According to Trading Economics global macro models and analysts, Rwanda’s GDP is predicted to reach $10.50 billion by the end of 2021. According to our econometric models, Rwanda’s GDP will trend around 11.00 USD billion in 2022 and 11.50 USD billion in 2023 in the long run.
Is Rwanda wealthy or impoverished?
Rwanda is a poor country in every way. The country’s economy, social fabric, human resource base, and institutions were all destroyed by the 1994 war. Almost 90% of the population lives on less than $2 per day, with half of the population living on less than $1. According to government statistics, 65.3 percent of the population lived in poverty in 1998.
Despite the fact that in 1996, 87 percent of Rwanda’s population resided within 2 hours walking distance of a health-care institution, the Rwandan people’s health is in bad condition. Malnutrition is rampant, and life expectancy is short. The leading causes of death in Rwanda are malaria and respiratory disorders, which are uncommon in more affluent countries. The people are not just ill, but also uneducated. Only 46% of Rwandan teachers are qualified, teaching materials are substandard, and drop-out rates are high, according to government figures. In 1998, only 7% of eligible pupils were enrolled in secondary school.
The International Monetary Fund (IMF), the African Development Bank (ADB), and the World Bank have all made initiatives to aid Rwanda in its quest to recover economically. As a result, in 1998, the IMF gave its approval.
What accounts for Rwanda’s low GDP?
Rwanda, a small landlocked country with a population of around 12.5 million people, is hilly and fertile (2018). It shares borders with the significantly larger and wealthier Democratic Republic of Congo, as well as Tanzania, Uganda, and Burundi in East Africa.
Since the 1994 genocide, Rwanda has maintained political stability. Women won 61 percent of seats in parliament in September 2018, the Rwandan Patriotic Front kept its absolute majority, and opposition parties, the Democratic Green Party of Rwanda and the Social Party Imberakuri, won two seats each for the first time. In August 2018, President Paul Kagame was re-elected to a seventh term after the constitution was amended to allow for a third term.
Rwanda now intends to be classified as a Middle-Income Country by 2035 and a High-Income Country by 2050. This will be accomplished through a succession of seven-year National Plans for Transformation (NST1), which will be supported by sectoral strategies aimed at achieving the SDGs.
The NST1 followed two five-year Economic Development and Poverty Reduction Strategies EDPRS (2008-12) and EDPRS-2 (2013-18) during which Rwanda’s economy and social performance were strong. Over the decade to 2019, growth averaged 7.2 percent, while per capita GDP increased at a rate of 5% each year. Economic activity was severely restricted in 2020 as a result of the COVID-19 pandemic lockdown and social separation measures. In 2020, the economy contracted by 3.4 percent, the first time since 1994.
Prior to the epidemic, Rwanda was experiencing a period of rapid economic growth. In 2019, growth surpassed 10%, owing primarily to governmental investments in the National Transformation Strategy’s implementation. In 2020, strong growth is likely to continue.
The pandemic interrupted the flow of commodities and services across international borders, affecting the global economy as a whole. Exports and tourism are suffering as a result of the global trade and travel disruptions. Rwanda is already under financial and balance-of-payments strains. As resources are allocated to the disaster response, this could have a negative impact on public health service delivery, COVID-19 response and preparedness capacity, and the provision of vital health service delivery.
Rwanda’s public-sector-led development model has flaws, since the country’s public debt has skyrocketed in recent years. Rwanda’s high reliance on massive public investments (12.3 percent of GDP in 2019) has resulted in significant fiscal deficits, which have been sustained primarily through external borrowing. As a result of the increased borrowing demands caused by the pandemic, the debt-to-GDP ratio increased to 56.7 percent in 2019 (from 19.4 percent in 2010) and is expected to reach 71.3 percent of GDP in 2020. Grants, concessional and non-concessional borrowing were all important sources of external finance for state investments. The private sector will play a larger role in ensuring economic growth in the future. Private investment is hampered by a lack of domestic savings, a lack of skills, and the high cost of energy. Stronger private sector dynamism will aid in maintaining strong investment rates and accelerating growth. Domestic savings, as well as inclusive growth, are seen as vital. The importance of developing a medium-term public investment strategy to enable a more efficient allocation of resources targeted toward projects important for broad-based and inclusive economic recovery following the epidemic has increased in recent years.
Rwanda’s rapid economic expansion coincided with significant gains in living conditions, including a two-thirds reduction in child mortality and nearly universal primary school attendance. Access to services and human development indices have improved significantly as a result of a strong focus on domestic policies and initiatives. Poverty decreased from 77 percent in 2001 to 55 percent in 2017, while life expectancy increased from 29 in the mid-1990s to 69 in 2019. In the 1990s, the maternal death rate was 1,270 per 100,000 live births; in 2019, it was 290. The Gini index, which measures inequality, fell from 0.52 in 2006 to 0.43 in 2017. The COVID-19 situation, on the other hand, is drastically expanding poverty and endangering human capital.
When compared to the no-COVID scenario, the headcount poverty rate is expected to grow by 5.1 percentage points (or more than 550,000 individuals) in 2021. The COVID-19 has the potential to jeopardize decades of progress in human capital development by combining poorer nutrition, limited health services, learning losses from school closures, and the possibility that some children (particularly adolescent girls and children from low-income households) will never return to school.
Is Rwanda developing faster than Kenya?
Kenya ranked 66th in the world with a GDP of $87.9 billion dollars, whereas Rwanda ranked 145th with $9.5 billion dollars. Kenya and Rwanda were placed 25th and 7th, respectively, in terms of GDP 5-year average growth and GDP per capita.
What is Rwanda’s most serious issue?
Rwanda’s political and societal instability has had major economic consequences since 1959. Rwanda’s economic development has been hampered by intense demographic pressure, a scarcity of agricultural land, and a lack of access to the Indian Ocean.
Is Rwanda considered a first-world country?
A large agrarian sector and a large proportion of the people living in rural areas characterize Third World countries. Low production, sickness, high infant mortality, a lack of drinkable water, and poor infrastructure characterize them.
Cities in the First World are densely populated, and inhabitants have universal access to health, education, and housing. Because of infrastructure, they also have high productivity, significant service industries, and mobility.
Many Asian countries advanced from Third World to First World rank in a matter of decades.
Some African countries are well positioned to accomplish this transformation. Ethiopia, Rwanda, Uganda, Kenya, Ghana, Cte d’Ivoire, Gabon, Mozambique, Angola, and South Africa are among them.
We believe these countries can follow in the footsteps of the “Asian miracle,” but only if governments take bold action to attain certain goals. East Asia has a long history of robust and consistent economic growth. East Asia’s 23 economies expanded faster than those of all other regions of the world between 1965 and 1990. The majority of this success can be attributed to the almost miraculous growth of the eight economies examined.
First, the average family income or gross domestic product (GDP) per capita must be increased. Without it, it is impossible to sustain crucial parts of human growth.
Second, strong national leadership and state intervention are essential. Leaders who were committed to rapid development influenced the economic strategies of successful countries. They put a strong emphasis on developing human capital. As a result, productivity climbed, household income increased, and the general standard of living improved.
What causes Rwanda’s poverty?
Rwanda is a small landlocked African country in the middle of the continent. The country’s natural features, which include a huge savanna in the east and a mountainous jungle in the west, have piqued international interest. Aside from Rwanda’s natural wonders, the country has made significant progress in combating poverty since the 1994 genocide, which claimed the lives of 800,000 people in just 100 days. While Rwanda has significant challenges, there are several signs that the country’s economic stability will improve in the future.
The Good News
Rwanda has consistently outperformed the rest of Sub-Saharan Africa with an average annual GDP growth rate of 7% over the last two decades. Another encouraging feature is Rwanda’s growing economic diversity. Agriculture and services, as well as rising industries such as power, infrastructure, and construction, are all contributing. Tourism has also played an important role, accounting for 10% of the country’s GDP.
Rwanda has been the World Bank’s darling as a result of its economic progress. Hundreds of millions of dollars are routinely invested by the World Bank in public improvement projects ranging from education to renewable energy. These projects have yielded promising results. From 2009 to 2019, national power access increased from 9% to 47%. Six cities have also benefited directly from a large expansion in urban roadways and stand-alone drainage, according to the World Bank-supported Rwanda Urban Development Project.
The Obstacles
Poverty is a major issue in Rwanda, with roughly 38% of the population living in poverty as of 2016. One contributing cause is Rwanda’s weak educational system, with only 68 percent of first-graders completing all six years of primary education. Another factor is that Rwandan domestic private investment has yet to take off, owing to a lack of local savings. Furthermore, many rural Rwandans work on subsistence farms and consequently have limited free time and resources.
According to The Washington Post, Rwandan President Paul Kagame’s authoritarian tendencies are a further impediment to the country’s poverty reduction. Tourists have praised Rwanda’s cities’ pristine streets in recent years. The forceful deportation of “undesirables” into detention cells is something those tourists are oblivious to.
Farmers’ fields have been destroyed by the government in rural areas because they did not grow their designated crops. Kagame’s heavy-handed attitude to modernizing has also impacted rural populations. Rwanda’s administration has taken inhabitants of their grass roofs in several areas, promising to return with metal substitutes. When replacement roofs are not installed, residents are exposed to the elements, which can lead to illness and death.
Some of Kagame’s initiatives have sparked anger around the world. Kagame’s assistance for Congolese rebels in 2012 led to the suspension of foreign aid by the United States and the European Union. With recent revelations of Kagame’s dictatorship falsifying poverty figures, another comparable scenario could be on the horizon.
A Financial Times investigation into poverty statistics in 2019 discovered that the government was manipulating data to inflate the reduction in poverty. Despite this assertion, the World Bank and a number of other major donors have continued to invest in the country. However, as a result of the COVID-19 pandemic, governments throughout the world are focusing more resources on internal issues, international help to Rwanda is in jeopardy. Aid is still required to avoid disastrous results, since Rwanda is currently undergoing a humanitarian crisis. The bright side is that many of Rwanda’s regular contributors are still available to help.
The pandemic has also had a negative impact on tourism and exports, two important cornerstones of Rwanda’s economy. In addition, while the government devotes its healthcare staff and financial resources to emergency response, other health issues, such as the AIDS epidemic, are pushed to the background.
Hope for Poverty in Rwanda
Rwanda has difficulties that are difficult to solve, yet there is still hope. Rwanda’s economy grew by more than 10% in 2019 before the outbreak. This number was accompanied by a two-thirds decrease in child mortality and near-universal primary school enrollment.
The Rural Sector Support Program and the Land Husbandry, Water Harvesting, and Hillside Irrigation Project, both supported by the World Bank, have enhanced the production and commercialization of rural agriculture. Between 2010 and 2018, maize and rice yields doubled, while potato yields tripled. These findings are especially encouraging given that Rwanda’s rural poverty is the worst.
Rwanda has also managed to maintain a high degree of political stability. Women now make up 62 percent of the national legislature, and previously disadvantaged opposition groups have gained seats in parliament without jeopardizing the stability of the system. These are indications that will boost foreign investor trust. Despite Rwanda’s turbulent past, the country’s future holds a lot of promise.
Is Rwanda Africa’s most developed country?
This country is made up of 115 islands that are 1500 kilometers east of the coast of Eastern Africa. Seychelles’ economy used to be based on plantation farming. Tourism is the most prosperous element of the local economy. The Seychelles is regarded as one of the most popular honeymoon locations. Aside from agriculture, the country is reliant on other industries such as boat making, poultry, drinks, and others.
Mauritius
Mauritius is the African continent’s second most developed country. It is also a major tourism destination in Africa. Thousands of people come here every year to spend their holiday.
For a long time, the country’s economy was exclusively based on agriculture. Since then, though, it has greatly expanded its economic setup. Mauritius’ GDP per capita is $10, 437, and its HDI is 0.790. Mauritius has recently experienced significant growth in industries such as sugar, textiles, and financial services.
Algeria
Algeria’s rapid development is due to its thriving infrastructure. The citizens’ quality of living is far superior than that of other countries on the continent. Algeria’s population responds positively on the country’s economic situation.
In the last 20 years, the country has also accomplished the extraordinary feat of eliminating poverty by a stunning 20%. Algeria is continuously undergoing development. This country’s GDP per capita is $4,669.
Tunisia
Tunisia, like Algeria, has proven to be one of Africa’s most stable and expanding economies. Previously an impoverished country, it has undergone significant transformation and development in recent decades.
Agriculture, tourism, and electrical and mechanical exports account for a significant amount of Tunisia’s revenue. People in this country have a higher quality of life than those in other African countries.
Botswana
This landlocked country in Southern Africa is ranked as the continent’s fifth most developed country. Botswana has a small population, with about 2 million people residing there.
Botswana’s HDI is 0.717, while the country’s GDP per capita is $8,442. Tourism and mining are the country’s main sources of revenue. Cattle farming is another important means of boosting the country’s economy. Botswana, according to analysts, will experience tremendous growth in the next years.
Libya
Libya is also one of the African continent’s most developed countries. The country’s primary source of revenue is oil. It is home to the world’s greatest oil reserves on the African continent.
Libya has a GDP per capita of $7,998 and an HDI of 0.706. Libya still has a long way to go in terms of overcoming its losses. One of them is the country’s bad environment and high unemployment rate.
Rwanda
Rwanda has become one of Africa’s most developed countries as a result of numerous government reforms and strong leadership. In 1994, the country was subjected to a huge genocide, which severely impacted the country’s infrastructure, economy, and level of living.
The country overcome all challenges thanks to strong leadership and government reforms. It now has a total GDP of $9.14 billion dollars. Rwanda is still making progress in areas like education, jobs, and technical developments.
Egypt
Egypt is Africa’s seventh most developed country, with a GDP per capita of $2,501 and an HDI of 0.696. The majestic Giza Pyramids are well-known in this Middle Eastern country. It receives a large number of tourists throughout the year.
Egypt’s economy is heavily reliant on industries like telecommunications, agriculture, mining, and others. It is now classified as a middle-income country. Economists, on the other hand, expect that all industries will have more expansion chances.
Morocco
Morocco, in Africa, is known for its diverse and rich culture. It also happens to be one of the continent’s most developed countries. Morocco has a GDP per capita of $3,435 and an HDI of 0.667. Morocco’s resources originate from its mining, service sectors, manufacturing, textile, and other industries.
Tourism, information technology, and telecommunications are also important to the country. Morocco appears to have a promising future.
Namibia
Namibia is a country in southern Africa that is ranked as Africa’s tenth most developed country. Namibia’s economic development and expansion are inextricably linked to that of South Africa. It is due to the fact that both countries share a common past.
Technology, mining, agriculture, and tourism are some of the areas that have contributed to Namibia’s economic prosperity. The country is currently working to build an excellent internet banking system for its residents.
South Africa
South Africa has a 0.699 HDI and a $6,541 GDP per capita. It is regarded as one of Africa’s most developed countries. Mining, tertiary services, and industrial growth, to name a few, all contribute to the region’s economic development.
Mining is, by far, the most important industry in South Africa. Citizens here have more job and educational options, as well as a higher quality of life.
Is Rwanda’s economy the fastest-growing in Africa?
It’s no surprise that the COVID-19 pandemic has slowed global economic growth. Despite this, Africa is likely to recover and continue to expand economically. The opening of the African Continental Trade Area in 2021 has already shaped a bright economic future for Africa, with a potential income gain of $450 billion by 2035. East Africa’s strong economic dynamics might be credited for some of this expansion. Africa’s economic growth is predicted to remain constant at a positive percentage. With an average growth rate of 5% in 2019, East Africa remains the continent’s fastest-growing area. Before COVID-19, East Africa’s projected GDP growth was expected to be more than 5%. East Africa’s economic development is contributing to Africa’s overall development.
East African Economies
Looking at annual GDP over the last decade clearly demonstrates economic growth. Some of the region’s most important economic entities are moving in the right way. Three East African countries, Rwanda, Ethiopia, and Tanzania, are among the world’s top ten fastest-growing economies in 2020. Ethiopia and Rwanda came in second and third position, respectively, in 2019. From 2007 to 2017, Ethiopia’s economy grew at a rate of 10.3 percent per year, making it Africa’s fastest-growing economy. Rwanda came in second with an average of 7.5 percent throughout the same time period.
Increased Foreign Investments
Inflows of East African Foreign Direct Investment (FDI) surged from $5.7 billion to $11.5 billion in just a year, according to the World Bank. During this time, inflows to all East African countries except Tanzania grew. China, as East Africa’s largest investor, is largely responsible for the 103 percent gain. In East Africa, Chinese investment accounts for over 60% of total FDI inflow. Technology, manufacturing, and services are all receiving investment. FDI inflows resulted in the creation of 89,877 jobs in 2018 and 211,084 jobs in 2019. Uganda, Tanzania, Rwanda, Kenya, Burundi, and South Sudan all saw increases in employment.
Economic Development Initiatives
In addition, regional investment has increased from $152.7 million to $724.6 million. The number of projects financed by these funds grew by 23.3 percent. The East African Community (EAC) has implemented development incentives in associated sectors to take advantage of the region’s strong investment flow. The EAC’s six member countries represent a substantial consumer market for agricultural raw materials and other derived goods. In addition, the EAC supplied critical data and technology to expand investment prospects in the financial and banking industries.
Looking Ahead
The COVID-19 pandemic has exacerbated concerns about income disparity, inflation, and poverty in the region. This means that the region must establish policies that make use of available resources and promote economic growth in order to maintain growth and combat chronic economic situations.
The African Development Bank Group recommends hastening structural transformation and bolstering macroeconomic policy. Inflation would be addressed, and funding and commerce would be increased. Investing in human capital is another significant policy recommendation. Developing a competent workforce, beginning with youth education and technological training, will help East Africa and the African continent as a whole to achieve more innovative economic growth.