Economy of Rwanda

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Economy of Rwanda

Kigali, the financial centre of Rwanda

Currency Rwandan franc (RWF, FRw)

Fiscal year calendar year

Trade AU, AfCFTA, WTO, ECCAS, EAC, COMESA
organisations

Country group Least Developed[1]

Low-income economy[2]

Statistics

Population  12,374,397 (2019 proj.)[3]

GDP  $18.209 billion (nominal, 2019 est.)[4]

 $35. 587 billion (PPP, 2021.)[5]

GDP rank 139th (nominal, 2019)

129th (PPP, 2020)

GDP growth 8.6% (2018) 10.1% (2019e)

3.5% (2020e) 6.7% (2021e)[5]
GDP per capita  $825 (nominal, 2019 est.)[4]

 $2,660 (PPP, 2021.)[4]

GDP per capita 167th (nominal, 2019)
rank
165th (PPP, 2019)
GDP by sector agriculture: 30.9%

industry: 17.6%

services: 51.5% (2017 est.)[6]

Inflation (CPI) 6.9% (2020 est.)[5]
Population 39.1% (2015 est.)[6]
below poverty line
55.5% on less than $1.90/day (2016)[7]
Gini coefficient 43.7 medium (2016)[8]
Human  0.534 low (2021)[9] (165th)
Development Index
 0.402 low IHDI (2021)[10]
Labour force  6,374,891 (2019)[11]

 48.3% employment rate (Q1, 2020)[12]

Labour force by agriculture: 75.3%
occupation
industry: 6.7%

services: 18% (2012 est.)[6]

Unemployment  13.1% (Q1, 2020)[12]

Main industries cement, agricultural products, small-scale beverages, soap,

furniture, shoes, plastic goods, textiles, cigarettes

Ease-of-doing-  38th (very easy, 2020)[13]
business rank

External

Exports  $1.05 billion (2017 est.)[6]

Export goods coffee, tea, hides, tin ore
Main export  UAE 38.3%
partners
 Kenya 15.1%

 Switzerland 9.9%

 Democratic Republic of the Congo 9.5%

 US 4.9%

 Singapore 4.5%

(2017)[6]

Imports  $1.922 billion (2017 est.)[6]

Import goods foodstuffs, machinery and equipment, steel, petroleum products,

cement and construction material

 Main import  China 20.4%
partners
 Uganda 11%

 India 7.2%

 Kenya 7.1%

 Tanzania 5.3%

 UAE 5.1%

(2017)[6]
FDI stock  $2.378 billion (31 December 2017 est.)

 Abroad: $113.2 million (31 December 2017 est.)[6]

Current account  −$622 million (2017 est.)[6]
Gross external debt  $3.258 billion (31 December 2017 est.)[6]

Public finances
Public debt  40.5% of GDP (2017 est.)[6]
Budget balance −4.3% (of GDP) (2017 est.)[6]

Revenues 1.943 billion (2017 est.)[6]

Expenses 2.337 billion (2017 est.)[6]

Economic aid recipient: $285 Million (2015)

Foreign reserves  $997.6 million (31 December 2017 est.)[6]

Main data source: CIA World Fact Book

All values, unless otherwise stated, are in US dollars.

The economy of Rwanda has undergone rapid industrialisation due to a successful

governmental policy. It has a mixed economy.[14] Since the early-2000s, Rwanda has
witnessed an economic boom, which improved the living standards of many Rwandans.
The Government's progressive visions have been the catalyst for the fast transforming
economy. The President of Rwanda, Paul Kagame, has noted his ambition to make
Rwanda the "Singapore of Africa".[15]

Contents

 1History
o 1.1Before the civil war and genocide
o 1.2After the civil war and genocide
o 1.3Current Economy and Economic Prospects
 2Agriculture and Primary resources
 3Energy and electrification
 4Industry
 5Tourism and Services
 6Macro-Economic
 7See also
 8References
 9External links

History[edit]
See also: History of Rwanda

Estimated development of real GDP per capita in Rwanda, since 1950

Before the civil war and genocide[edit]

In the 1960s and 1970s, Rwanda's prudent financial policies, coupled with generous
external aid and relatively favorable terms of trade, resulted in sustained growth in per
capita income and low inflation rates. However, when world coffee prices fell sharply in
the 1980s, growth became erratic.
Compared to an annual GDP growth rate of 6.5% from 1973 to 1980, growth slowed to
an average of 2.9% a year from 1980 through 1985 and was stagnant from 1986 to
1990. The crisis peaked in 1990 when the first measures of an IMF structural
adjustment program were carried out. While the program was not fully implemented
before the war, key measures such as two large devaluations and the removal of official
prices were enacted. The consequences on salaries and purchasing power were rapid
and dramatic. This crisis particularly affected the educated elite, most of whom were
employed in civil service or state-owned enterprises.
During the 5 years of civil war that culminated in the 1994 genocide, GDP declined in 3
out of 5 years, posting a rapid decline at more than 40% in 1994, the year of the
genocide. The 9% increase in real GDP for 1995, the first postwar year, signalled the
resurgence of economic activity.
After the civil war and genocide[edit]
The 1994 genocide destroyed Rwanda's fragile economic base, severely impoverished
the population, particularly women, and eroded the country's ability to attract private and
external investment. However, Rwanda has made significant progress in stabilizing and
rehabilitating its economy. In June 1998, Rwanda signed an Enhanced Structural
Adjustment Facility with the International Monetary Fund. Rwanda has also embarked
upon an ambitious privatization program with the World Bank.
In the immediate postwar period—mid-1994 through 1995—emergency humanitarian
assistance of more than $307.4 million was largely directed to relief efforts in Rwanda
and in the refugee camps in neighboring countries where Rwandans fled during the war.
In 1996, humanitarian relief aid began to shift to reconstruction and development
assistance.
The United States, Belgium, Germany, the Netherlands, France, the People's Republic
of China, the World Bank, the UN Development Programme and the European
Development Fund will continue to account for the substantial aid. Rehabilitation of
government infrastructure, in particular the justice system, was an international priority,
as well as the continued repair and expansion of infrastructure, health facilities, and
schools.
After the Rwandan Genocide, the Tutsi-led government began a major program to
improve the country's economy and reduce its dependence on subsistence farming. The
failing economy had been a major factor behind the genocide, as was overpopulation
and the resulting competition for scarce farmland and other resources. The government
focused primarily on building up its manufacturing and service industries and eliminating
barriers to trade and development.

A coffee farmer in Rwanda.

The Government of Rwanda posted a 13% GDP growth rate in 1996 through improved
collection of tax revenues, accelerated privatization of state enterprises to stop the drain
on government resources, and continued improvement in export crop and food
production. Tea plantations and factories continue to be rehabilitated, and coffee,
always a smallholder's crop, is being more seriously rehabilitated and tended as the
farmers' sense of security returns. However, the road to recovery will be slow.
Coffee production of 14,578,560 tons in 2000 compares to a pre-civil war variation
between 35,000 and 40,000 tons[citation needed]. By 2002 tea became Rwanda's largest export,
with export earnings from tea reaching US$18 million equating to 15,000 tons of dried
tea. Rwanda's natural resources are limited. A small mineral industry provides about 5%
of foreign exchange earnings. Concentrates exist of the heavy minerals cassiterite (a
primary source of tin), and coltan (used to manufacture electronic capacitors, used in
consumer electronics products such as cell phones, DVD players, video game
systems and computers).
By mid-1997, up to 75% of the factories functioning before the war had returned to
production, at an average of 75% of their capacity. Investments in the industrial sector
continue to mostly be limited to the repair of existing industrial plants. Retail trade,
devastated by the war, has revived quickly, with many new small businesses
established by Rwandan returnees from Uganda, Burundi, and the Democratic Republic
of the Congo.
Industry received little external assistance from the end of the war through 1995.
Beginning in 1996–97, the government has become increasingly active in helping the
industrial sector to restore production through technical and financial assistance,
including loan guarantees, economic liberalization, and the privatization of state-owned
enterprises. In early 1998, the government set up a one-stop investment promotion
center and implemented a new investment code that created an enabling environment
for foreign and local investors. An autonomous revenue authority also has begun
operation, improving collections and accountability.
Cassiterite production peaked at 1,000 tonnes in 1990, but was under 700 tonnes in
2000. Recorded coltan production has soared from 147 tonnes in 1999 to 1,300 tonnes
in 2001, and coltan was the country's biggest single export earner in 2001. At least part
of the increase in production is because of new mines opening up in Rwanda. However
it is true, as has frequently been observed, that the increase is also because of the
fraudulent re-export of Congolese coltan. In addition to the well-publicised involvement
in this trade of the Rwandan Defence Force (RDF), another important factor in the
coltan re-export is that international dealers are under pressure not to buy from the
DRC, thus increasing the incentive for DRC coltan to be re-exported as Rwanda's.
Rwanda is also alleged to be trading in fraudulently exported gold and diamonds from
the DRC.[16]
Current Economy and Economic Prospects[edit]
The country entered a high period of economic growth in 2006, and the following year
managed to register 8% economic growth, a record it has sustained since, turning it into
one of the fastest-growing economies in Africa. This sustained economic growth has
succeeded in reducing poverty and also reducing fertility rates, with growth between
2006 and 2011 reducing the percentage of the country's population living in poverty
from 57% to 45%.The country's infrastructure has also grown rapidly, with connections
to electricity going from 91,000 in 2006 to 215,000 in 2011. [17] Rwanda wants to
achieve Middle Income Country status by 2035 and High-Income Country status by
2050.[18]
Existing foreign investment is concentrated in commercial establishments, mining, tea,
coffee, and tourism. Minimum wage and social security regulations are in force, and the
four prewar independent trade unions are back in operation. The largest
union, CESTRAR, was created as an organ of the government but became fully
independent with the political reforms introduced by the 1991 constitution. As security in
Rwanda improves, the country's nascent tourism sector shows great potential to expand
as a source of foreign exchange.
In 2016, Rwanda was ranked 42nd and second best country in Africa to do business in
the Mara Foundation-The Ashish J Thakkar Global Entrepreneurship Index report. [19]
However, a recent research in the UK-based political science journal, Review of African
Political Economy, indicates that economic growth may be slower than what official
figures suggest. Researchers stated that average consumption per household closely
followed growth in GDP per capita from 2000 to 2005, but diverged afterwards when
average consumption per household stagnated despite huge improvements in GDP per
capita from 2005 to 2013.[20]

Agriculture and Primary resources[edit]

See also: Mining in Rwanda

Graphical depiction of Rwanda's product exports.

Coffee beans drying in Maraba. Coffee is one of Rwanda's major cash crops.

Rwanda produced in 2019:[21]

 2.6 million tons of banana;

 1.2 million tonnes of sweet potato;
 1.1 million tons of cassava;
 973 thousand tons of potato;
 484 thousand tons of beans;
 421 thousand tons of maize;
 256 thousand tons of pumpkin;
 171 thousand tons of taro;
 159 thousand tons of sorghum;
 131 thousand tons of rice;
 114 thousand tons of sugarcane;
 105 thousand tons of tomato;
 36 thousand tons of pineapple;
 31 thousand tons of tea;
 29 thousand tons of coffee;
 5.4 thousand tons of tobacco;
In addition to other productions of other agricultural products. Products such as
bananas, pineapples, tea, coffee, and tobacco are high-value, export-oriented products.
[21]

In 2019 agriculture accounted for 29% of the economy of Rwanda. [22]

Rwanda has long relied on coffee as a cash crop. The crash of coffee prices in 1989
caused a great decrease in purchasing power, and increased domestic tensions.
Rwanda's economy suffered heavily during the 1994 Genocide, with widespread loss of
life, failure to maintain the infrastructure, looting, and neglect of important cash crops.
This caused a large drop in GDP and destroyed the country's ability to attract private
and external investment.[23] The economy has since strengthened, with per-capita GDP
(PPP) estimated at $2,225 in 2018,[24] compared with $416 in 1994.[24]

Tea field workers.

Major export markets include China, Germany, and the United States. [23] The economy is
managed by the central National Bank of Rwanda and the currency is the Rwandan
franc; in June 2010, the exchange rate was 588 francs to the United States dollar.
[25]
 Rwanda joined the East African Community in 2007 and there were plans for a
common East African shilling, which it had been hoped would be in place by 2015, [26] but
have not yet reached fruition (2020).
Rwanda is a country of few natural resources,[27] and the economy is based mostly
on subsistence agriculture by local farmers using simple tools.[28] An estimated 90% of
the working population farms, and agriculture comprised an estimated 42.0% of GDP in
2010.[23] Since the mid-1980s, farm sizes and food production have been decreasing,
due in part to the resettlement of displaced people. [29][30] Despite Rwanda's fertile
ecosystem, food production often does not keep pace with population growth, and food
imports are required.[23]
Crops grown in the country include coffee, tea, pyrethrum, bananas,
beans, sorghum and potatoes. Coffee and tea are the major cash crops for export, with
the high altitudes, steep slopes and volcanic soils providing favourable conditions.
Reliance on agricultural exports makes Rwanda vulnerable to shifts in their prices. [31]
Agricultural animals raised in Rwanda include cows, goats, sheep, pigs, chicken, and
rabbits, with geographical variation in the numbers of each. [32] Production systems are
mostly traditional, although there are a few intensive dairy farms around Kigali.
[32]
 Shortages of land and water, insufficient and poor-quality feed, and regular disease
epidemics with insufficient veterinary services are major constraints that restrict output.
A "One Cow per Poor Family Programme" (Girinka), implemented in 2006, distributed
341,065 cows in 2018.[33]
Fishing takes place on the country's lakes, but stocks are very depleted, and live fish
are being imported in an attempt to revive the industry. [34]
Rwanda's mining industry is an important contributor, generating US$93 million in 2008.
[35]
 Minerals mined include cassiterite, wolframite, sapphires, gold, and coltan, which is
used in the manufacture of electronic and communication devices such as mobile
phones.[35][36] Production of methane from Lake Kivu began in 1983, but to date has been
used only by the Bralirwa Brewery.
In 2019, the country was the 7th largest world producer of tungsten[37] and the 12th
largest world producer of tin.[38]

Energy and electrification[edit]

See also: List of power stations in Rwanda and Energy in Rwanda
Rwanda has made tremendous strides in improving electrification in the 21st century. A
great number of new areas has become electrified through an expansion of
infrastructure.
Depletion of the forests will eventually pressure Rwandans to turn to fuel sources other
than charcoal for cooking and heating. Given the abundance of mountain streams and
lakes, the potential for hydroelectric power is substantial. Rwanda is exploiting these
natural resources through joint hydroelectric projects with Burundi and the Democratic
Republic of the Congo.

Industry[edit]
The industrial sector is growing, contributing 16% of GDP in 2012. [22]
Rwanda's manufacturing sector is dominated by the production of import substitutes for
internal consumption. The larger enterprises produce beer, soft drinks, cigarettes, hoes,
wheelbarrows, soap, mattresses, plastic pipe, roofing materials, and bottled water.
[39]
 Other products manufactured include agricultural products, small-scale beverages,
soap, furniture, shoes, cement, plastic goods, textiles and cigarettes. [23]

Tourism and Services[edit]

See also: Tourism in Rwanda
Mountain gorillas in Volcanoes National Park.

Rwanda's service sector suffered during the late-2000s recession as banks reduced

lending and foreign aid projects and investment were reduced. [40] The sector rebounded
in 2010, becoming the country's largest sector by economic output and contributing
43.6% of the country's GDP.[23] Key tertiary contributors include banking and finance,
wholesale and retail trade, hotels and restaurants, transport, storage, communication,
insurance, real estate, business services and public administration including education
and health.[40]
Tourism is one of the fastest-growing economic resources and became the country's
leading foreign exchange earner in 2011.[41] In spite of the genocide's legacy, the country
is increasingly perceived internationally as a safe destination; [42] The Directorate of
Immigration and Emigration recorded 405,801 people visiting the country between
January and June 2011; 16% of these arrived from outside Africa. [43] Revenue from
tourism was US$115,600,000 between January and June 2011; holidaymakers
contributed 43% of this revenue, despite being only 9% of the numbers. [43]
Rwanda is one of only two countries in which mountain gorillas can be visited safely;
gorilla tracking, in the Volcanoes National Park, attracts thousands of visitors per year,
who are prepared to pay high prices for permits. [44] Other attractions include: Nyungwe
Forest, home to chimpanzees, Ruwenzori colobus and other primates, the resorts of
Lake Kivu, and Akagera, a small savanna reserve in the east of the country.[45]
Rwanda's tourism is centred on the attractions of Volcanoes National Park (PNV) with
its six volcanoes and the protected population of mountain gorillas made famous
by Dian Fossey. Additionally, tourism is drawn to central Africa's largest protected
wetland Akagera National Park, with its populations of hippopotami, cape
buffalo, zebras, elephants, elands, and other big game animals. Birdwatching-related
tourism has a potential to develop as well, especially in Nyungwe National Park, among
the largest uncut forest reserves in Africa. Nyungwe National Park is home to over 300
species of birds. And a vast variety of wild life as well.
Several memorial sites associated with the Rwandan genocide have begun to generate
significant dark tourism. For example, the Gisozi Genocide Memorial Site in the Gasabo
District of Kigali—the burial place of approximately 300,000 victims of the genocide—
has a related genocide exhibition area and library and has plans to develop a teaching
centre on the history of the genocide. Another major genocide-related memorial centre
attracting tourists is the Murambi Genocide Memorial Site housed in the
former Murambi Technical School where 45,000 people were murdered and 850
skeletons and mummified remains of the victims are on display.
Two other major memorial sites associated with the genocide are in Kicukiro District:
Rebero Genocide Memorial Site where 14,400 victims are buried and the Nyanza-
Kicukiro Genocide Memorial Site where 5,000 victims were killed after Belgian soldiers
who serving in the United Nations peacekeeping forces abandoned them. In Kibungo
Province, the site of the Nyarubuye Massacre is home to the Nyarubuye Genocide
Memorial Site where an estimated 20,000 victims were killed after seeking refuge in
the Roman Catholic church and homes of the nuns and priest there.

Macro-Economic[edit]
The following table shows the main economic indicators in 1980–2017. [46]

198 198 19 199 20 20 20 20 200 200 20 20 20 20 20 20 20 20

Year
0 5 90 5 00 05 06 07 8 9 10 11 12 13 14 15 16 17

2.1 3.6 3.9 2.9 5.0 8.2 9.3 10. 11. 12. 13. 14. 16. 17. 19. 21. 22. 24.
GDP 1 6 6 6 0 8 2 30 68 50 58 94 56 62 30 24 80 62
in $ Bln Bln Bl Bln Bln Bl Bl Bl Bln Bln Bl Bl Bl Bl Bl Bl Bl Bl
(PPP)
. . n. . . n. n. n. . . n. n. n. n. n. n. n. n.

GDP
per 61 66 93 1,0 1,1 1,2 1,2 1,3 1,4 1,5 1,6 1,7 1,8 1,9 2,0
capita 453 643 541
4 7 8 36 20 29 89 58 65 77 40 54 84 73 80
in $
(PPP)

GDP
growt −3. 5.5  0.4  24. 8.4  9.4  9.2  7.6  11. 6.3  7.3  7.8  8.8  4.7  7.6  8.9  6.0  6.1 
h 6 % % % 5 % % % % % 2 % % % % % % % % % %
(real)

Inflati
on 7.2  −1. 4.2  56. 3.9  9.1  8.8  9.1  15. 10. 2.3  5.7  6.3  4.2  1.8  2.5  5.7  4.8 
(in
% 1 % % 0 % % % % % 4 % 3 % % % % % % % % %
Percent
)

Gover ... ... ... 120  10 67  24  24  19  20  20  20  20  27  29  33  37  41 
nment % 3  % % % % % % % % % % % % %
debt %
(Percen
tage of
 GDP)

See also[edit]
 Rwanda
 Energy in Rwanda
 Telecommunications in Rwanda
 Transport in Rwanda
 United Nations Economic Commission for Africa
General:

 Economy of Africa