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Poverty in Rwanda: The Impact of COVID-19

Despite the World Health Organization’s (WHO) declaration of the end of the pandemic’s emergency phase, the economic and social consequences of COVID-19 continue to affect the world. According to the World Bank, the pandemic pushed an additional 97 million people into poverty in 2020, leaving governments struggling to recover from its widespread devastation. For example, the impact of COVID-19 on poverty in Rwanda has been particularly severe.

The Disruptive Impact of COVID

When the pandemic hit, Rwanda experienced a sharp decline in GDP, with a 39.1% drop during a six-week lockdown. Simultaneously, the national poverty rate increased by 10.9%. As a result, around 1.3 million people out of a population of approximately 13.4 million temporarily fell into poverty due to the effects of COVID-19. The pandemic disrupted the U.N’s Vision 2020 objectives in poverty reduction strategies, which had shown promising results in the past.

Previously, Rwanda had experienced an economic boom, including a real economic growth of 9.4% in 2019. It had also benefited from large foreign investment in industries such as hospitality and travel.

Rwanda, similar to many other countries, faced significant economic challenges due to the pandemic. A study conducted by Private Enterprise Development in Low-Income Countries revealed that 80% of businesses were closed from March to April 2020. By January 2021, the average business had laid off 25% of its workforce. 

The pandemic also affected education in Rwanda, with approximately 3.5 million students being unable to attend school as usual. The impact of COVID-19 on poverty in Rwanda has been especially harsh on women, who are often only able to secure employment in seasonal jobs.

The Government’s Response

The Rwandan government responded swiftly to the crisis, implementing various measures in March 2020, including a lockdown, border closure, curfew and social distancing requirements. In March 2021, an Economic Recovery Plan was introduced, featuring an Economic Recovery Fund worth $100 million to support severely affected businesses. The plan specifically targeted the once-thriving travel sector, providing financial assistance to 138 hotels. Additionally, the government allocated funds to educational institutions and factories, aiming to facilitate the return to school and work.

Recovery and Investment Abroad

Rwanda has attracted foreign investors and regained economic confidence. For instance, it received $200 million from the Asian Infrastructure Bank and raised $650 million through a Eurobond. These investments stimulated the Economic Recovery Fund, allowing the country to diversify its economy and foster innovation. The World Bank reported a 1.2% reduction in poverty by the end of 2020 as a result of these initiatives. And the government’s rapid response also ensured continued access to education, health care and nutrition.

NGO Findings

Innovations for Poverty Action surveyed Rwandan people as part of its Research for Effective COVID-19 Responses, which informed government policy in responding to the pandemic. Collecting information on health, food security, finance resilience, education and employment, it recommended policies in line with the U.N. Sustainable Development Goals, emphasizing an opportunity to boost Rwanda’s economy with these in mind. In the case of addressing the impact of COVID-19 on poverty, local charitable organizations continue to make efforts. The Dufatanye Organisation, for example, has fundraised for food support for those living with type 1 diabetes during the pandemic due to poverty’s impact on access to medication. Other organizations like the Centre Marembo Organization have also tried to address the impact of COVID-19 on the homeless by fundraising and mobilizing communities.

Moving Forward

The COVID-19 pandemic has reshaped global perspectives on community, economics and society, once again highlighting the issue of poverty. Despite the disruptive impact of COVID-19 on poverty in Rwanda, the government’s swift response has set the country on a path to strong economic recovery in 2021. Industrial production, exports and agricultural output have shown significant increases, leading to more employment opportunities and helping people escape poverty caused by the pandemic.

In conclusion, while the pandemic’s effects on poverty have been substantial, Rwanda’s proactive measures and collaborative efforts have laid the foundation for recovery and progress.

– Rosie Lyons

Photo: Wikimedia

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Laos Tourism Industry on the Up

Laos tourismLaos is a landlocked country in Southeast Asia that borders Cambodia, Thailand, Myanmar and China. With a population of around 7.8 million people, the country of Laos relies heavily on agriculture, foreign aid and investments to keep its economy afloat. At one point, three-fourths of Laos’s population was employed in agriculture, with particular engagement in rice farming. Because the forest covers two-fifths of the country’s land, farming and agriculture are an integral part of the culture of Laos.

As of 2023, much of the population lives in poverty. In 2013, more than 80% of the population was making under $2.5 dollars per day. Laos, however, is a beautiful country. The landscape features rivers, waterfalls and beautiful architectural sites. The country has become a popular tourist destination due to its natural beauty. Laos has several spas and resorts that operate to encourage tourists to visit and experience comfort and luxury.

COVID-19 Affects Tourism

The COVID-19 pandemic affected many industries, especially tourism. Tourism accounts for 10% of the global gross domestic product and more than 320 million jobs worldwide. As countries went on lockdown, jobs that relied on tourism became severely impacted. More than 100 million jobs were impacted because of the pandemic. Nearly three years since the beginning of the pandemic, many tourism-dependent countries continue to struggle.

The tourism sector in Laos has been profoundly affected by the COVID-19 pandemic, resulting in a substantial decline in international tourist arrivals. As reported by the Asian Development Bank (ADB), the outbreak has led to a staggering 74% reduction in the number of visitors. Consequently, businesses operating within this industry have experienced significant disruption, with a detrimental impact on their overall revenue, estimated to range between 70% and 80%. To address these challenges and foster recovery, the Lao PDR Tourism COVID-19 Recovery Roadmap for the period of 2021 to 2025 has been developed. This strategic plan aims to cultivate a tourism industry that is both resilient and sustainable, capable of withstanding future shocks.

Laos Tourism

Laos’s natural beauty is a spectacle that many people feel inclined to experience. With the reopening of previously locked-down countries, Laos has seen a reemergence of tourists entering the country. The country has opened its borders back up to tourists and is beginning to reap the benefits once again. China has officially allowed its residents to travel again, and because Laos borders China, a lot of its tourism comes from its neighbors to the north. On March 4, Laos set its largest Laos-China highspeed railway record in a single day, with 10,000 passengers entering the country.

In 2019, Chinese tourists accounted for a quarter of the country’s 4.7 million visitors. Laos is now expecting to see more than 1.4 million visitors from foreign countries and generate around $340 million in 2023. Tourism also contributes to job creation in Laos. In 2018, there were more than 114,000 tourism-related jobs created for the local people of Laos.

Looking Ahead

Now that many of the lockdowns have been lifted across Southeast Asia, Laos’s tourism sector looks promising once again. With the continuous influx of Chinese tourists and hopefully more from all around the globe, Laos is looking to restore a vital part of its economy. There is hope that the country can continue to benefit from tourism as it did pre-pandemic.

– Olivia MacGregor
Photo: Flickr

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As a Global Stagflation Crisis Approaches, Foreign Aid Must Be a Priority

Global economic growth is on a steep downturn, due primarily to the consequences of the COVID-19 pandemic and supply chain shortages from the Russia/Ukraine conflict. The World Bank and the Organization for Economic Cooperation and Development (OECD) had each predicted that global economic growth in 2022 would reach more than 4% earlier this year. At the beginning of June, they scratched the original estimates, saying that economic growth would barely reach 3%, indicating a possible crisis of global stagflation.

Economic Downtown After the Pandemic

At the end of 2021, many global organizations, including the United Nations and the International Monetary Fund, predicted that the global economy would see a post-pandemic boom. However, because of the conflict in Ukraine and the COVID-19 shutdown in China, the global supply chain took a significant hit. In turn, inflation is rising at an alarming rate, especially in global economic powerhouses like the United States and England. This is cause for concern not only for rich countries but for small and developing countries as well, which often rely on economic overflow from large nations.

Stagflation

The World Bank and the OECD declared that the global economy is at risk of stagflation, which is a combination of high, sustained inflation and stagnating growth. Global stagflation poses a risk for everyone, but poor and developing countries would face the worst of it. Many developing nations’ economies rely on exports to wealthy nations, meaning a global economic slowdown would seriously harm them. Additionally, high interest rates and low growth would make it nearly impossible to pay back large quantities of debt. The World Bank has predicted that some nations will default on their debts, which would mean a decline in living conditions.

The most recent stagflation crisis took place in the 1970s when the global economy saw aggressive inflation and low economic growth. The current situation is worrying to many economists and activists because at that time living standards and economic well-being took a drastic downturn in many developing countries in Latin America and the Middle East.

Avoiding Stagflation

The good news is that the circumstances of the current economic situation differ significantly from the stagflation crisis of the 1970s. Most central banks are now independently operated and the global economy is less reliant on low energy prices, two factors that provide some relief to poorer countries.

The OECD believes that a stagflation crisis can be avoided, but economic powerhouses and international organizations need to take serious action. There are significant factors in play that are preventing governments from stepping in, primarily the fact that developing nations have already accumulated record levels of debt.

To avoid stagnation, the World Bank suggests worldwide policymakers focus on five key areas. They need to:

  1. Limit the harm caused by the war in Ukraine by coordinating the crisis response in terms of delivery of food and medicine and support of refugees.
  2. Counter the high prices of oil and food by increasing supplies of key commodities.
  3. Escalate debt relief as debt distress spreads from low-income countries to middle-income countries.
  4. Continue to strive to contain COVID-19 globally through strong immunization programs.
  5. Continue to invest in clean energy and energy efficiency and decrease their reliance on fossil fuels.

The United States Steps Up with Aid

Support from the United States could come from protecting and enhancing the International Affairs Budget, emergency COVID-19 relief and direct collaboration with the governments of developing nations concerning exports and investments. The United States has taken a step in the right direction by supporting the Partnership for Global Infrastructure and Investment (PGII), which will pledge $600 billion to the global economy over the next five years.

–Ella DeVries
Photo: Flickr