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After a decade of remarkable progress, the small Central African nation has been reborn

Rwanda produces some of the world’s best coffee, which is now being exported to the United States.

A little more than a decade ago, Rwanda was at ground zero. Five years of civil war had culminated in genocide, more than a million people had died, and two million had fled into exile. The social and economic fabric was in tatters. “Everything had been destroyed, including our economy,” says Prime Minister Bernard Makuza.

Today it is a very different story. A process of reconstruction and national reconciliation has transformed Rwanda from a basket case into one of the most politically and economically stable countries in the region.

The lessons of the past have been learned. Rwanda has become a multi-party democracy with a referendum-backed constitution that emphasizes national unity and individual freedoms. “In Rwanda, democracy must be based upon the unification of the people,” says Mr. Makuza. “We consider Rwandans to be part of a singular nation and leave no room for ethnic divisionism.”

Making good use of the massive foreign aid, Rwanda has managed to boost its economy. High levels of growth have been driven by agriculture, which accounts for about 50 percent of the gross domestic product (GDP), and by construction. In the 2004/05 financial year, the GDP increased by 6 percent. Structural reforms have been introduced in key areas through trade liberalization, privatization of public entities, new tax laws, and the rehabilitation of the banking sector.

The national plan designed by President Paul Kagame, Vision 2020, seeks to turn Rwanda from a low-income into a middle-income country, focusing on poverty reduction, infrastructure development and expansion of the export base.

To achieve the growth it needs, Rwanda has to move away from being a largely subsistence economy which is heavily dependent on agriculture. The nation must concentrate on becoming a services-oriented economy that maximizes the contribution of its most important asset, its people.

Emphasis is being put on the sectors in which Rwanda has huge potential, such as information and communication technologies (ICT), transportation, and tourism. At the same time, the government aims to turn the agricultural sector into a bigger profit yielder by encouraging agro-processing and the export of value-added products.

Manasseh Nshuti, Minister of Finance and Economic Planning, says, “We want to expand our industries and exports in high value areas. Simply exporting raw materials does not allow us to do this.”

The engine for growth will be the private sector. Though privatization, the government is separating itself from commercial activities and focusing on being a business facilitator. “As a government, we do not believe that it is our role to be in business,” says the Minister of Finance, Professor Nshuti. “We think it is important to provide the right environment for the private sector to do business.”

Prime Minister of Rwanda
Minister of Finance and Economic Planning
President of African Development Bank

There is a huge need for foreign investment in all areas of the economy. The government understands that it will only come if there are stable conditions and good governance, and if risks are reduced and costs are made competitive.

The new Rwanda prides itself on good governance. President Kagame has made it very clear that corruption will not be tolerated. “Transparency and accountability are the keys to our system of governance,” says Mr. Makuza.
Rwanda was one of the first countries to agree to an assessment under the peer review mechanism instituted by the New Partnership for Africa's Development (NEPAD).

Early last year, it met the criteria for the Heavily Indebted Poor Countries (HIPC) initiative and became one of fourteen African nations to have their multilateral debts absolved by the World Bank, the International Monetary Fund, the African Development Bank and other international financial lenders.

The lifting of the debt removes an enormous burden on Rwanda’s economy, freeing resources for expanding infrastructure, education and health, and creating a better environment for private investment.

“Rwanda has created an environment of macroeconomic stability, one that is conducive to private businesses and the creation of sustained economic growth,” says Dr. Donald Kaberuka, President of the African Development Bank and a former Rwandan Minister of Finance and Economic Planning.

“The challenge now is to sustain this trend of growth so that it can keep up with the increasing population.”