Rwanda Economic Structure

By: EconomyWatch   Date: 10 April 2010

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Rwanda’s economic structure is a product of its land locked position as one of the central African countries and its almost total reliance on rural agriculture. A dearth of natural resources and minimal industrial development has further exacerbated Rwanda’s economic growth, as has the 1994 episode of genocide.

Rwanda Economic Structure: GDP Composition

Rwanda has posted an average GDP real growth rate of 5% over the last five years (5.5% in 2009), despite the reduction from 11.2% in 2008 and 7.9% in 2007. Inflation, although high, seems to have been limited to around the current rate of 14.2% (2009). Over the last three years, Rwanda’s GDP Purchasing Power Parity (PPP) stood at:

  • $10.39 billion in 2009

  • $9.845 billion in 2008

  • $8.854 billion in 2007

The GDP per capita (PPP) was as follows:

  • $1,000 in 2009

  • $900 in 2008

  • $900 in 2007

Sector-wise, Rwanda’s GDP is receives 42% from agriculture, 22.2% from industry and 35.2% from the service sector. Out of a labor force of 4.446 million, 90% is engaged in agriculture and lives in rural conditions, while industry and services employ just 10%. Unfortunately, more than 60% of the population is below the poverty line and in terms of household income, 2.1% fall in the lowest 10% bracket, while 38.2% are in the highest 10%. Investment (gross fixed) stands at 19.6% of the GDP, as of 2009. 

Rwanda Economic Structure: Future Challenges

A struggling economy, Rwanda faces clear-cut challenges regarding its future growth in terms of reduction in farm size and increasing population density. A pre-disposition towards sustenance farming and government focus on increasing manufacturing and service industries to invite further trade will have to be balanced going forward beyond 2010. Government aid in the form of privatization, investment promotion, revenue reforms, labor law reforms and an overhaul of the existing judiciary system will continue to be high priorities. On the plus side, open door trade policies, conducive investment climate, tax incentives, low crime rates and even investment insurance signify the Government of Rwanda’s strong commitment to long-term economic health.


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