During the launch of the 23rd Edition of the Rwanda Economic Update (REU), the World Bank country Director in Rwanda, Sahr Kpundeh, yesterday announced that the World Bank support to the education sector and skill development amount to about USD 829 million, representing 25 % of the total World Bank portfolio in Rwanda. The State Minister of Education, Claudette Irere, said she was highly grateful to the World Bank for his support to Rwanda. Read below Sahr Kpundeh’s speech:
I am pleased to welcome you all to the launch of the 23rd edition of the Rwanda Economic Update. Published twice a year, the Update analyzes recent economic developments, forecasts, and provides an in-depth examination of key economic and policy issues relevant to Rwanda.
The current edition of the Update focuses on Accelerating Skills Development to Foster Private Sector and Growth in Rwanda. The World Bank prepared this report in close collaboration with the Government of Rwanda, the Ministry of Finance and Economic Planning (MINECOFIN), and key education stakeholders.
The data, insights and feedback from these institutions have enriched the report and shaped the recommendations. This report is indeed a collective effort, involving contributions from various players, as well as teams from several parts of the World Bank Group, including the Macro Trade and Investment (MTI), the education sector, and the International Financial Corporation (IFC).
Main findings of the REU
My colleagues will share the report’s findings in detail but allow me to briefly highlight some of the key conclusions and policy recommendations. Despite a challenging global environment, Rwanda’s economy continued to show resilience, growing by approximately 9.7 percent in the first quarter of 2024. This growth was driven by strong momentum in the services and industry sectors as well as a recovery in food production. Another positive development is the sharp decline in headline inflation, which fell to 5 percent year-on-year in August 2024, down from 17.8 percent recorded a year ago. This reduction was primarily due to lower food prices, reflecting improved supplies of fresh produce, especially vegetables, a decrease in imported inflation as global price growth slowed, and the tightening of monetary policy. However, underlying pressures remained due to the removal of transport subsidies.
Maintaining Rwanda’s development trajectory and achieving the targets set in Vision 2050 will require intensified efforts to shift the drivers of economic growth towards a private sector-led, knowledge-based economy. Despite significant progress, Rwanda’s skill levels remain insufficient to meet its development ambitions. In fact, the proportion of the workforce with only a basic education or less is one of the highest in the region. Particularly, workers in agriculture and industry have low levels educational attainment, with nearly all (98 percent) of agricultural workers having completed only basic education or less.
The 23rd edition of the REU provides a comprehensive list of recommendations on how to close the skill gap and reform the skills system as Rwanda transitions to a knowledge-based economy. However, allow me to focus on a few key points:
First: Expanding investments in technical and vocational education, especially targeting support for disadvantaged students, and broadening work-based learning opportunities, such as internships and apprenticeships, is vital for providing practical experience.
Second: Establishing Sector Skills Councils is crucial to bridging the supply-demand mismatch in the labor market and improving job matching. Too many students are not pursuing degrees that align with job market demands. Evidence from various surveys and tracer studies indicates that employers often rely on personal networks to find employees, with little or no engagement with educational institutions.
Third: Accelerating efforts to address challenges in basic education – including poor quality, limited access, low enrollment, and high dropout rates – is critical for skill development. Too many children leave school without acquiring the foundational skills necessary for higher education or further training, limiting their prospects for meaningful employment. Furthermore, the mismatch between educational outputs and labor market needs aggravates this issue.
Fourth: Skill development and high levels of unemployment in Rwanda are as much a demand-side problem as they are a result of supply-side factors. Labor demand from the private sector remains weak, and there are not enough high-quality jobs being created in the country.
Therefore, any sustainable solution to address the skill gap and unemployment must include interventions that stimulate private sector growth to create future jobs, while also skilling the youth across the low, medium, and high skills spectrum.
World Bank engagements on skill development: The World Bank stands ready to support the Government to the best of its capacity to take these recommendations forward. Overall, our support to the education sector and skill development amount to about USD 829 million, representing 25 % of the total World Bank portfolio in Rwanda.
For example, through the Priority for Skills and Growth operation (US$ 270M,) the World Bank has laid a solid foundation for improved processes and governance of skills development in Rwanda with a key focus on market relevance to enhance employability.
Some key achievements include the development of a demand-driven, updated curriculum by the private sector and academia for about 33 TVET and degree programs in energy, transport and logistics and agriculture. A total of 5,365 new students (44 % female) are currently enrolled in these programs. In collaboration with the private sector, RTB, and RDB-CSO The Priority for Skills and Growth initiative, supported about 23,000 youths (48 % female) in short-term training for market driven programs, as well as upskilling of existing workers in micro and small enterprises.
Last week, on September 9, 2024, the World Bank Board approved a new skills operation: The Priority Skills for Growth and Youth Empowerment amounting to US $200 million. In line with the National Strategy for Transformation (NTS) and the findings of this REU, the project, seeks to:
1-Increase opportunities for acquiring market demanded skills for 200.000 vulnerable and TVET youths (Not educated, employed or in training);
2- Improve the quality and market-relevance of TVET for the workforce;
3- Strengthen the overall governance of the skills development system.
Conclusion: I very much look forward to what I hope will be a fruitful discussion on the challenges and solutions to skills development in the country boost private sector development and promote growth. (Fin)