The national carrier Rwandair and other key businesses will benefit from a government stimulus package to resuscitate the economy and mitigate the impact of the new Coronavirus pandemic when it eventually subsides.
This was revealed by President Paul Kagame while addressing over 400 Investors from different parts of the globe in a Webinar session organized by Invest Africa to discuss the impact of COVID 19 and ongoing measures to sustain the economy.
President Kagame was asked by South African Billionaire and Investor Rob Hersov about the impact of the pandemic on aviation and growing airlines like Rwandair which could be set back by the effects of COVID-19.
President Kagame talked about the situation of Rwandair, pointing out that unlike bigger airlines on the continent such as Ethiopian which had already gained bigger market and leverage globally, Rwandair was still small and growing but like other areas of the economy it will require reinvestment to pick up.
Like many other airlines, Rwandair grounded all planes, except a few cargo planes as the country stopped all inbound and outbound flights as part of the measures to stop the spread of COVID-19.
“We are going to need to look at how we inject in new resources to revitalize its activities and maintain the growth it was already making. Rwandair, like all other businesses that will need to be bailed out, will need some injection of capital to try and enable it to continue despite the losses they will have made over this period which we don’t know how long it is going to be,”
“Nobody yet sees the end to that for sure and says by this date, Coronavirus will be gone and we will be back to business as usual,” President Kagame said, adding that there is a need to start planning now what will be done in the months ahead to revitalize the affected sectors including aviation.
How well positioned is Rwanda?
President Kagame was asked about how Rwanda is positioned fiscally to absorb the impact of COVID-19 and recover to which he said that there is hope that through different efforts by the government and partners, the economy will emerge even stronger.
“Our economy before COVID-19 was really doing well and I think we will continue to do well after this, but fiscally, I think we are ready. We are in a good place to move ahead and for us, we are finding resources with our partners which we are going to deploy to give us that capacity and that space that is required,”
“We have already received funding from the IMF, the other day we got $109m funding and we are getting different funds. On the basis of what our level can provide us with, but also the money we are able, if they are not grants, we should be able to pay back because we are going to invest this money very well,”
“With our internal resources plus the external resources we are getting, I don’t see us failing to find the way forward and in a decent way to allow our economy to keep growing,”
On the concerns that African countries might struggle to pay back debts due to repayment holidays yet at the same time they might be forced to take more debt to resuscitate their economies, President Kagame said debt relief and freezing will allow countries much needed time to recover.
He said it will also allow these countries to divert the money they would be using to service debts and invest them in vital areas of their economies during the period of debt relief or debt standstill but emphasized the need to collectively discuss how these countries can avoid being affected by the debt burden in future.
President Kagame said that unlike developed countries which have enough resources to invest in their economies, the debt relief and other forms of debt facilities available should be considered because they will be key in helping these countries to get back on their feet, something he said is not exclusive to only Africa.
“People need to think about how to approach this particular problem so that we exactly eliminate that future problem that may result from that [debt burden] but debt standstill is necessary to enable Africa to find resources to do what needs to be done,” he said.
Still on debt, President Kagame said that it does not affect all the countries equally because there are some doing well while others are doing badly.
“I am sure that even if you gave us all the money each country in Africa and say ‘solve your problem’, we are not all going to come out well. There are some who will do well, better than others because of different reasons,”
“How they do their business, how they are governed, whether really this money goes where it should go and solve the problem, whether it is to build the public health infrastructure and systems so that next time they are more resilient to deal with future pandemics and so on,” President Kagame said.
He emphasized that indeed the debt burden could be a serious issue which in future could affect the continent’s chances to access more funding.
He referred to different efforts at the continental level and through initiatives including the efforts by G20 countries to raise funds that can support countries to overcome the impact of COVID-19.
He however said that COVID-19 has become an equalizer – everybody has come to their senses and people are willing to work together in the face of the pandemic.
“We have lived a life where some people are so well off or they think they are that they don’t care what happens to somebody else or anywhere else,”
“This virus has brought everybody to say I am better off if the other person is better off as well, it does not matter how much money you have in your bank account or how powerful you are as a leader of a powerful economy,” he said.
President Kagame noted that Corona virus has knocked on people’s doors and said come down to earth, put your feet on the ground, listen to your people, colleagues, rich countries listen to poor ones, poor countries have to do better and listen to advice given to them.