Effect of Foreign Aid on Real Exchange Rate in Rwanda
Joseph Gasana (1) and Charles Mulindabigwi Ruhara
This study examines the effect of foreign aid inflows on the real exchange rate in Rwanda. It uses annual time series data for the period of 1980 to 2013. The main hypotheses of the study is that large foreign aid inflows in Rwanda lead to the appreciation of the real exchange rate and thus, impact negatively on exports competitiveness, a phenomenon known as the Dutch disease effect.
To test the research hypothesizes ; the Johansen cointegration techniques and the vector error correction model were used to estimate the long run equilibrium and the short run real exchange rate respectively. Although Rwanda received considerable foreign aid inflows within the period under study, the estimated model results suggest that the country foreign assistance depreciates the real exchange rate.
In order words, foreign aid inflows have a positive impact on the real exchange rate in Rwanda. However, the research reveals that there is no long run relationship between foreign aid inflows and Rwanda exports, meaning that exports in Rwanda have other determinants, which are not foreign aid inflows. The results of the study suggest that Rwanda can still receive foreign aid as they do not harm exports competitiveness.
They should however be used in the provision of the public goods. In addition, given the fact that trade openness appreciates the real exchange rate, Rwanda can continue the economic integration process with other economies in Africa and the rest of the world.
Closing the Poor-rich Gap in Contraceptive Use : Evidence from Rwanda
Dr. Dieudonne Ndaruhuye Muhoza
Rwanda has made impressive increase in population growth control during the last decade. The Contraceptive Prevalence Rate (CPR) rose threefold from 17% in 2005 to 52% in 2010 and 53% in 2014. Contraceptive uptake was recorded more among poor populations than among rich and among rural than among urban residents. As result, the poor-rich gap in family planning evolved in convergence. This paper investigates the pathways through which the narrowing contraceptive gap is occurring. More specifically, the research examines the extent to which the differences in trends are associated with the differences in demand for children and/or the differences in family planning services in terms of types of contraceptive methods used and sources of supply. Understanding these mechanisms is essential for both family planning providers and policy makers in Rwanda to evaluate the ongoing program and take the best way towards a sustainable population growth control. It is also useful for other countries to improve their family planning programs.
The study uses a polled dataset from the 2005, 2010, and 2014 DHS datasets. Descriptive statistics and Multivariate analysis are used to describe the trends and assess the change of overtime. Results indicate that the convergence in contraceptive use is associated with higher decline in desired fertility and higher uptake of long acting methods among the poor. The Community Health Worker service would have played an important role in the uptake among the poor population. The study suggests that the increase in contraceptive use among poor requires specific strategies in accordance to the local culture, a strategy that will respond to their requests and aspirations.
Effect of International Remittances on Poverty in Rwanda
International remittances to developing countries have been increasing in the recent decades and they constitute a critical lifeline for millions of recipient households. However, there is a growing mixed empirical claims about their impact on socio-welfare in recipient economies. In the case of SSA countries, there is a sparse empirical studies providing an in-depth understanding how these inflows reduce poverty and improve development outcomes. This paper contributes to the existing literature by examining the micro-impact of remittances in Rwanda. Specifically, how international remittances affect consumption expenditure per adult equivalent of recipient households, and how they contribute to the development outcomes. To respond to these questions we employ both ordinary least square and propensity score matching (PSM). The OLS results suggest that, international remittances increase consumption expenditure per adult equivalent of recipient-households by between 39.3% and 46.3% more than non-remittance recipient households. The PSM results reveal that, on average, international remittances reduce poverty of recipient households by 54.7% significantly higher than non-recipients. Similar findings indicate that, households receiving international remittances spend on average, 5.16% and 4.83% on physical investment respectively more than non-recipient households. While similar remittance-recipient households on average, spend respectively 6.99%, 107%, 24.9% and 16.1% statistically significantly more than non-recipients on business, savings, education and health in Rwanda. The findings suggest that government should harness formal remittance inflows by introducing mechanisms through which international remittances could be channeled into savings, investments and socio-economic activities that spur socio-economic development in the country.