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Business and Development

Rwanda Makes Remarkable Strides In Its Economy Just 2.5 Decades After A Devastating Genocide

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Kigali, the capital of Rwanda

Kigali, Rwanda’s capital

Rwanda is emerging as an economic powerhouse in East Africa just 2.5 decades after a very dark and devastating genocide. So good is the economic progress that the country has reduced its reliance on foreign donations. Currently, Rwanda domestically funds 84 percent of its budget. Two decades ago, the country could afford to fund only 36 percent of its budget.

Indicators

In addition to the reduced reliance on foreign aid, several indicators demonstrate Rwanda’s rapid growth. Major indicators are the rate of growth, decline in inequality, diversification, and decline in rates of poverty.

Growth Rate

Between 2001 and 2014, the average economic growth was 8 percent. The IMF projected Rwanda’s economic growth at 7.2 percent in 2018. The projections were based on favorable rains and strong industrial activity. In the first quarter of 2018, Rwanda registered a 10.6 percent growth in economy.

Equality in Rwanda

The country’s growth is also characterized by a decline in rates of inequality. The decline is largely due to improved healthcare, school enrollment, literacy, and life expectancy.

Greater equality is exhibited in the country’s parliament, where women make up 68 percent of parliament. This is one of the highest rates globally, putting Rwanda up in the ranks of countries with highest female representation in parliament.

Diversification

Farming is an important sector in Rwanda’s economy. A majority of the population still live in rural areas and depend on subsistence farming. The government plans to shifts this focus to include more economic and investment opportunities. Specifically, the country is moving towards becoming more of a service-oriented and knowledge-based economy.

Decline in Poverty

The economic growth has translated into reducing poverty levels across the country. In 2005, 57 percent of Rwandese lived below the poverty line. By 2010, this number had reduced to 45 percent. In 2017, the poverty level was registered at 38.2 percent, according to the National Institute of Statistics of Rwanda.

Kagame’s Transformative Leadership

At the centre of the country’s rapid growth is President Paul Kagame. Kagame adopted and pursued policies that have transformed Rwanda to a prospective middle economy. The President continues to implement development plans for the country, as outlined in the country’s vision 2020. Also, under Kagame, Rwanda’s ease of doing business has significantly improved.

Vision 2020

Vision 2020 is Rwanda’s blueprint to continued economic progress. The vision is based on several pillars that include good governance, human resource development, infrastructure development, and private sector-led development. Other pillars are regional and international integration and market-oriented agriculture. With only one year left on the Plan, the government is still optimistic it will hit the targets.

Rwanda will be moving from Vision 2020 to Vision 2050, which heightens the growth prospects of the country by targeting a high income economy status by 2050. In order to reach this target, the country needs to achieve an average growth rate of 10 percent.

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