Small and landlocked, Rwanda is hilly and fertile with a population of about 13 million people (2020). It borders the far larger and richer Democratic Republic of Congo, and East African neighbors, Tanzania, Uganda, and Burundi.
With the support of the International Monetary Fund and the World Bank, Rwanda has made important economic and structural reforms and sustained its steady economic growth rates for over a decade until COVID-19 and its impact threatened to reverse the trend.
Rwanda has guarded its political stability since the 1994 genocide against the Tutsi. Parliamentary elections in September 2018 saw women fill 61% of seats, the Rwandan Patriotic Front maintain an absolute majority, and two opposition parties, the Democratic Green Party of Rwanda and Social Party, Imberakuri, win two seats each. President Paul Kagame was re-elected for a seven-year term in August 2018, after an amendment to the constitution allowing a third term.
Rwanda now aspires to Middle Income Country status by 2035 and High-Income Country status by 2050. It plans to achieve this through a series of seven-year National Strategies for Transformation (NST1), underpinned by sectoral strategies focused on meeting the UN’s Sustainable Development Goals.
The NST1 followed two, five-year Economic Development and Poverty Reduction Strategies, EDPRS (2008–12) and EDPRS-2 (2013–18), during which Rwanda experienced robust economic and social performance. Growth averaged 7.2% a year over the decade to 2019, while per capita gross domestic product (GDP) grew at 5%. In 2020, however, the lockdown and social distancing measures, critical to controlling the COVID-19 pandemic, sharply curtailed economic activities. GDP fell by 3.4% in 2020, the first major drop since 1994.
The World Bank (WB) has contributed to Rwanda’s COVID-19 response and vaccination efforts by providing support in the following areas:
• Procurement of diagnostic tests and equipment, health supplies, and personal protective equipment or PPE, as well as support for the implementation of public health measures adopted by the government to curtail the spread of the virus and limit its impact.
• Procurement and deployment of COVID-19 vaccines. World Bank financing has so far supported the procurement of 3.6 million doses (15% of all doses received), enough to fully vaccinate up to 1.8 million people (14% of the population).
• Since the kick-off of the vaccination campaign in March 2021, over 9.17 million people (70% of the population) have been reached with at least one dose. This includes 8.93 million people (68.5% of the population) who have been fully vaccinated, and 5.5 million people (42%) who had received a booster dose as of the end June 2022.
Rwanda’s public-sector led development model has shown its limitations, with public debt increasing significantly in recent years. Rwanda’s heavy reliance on large public investments (at 13% of gross domestic product or 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 71.3% of GDP in 2020, following an increase in borrowing needs due to the pandemic. External financing through grants, 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 viewed as critical, along with inclusive growth. The momentum in poverty reduction has weakened in recent years, increasing the urgency to design a medium-term public investment strategy to achieve a more efficient allocation of resources geared toward projects critical for broad-based and inclusive economic recovery following the pandemic.
Rwanda’s era of strong economic growth was accompanied by substantial improvements in living standards, with a two-thirds drop in child mortality and near-universal primary school enrollment. A strong focus on homegrown policies and initiatives has contributed to significant improvement in access to services and human development indicators. Measured against the national poverty line, poverty declined from 77% in 2001 to 55% in 2017, while life expectancy at birth improved from 29 in the mid-1990s to 69 in 2019. The maternal mortality ratio fell from 1,270 per 100,000 live births in the 1990s to 290 in 2019. The official inequality measure, the Gini index, declined from 0.52 in 2006 to 0.43 in 2017. However, the COVID-19 crisis is dramatically increasing poverty and threatening human capital.
The headcount poverty rate is likely to rise by 5.1 percentage points (more than 550,000 people) for 2021, compared to the no-COVID scenario. The combination of poorer nutrition, limited health services, learning losses from school closures, and the likelihood that some children (particularly adolescent girls and children from poor households) may never return to school because of the pause in education during COVID-19 has the potential to threaten decades of progress in the development of human capital in Rwanda, as elsewhere.
Last Updated: Oct 03, 2022