POTRAIT OF DEVELOPING ECONOMY: RWANDA PERSPECTIVE

Abstract

Rwanda is a landlocked country situated in Central Africa, bordered to the North by Uganda, to the East by Tanzania, to the South by Burundi and to the West by the Democratic Republic of Congo. Considered to be among the smallest countries on the continent, Rwanda’s total area is estimated to be 26,338 KM². According to Rwanda’s National Institute of Statistics (NISR), in 2015, the population density in Rwanda was estimated to be 445 people per KM² and the total population is approximately 11,809,295 according to 2017 NISR projection. Also known as the ‘Land of a thousand hills’, Rwanda is situated at an altitude ranging between 1,000 m above sea level in the eastern part to 4,500 m of the Karisimbi, the country’s highest mountain near the border with the Democratic Republic of the Congo. With an estimated population of about 12 million people (NISR, 2019 estimates), 52% of which are women, Rwanda has one of highest population densities in Africa (458.75/Km2). With over 40% of the population under the age of 30 (RPHC, 2012), Rwanda also boasts of one of the most youthful populations on the continent. 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. Rwanda has made good progress over the last two decades since the enormous challenges faced in the aftermath of a genocide against the Tutsi that destroyed the entire social and economic fabric of this country. Rwandans have benefited from rapid economic growth, reduced poverty and the equality and increased access to services including health and education. This has been possible through the strong leadership under H.E Paul Kagame, President of the Republic of Rwanda and vision through high level commitment by government of Rwanda. More to this is Rwandan people choice as can be seen the leadership attributes behind Rwanda’s transformation change and continuity. Rwanda’s institutions evolved and developed into stronger, stable and sustainable in such a way that their efficiency have become a culture a rarity among many African countries.  The aim of the study was to assess how Rwanda has fared with respect to economic transformation over the past 27 years and suggest recommendations for accelerating its progress. In this study, we not only analysed the trends in Rwanda’s economic indicators over time, but also reviewed the policies that underlined the observed trends, with the aim of giving policy explanations and policy recommendations to accelerate economic transformation in Rwanda. There is evidence of a significant increase in private sector investment following the introduction of a revised tax code and implementation of the doing business reforms since 2005 although there was a downturn due to the World economic crisis in 2009. Both foreign and domestic investments have increased with FDI exceeding local investment and new jobs have been created. Exports have increased and there is some evidence of a beginning of export diversification into areas prioritised by government as well as an increase in revenues from tourism. However, imports have also increased and so the balance of trade has worsened. Rwanda has recently enjoyed strong economic growth rates, creating new business prospects and lifting people out of poverty. The Government of Rwanda is actively working to develop the economy and reform the financial and business sectors – improving the business climate dramatically between 2010 and 2016, increasing its rank from 139 to 62 on the annual World Bank Doing Business Report. Rwanda’s major foreign exchange earners include mining, tourism, coffee, and tea, and continued growth in these sectors will be critical for economic development and poverty reduction. USAID investments focus on enhancing private sector competitiveness with a focus on increasing market access and supporting the Government of Rwanda in removing barriers to private sector growth. The major exports of Rwanda are coffee, tea, minerals (tin, cassiterite, wolframite) and pyrethrum. Coffee is the main export revenues contributor and makes up a quarter of the total export value, while the mountain grown tea is considered to be one of the finest in the world. Tourism is also being developed in Rwanda and it is gradually benefiting the Rwandan economy. Tourists enjoy of some of the unique and fascinating features of Rwanda, including the rare mountain gorillas of the Volcanoes National Park, and the large numbers of animal species in Nyungwe and Akagera National Parks. Most of this plays out in the rainforests, which are home to a 1,000-strong population of mountain gorillas, some of the last surviving on the planet.

Keywords: Rwanda, GDP, Development

CITATION: Rwigema, P, C. (2021). Potrait of developing economy: Rwanda perspective. The Strategic Journal of Business & Change Management, 8 (3), 637 – 680.