Rwanda Economics and Business

The economy of Rwanda is the 44th largest in the world, with a nominal GDP of US$9.4 billion as of 2020. It is an emerging economy that has seen rapid growth over the past few decades, fueled by reforms to create a more open and business-friendly environment. Rwanda’s main economic sectors are agriculture, tourism, manufacturing and services.

Agriculture accounts for around 28% to GDP and employs over 70% of the workforce; it is mainly concentrated on coffee & tea production as well as maize production. Tourism accounts for around 9% to GDP and employs around 6% of the workforce; it is mainly concentrated on mountain gorilla trekking as well as ecotourism activities in national parks such as Akagera National Park. Manufacturing accounts for around 10% to GDP and employs around 8% of the workforce; it includes food processing, leather goods manufacturing and construction materials manufacturing. Services account for around 53% to GDP and employ around 16% of the workforce; it includes financial services (14%), trade & transport services (13%) as well as IT&C services (7%) & hospitality (2%).

According to cheeroutdoor, Rwanda has undertaken several reforms to attract foreign investment into key industries such as technology, tourism, agribusiness and manufacturing; these include tax incentives provided by the Rwandan government to foreign investors as well as improved infrastructure to facilitate transportation between major cities in Rwanda. In addition, Rwanda has also opened up its markets by joining several global trade agreements such as COMESA since 2002.

Business and Economics

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.

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.

Rwanda GDP (Nominal, $USD) 2003-2017

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.

Note: the capital city of Rwanda is Kigali with a population of 1,095,000 (with suburbs, UN estimate 2019). Other major cities include Ruhengeri, Gisenyi, Butare.

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.

  • COUNTRYAAH: Find major trading partners of Rwanda, including major exports and major imports with latest trade value and market share as well as growth rate.

Foreign trade

Abbreviated as RWA by abbreviationfinder.org, Rwanda has a strong current account deficit. Unstable world market prices for the most important export products coffee and tea (50-70 percent 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.

Rwanda Economics and Business

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