21 Sept 2018
Rwanda: Market Profile
Major Economic Indicators
- Rwanda, also known as the “land of a thousand hills”, is a small landlocked country in east-central Africa with one of the highest population densities in sub-Saharan Africa.
- Agriculture is the backbone of Rwanda’s economy, accounting for one-third of its GDP and 70% of the labour force in 2017. Traditional goods such as tea and coffee are the major exports while cassava, potatoes and beans are the most productive crops. Although traditional goods are still important export earners for the country, non-traditional merchandise exports such as chili increased gradually in the last decade.
- The outlook for construction sector is the brightest among other sectors due to the increased government investment in infrastructure development. The new Bugesera Airport started construction in August 2017 with an annual capacity of 4.5 million passengers expected upon completion. The Kigali Innovation City project co-financed by the African Development Bank was launched in 2016, seeking to build a technology innovation hub with facilities such as innovation lab centre and office buildings for start-ups.
- Rwanda enjoyed strong economic growth at an average annual rate of 5% from 2005 to 2016, high ranking in the ease of doing business (#41 out of 190 countries according to the World Bank’s Doing Business 2018 report) and a reputation of low corruption. With its business-friendly reputation, Rwanda attracts foreign direct investments particularly in the construction and real estate sector. According to UNCTAD, cumulative FDI stock in Rwanda amounted to US$1.8 billion in 2017, up 7% from 2016.
- Since 2004, the Ministry of Agriculture and Animal Resources has rolled out three phases of the Strategic Plans for the Transformation of Agriculture (PSTA) in the effort to harmonize the agriculture development with the national economic development and poverty reduction strategies. PSTA4, phase 4 of PSTA covering the period between 2018 and 2024, was launched earlier this year aiming to increase farm productivity and address agricultural challenges and opportunities. The PSTA4 will be funded by the government, development partners such as the European Union and the private sector.
- Rwanda is one of the few African countries that developed an integrated information communication and technology (ICT) policy in the late 1990s. The National Information Communications Infrastructure (NICI) policy is divided into four stages with the final stage covering the period 2016 to 2020. In the past three stages under NICI policy, Rwanda’s government concentrated on enhancing ICT infrastructure and increasing internet accessibility and affordability. As of July 2018, the number of active mobile telephone subscriptions in Rwanda reached 9.3 million with a penetration rate of 79%.
- Rwanda is a member of the World Trade Organization (WTO) and Common Market for Eastern and Southern Africa (COMESA). It is also a member of the East African Community (EAC), along with Kenya, Tanzania, Burundi, Uganda and South Sudan. In March 2018, Rwanda signed the African Continental Free Trade Area (AfCFTA) with other member states of the African Union, committing to boost African economies through trade liberalization in the region.
- China has remained one of the important development partners of Rwanda since they established diplomatic relations back in the 1970s. In July this year, Rwanda and China signed multiple bilateral agreements regarding cooperation in the Belt and Road Initiative (BRI). The agreements also included a mutual visa exemption for diplomatic and service passport holders and covered other sectors such as infrastructure, cultural and human development cooperation. According to China’s Ministry of Commerce, China’s FDI stock in the Rwanda surged 41% in five years to reach US$89 million in 2016.
- E-commerce is growing in Rwanda with the participation of local and international players such as Yubeyi and China’s Alibaba Group. Rwanda and China have signed a memorandum of understanding on e-commerce cooperation, looking to promote digital trading. This agreement comes a year after Jack Ma, the founder of Alibaba Group, made investment commitments for start-ups in e-commerce and technology businesses in 2017.
- In an effort to introduce and promote Chinese culture and language in Rwanda, the Confucius Institute at University of Rwanda was established in 2009 with a pioneer class of about 100 students. The number of registered students has increased to over 4,900 as of July 2018.