Buoyed by the good performance of the ICT sector, the recent figures from the Ministry of Finance and Economic Planning demonstrate that the sector is one of the major contributors to the country's economy.

According to the Ministry, the ICT sector recorded an impressive growth of 35% in 2023 and 28% in the first quarter of 2024 putting it second to the transport sector with only a 1%-point difference.

But what is behind these figures?

The evolution of industry regulation and policies offers valuable insights into how regulation can actively support innovation rather than sacrificing it. This divergence of regulators not being industry police but collaborators is one of the factors that have enabled the ICT sector to claim its position as the driver of the country’s economic growth.

This proactive regulation and political gesture started with the National Information and Communication Policy and Plan adopted in 2000 and later 2006 - 2010 National Information and Communication Infrastructure (NICI) plan among other objectives laid the foundation for infrastructure development, human capital development, and a brilliant blueprint on the integration of ICT in other sectors like Education, Health, and offering government services.

In 2002 the country had two telecom companies Rwanda Tel and MTN the first foreign and privately owned company joined the industry in 1998 just when mobile phone ownership was below 2.5% and now is standing at 78%. Intriguing enough today MTN ranks as one of the most profitable companies on the land with a net annual revenue of over Rwf200bn.

Breaking from the tendency of regulators to lag behind innovators, the friendly regulatory framework has enabled traditional communication companies to completely morph establishing new business ventures giving birth to fresh revenue streams and reinvesting part of the returns to drive up their penetration and buying new technology.

This is evident in the Fintech industry whose growth is predominantly driven by the telecommunication companies responsible for the imposing performance of the industry particularly the payment cluster with a more than 70% dominance. In 2023 National Bank of Rwanda revealed that in June digital payments had reached an all-time high of 160% of the total GDP. This can be attributed to the bank’s decision to suspend all charges on push-and-pull bank transactions.

The rewards of the penetration and application of ICT are visible in every sector and they are becoming synonymous with the country’s development. Today 93% of Rwandans are financially included with 77% accessing and using formal financial products provided by the banking sector and others from formal non-bank institutions such as insurance firms, including mobile network operators.

A second demonstration of the ICT sector as a source and catalyst of economic transformation with ongoing initiatives like a Rwanda connect and breaking the monopoly of 4G LTE internet supply, and total automation of SACCOs, penetration, usage, and application is expected to shoot in the roof in the next half a decade.

Unfinished business

The above comments and statistics may be shading an excellent picture and create a belief that the sector is in automatic mode but there are still visible black spots with some qualifying as feasible investment opportunities.

The country is still facing the challenge of low digital skills which needs to be addressed. The entry of African Leadership University and Carnegie Mellon University is promising but enough to supply the industry with needed talents to meet the gap.

With internet penetration, the collaboration between the government and the private sector has dramatically reduced the price of the internet now averaging at 0.05USD per 1GB but there is still a challenge on the affordability of end-user digital devices. Recent figures from NISR revealed that only 2.5 million people own a smartphone with 22.8% of the total population reported having used the internet 12 months before the census.

In ICT-enabled financial services, there is still a challenge of limited interoperability and negative perception which are acutely affecting the adoption of cashless means of payment. Rwanda is still underperforming with the Instant Payment System application and usage compared to its regional peers. According to the State of Inclusive Instant Payment Systems in Africa 2023 report, the usage of eKash the only country’s cross-domain IPS was 0.1 percent.

These challenges do not only retard the spillover effect of excellent adoption and application of the ICT sector to the entire economy but also act as a fundamental barrier to innovation.