Country Overview
Rwanda is a small landlocked country in East Africa. It is bordered by the Democratic Republic of Congo (DRC) to the west, Tanzania to the east, Uganda to the north, and Burundi to the south. The 2012 Population and Housing Census put the population of Rwanda to 10.5 million residents, of which 52% are women. With the support of the International Monetary Fund (IMF) and the 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 maintained political stability since 1994. The last parliamentary elections held in September 2013 saw 64% of the seats taken by female candidates, and the Rwandan Patriotic Front maintain absolute majority in the Chamber of Deputies. President Paul Kagame is serving his second and last term, and presidential elections are due in 2017. However, in December 2015, the Rwandan constitution was amended and allows the president to run for a third term.
Economic Overview
Rwanda’s long-term development goals are defined in a strategy entitled “Vision 2020”. The strategy seeks to transform the country from a low-income agriculture-based economy to a knowledge-based, service-oriented economy with a middle-income country status by 2020.
In order to achieve these long-term development goals, the government of Rwanda has formulated a medium-term strategy. The second Economic Development and Poverty Reduction Strategy (EDPRS 2). The overarching goal of the EDPRS 2 is growth acceleration and poverty reduction through four thematic areas: economic transformation, rural development, productivity and youth employment, and accountable governance. The EDPRS 2 aims to achieve the following goals by 2018: raise gross domestic product (GDP) per capita to $1,000, have less than 30% of the population below the poverty line, and have less than 9% of the population living in extreme poverty.
These goals build on remarkable development successes over the last decade which include high growth, rapid poverty reduction and, since 2005, reduced inequality. Between 2001and 2015 real GDP growth averaged at about 8% per annum. Recovering from the 2012 aid shortfall, the economy grew 7% in 2014 and 6.9% in 2015, up from 4.7% in 2013.
Development Challenges
Going forward, the private sector, which is still largely informal, will have to play a bigger role in ensuring economic growth. Poor infrastructure and lack of access to electricity are some of the major constraints to private investment. As Rwanda’s investment relies a lot on foreign saving, stable inflows of foreign saving is critical to keep the current high investment rate at around 25 percent of GDP.
In addition, reducing the country dependency on foreign aid (30% to 40% of the budget) through domestic resource mobilization is critical. While Rwanda has been effectively using aid for development, the country remains vulnerable to fluctuations in aid flows.
Social Context
Rwanda had meet most of the MDGs by the end of 2015. Strong economic growth was accompanied by substantial improvements in living standards, evidenced by a two-thirds drop in child mortality and the attainment of near-universal primary school enrolment. A strong focus on homegrown policies and initiatives contributed to a significant improvement in access to services and in human development indicators. The poverty rate dropped from 59% in 2001 to 45% in 2011 while inequality measured by the Gini coefficient reduced from 0.52 in 2006 to 0.49 in 2011.
Last Updated: Apr 11, 2016
