The World Bank in Rwanda

Small and landlocked, Rwanda is hilly and fertile with a population above 13 million people (2022). It borders the far larger and richer Democratic Republic of Congo, as well as East African neighbors, Tanzania, Uganda, and Burundi.

Political Context

Rwanda has guarded its political stability since the 1994 genocide against the Tutsi. Elections for the president and parliamentary seats are scheduled for July 15, 2024, after the government decided last year to synchronize the dates for the votes. President Paul Kagame is the ruling party’s presidential flagbearer for the upcoming election, setting the stage for a fourth consecutive seven-year term.

Economic Overview

Rwanda aspires to become a Middle-Income Country by 2035 and a High-Income Country by 2050. It plans to achieve this through a series of seven-year National Strategies for Transformation (NST), underpinned by sectoral strategies focused on meeting the UN’s Sustainable Development Goals (SDGs).

Rwanda's economy has remained resilient and adaptable despite challenging external and domestic factors, achieving a 7.6% growth rate in the first three quarters of 2023. GDP growth is expected to regain momentum in 2024–26, with a projected average growth of 7.2%. The services sector sustained domestic demand, and the rebound of the industrial sector contributed to the robust growth and the positive economic trajectory.

Development Challenges

Rwanda’s public-sector-led development model has shown its limitations, with public debt increasing significantly in recent years. The country’s heavy reliance on large public investments (at 13% of GDP in 2019) has led to substantial fiscal deficits, financed through external borrowing. Consequently, the debt-to-GDP ratio rose to 56.7% in 2019 (from 19.4% in 2010) and was estimated to have reached 71% of GDP in 2020, following an increase in borrowing needs due to the pandemic. External financing through grants and concessional and non-concessional borrowing has played a key role in financing public investments. Going forward, the private sector looks set to play a bigger role in helping to ensure economic growth. Low domestic savings, a shortage of skills, and the high cost of energy are some of the major constraints to private investment. Stronger dynamism in the private sector will help to sustain high investment rates and accelerate growth. Promoting domestic savings is critical, along with inclusive growth.

Inclusive growth remains a key challenge, as the poverty reduction momentum has weakened in recent years. In terms of the international poverty line of $2.15 (2017 PPP), the poverty rate declined from 75.2% to 53.5% over 2000 to 2013 and became almost stagnant. In 2016, it was 52%. This poverty reduction slowdown is explained by compressed household consumption in rural areas, due in part to a slow rural to urban transition.

Addressing the above challenges will require continued efforts to improve the quality of infrastructure (water and electricity), essential basic services (education, health, and social safety nets), and effective support for entrepreneurship and private-sector job creation. The  World Bank’s Human Capital Index scores Rwanda at 0.38, slightly higher than the average for low-income countries but lower than the average for Sub-Saharan Africa.

Last Updated: Apr 03, 2024

World Bank Group Engagement in Rwanda

The World Bank Group’s (WBG) Country Partnership Framework (CPF) FY21–FY26 focuses on five thematic areas:

• Improved Human Capital
• Improved Conditions for Private Sector Development
• Expanded Access to Infrastructure and the Digital Economy
• Increased Agricultural Productivity and Commercialization, and
• Intensified Urban Agglomeration and Enhanced Resilience.

The CPF, prepared by the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), aims to catalyze higher volumes of private resources to support Rwanda’s development. It builds on the government’s National Strategy for Transformation (NST 1) and on its proposed division of labor among development partners.

The World Bank's portfolio in Rwanda currently comprises 22 national and four regional projects with a net commitment of $3.19 billion. Investments are in infrastructure, urban management, social protection, health, energy, and education, among others.

Recently approved projects

·      Boosting Green Finance, Investment, and Trade in Rwanda ($125 million), approved on December 8, 2023, aims to strengthen the capacity of foreign and domestic firms to invest sustainably. This is by promoting and maintaining long-term macroeconomic and fiscal sustainability to preserve country risk, promoting inclusive and sustainable trade and investment, enabling the growth of domestic MSMEs, and creating a competitive landscape for businesses in Rwanda.

·      Accelerating Sustainable and Clean Energy Access Transformation in Eastern and Southern Africa MPA (ASCENT - Rwanda) ($300 million), approved on November 28, 2023, aims to improve access to modern energy for households, enterprises, and public institutions, and to enhance the efficiency of electricity services in Rwanda.

International Finance Corporation (IFC)

As of June 30, 2023, the International Finance Corporation’s (IFC) investment portfolio in Rwanda totaled $35 million across several key sectors, such as financial services, tourism, retail, agriculture, infrastructure, and affordable housing. IFC also has an advisory portfolio of $6.3 million. The advisory program has played a significant role in enhancing IFC's investments in promising sectors such as financial services, agriculture, climate, and health. Notably, IFC is actively involved in bolstering Rwanda's health sector by partnering with the government in the development of a pharmaceutical sector.

Multilateral Investment Guarantee Agency (MIGA)

As of February 29, 2024, the Multilateral Investment Guarantee Agency (MIGA) is actively engaged in Rwanda with a total gross exposure of $32 million across three sectors: Water, Financial Services, and Tourism/Hospitality. The three existing projects include a bulk water public-private partnership (PPP) project, a fintech mobile money project across 12 countries, of which Rwanda is included, and the acquisition and development of a hotel project. MIGA has also supported a regional development bank, the Trade and Development Bank (TDB), of which Rwanda is a member. MIGA’s support has mobilized $747 million of commercial financing for TDB to expand its trade finance activities with clients in member countries, including support of COVID-19-related trade finance transactions.

Last Updated: Apr 03, 2024

The World Bank's steadfast partnership with Rwanda began six decades ago and has contributed to the country’s economic transformation, including the reconstruction of the country after the genocide against the Tutsi of 1994. The World Bank has financed investment and policy operations across sectors, including human capital, infrastructure, agriculture, resilience, and private sector development, to the tune of $8.2 billion. The IDA resources and analytic and advisory services have contributed to substantial development impact. Here are some examples:

Energy sector: Over the past 15 years, Rwanda's energy sector has witnessed an impressive transformation and the World Bank has played a key convening and financing role, providing over $1 billion in credit, grants, and technical support to the sector. These interventions have helped:

·       Connect 3.2 million people to electricity after 358,000 and 360,000 households were added to grid and off-grid electricity, respectively.

·      Generate 61MW of hydroelectricity through new infrastructure and preparing to add, using World Bank funding, 10MW through the rehabilitation of an existing hydro station.

·      Connect 100% of all large and medium-sized customers to advanced metering, enabling accurate, timely billing and real-time consumption data, reducing commercial losses by 3.39%.

·      120,000 households have access to cleaner cooking.

·      Strengthen high voltage transmission network has provided stability, reduced voltage fluctuations, and ensure connectivity to other countries, hence advancing regional integration agenda.

Agriculture: In the last three decades, the World Bank has provided Rwanda with $1.6 billion in IDA and $257 million in grants, technical expertise, and data to enhance agricultural practices, productivity, and farmers' livelihoods, with notable results:

·      18,000 hectares of marshland, hillside, and small-scale irrigation systems and technologies developed.

·      61,000 hectares of terraced hills and land husbandry technologies have helped control erosion and enhanced productivity for hillside farmers.

·      49 Water Users Associations created for the sustainable operation and maintenance of irrigation systems.

Human Capital Development: With a remarkable commitment to human capital development, and the support of the World Bank, Rwanda has advanced sequenced reforms in social protection, health, nutrition, and education. These investments have real impact on the lives of people across the country, especially women and children.

Education: In the past seven years, the Bank has provided $1 billion and $65 million in IDA loans and grants, respectively, as well as technical expertise and data in the education sector, contributing to the growth of human capital. In just two years (2019 to 2021), the World Bank investments helped,

·      Add 22,000 classrooms, decongesting schools.

·      Improve student-to-classroom ratio from an average of 73:1 (2019) to 56:1 (2021)

·      Build 31,000 gender-specific restrooms to give students access to improved sanitation.

·      Two million 5-14-year-old children can access a school within a 2 km radius of their home. Previously, 68,000 children walked between 5 and 7 kilometers to reach school.

·      Enhance accessibility for students with disabilities.

·      Improve teacher competency.

·      Enrich the quality of learning and learning outcomes. 37.5% grade 3 students to achieve grade-level proficiency in English from a baseline of 10% in 2021.

Health: The World Bank has provided over $240 million in projects for the implementation of key strategies in the health sector since 2018. The investments have:

·      Contributed to the remarkable reduction in the stunting rate among children under five years of age in the 13 targeted districts.

·      Benefitted 5.2 million people (40% of Rwandan population), over 1.3 million women in reproductive age, and 600,000 children aged 0-5 years from critical health and nutrition services at community and health facilities levels.

Last Updated: Apr 03, 2024

Many of Rwanda’s ongoing development projects are supported by the World Bank in partnership with various development partners, including Power of Nutrition and the Global Financing Facility, African Development Bank, Arab Bank for Economic Development in Africa, European Union, European Investment Bank, Government of Denmark, Belgium, Japan, the Netherlands, OPEC Fund, and Saudi Fund to name a few. The World Bank also coordinates with development partners in-country, such as the United Nations and other multilateral and bilateral agencies, through a formally established framework, the Development Partners Coordination Group. The division of labor between development partners, as established by the government in 2013, supports and eases inter-development partner coordination, alignment, and harmonization.

Last Updated: Apr 03, 2024