Global Analysis - Rwanda

In 2013 President of Rwanda Paul Kagame said Our thinking is based on

people. In national budgets we focus on education, health, we look at
technology, skills, innovation, creativity. We are always thinking about people,
people, people.
Vision 2020:
Good governance
An efficient state
Skilled human capital, including education, health and information
technology
A vibrant private sector
A world-class physical infrastructure
Modern agriculture and livestock
In 2011 Ministry of Finance and Economic Planning issued a report that showed
which goals have been achieved in the Vision 2020. The results showed that
66% of goals were 'on-track' and 22% were 'of-track'. 11% were on-watch.
Progress was seen especially in education and health sectors and also business
environment.

A. FINANCIAL SECTOR
Rwanda's Economy has been hurt severely by the 1994 Genocide.
Infrastructure wasn't maintained, crops were neglected and lives have been
lost; they all contributed to a large drop in GDP. Internal and external
investments dried out. GDP per-capita has risen from 416$ in 1994 to 1,592$ in
2013. Economy is managed by the central National Bank of Rwanda and mayor
export markets include China, Germany and the United States.
Angles
Given the pace at which Rwandas financial sector is evolving, our targets are
high but achievable, says Central Bank Governor Claver Gatete.

The ease of doing business in Rwanda is a strong step in the right

direction it ranks third across sub-Saharan Africa in the Ease of Doing
Business ranking published by the IFC and World Bank, second to only
Mauritius and South Africa.
Formal banking services are expanding with new client and new products

Total assets of the banking system in Rwanda have nearly doubled from
2007-2012
Foreign investment in the banking sector has been increasing over the
last 7 years
Mobile money used by 310,000 clients in the largest telecom company
MTN
Stressing the opportunity of new financial services to the rural and
underdeveloped areas of Rwanda
Target of becoming a middle-income economy by 2020 targeting 80%
access to finance by 2017
Likewise, Rwanda comes in first in the category of Starting a Business
and second in Getting Credit. As the financial sector strives to expand
products and services to reach the underserved population, Rwanda is
progressing positively and seems to be on the right track to towards
achieving its goals.
Stable macroeconomic policies
Welcoming investment climate
Relatively low corruption
Hurts

Law differentiation between domestic and foreign investors

Natural difficulties to moving to a more diversified economy
The central African state's economy has suffered from cuts in budgetary
support by donors after United Nations monitors accused it in 2012 of
backing rebels in the neighbouring Democratic Republic of Congo.
A slowdown of credit growth to the private sector.
Review on Finance: Budget 2014

11.5% annual average growth objectives (middle-income country goal)

National budget 2014/2015 allocated 148.6 billion rwf to the energy
sector (electricity generation, transmission, distribution, energy
efficiency, alternative sources of energy)
Output growth from 6% from 4.5% in 2013 is projected
Growth from 3% in 2013 to 5% in agriculture
Projected growth in industry sector is 6% (due to construction activities,
however ill change in the future, since many projects are work in
progress)
Service sector to rise to 7% in 2014 from 4% of the previous year
Growth in the retail and wholesale trade to 8% (1% more than in the
previous year)
Inflation is expected to be contained at 5% in the medium term
Exports expected to rise by 7% to $751 million
Total grants are expected to increase to rwf 544.8 billion from rwf 463
billion in 2013
Loans are projected at rwf 667.6 billion (38.1%) of the 2014/2015 budget
Rural development will be allocated rwf 252.8 billion

A. ENERGY SECTOR
85% of energy consumption in Rwanda is from biomass, 11% from petroleum
and only 4% from electricity. Rwanda received 460 million euros from the
European Union on 19.9. 2014 targeted to improve power generation and
agriculture. 200 million euros were allocated to power generation and
distribution.
Angle

Country put in place second Economic Development and Poverty

Strategy (2013-2017)
Energy production target to see 563MW of energy realised by 2017
Investments in alternative energy sources (methane gas Lake Kivu) by
government and its partners
Plan to increase countries capacity mainly from hydro, peat, methane,
geothermal and solar
Rwanda Development Board (RDB) is mobilizing local and foreign private
investors to invest into the sector to supplement public investments
Hydro power is expected to remain a mayor source for a foreseeable
future
Methane gas in Lake Kivu presents investment opportunities
Developing peat resources by the government
Solar energy has huge potential in Rwanda
Waste-to power in Kigali city which is coordinated by the ministry of
Infrastructure which also coordinates waste-to-owner investments
Geothermal energy in Rwandas volcanic area (private investors)
Wind-to power (private investments)
World Bank support to Rwanda consists of nine operations with an aid
commitement of US$ 509 million, Rwanda Electricity Access Scale-up and
Sector Wide Approach (swap) Development Project (US$70 million)

Hurts

Electricity access level is still low in Rwanda

Per capita energy consumption is only 41kwh which explains
overdependence on wood-fuel
Only 4% energy consumption is from electricity
Needs $1.3billion capital investment from private investors by 2017 in
order to achieve the planned generation of 563MW and 70% access
Demand-supply balance
Inadequate financing
Expensive thermal power

A. AGRICULTURE SECTOR
Agriculture is of great importance with 90% of the working population farms
and agriculture represents 42.1% of GDP in 2010. They export mainly Coffee
and tea; however this makes them vulnerable to shifts in their prices, since
they rely heavily on these exports.
Angle
Economic Development and Poverty Reduction Strategy (EDPRS) defines
programmes in the agriculture sector
World Bank support to Rwanda consists of nine operations with an aid
commitment of US$ 509 million (helping farmers to manage marshlands,
rehabilitating water supplies and providing, concrete projects are: Water
Harvesting and Hillside Irrigation (US$ 69 million)
Expected growth of the agriculture sector to 8.5% by the year 2018 from
5.8% in 2014
Focus on agro processing
Growth of food exports from 19.2% to 28% p. A.
Hurts

They are dependent on food imports, since the food production doesn't
keep pace with population growth
Food production systems are mostly traditional.
Foreign exchange risks
Adverse wheatear conditions in 2013
Increasing use of chemical fertilizers-water contamination
Reducing water to downstream users
Increasing sedimentation of the natural water bodies
Contributing to soil erosion

A. TOURISM SECTOR
Strong economic growth in recent years has opened the door for Rwanda to
become a very promising international travel and tourism destination. The
country has been doing many things right and is even looked to as a model of
sustainable tourism development. Its travel and tourism industry has enormous
potential to drive growth in its vibrant economy thanks to its natural beauty
and wildlife attractions. With continued investment by the Rwandan
government, growth in the travel and tourism industry is expected to remain
positive throughout the forecast period. This is set to enable Rwanda to
achieve its development goal as set out in the 10-year sustainable travel and
tourism master plan called Vision 2020 and is also set to remain an important
foreign exchange earner.
Angle

National parks and unique wildlife

Low crime rates
Average occupancy rate for the upper level hotels is 70%
A base to visit east African destinations (Uganda, Tanzania, Burundi, ..)
Largest source of foreign exchange
Unprecedented growth in 2011 and 2012 and continued to be very strong
in 2013 thanks to infrastructure development, high end travel and
marketing strategy supported by the government
Visa free access to all African citizens to Rwanda
Leading hotel chains forecast building their hotels in Rwanda

Hurts
Lack of hotels of the upper range
Image of the country affected by the genocide in 1994
Poor infrastructure
Internet access

E. HEALTH SECTOR
Angle

The Ministry of Health has revised its National Health Policy based on
vision 2020 and EDPRS II (to ensure optimal performance of the health
programs)

Hurts

High fertility rate and increase of the population at an annual rate of

about 2.8%, which means it is straining development, equitable
distribution of resources, and agriculture, population control is therefore
one of the governments top priorities

A. TRANSPORT SECTOR
The transport sector is one of the key engines of growth in an economy.
Improving the quality and reliability of transport infrastructure and services is a
major building block for reducing transport costs, attracting domestic and
foreign investment, and expanding access to economic opportunities. The
Government of Rwanda recognizes that more needs to be done to address
existing constraints in the transport sector and to offset the geographical
bottlenecks which continue to drive the high transportation costs in Rwanda
relative to the region. Indeed, an efficient transport sector is central to
achieving the objectives of Rwandas Vision 2020 whose overarching goal is to
transform the country from a low-income agrarian economy to a medium
income export-oriented and knowledge-based economy.

Angle
Rwanda's government continues to invest heavily in infrastructure,
transport (10% of annual budget); specifically they invest in Roads, Rail
and water transport infrastructure
Goal to dramatically reduce the cost of transport to businesses and
individuals
Projected increase of urbanisation from 15% (2014) to 35% by 2017
Investment opportunities are in: roads, new modern airport at Bugesera,
railway (wants to develop two mayor regional lines, inland water
transport for the transportation of goods and passengers on the Kivu
Lake, development of modern Public Transportation System
Hurts
Low investment in the development and maintenance of the physical
infrastructure
Limited participation of the private sector in the development and
financing of transport infrastructure
Insufficient public sector capacity to deliver required transport services

A. INFRASTRUCTURE SECTOR
With the vision 2020 in mind, Rwanda's government goal is to transform the
country into a middle income country by 2020. The goals of the Ministry of
Infrastructure are to enhance quality, sustainability, efficiency and
effectiveness of infrastructure facilities in the country.
Angles

Rwanda plans to achieve that 40% of its population lives in well planned
urban areas
Rwanda Housing Authority was establish to oversee and manage all
aspects of building and construction with legislation Code of Urbanisation
and construction, which sets strong legislative support for the
urbanisation projects
Master plans are there to help to achieve the goals of better land
management, encourage trade and industry, attract tourism this is
creating a more secure environment for investors
Several important projects are underway to achieve sustainable access
for all to safe water and sanitation facilities
Several important projects are underway to research new sources of
water and education programmes promoting better hygienic practices
(Rwanda is on a good track to achieve 100% coverage for water and
sanitation by 2015)
Working close with the private sector to leverage funding and build
requires capacity and skills

Hurts

Out of 4700 km of roadways, only 1207 km are paved

No railway transport system
No public water transport system for the country interior
Investment in infrastructure is still dependent on foreign aid

A. TRADE AND INDUSTRY

Angle

Groth potential: industry and trade represent 16% of economy and

10% of labor force
Investment in industry is encouraged by the establishing of the
Special Economic Zone (SEZ) in Kigali
Rwanda joined the East African Community and in order to improve
its trade with regional partners
The Rwandan Government has set the objective of becoming a
regional leader in information and comunication technology

Hurts

Low competitivity of industry, based mostly on producing consumer

goods and substitutes for imports
Government subsidies given in the context of the global recession
are about to end
Not oriented towards exports

A. MINERAL RESOURCES SECTOR

Angle

Hurts

Mining is the biggest source of export income (14,9% of total

revenues)
Significant resources of tin, tungsten (4% of world production) and
tantalite (9% of world production)
No processing plants
Low technology causes environmental problems
Government shutdown of mining in the western province for
endangering the Sebeya River