Small and landlocked, Rwanda is hilly and fertile with a densely packed population of about 11.9 million people (2016). It borders the far larger and richer Democratic Republic of Congo, as well as its closest East African neighbors, 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.
Rwanda has guarded its political stability since the genocide in 1994. Parliamentary elections in September 2013 saw women fill 64% of the seats, and the Rwandan Patriotic Front maintain an absolute majority in the Chamber of Deputies. President Paul Kagame was re-elected to a seven-year term in the August 2018, following an amendment to the constitution in December 2015 allowing him to serve a third term.
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. To achieve this, the Government of Rwanda has developed the second Economic Development and Poverty Reduction Strategy (EDPRS 2), a medium-term strategy which outlines the country’s overarching goal to accelerate growth and reduce poverty through four thematic areas: 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%; and reduce the percentage of the population living in extreme poverty to less than 9%. These goals build on recent development successes over the last decade that include high growth, rapid poverty reduction and reduced inequality. Between 2001and 2015, real GDP growth averaged at about 7.8% per annum.
Public investments have been the main driver of growth in recent years. External financing through grants, concessional and non-concessional borrowing played an important role in financing of public investments. Growth slowdown of 2016 and 2017 highlighted the limits of public sector-led growth model. Going forward, the private sector will play a bigger role in helping to ensure economic growth. Low domestic savings, skills, and high cost of energy are some of the major constraints to private investment. A stronger dynamism in the private sector will help to sustain high investment rate and accelerate the growth. Promoting domestic savings is viewed as critical.
. Rwanda’s 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% in 2011 to 39% in 2014, while inequality measured by the Gini coefficient stood at 0.45.
Last Updated: May 16, 2018