Rwanda aims to become a service-hub based middle-income economy by 2020
Services already expected to have generated 60% of the country’s GDP in 2010
World Bank IDA credit of US $30 million to help build skilled workforce in Rwanda
KIGALI, April 7, 2011—The New Caiman restaurant in Kibagabaga, on the outskirts of Kigali city, is a place where weekend revelers often gather to enjoy a popular East African roast known as nyamachoma, while they listen to salsa or travel down memory lane with old-time blues and rumba rhythms.
But Kano, the patron, is worried. Among his 25 staff, not one is professionally trained in the restaurant business. He is concerned that this may affect the growth of his business and its capacity to compete.
“If one is to compete favorably in the local or regional East African market, the presence of skilled personnel is imperative for any business, and more so for the hospitality industry,” Kano says. “You may have everything else—the infrastructure, the products and services to sell, and hundreds of staff under you. But if your staff lacks the necessary skills, you will not advance an inch.”
Kano’s predicament is not uncommon in Rwanda, which intends to become a middle-income economy by 2020, by developing as a regional service-hub. The country’s growing private sector is already short of trained workers—higher-educated workers command a market premium and workers with vocational education earn 73 percent more, on average, than those who finished primary school only.
In March 2011, the World Bank approved a US$30 million credit to Rwanda for a Skills Development Project that will help citizens to equip themselves with vocational and technical skills that are in urgent demand in the job market, particularly in the hospitality, tourism, and construction sectors.
Building a skilled workforce in Rwanda, an economy on the move
Despite the recent global economic crisis, manufacturing and services have already become very significant in Rwanda’s steadily growing economy. Services are expected to have generated about 60 percent of national GDP in 2010, up from only 37 percent in 2001.
“We are delighted to support Rwanda’s effort to invest in people—especially youth—by helping them acquire skills that will find use in a modern economy,” said Omowunmi Ladipo, World Bank Country Manager for Rwanda. “This is essential for sustained economic growth and competitiveness.”
As the Rwandan economy becomes increasingly sophisticated and moves further away from traditional agriculture, the demand for workers with technical or vocational education will continue to rise.
Forging links with the private sector
A key feature of Rwanda’s approach to technical and vocational development that is supported by the project is the increasing engagement of the private sector.
Internships in various enterprises are expected to become an integral part of training delivery, and private-sector representatives will be invited both to contribute to the design of examination mechanisms as well as to help assess the skills attainment of participants.
Employer satisfaction with the skills of the newly trained graduates will be an important indicator of the project’s performance. In addition, studies of market skills needs will be conducted periodically to allow the government and training providers to better adjust their activities to labor demand.
A pilot Skills Development Facility
The project will also pilot a Skills Development Facility that provides financing for the rapid delivery of high-priority skills through competitive sub-grants ranging from US$10,000 to $100,000 to both public and private training providers.
“The Skills Development Facility is going to help us in what we call a “quick win initiative”, that is, trying to identify skills that are badly needed in our key sectors and see how we can engage with the private sector so that the necessary training is provided by the enterprise or training provider that has successfully applied for funding,” said Albert Nsengiyumva, Director General of Rwanda’s Workforce Development Authority.
“A more skilled workforce is fundamental to enabling Rwanda to develop into the export- and service-oriented economy that it aspires to become,” said Margo Hoftijzer, Senior Education Economist with the World Bank. “The involvement of the private sector in shaping, providing and monitoring the results of training is essential to ensure that graduates do not just go to school, but are actually equipped with those skills that are most valued in the labor market.”
New World Bank Strategy for Africa
The Rwanda Skills Development Project embodies some of the strategic directions laid out in “Africa’s Future,” recently outlined by the World Bank in consultation with a broad range of stakeholders. Competitiveness and employment is one of the key pillars of the new plan.