The Rwandan economy is based on the largely rain-fed agricultural production of small, semi-subsistence, and increasingly fragmented farms. It has few natural resources to exploit and a small, uncompetitive industrial sector. While the production of coffee and tea is well suited to the small farms, steep slopes, and cool climates of Rwanda, the average family farm size is one-half hectare, unsuitable for most agro-business purposes. Agribusiness accounts for approximately 36.2% of Rwanda's GDP and 45% of exports. Minerals in 2009 accounted for 28% of export earnings, followed by tourism, tea and coffee, and pyrethrum (whose extract is used as a natural insecticide). Mountain gorillas and other niche eco-tourism venues are increasingly important sources of tourism revenue. Rwanda's tourism and hospitality sector requires continued investment. Rwanda is a member of the Commonwealth, the Common Market for Eastern and Southern Africa (COMESA), and the East African Community (EAC). Some 34% of Rwanda's imports originate in Africa, 90% from COMESA countries. The Government of Rwanda has sought to privatize several key firms. Since 2007, the telecom and mining sectors have been largely privatized, and the government has sold off several government-owned tea estates and made great strides in completing privatization of the banking sector. RECO, the utility monopoly, remains to be privatized, as do several other parastatals.
During the 5 years of civil war that culminated in the 1994 genocide, GDP declined in 3 out of 5 years, posting a dramatic decline at more than 40% in 1994, the year of the genocide. The 9% increase in real GDP for 1995, the first postwar year, signaled the resurgence of economic activity and massive foreign aid inflows.
In the immediate postwar period--mid-1994 through 1995--emergency humanitarian assistance of more than $307.4 million was largely directed to relief efforts in Rwanda and in the refugee camps in neighboring countries where Rwandans fled during the war. In 1996, humanitarian relief aid began to shift to reconstruction and development assistance.
Since 1996, Rwanda has experienced steady economic recovery, thanks to government reforms and foreign aid (now over $500 million per year). Since 2002, the GDP growth rate ranged from 3%-11% per annum, and inflation ranged between 2%-9%. Rwanda depends on significant foreign imports (over $900 million per year). Exports have increased, up to $193 million in 2009. Private investment remains below expectations despite an open trade policy, a favorable investment climate, cheap and abundant labor, tax incentives to businesses, stable internal security, and crime rates that are comparatively low. Investment insurance also is available through the Africa Trade Insurance Agency, the Overseas Private Investment Corporation, and the World Bank's Multilateral Investment Guarantee Agency (MIGA). The weakness of exports and low domestic savings rates are threats to future growth. The global economic crisis has impacted Rwanda. However, while there was a decline in overall exports (28% between 2008 and 2009), remittances, and nongovernmental organization (NGO) transfers in 2009, the agricultural sector performed strongly, propelling Rwanda to a 4% growth in GDP, well above the sub-Saharan average growth for the year. Amidst obstacles, Rwanda appears committed to economic reform and private sector investment. In the World Bank's "Ease of Doing Business" report released in September 2009, Rwanda catapulted from number 143 to number 67; in the 2010 report, Rwanda improved its ranking to number 58.
The Government of Rwanda remains dedicated to a strong and enduring economic climate for the country, focusing on poverty reduction, infrastructure development, privatization of government-owned assets, expansion of the export base, and trade liberalization. The implementation of a value added tax of 18% and improved tax collections are having a positive impact on government revenues and thereby on government services rendered. Banking reform and low corruption also are favorable current trends. Agricultural reforms, improved farming methods, and increased use of fertilizers are improving crop yields and national food supply. Moreover, the government is pursing educational and healthcare programs that bode well for the long-term quality of Rwanda's human resource skills base.
Many challenges remain for Rwanda. The country is dependent on significant foreign aid. Exports continue to lag far behind imports and will continue to affect the health of the economy. The persistent lack of economic diversification beyond the production of tea, coffee, and minerals keeps the country vulnerable to market fluctuations. Perhaps the largest constraint on private sector development is the cost of electricity, which is currently among the highest in the world at about 24.6 cents per kilowatt hour. Given Rwanda's landlocked geography, strong highway infrastructure maintenance and good transport linkages to neighboring countries, especially Uganda and Tanzania, are critical. Transportation costs remain high and, therefore, burden import and export costs. Rwanda has no railway system for port access to Tanzania or Kenya. The limited availability and high cost of power also continues to impede the growth of manufacturing enterprises. The tourism industry has undeveloped potential for growth given the current political stability, travel infrastructure, and extensive national parks as well as other potential tourist sites. In 2006, Rwanda completed the Multilateral Debt Relief Initiative and the Heavily Indebted Poor Countries (HIPC) debt initiative, significantly lowering its foreign debt load.
American business interests in Rwanda are modest, and the African Growth and Opportunity Act (AGOA) has yet to make a significant impact in Rwanda. In addition to long-standing tea production by an American firm, in 2008 a U.S. corporation concluded an agreement with Rwandan authorities to produce 100 megawatts of electrical power from methane extraction operations in Lake Kivu. In 2009 a U.S.-British consortium signed an agreement with the government to develop a biofuel project based on jatropha, and a U.S. mining company expanded its investment in local mineral production. In 2010, RwandAir signed a contract with Boeing for the purchase of two Boeing 737-800 aircraft, for an estimated $80 million. American exports of aviation, telecommunications, and construction equipment have increased in recent years. Energy needs will stress natural resources in wood and gas, but hydroelectric power development is underway, albeit primarily in the planning stages, as is methane development. Rwanda does not have nuclear power or coal resources. Finally, Rwanda's fertility rate--averaging 5.5 births (2008 est.) per woman--will continue to stress services, and diseases such as HIV/AIDS transmission, malaria, and tuberculosis will have a major impact on human resources.
Rwanda's government-run radio broadcasts 15 hours a day in Kinyarwanda, English, and French, the national languages. News programs include regular re-broadcasts from international radio such as Voice of America, BBC, and Deutsche Welle. There is one government-operated television station. In addition to government-operated Radio Rwanda, there are a number of independent FM radio stations. There are few independent newspapers; most newspapers publish in Kinyarwanda on a weekly, biweekly, or monthly basis. Several Western nations, including the United States, are working to encourage freedom of the press, the free exchange of ideas, and responsible journalism.
GDP (2009 est.): $5.1 billion.
Real GDP growth rate (2010 est., International Monetary Fund): 6.5%.
Per capita income (2009 est.): $510. Purchasing power parity (2006 est.): $1,600.
Average inflation rate (2008 est.): 5.7%.
Agriculture (2009): 36% of GDP. Products--coffee, tea, pyrethrum (insecticide made from chrysanthemums), bananas, beans, sorghum, potatoes, livestock.
Industry (2009): 14.2% of GDP. Types--cement, agricultural products, beer production, soft drinks, soap, furniture, shoes, plastic goods, textiles, cigarettes, pharmaceuticals.
Services (2009): 43.7%.
Trade (2009 est.): Exports--$193 million: tea, coffee, coltan, cassiterite, hides, iron ore, and tin. Major markets--China, Belgium, and Germany. Imports--$963 million f.o.b.: foodstuffs, machinery and equipment, steel, petroleum products, cement, and construction material. Major suppliers--Kenya, Germany, Belgium, France, Uganda, and Israel.
After its military victory in July 1994, the RPF organized a coalition government called "The Broad Based Government of National Unity." Its fundamental law was based on a combination of the June 1991 constitution, the Arusha accords, and political declarations by the parties. The government outlawed the MRND Party. In April 2003, the transitional National Assembly recommended the dissolution of the Democratic Republican Party (MDR), one of eight political parties participating in the Government of National Unity since 1994. Human rights groups noted the subsequent disappearances of political figures associated with the MDR, including at least one parliamentarian serving in the National Assembly. On May 26, 2003, Rwanda adopted a new constitution that eliminated reference to
and set the stage for presidential and legislative elections in August and September 2003. The seven remaining political parties endorsed incumbent Paul Kagame for president, who was elected to a 7-year term on August 25, 2003. Rwanda held its first-ever legislative elections September 29 to October 2, 2003. A ninth political party formed after these 2003 elections.
In the spring of 2006, the government conducted local non-partisan elections for district mayors and for sector and cell executive committees. Elections for the Chamber of Deputies occurred in September 2008; the RPF won an easy victory in coalition with six small parties, taking 42 of 53 directly-elected seats. As provided in the constitution, 24 seats were also accorded to women candidates in indirect elections. Women now hold 45 of the 80 seats in the Chamber. The elections were peaceful and orderly, despite irregularities. A tenth political party formed in 2010.
Presidential elections were held in August 2010; the National Electoral Commission reported that President Kagame won re-election with roughly 93% of the vote. The presidential election was peaceful and orderly, with heavy turnout. However, the pre-election period was marked by events of concern, including waves of terrorist attacks using grenades in populous areas, the murder of a journalist, the unexplained murder of the vice president of the Democratic Green Party, an assassination attempt on a former high-ranking government official accused of fomenting attacks, and the suspension of two local-language newspapers. In addition, two political opposition figures were arrested on criminal charges, and a party that had been seeking to register for many months was unable to do so.
Challenges facing the government include maintaining internal and regional security, promoting further democratization and judicial reform; completion of prosecution of remaining individuals for crimes relating to the 1994 genocide, either by the regular court system or the
system; integrating former combatants and prisoners; preventing the recurrence of any insurgency directed by ex-military and
militia who remain in eastern Congo; and the continuing work on medium- and long-term development.
Principal Government Officials
Prime Minister--Bernard Makuza
Minister of Foreign Affairs--Louise Mushikiwabo
Ambassador to the United States--James Kimonyo
Ambassador to the United Nations--Eugene-Richard Gasana
Rwanda maintains an embassy in the United States at 1714 New Hampshire Avenue NW, Washington, DC 20009 (tel. 202-232-2882).
Independence: July 1, 1962.
Constitution: May 26, 2003.
Branches: Executive--president (chief of state), prime minister (head of government). Broad-based government of national unity formed after the 1994 civil war. Elections in 2003 elected a president, 80-seat Chamber of Deputies and 26-member Senate. Elections for the Chamber of Deputies were again held in 2008. Legislative--Chamber of Deputies; Senate. Judicial--Supreme Court; High Courts of the Republic; Provincial Courts; District Courts; mediation committees.
Administrative subdivisions: 4 provinces plus Kigali; 30 districts; 416 sectors; 2,148 cells.
Political parties: There are nine political parties, including the ruling Rwandan Patriotic Front (RPF), which leads a coalition that includes the Centrist Democratic Party (PDC), the Rwandan Socialist Party (PSR), the Ideal [formerly Islamic] Democratic Party (PDI), and the Democratic Popular Union (UPDR). Other parties include the Social Democratic Party (PSD), the Liberal Party (PL), the Concord Progressive Party (PPC), and the Prosperity and Solidarity Party (PSP).
Suffrage: Universal for citizens over 18--except refugees, prisoners, and certain categories of convicts.
Central government budget (2007 est.): 31.7 billions of Rwandan francs ($29 million) Revenues--$28 million. Expenditures--$29 million.
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