BERF’s Work in Rwanda

BERF has yet to complete any projects in Rwanda, but is in discussion with the country office to support work in the following areas:

  1. Mining Sector Diagnostic Report
  2. Evidence work to assess the poverty impact of  the Rwanda Investment Climate Reform Programme and similar investment climate programmes

Context

Rwanda has rebuilt since the genocide of 1994 to become a significant development success, achieving high growth, lowering poverty and reducing levels of inequality. Consistent economic policies over the 14 year period from 2001 to 2015 have contributed to this small landlocked country averaging real economic growth of around 8 percent per year.  With the support of DFID and other development partners, Rwanda has become known as one of the easiest places to do business in Sub-Saharan Africa, according to the World Bank.

Rwanda’s long term development goals are set out in its Vision 2020. This seeks to transform the economy from a low-income, agriculture-based one, to a middle income country driven by private sector growth through the development of services and a knowledge-based economy that works for the country’s 11 million people according to World Bank data. The Economic Development and Poverty Reduction Strategy aims to realise certain medium term goals by 2018: raise national income per capita to US$1,000 (from a low of US$207 in 2000), reduce the number of Rwandans living in poverty to less than 30% of the population, and implement policies to ensure that less than 9% of the population is living in extreme poverty by 2018.

Rwanda has embraced regional integration as a strategic solution to address its constraints as a landlocked country with a limited export base and high export costs. Active membership of the East African Community has helped Rwanda promote regional approaches to investments in energy, trade and transport infrastructure that have benefited the country. These include initiatives such as the Single Customs Territory and the Northern Corridor, which links Mombasa Seaport through Kenya and Uganda to Kigali. These advances have become important ingredients for Rwanda’s long term plan to become a regional trade logistics and distribution hub serving Western Uganda and Eastern Democratic Republic of Congo.

Challenges include the need to continuously reform in a smart way, in order to realise the long term goals set out in the national strategy. In the shorter term, Rwanda will find it necessary to continue applying measures to boost private sector growth by including new mechanisms to encourage small informal entities to become mainstreamed in the country’s private sector.

DFID Strategy in Rwanda

DFID supports Rwanda’s economic development agenda through development assistance to:

  1. shift from an agricultural economy to one based on private sector-led growth
  2. facilitate small and medium sized enterprises to grow and become employers, providing opportunities for women and men
  3. improve basic services that will contribute to the attainment of the MDGs and build human capacity, skills and resilience
  4. increase opportunities for domestic earnings in order to reduce the country’s dependence on foreign aid

 World Bank Doing Business

In 2017 the World Bank ranked Rwanda at 56 in the terms of the Ease of Doing Business, continuing a trend which has seen the country successfully put in place measures to improve the business environment. Rwanda is the Sub-Saharan Africa’s best reformer after Mauritius, and is substantially ahead of the regional average score of 143.

In terms of the Distance to Frontier, Rwanda scores 69.81, close to strong performing Mauritius (72.27), and well above the regional average of 49.51.

Policies to make it easier for business to operate efficiently were reflected in significant improvements in four Doing Business indicators: starting a business, registering property, trading across borders and enforcing contracts. A sharp decline in the Distance to Frontier score for getting construction permits from 66.26 in 2016 to 55.40 in 2017 suggests that positive reforms in other indicators have not been fully realised in this important requirement for investors and businesses.