth and running a disciplined government, but critics say his authoritarian leadership suppresses democratic freedoms.
The country aims to become an ICT hub in the region. Like its east African neighbours it is eagerly awaiting the arrival of new fibre-optic cables to speed up the Internet and end its reliance on expensive satellite communications.
According to the central bank report, industrial output grew 10.7 percent last year thanks to heavy government investment in infrastructure. Electricity, gas and water production grew 16.9 percent and construction rose 25.9 percent. But manufacturing output contracted 4 percent.
Real estate and business grew 14.2 percent, while finance and insurance grew 12 percent and transport, storage and communication 11.4 percent.
Kanimba said the government’s long-term focus on capital expenditure — energy sector infrastructure, road maintenance and the privatisation and expansion of the telecommunication industry — would sustain Rwanda’s growth momentum. (Editing by David Clarke/Ruth Pitchford)