Rwanda Economic Update: Investing in Skills Development Can Spur Rwanda’s Private Sector Growth and Economic Transformation

Investing in skills development across key sectors of the economy is crucial to accelerating the growth of Rwanda's private sector and achieving the country's economic targets, as outlined in Vision 2050.

Rwanda has made noteworthy progress in education, however, more needs to be done to ensure the skill levels in its workforce match labor-market demands and the country's development goals. This is according to the 23rd edition of the Rwanda Economic Update (REU), titled "Accelerating Skills Development to Foster Private Sector Growth".

In key sectors such as agriculture and industry, most workers have only attained basic education. In agriculture, for instance, 98% of the workforce has not completed primary school, limiting their opportunities for decent jobs and hindering the sector's growth.

Rwanda's Vision 2050, which aims to transform the country into a high-income nation, emphasizes the need for a well-skilled workforce to drive a knowledge-based economy. However, one of the major challenges is the mismatch between the education system's outputs and labor market demands, with students pursuing degrees that do not align with job market needs.

To address this challenge, stronger collaboration with the private sector is essential. Through active participation in the design and development of academic curricula and by offering internships, the private sector can help ensure that the skills taught in schools are aligned with the demands of the job market.

The World Bank is working closely with the Government of Rwanda to strengthen skills development initiatives and, earlier this month, approved $ 200 million for the Priority Skills for Growth and Youth Empowerment (PSGYE) Project. This project aims to provide 200,000 vulnerable youth, particularly those who are not in education, employment, or training, with market-demanded skills. The project also aims to improve the quality of technical education.

Bridging Rwanda's skills gap is an ongoing journey, but the progress made so far shows promise. Rwanda is laying the foundation for a future workforce that can support a knowledge-based economy, with the support of projects like the Priority for Skills and Growth, which has trained 23,000 youth in market-driven skills, and the newly approved PSGYE.

By investing in upskilling its youth, Rwanda is also investing in the private sector's ability to grow and play a critical role in achieving the ambitious goals set out in Vision 2050.

Employee at clothing and textile manufacturing company Pink Mango C&D Productions. Photo: Illume Photos

The REU offers a set of recommendations on how to close the skills gap and reform the skills system as Rwanda transitions to a knowledge-based economy:

1. Strengthen institutional mechanisms for identifying skills gaps and market opportunities.
2. Improve the quality of Technical and Vocational Education with updated curricula and better-trained teaching staff.
3. Expand access to scholarships, financial aid, and affordable digital tools for students, especially those from disadvantaged groups.
4. Enhance sector-specific skills development and digital literacy to align with Rwanda's economic transformation goals.
5. Increase public investment in higher education and strengthen links between academia and employers.
6. Establish Sector Skills Councils to improve job matching and labor market information systems, reducing reliance on personal networks for job searches.
7. Expand access to work-based learning opportunities, such as internships and apprenticeships.
8. Develop a public-private partnership framework to address student housing and financing gaps.
9. Build a comprehensive digital skills framework to improve digital literacy and instructor training.

The REU assesses recent economic and social developments and prospects, as well as Rwanda's policy priorities. This edition highlights that, despite the global economic slowdown, Rwanda has shown remarkable resilience, driven by strong consumer spending in key sectors such as services and industry. Rwanda's real GDP grew by 9.7% in the first quarter of 2024, exceeding the previous year's growth rate of 8.2%. Investing in and building a comprehensive system focused on sector-specific skills, Rwanda can continue on this path.

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