A hilly and landlocked country with a densely packed population of about 12.5 million people (2018), the Rwandan economy despite the disruption occasioned by the COVID-19 pandemic has continued to undergo rapid industrialization and transformation attributed to a successful government policy, export-focused agriculture and a high level of private investment inflows.
According to the 2020 ranking by Index of Economic Freedom, Rwanda GDP growth ranked 2nd among 47 countries in the Sub-Saharan Africa region; Making it the second year in a role that the Rwandan economy has been rated this far.
Many economic experts have continued to applaud the giant stride made by the government of Rwanda in improving the economy of the nation. According to Jacques Nel, Chief economist at Oxford Economics: “Effective governance has been key in Rwanda’s success, with accountable political and inclusive economic institutions creating an environment conducive to private sector development. The reform-minded government has decided to play more of a supporting role in the economy’s development, putting policies in place that promote entrepreneurial activities and that attract foreign investment. This has resulted in widespread development, with growth and foreign investment not only restricted to a few sectors.” He said.
Pillars of Rwanda economic blossom
The extraordinary emergence of Rwanda has centered predominantly on one man, President Paul Kagame. The Rwandan economic miracle is made more impressive by the tremendous lack of comparative advantages of the East African nation. While many neighboring states are rich in natural resources, Rwanda is not so blessed. The country is also landlocked with expensive trade routes. As a remedy to these problems President Kagame put forth an ambitious economic model based on one model pioneered in Singapore.
- Comprehensive program of privatization
There was an evidence of a significant increase in private sector investment following the introduction of a revised tax code and implementation of the doing business reforms in Rwanda in 2005. although there was a downturn due to the World economic crisis in 2009, both foreign and domestic investment have increased with FDI exceeding local investment and new jobs have been created since that time. Exports have increased and there is some evidence of a beginning of export diversification into areas prioritized by government as well as an increase in revenues from tourism.
- Increased productivity in the agricultural sector
Rwanda as a country of few natural resources depends largely on agriculture, which accounted for 29% of the country’s economy in 2019 and remains its biggest industry.
In 2010, it was estimated that over 90% of Rwandan working population farms and agriculture comprised an estimated 42.0% of GDP that year.
Rwanda major agricultural exports include coffee, tea, pyrethrum, bananas, sorghum and potatoes
Another factor that has contributed immensely to Rwanda economic stride is the accessibility to foreign assistance. Since the end of the Rwandan genocide in 1994, the country has received extensive foreign aid, with nearly 50% of its 2019-2020 budget coming from domestic and foreign borrowing.
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.
Tourism is one of the fastest-growing economic resources and became the Rwanda’s leading foreign exchange earner in 2011. In spite of its genocide’s legacy, Rwanda is increasingly perceived internationally as a safe destination.
Rwanda is one of only two countries in which mountain gorilla can be visited safely; gorilla tracking, in the Volcanoes National Park, attracts thousands of visitors per year, who are prepared to pay high prices for permits. Other attractions include: Nyungwe Forest, home to chimpanzees, Ruwenzori colobus and other primates, the resorts of Lake Kivu, and Akagera, a small savanna reserve in the east of the country.
- Good Gender Representation
Rwanda’s economy has benefitted from an increase in gender equality, too – a fact that is seen most prominently in its parliament, where 61% of members are women. This development has significantly enabled women in the country to make economic advances. Women are now able to own land and girls can inherit from their parents.
- Improved healthcare Sector
Rwanda has recently adopted a new technology of deploying drones that can deliver blood across the country. These drones are able to supply blood to 21 remotely located transfusion clinics in Rwanda, dropping off blood in minutes after a text or WhatsApp message is received from those in need. Rwanda’s health sector is showcasing plenty of improvement, recently with the launching of a cervical cancer screening and vaccination campaign that aims to protect young girls and women.