Rwanda: Economic and Political Overview
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Rwanda registered a good economic performance over the last years, and thanks to investments in education and infrastructure, it reached the Millennium development goals. In 2022, the economy continued to show signs of recovery from the recession brought on by the COVID-19 pandemic, with GDP growing an estimated 6%, thanks to the service sector and the measures taken to fight back the coronavirus. Growth is expected to continue in 2023 and 2024, when GDP should grow by 6.7% and 7%, respectively.
In 2022, inflation significantly increased to 9.5%, but it is expected to decrease to 8% in 2023 and 5% in 2024. The debt-to-GDP ratio increased to 68.1% in 2022, and it is expected to continue to rise in the coming years, reaching 68.6% in 2023 and 69.4% in 2024. The country's current account deficit also increased in 2022, reaching 12.6%, but it should decrease to 11.7% in 2023 and 10.3% in 2024. With over 70% of the population employed in agriculture, household incomes benefited from the favourable prices of export crops in 2022, which resulted in higher household expenditure. Public investment, through the national strategic transformation plan (NST), targeted infrastructures related to trade such as the construction of the airport of Bugesera, to help the restart of the economy. The NST focuses on economic, social and governance transformation, according to the aspirations of the plan Vision 2050. As part of the latter, the government is developing new medium-term development strategies aimed at turning the country in a country with intermediate high income status before 2035, while the “Made in Rwanda” program aims to promote local production in order to reduce imports.
Despite the progress made, Rwanda remains a very poor country, where around 40% of the population lives below the national poverty line. In 2022, the unemployment rate in the country was at 24.3%, according to the government's Labour Force Survey, and increase from the previous year, when that rate stood at 23.5%
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 10.19 | 11.07 | 12.70 | 13.15 | 13.63 |
| GDP (Constant Prices, Annual % Change) | -3.4 | 10.9 | 6.8 | 6.2 | 7.5 |
| GDP per Capita (USD) | 804 | 854 | 958 | 970 | 984 |
| General Government Gross Debt (in % of GDP) | 65.6 | 66.6 | 64.4 | 67.1 | 71.1 |
| Inflation Rate (%) | 7.7 | 0.8 | 13.9 | 8.2 | 5.0 |
| Current Account (billions USD) | -1.23 | -1.21 | -1.48 | -1.73 | -1.64 |
| Current Account (in % of GDP) | -12.1 | -10.9 | -11.6 | -13.2 | -12.0 |
Source: IMF – World Economic Outlook Database, October 2021
The Rwandan economy depends on subsistence economy, tea and coffee exports, and tourism. The mining sector is also a pillar of the economy: the country is one of the largest producers of tantalum, used, among other things, in the construction of mobile phones. Agriculture is the main economic activity of the Rwandan people, directly providing employment for 62.3% of the total population (World Bank). The sector accounts for 24.1% of GDP and accounts for around 80% of foreign income from exports of coffee, tea, hides and skins, horticulture and pyrethrum (chrysanthemum-based insecticide). About 61% of the Rwandan soil is suitable for agriculture because the soils are fertile, but food production often does not meet demand, requiring imports. In 2022, Rwanda's agricultural sector greatly benefited from an expansion in the country's planted area and favourable weather, which lead to above-average yields and an increase in agricultural export sales.
The industrial sector is strongly linked to the processing of primary agricultural products. It represents 20.3% of GDP and 8.6% of employment. It is estimated that almost 70% of industries in Rwanda are located in Kigali, with little activity in the urban centers of the hinterland. The government is committed to gradually privatizing the productive sector and promoting the development of the private sector.
The tertiary sector contributes around 47.8% of GDP and employs 29.1% of the total workforce. According to the government's "Vision 2020" plan, services could become the main driver of the Rwandan economy. The financial sector is made up of seven commercial banks and one development bank; the “Financial Sector Development Program” aims to deepen financial services and increase their reach among Rwandan citizens. In addition, Rwanda seeks to support the growth of the tourism industry and to become a regional leader in information and communication technologies. Tourism has become an important source of foreign exchange (around USD 300 million), in particular thanks to the increase in the number of international conferences, and should continue to grow thanks to significant investments in infrastructure, such as the construction project of Bugesera Airport. The expansion of RwandAir, the national airline, with the opening of new routes, should accompany the development of the sector. Furthermore, while the COVID-19 pandemic has greatly impeded services, the sector registered an overall growth in 2022, with the recovery being mainly driven by travel and hospitality services.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 62.3 | 8.6 | 29.1 |
| Value Added (in % of GDP) | 24.1 | 20.3 | 47.8 |
| Value Added (Annual % Change) | 6.4 | 13.4 | 11.9 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
Find more information about your business sector on our service Market reports.
Find out all the exchange rates daily on our service International currency converter.
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: September 2023
