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Rwanda Business

Business and Economics

According to COUNTRYAAH, Rwanda's business was long hampered by the country's isolated location and its overpopulation. During the first half of the 1990s, the situation worsened further as war and genocide destroyed the country's economic and social infrastructure.

Business of Rwanda

Thanks to significant financial support from the outside world, Rwanda recovered from the civil war, and during the 1990s, the country's economy grew sharply. For several years in the early 1990s, the country had a GDP growth of over 10 percent, and the positive development has continued since then.

In 2018, the country's GDP per capita was US $ 773, which is more than three times that of the turn of the millennium 2000. However, nearly half of the population still lives below the national poverty line. After all, in a report at the end of 2014, the country received praise from the International Monetary Fund (IMF) for economic growth to benefit the poor as well and for income disparities to decrease. Poverty reduction is part of the government's strategy to ensure political and social stability. Large write-offs of foreign debt have also improved Rwanda's financial situation.

However, President Paul Kagame's regime has been criticized for becoming increasingly authoritarian. Accusations of involvement and support for the rebel movement in the mineral-rich but by force torn-apart eastern Congo (Kinshasa) prompted several countries to freeze the otherwise comprehensive aid to the country in 2012.

The vast majority of the country's population (90 percent) are employed in agriculture. Although coffee and tea are the most important export goods, agriculture is dominated by self-cultivation. However, the country is forced to import food to meet its needs. Fishing is conducted to a limited extent, mainly in Lake Kivus.

The government has set the goal that by 2020, the country should have evolved from an agricultural-based low-income country to a middle-income country where the economy is driven forward by a knowledge-based service sector. Investment in economic restructuring, rural development and increased productivity in agriculture and reduced youth unemployment have begun to show results. To the benefit of Rwanda also speaks to the fact that corruption in the country is relatively low.

The country is now also considered to be the countries in Africa where it is easiest to start and run businesses. According to the World Bank, however, the private sector, which is still largely informal, needs to grow in order for economic development to continue. A serious inhibitory factor for growth is the substandard infrastructure, which makes it difficult to transport goods, both inland and partly between Rwanda and neighboring countries. The lack of electricity and the poorly developed electricity grid are other serious problems.

Water energy production has been expanded, but large quantities of petroleum products are still being imported to meet energy needs. However, wood, peat and charcoal are the most important energy sources for a large part of the population. Under the Kivus Lake on the border with Congo (Kinshasa), there is one of the world's largest natural gas reserves, estimated to contain 57 billion m 3, half of which is in Rwanda. The reserve will be developed with support from the World Bank, but the project has been delayed.

Rwanda is little industrialized. The industry that exists is mainly agricultural-based and processes coffee, tea sugar cane and tobacco. Rwanda's most important mineral resource is tinstone, and exports of tin concentrate account for a large part of export revenue.

Agriculture

Agriculture, which is mainly self-sustaining agriculture, employs 90 percent of the labor force. The most important crops are flour bananas, sweet potatoes, potatoes, cassava, beans, sorghum, rice, maize and peas. To meet the needs, Rwanda must import large quantities of food.

In recent years, efforts have been made to develop forage agriculture, including grubbing and re-colonization of neglected valleys for commercial cultivation of sugar cane and rice. Investment in the cultivation of cut flowers for export has also been implemented.

The most important export crops are coffee and tea. Livestock management, traditionally central to the Tutsis, was severely affected during the 1994 genocide but has recovered in the 2000s and exports of hides contribute to the country's income. Intensive cultivation and deforestation have led to depletion of the soil and erosion in many places.

Foreign trade

Rwanda has a strong current account deficit. Unstable world market prices for the most important export products coffee and tea (50-70 per cent of the country's export revenue) and a large energy import are the main causes of the deficit. The main importing countries are China, Uganda and India, the main exporting countries are the United Arab Emirates, Kenya, Switzerland.

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