Small and landlocked, Rwanda is hilly and fertile with a densely packed population of about 11.9 million in 2016. It borders the far larger and richer Democratic Republic of Congo as well as Tanzania, Uganda and Burundi. With the support of the International Monetary Fund (IMF) and World Bank, Rwanda has been able to make important economic and structural reforms and sustain its economic growth rates over the last decade.
Political Context
Rwanda has guarded its political stability since the genocide in 1994. Parliamentary elections in September 2013 saw women fill 64 per cent of the seats and the Rwandan Patriotic Front maintain an absolute majority in the Chamber of Deputies. An amendment to the constitution in December 2015 paved the way for the re-election of President Paul Kagame in August 2017 to third seven-year term in office.
Economic Overview
Rwanda’s long-term development goals are defined in Vision 2020, a strategy that seeks to transform the country from a low income, agriculture based economy to a knowledge based, service-oriented economy with middle-income country status by 2020. In order to achieve this, the government has come up with a medium-term strategy.
The second Economic Development and Poverty Reduction Strategy (EDPRS 2) outlines its overarching goal of growth acceleration and poverty reduction through four themes: economic transformation, rural development, productivity and youth employment, and accountable governance.
The EDPRS 2 aims to: raise gross domestic product (GDP) per capita to $1,000; reduce the percentage of the population living below the poverty line to less than 30 per cent; and reduce the percentage of the population living in extreme poverty to less than nine per cent. These goals build on remarkable development successes over the last decade that include high growth, rapid poverty reduction and reduced inequality. Between 2001 and 2015, real GDP growth averaged at about eight per cent a year.
Development Challenges
Poor infrastructure and a lack of access to electricity are some of the major constraints to private investment. Investment relies heavily on foreign aid, with stable inflows critical to keep the current investment rate high at about 25 per cent of GDP. Reducing dependence on foreign aid through domestic resource mobilisation and promoting domestic savings is viewed as critical.
Social Context
Rwanda met most of the Millennium Development Goals (MDGs) by the end of 2015. Strong economic growth was accompanied by substantial improvements in living standards, with a two-thirds drop in child mortality and near-universal primary school enrolment.
A strong focus on homegrown policies and initiatives has contributed to significant improvement in access to services and human development indicators. The poverty rate dropped from 44 per cent in 2011 to 39 per cent in 2014, while inequality measured by the Gini coefficient fell from 0.49 to 0.45.
