## dplterea ## Source details **Canonical URL:** [dplterea](https://www.imf.org/-/media/files/publications/dp/2020/english/dplterea.pdf) ## Other formats - [Markdown version](/-/media/files/publications/dp/2020/english/dplterea.pdf.md) - [Structured JSON version](/-/media/files/publications/dp/2020/english/dplterea.pdf.json) --- ### Foreword — Context, features, and strategic challenge - The 1994 conflict ("Genocide Against the Tutsi") lasted 100 days and devastated infrastructure, civil service, and societal structures. - Reconstruction combined donor aid, military legitimacy, rapid reintegration of the Hutu, and rebuilding informed by precolonial values. - 2000: government launched Vision 2020, a 20-year growth strategy to reach middle-income status. - By 2020 Rwanda remained classified as “low” income, though post-conflict recovery delivered growth surpassing estimates of what would have been achieved without the conflict. - Finalization during the COVID-19 pandemic increases relevance of the paper’s policy lessons. - Key emphases: - Purposeful institution-building emphasizing governance and ownership. - Aid-fueled and government-led strategic investment in people, infrastructure, and high-yield economic activity. - Re-establishment and expansion of a domestic tax base. - Policies to reduce aid dependency by attracting private investment and bolstering exports. - Purposeful strategy to harness the economic power of gender inclusion. - Financing challenge: - Rwanda articulated a new strategy to achieve the SDGs by 2030 and move to middle-high income status by 2050. - Financing full implementation is extremely challenging given waning donor aid and limited domestic resources; continued progress hinges on accelerating external private financing and investment. ### Introduction — scope, framework, and key takeaways - Scope and limitations: - Political aspects of recovery are not analyzed in-depth; the influence of President Paul Kagame and the RPF is recognized but not re-evaluated. - Does not revisit macroeconomic evolution already covered in IMF staff reports. - Does not question Bretton Woods definitions of fragility; Rwanda exited “fragile state” status many years ago. - Analytical framework: Gelbard and Jacoby (2015) categories — stability; resources; spending; international support; private investment. - Chapter overview summarized (Chapters 1–7 themes): cross-cutting overview; rebuilding policies and institutions; government-led public investment; tax collection and DRM; reforms to attract private investment and exports; gender equality policies; forward-looking challenges. - Key takeaways: - Rwanda’s exit from severe post-conflict fragility outpaced other conflict-affected countries with strong and stable growth over an extended period despite shocks. - Strategic use of international support was decisive — more so than absolute amounts — with increasing government control over aid use and coordination. - Post-conflict policies embedded accountability tools, broad ownership, clear goals, and pragmatic reforms blending precolonial traditions and international best practices. - Public investment targeted labor skills (health and education), growth-enhancing infrastructure, and greenfield enterprise in sectors of strong potential. - A robust domestic tax base was established via a single revenue authority and ambitious tax policy/administrative reforms. - Special institutions and policies channeled foreign direct investment toward targeted export sectors (services exports, tourism, light manufacturing, agro-processing). - Deliberate gender-equality policies (gender budgeting, education/finance schemes, inclusion in decision-making) bolstered growth and accelerated poverty reduction. - Future: accelerate private sector-led growth, attract external private investment, and leverage technology to “leapfrog” development hurdles. ### Selected exact human and economic impact figures (post-conflict) - Lives lost: some 1 million (roughly 15 percent of the population). - Refugees: 3 million fled to neighboring countries. - GDP contracted by 50 percent in 1994, to $146 per capita (same level as in 1975). - Poverty rate reached 78 percent (post-conflict peak). - Recovery indicators: - GDP per capita more than tripled to approximately $800 per person in 2018. - Life expectancy: 67 years in 2018. - Child mortality reduced to one-quarter of the level in 2000. - Maternal mortality reduced to one-fifth of its 2000 level. - Poverty reduced to 38 percent. ### Synthetic-counterfactual growth milestones (exact) - Four years after conflict onset (1994): Rwanda’s per-capita GDP was 42 percent below the 1989 level while the synthetic group’s per capita GDP was 7.5 percent higher. - Rwanda’s per capita GDP caught up with its 1989 level in 2004 (14 years after onset); synthetic group was 18 percent above 1989 then. - Rwanda’s per capita GDP caught up with the synthetic group in 2011 at a level 51 percent higher than in 1989. - Synthetic-control results: only Rwanda and Ethiopia made significant progress catching up among SSA conflict-affected countries considered. ### Rwanda’s use of international support and aid dynamics - Early post-conflict period: international aid financed most of the national budget. - As of 2019: ODA financed less than one-third of the budget. - Qualitative difference: increasing self-determination in how aid was used and which external advice was accepted; implementation of aid-effectiveness principles (ownership, alignment, harmonization, results focus, mutual accountability). - Donor timetables (3‒5 years) can be misaligned with 15-year horizons for meaningful change; technical assistance sometimes transplanted best practices without sufficient local adaptation. ### Key policy implications (implicit) - Sustain and deepen institution-building supporting governance, accountability, and ownership. - Rebalance from aid-fueled, government-led investment toward private-sector-led growth: improve investment climate, address structural constraints (skills, transport, energy), and expand market access. - Prioritize investments with high social returns (human development) while ensuring public investment efficiency. - Leverage gender inclusion to promote growth and broaden economic participation. - Prepare fiscally and institutionally for reduced donor dependence via domestic revenue mobilization and expanded domestic savings/investment. ### Notable program and policy time markers (as referenced) - Vision 2020 (2000 launch) - 2006: new aid policy after Paris Declaration - 2008: governance assessment (joint work with World Bank) - 2010: “Division of Labor” policy - 2012: temporary donor ODA withdrawal over mineral smuggling concerns - 2015–16: acute external imbalances episode - 2018: drivers of growth study (joint with World Bank) - 2019: three-year “signaling” (non-financing) IMF program - Continuous IMF engagement since 1995 ### Donor coordination and recipient ownership (conclusions) - Effective donor coordination requires the recipient government to set the agenda; entrenched policy conditionality should be abandoned in favor of assistance that empowers rather than imposes. - Rwanda implemented a donor coordination architecture (Development Partners Retreat; Development Partners Coordination Group; Sector Working Groups; Joint Sector Reviews; Country Portfolio Performance Review; Development Assistance Database) and used mutual accountability mechanisms. - Examples of government-directed controversial projects proceeded despite donor objections (Serena Hotel upgrade, Kigali Convention Centre, RwandAir expansion, tourism marketing, Bugesera airport plans); donors temporarily withdrew ODA in 2012 but reengaged after government action (mineral tagging). ### IMF engagement and macro management outcomes - Intensive IMF policy dialogue since 1995 despite rare IMF financing use. - 2012 donor withdrawal accelerated domestic revenue and export diversification efforts. - 2015–16 external imbalances addressed by IMF-recommended domestic adjustment (exchange rate flexibility, contained public spending, tighter monetary stance) combined with home-grown policies to promote domestic production and diversified exports. - 2019 signaling program: technical agreement to modestly loosen medium-term financing/spending goals while keeping public debt manageable; country-specific approach contrasted with broader Bretton Woods debt-risk concerns. --- ### Public investment, NST-1, and innovation highlights - Public investment since 2000 averaged about 10 percent of GDP (about 50 percent higher than the average for LICs). - Over 2000–14: - Annual investment (roughly half public, half private) contributed about 40 percent of annual real GDP growth. - Labor force growth contributed about 25 percent. - Total factor productivity (TFP) contributed about 35 percent. - NST-1 pillars: Economic; Social; Governance. NST-1 targets include job creation, export growth, urbanization rates, tourism receipts, digital literacy, national savings rate, agricultural productivity, and financial inclusion. - Innovation and digital transformation: - Fiber optic cables along main roads; more than 95 percent population covered by 4G cellular networks. - Zipline drone blood delivery: by mid-2019, more than 65 percent of Rwanda’s blood delivery outside Kigali used Zipline. - irembo electronic platform: 90 basic government services; birth certificate online in one day for US$0.50. - Government objective to move to a cashless economy and extensive digital literacy programs. - Health sector innovations: - Mutuelles de Sante: community health insurance; annual payment of 1,000 Rwandan francs (US$2) per family member (WHO 2008). - Voluntary insurance coverage rose from 7 percent in 2003 to almost 90 percent in 2018 (MINECOFIN). - Life expectancy: 68.7 years as of 2018 (Box 2). - Infant and maternal mortality rates have fallen by more than 500 percent since 2000 (Box 2). - Education: good access to primary education but quality issues remain (high repetition, low completion); employers report gaps in problem-solving and targeted skills. ### Public investment management and oversight - Robust public investment management process: project appraisal, selection, implementation, evaluation. - For projects above about US$750,000 and PPPs: detailed feasibility studies; investment committee chaired by MINECOFIN assesses feasibility; projects scored on social benefits and economic returns; scores inform budget prioritization. - Oversight: MINECOFIN project monitoring unit; Ministry of Local Government monitors local projects; quarterly project reports; bi-annual development assessments; annual Public Financial Management Report. --- ### Raising domestic resources — revenue performance and modernization (exact figures preserved) - Since 1992: Rwanda mobilized an additional 4.2 percent of GDP in taxes on goods and services. - 1992 average tax revenue ratio: 9.3 percent of GDP. - By 2017 direct tax collection nearly tripled: from 2.5 percent of GDP in 1992 to 6.5 percent of GDP. - Income tax receipts: income tax contribution rose by 2.7 percentage-points (as described). - Corporate income tax collections rose by 0.7 percentage points. - Other direct receipts increased by 1 percentage point of GDP. - Rwanda 2018 Tax Revenues: 16.2% of GDP. - Rwanda 2030 Tax Revenues scenarios shown: 18.2% of GDP (Additional DRM potential: 2% of GDP) and alternative 19.8% of GDP (Additional DRM potential: 3.6% of GDP). - Tax administration modernization: - RRA established in 1997. - 2003: SIGTAS implemented. - 2010: electronic filing and registration introduced. - By 2016: migration from SIGTAS to E-Tax by TATA Consultancy services. - 2015: introduction of Electronic Billing Machines (EBMs). - VAT timeline: - VAT introduced in 2001 at 15 percent, replacing turnover tax. - VAT increased to 18 percent in 2003; increased VAT revenues by slightly more than 1 percentage point of GDP. - VAT C-efficiency ratio: 29 percent. - CIT Productivity: 5 percent. - Large Enterprise Unit created to collect taxes from the 150 largest corporate taxpayers. - Estimated potential additional tax take: 1–3 percentage points of GDP (Steenbergen, von Uexkull, and Thum 2018; IMF 2018). ### Sequencing and strategy - Sequencing emphasized initial focus on high-yield excise taxes and customs duties, then adoption of VAT, broadening base, building capacity, and later modernization and MT Revenue Strategies. - Investment incentives: - RDB established 2008; private investment rose from 4.5 percent of GDP in 2000 to roughly 15 percent in 2019. - Investment code (2011, revised 2015) introduced generous tax incentives. - IGC study: only 11 percent of associated tax expenditures went to firms whose investment decisions likely affected by incentives, representing 3 percent of the total. ### Challenges and recommendations - VAT and CIT performance lag peers despite modernization. - VAT compliance problems persist despite EBMs and lottery incentives; low compliance partly due to lack of information and consumer reluctance to request receipts. - Recommendations: - Make tax incentives more time-bound, transparent, and targeted. - Improve coordination between RDB and RRA. - Develop a Medium-Term Revenue Strategy (MINECOFIN working on this). --- ### Structural transformation, productivity, and private investment - Agriculture: 70 percent of Rwanda’s workforce engaged directly or indirectly in agriculture. - Since 2010, more employment created in manufacturing, but productivity remains low relative to peers. - Productivity accounted for about one-third of Rwanda’s growth during 2000–14. - World Bank employment series (2000−16) suggests an annual decline of 1.5 percentage points in agriculture’s employment share. - Public investment has been about half of total investment; private investment increased but public sector still accounts for about half of all investment. - Recent high public investment includes projects such as Kigali Convention Centre, Kigali Arena, and RwandAir expansion. - Institutional support for industrial innovation: National Industrial Research and Development Agency (NIRDA) established in 2013. ### Special Economic Zones and Made in Rwanda (SEZ / MIR outcomes) - SEZ law enacted in 2011; Kigali SEZ Phase 1 (98 hectares) completed in 2013 with roughly 65 companies; Phase 2 nearly fully booked as of mid-2019. - KSEZ contains exporters and domestic producers; exporters contributed to diversification in textiles, processed foods, and light manufacturing. - Made in Rwanda (MIR) policy supports construction materials, light manufacturing, and agricultural production; policy levers include higher tariffs on second-hand clothing, reduced VAT on textile inputs, procurement preferences, and industrial electricity tariff reductions. - Tourism and MICE: - US$300 million Kigali Convention Centre completed in 2016. - By end-2016 Kigali had 3,400 upper- and mid-range hotel rooms. - Tourism is the country’s largest foreign-exchange earner; visits to national parks in 2015 were 70 higher than 2008 levels. - Connectivity and transport: - Cargo revenues more than quadrupled between 2013 and 2017. - Qatar Airways acquiring a 49 percent stake in the national airline in early 2020 (reducing fiscal exposure). - Bugesera airport construction commenced; plans for a standard gauge railway to Dar es Salaam. --- ### Gender inclusion: outcomes, institutions, and fiscal implications (numbers preserved) - Growth impact: - Rwanda’s real GDP per capita grew on average 2.2 percentage more rapidly than the average EAC or SSA country during 2005−14. - Cross-country analysis suggests female legal equity and gender equality contributed ½ percentage points to this growth differential. - Gender indices and representation: - World Economic Forum 2020 Gender Gap Index: Rwanda best performer in sub-Saharan Africa, ninth best globally. - Women held 61 percent of seats in national parliaments in 2018 (SSA average: 24 percent). - Women comprise more than 47 percent of ministerial positions. - 2018: women accounted for 32 percent of Senators, 50 percent of judges, and more than 43 percent of city and district council seats. - Labor and education: - Female labor participation virtually equal to men; 2016/17 survey reports share of working females higher than males. - Female TVET enrollment nearly 42 percent in 2015 (about 16 percentage points lower than male enrollment). - Postsecondary enrollment: about four women enrolled for each five men. - Literacy: female >69 percent in 2015 (up >20 percentage points from 2000); male literacy about 84 percent in 2016. - Youth literacy (2016/17): females >88 percent; males just above 84 percent. - Health and fertility: - Maternal mortality: more than 1,000 per 100,000 births in 2000 to 210 in 2015. - Adolescent fertility: 49 in 2000 to 26 per-cent in 2015 (as presented in source). - Gender budgeting and institutional framework: - Gender budgeting implemented since 2002; integrated into MTEF; institutionalized via 2010 National Gender Policy and 2013 Organic Law on State Finances and Property. - 2003 Constitution (as revised in 2015) enshrines gender equality and establishes 30 percent quotas for female representation in decision-making structures. - Financial inclusion metrics (Table 3 composition preserved): - Banking: 2012 = 56.2; 2015 = 45.7; 2016 = 42.6 - Microfinance: 2012 = 43.8; 2015 = 54.3; 2016 = 57.4 - o/w Females: 2012 = 39.5; 2015 = 38.7; 2016 = 39.3 - Males: 2012 = 54.2; 2015 = 52.4; 2016 = 52.3 - Mix/Groups: 2012 = 6.3; 2015 = 8.9; 2016 = 8.4 - Financing and SDG costing (exact estimates preserved): - NST-1 estimated costs: roughly US$39 billion over 7 years. - Public share of costs: estimated 59 percent. - 41 percent of NST-1 costs assumed to be covered by private investment, implying private investment increases to about 21 percent of GDP by FY23/24. - Private savings rate currently below 10 percent of GDP. - IMF staff SDG costing: additional public spending needs for full SDG achievement could be as much as 20 percent of GDP by 2030. - Costing case study: additional annual public spending in 2030 of 19.6 percent of GDP to reach SDG outcomes comparable to highest performing peers. - Assuming grants stay constant in percent of GDP and domestic revenues increase by 4–5 percentage points of GDP, remaining financing gap in 2030 could be about 7.5 percent of GDP. - If ODA grants continue downward, the annual financing gap could be as high as 14 percent of GDP by 2030. - Assumption noted: gross external financing of 7 percent of GDP by 2030. - Policy levers to alleviate financing constraints: encourage external private investment via macro policy, SEZs, Made in Rwanda, RDB marketing; use ODA “de-risking” instruments to leverage private resources without additional public balance-sheet risk. --- ### Estimated additional spending needs and financing implications (exact figures) - Key spending needs (Percent of 2030 GDP): - Health: 2.2 percent of 2030 GDP - Education: 7 percent of 2030 GDP - Road: 3.9 percent of 2030 GDP - Water: 4.5 percent of 2030 GDP - Electricity: 2 percent of 2030 GDP - Total: 19.6 percent of 2030 GDP - Domestic revenue scenarios shown: - Rwanda 2018 Tax Revenues: 16.2% of GDP → Rwanda 2030 Tax Revenues: 18.2% of GDP (Additional DRM potential: 2% of GDP) - Alternative: Rwanda 2030 Tax Revenues: 19.8% of GDP (Additional DRM potential: 3.6% of GDP) - Historical totals in chart (explicit figures visible): - 2018 Total: 10.7% of GDP - 2030 Total: 3.9% of GDP - Change: –6.8% of GDP - Additional numeric chart entries visible: 7.6, 14.4, 5.0, 5.0, 14.6, 1.1, 13.5, 7.0, 5.0, –6.8, 7.0, 5.0 - Growth targets and long-term income projections: - Historical average growth since 2000: 7.8 percent. - Vision benchmarks: - Upper middle income by 2035 (USD 4,035 per capita). - High income by 2050 (USD 12,476 per capita). - Average growth of 9.1% over NST I. - Average growth of 12% over 2025–35. - Average growth of >9% over 2036–50. - Text: sustained average growth at 7.8 percent (or higher per target trajectories) should enable Rwanda to reach upper-middle-income status by 2050 at a minimum. ### Debt and fiscal tradeoffs - Macroframe charts (PV of Debt-to-GDP Ratio and Financing Gap) illustrate tradeoffs between scaling up aid, better-targeted aid, domestic revenue mobilization, and debt sustainability; numeric PV series not tabulated in text. --- ### Annex and methodology (synthetic control) - Synthetic-control methodology constructs a counterfactual “non-conflict” growth path using weighted comparator countries matching pre-conflict characteristics (per capita GDP PPP, trade openness, trading partner growth, country growth in four years pre-conflict). - Comparator countries must be conflict-free for several years prior. - Methodology used for eight SSA countries: Burundi, DRC, Ethiopia, Guinea-Bissau, Liberia, Republic of Congo, Rwanda, Sierra Leone. - Rwanda conflict start year in Annex Table 1: 1990 (reflecting building tensions leading to 1994 genocide). --- ### Concluding synthesis — model lessons and policy directions - Rwanda’s growth performance significantly outpaced the norm and is comparable to emerging Asian countries in sustained stability. - Strategic, country-led use of international support, robust accountability and governance architecture, investment in human capital and infrastructure, revenue mobilization, focused SEZ/industrial policies, and purposeful gender inclusion together explain much of the recovery. - Persistent constraints and policy priorities: - Waning ODA and fiscal pressures necessitate accelerated domestic revenue mobilization and private investment inflows. - Maintain and deepen institutions for ownership, accountability, and long-horizon strategy implementation. - Balance incentives for investment with revenue needs; improve VAT and CIT efficiency and compliance. - Continue skills and education reforms to close labor-market skill gaps. - Sustain and expand gender-responsive policies and financial inclusion. - Use de-risking and targeted policies to attract external private financing while safeguarding debt sustainability. *Source: Foreword, Introduction, Conclusions, and selected chapters from the IMF paper "THE DEVELOPMENT PATH LESS TRAVELED: THE EXPERIENCE OF RWANDA" (content unit: dplterea).* ### Foreword ��������������������������������������������������������������������������������������������������������������� ### Foreword ### Context of the 1994 Conflict and Post-Conflict Recovery - The 1994 conflict, referred to as the “Genocide Against the Tutsi,” lasted 100 days and left the country’s infrastructure, civil service, and societal structures devastated. - Twenty-six years after the conflict, Rwanda undertook reconstruction that combined donor aid, legitimacy of military success, rapid reintegration of the Hutu into public/military life, and rebuilding societal fabric informed by precolonial values. - In 2000 the government launched a 20-year growth strategy, Vision 2020, aimed to lift the country into middle-income status. - By 2020, Rwanda remained classified as “low” income, yet its post-conflict recovery delivered growth surpassing estimates of what the country would have achieved without the conflict. - The Foreword notes the paper was finalized during the COVID-19 pandemic, which makes the policy lessons even more relevant. ### Key Features of Rwanda’s Development Path (as emphasized) - Purposeful institution-building emphasizing governance and ownership. - Aid-fueled and government-led strategic investment in: - people, - infrastructure, - high-yield economic activity. - Re-establishment and expansion of a domestic tax base. - Policies to reduce aid dependency by attracting private investment and bolstering exports. - A purposeful strategy to harness the economic power of gender inclusion. ### Findings on Progress and Limits - Rwanda’s post-conflict growth rates are comparable to East Asian experience and by 2020 the country emerged as a “frontier economy” with access to global markets and private finance. - Despite unprecedented recovery and progress toward Vision 2020 goals, the plan’s objective of moving to middle-income status by 2020 was not achieved; Rwanda remained a low-income country as of 2020. - The government and World Bank’s analysis highlighted the need to “crowd-in” the private sector as the main engine for growth and to address constraints including: - low-skilled labor, - high transport and energy costs, - still-inadequate infrastructure, - continued vulnerability to weather and commodity prices, - untapped potential of regional markets. ### Future Strategy and Financing Challenge - Rwanda has articulated a comprehensive new strategy calibrated to achieve the Sustainable Development Goals by 2030 and move to middle-high income status by the year 2050. - Financing full implementation of the strategy will be extremely challenging given waning donor aid and limited domestic resources. - Continued progress hinges critically on accelerating the inflow of significant external private financing and investment. ### Policy Implications and Recommendations (implicit in Foreword and Executive Summary) - Sustain and deepen institution-building that supports governance, accountability, and broad ownership of development goals. - Rebalance the development model from aid-fueled, government-led investment toward private-sector-led growth by: - improving the investment climate to attract external private financing, - addressing structural constraints on competitiveness and skills, - expanding access to regional and global markets. - Prioritize investments that yield high social returns (human development) while ensuring public investment efficiency. - Leverage gender inclusion as a purposeful strategy to promote growth and expand economic participation. - Prepare fiscally and institutionally for reduced donor dependence by accelerating domestic revenue mobilization and expanding domestic savings and investment. *Source: Foreword and Executive Summary of the IMF paper "THE DEVELOPMENT PATH LESS TRAVELED: THE EXPERIENCE OF RWANDA" (content unit: Foreword).* ### Introduction ### dplterea - Introduction ### Scope and limitations - The paper does not contain an in-depth analysis of the political aspects of Rwanda’s recovery, while recognizing the influence of President Paul Kagame and the initial importance of his Rwandan Patriotic Front (RPF). - It does not revisit the overall macroeconomic evolution of Rwanda already covered in successive IMF staff reports. - It does not question the definition of fragility by the Bretton Woods institutions, which indicates that Rwanda exited “fragile state” status many years ago. - The paper only implicitly handles two important ingredients of Rwanda’s success: unwavering commitment to development by its leadership, and exceptional hard work by its civil service. ### Framework and contents - Analytical framework: Gelbard and Jacoby (2015) categories — stability (political inclusion, capacity and institutions, macroeconomic stability); resources (domestic revenues, official development aid or ODA); spending (priority spending, public investment); international support (IMF programs, donor coordination); private investment (external and domestic). - Alignment with Rwanda’s Vision 2020 goals. - Chapter overview: - Chapter 1: cross-cutting overview; country’s post-conflict growth relative to a synthetic counterfactual and strategic use of international support. - Chapter 2: rebuilding policies and institutions; emphasis on goal-setting, accountability/governance, ownership; incorporation of traditional societal values and international best practices. - Chapter 3: government-led public investment push financed by aid; focus on human capital, infrastructure, targeted sectors. - Chapter 4: policies to restart tax collection and increase domestic resource mobilization. - Chapter 5: reforms to attract private investment and boost exports to reduce aid dependency. - Chapter 6: policies to promote gender equality. - Chapter 7: forward-looking challenges. ### Key takeaways - Rwanda’s exit from severe post-conflict fragility significantly outpaced that of other conflict-affected countries, with strong and stable growth over an extended period, despite numerous shocks. - Strategic use of international support was decisive in success, more so than the absolute amount received. Aid initially comprised a large share of the budget, but the government increasingly decided how aid would be used and established structures for coordination and accountability. The government has been willing to say “no” to support/advice it deemed unhelpful. - Post-conflict policies and institutions were strengthened by embedding clear accountability tools, obtaining broad ownership of policies within the population, and maintaining clear goals translated into pragmatic policy reforms. Rebuilding incorporated precolonial traditions and international best practices. - Public investment was directed to restructure the economy toward higher-return activities by focusing on: - improving labor skills via health and education; - creating growth-enhancing public infrastructure; - introducing greenfield enterprise in sectors of strong potential, considering land-locked geography, still-low labor productivity, and high input costs. - A robust domestic tax base was established through creation of a single revenue authority and an ambitious agenda of tax policy and administrative reforms to transform a culture of low tax compliance. - Special institutions and policies were created to attract foreign direct investment to targeted export sectors, channeling investment toward services exports, notably tourism, and evolving to light manufacturing and agro-processing. - Deliberate policies to promote gender equality (e.g., gender budgeting, education and financial access schemes, inclusion of women in public decision-making) bolstered growth and accelerated poverty reduction. - Going forward, maintaining growth momentum requires accelerated progress toward a private sector-led growth model with less reliance on international aid; continued innovative policies to attract external private investment and leverage technology to “leapfrog” development hurdles will be critical. ### Post-conflict human and economic impact (selected exact figures) - The Genocide against the Tutsi in 1994: - some 1 million lives lost (roughly 15 percent of the population); - 3 million refugees fled to neighboring countries. - Economic impact: - GDP contracted by 50 percent in 1994, to $146 per capita (same level as in 1975). - Inflation soared; poverty rate reached 78 percent. - Recovery indicators: - GDP per capita more than tripled, to approximately $800 per person in 2018. - Life expectancy, at 67 years in 2018. - Child mortality reduced to one-quarter of the level in 2000. - Maternal mortality reduced to one-fifth of its 2000 level. - Poverty reduced to 38 percent. ### Growth compared to a non-conflict synthetic counterfactual (exact milestones) - Four years after the onset of the conflict (1994), Rwanda’s per-capita GDP was 42 percent below the pre-conflict (1989) level while the synthetic group’s per capita GDP level was 7.5 percent higher. - Rwanda’s per capita GDP caught up with its 1989 level in 2004, 14 years after the onset of the conflict, at which time the synthetic group’s per capita GDP had increased 18 percent above the 1989 level. - Rwanda’s per capita GDP caught up with the synthetic group’s per capita GDP in 2011, at a level 51 percent higher than in 1989. - Comparative synthetic-control results show only Rwanda and Ethiopia were able to make significant progress in catching up to the comparator group among SSA conflict-affected countries considered. ### Macro-relevant factors influencing overcoming fragility - The literature and the paper emphasize factors summarized by Gelbard and Jacoby (2015): stability; resources; spending; international support; and private investment. - The paper covers these elements, with macroeconomic stability already addressed in IMF reports. ### Rwanda’s use of international support - Early post-conflict period: international aid financed most of the national budget. - Over the past two decades, Rwanda benefited from above-average net ODA flows but was not an outlier; as of 2019 ODA financed less than one-third of the budget. - Key qualitative difference: increasing self-determination in how aid was used and which external advice was accepted. - Rwanda implemented aid-effectiveness principles (ownership, alignment, harmonization, results focus, mutual accountability) to a substantial degree, often implementing its own decisions even when controversial. - Observations from broader literature: - International assistance often resulted in overlaps and discontinuities across humanitarian, development, security, and political objectives. - Technical assistance frequently transplanted best practices without sufficient reference to local context. - Donor timetables (typically 3‒5 years) can be misaligned with the roughly 15-year horizon often required for meaningful change. - International support incentives are sometimes skewed by accountability to donors’ populations or institution shareholders rather than recipient countries. *Source: dplterea - Introduction (dplterea - Introduction, PDF).* ### conclusions, noting: ### conclusions, noting: ### Donor coordination and recipient ownership - For decades, donors have recognized the need for greater donor coordination without being able to achieve it; the reasons being self-evident: not donor government is genuinely willing to be coordinated by some other donor government. - The only means of achieving effective donor coordination is if the government of the country sets the agenda for all of them. - All international actors must decisively abandon the entrenched practice of policy conditionality, by which they make finance dependent upon government acceptance of specific policies. Their role is to assist and empower, not to impose their own preferences. (18‒19) - Mistakes will be made, but as long as the responsibility for them is clearly domestic, governments and society will learn from them. ### Rwanda’s approach to rebuilding and strategy-setting - Even in the early post-conflict period, the Rwandan government took a decisive role in rebuilding institutions and policies; development partners were heavily engaged and provided meaningful input into crafting Vision 2020 and its implementing strategies. - In 2006, following the Paris Declaration, the Rwandan government adopted a new aid policy emphasizing aligning donor operations more closely to the specifics of Rwanda’s development strategy and created a supporting architecture to set goals, facilitate coordination, assess results, and ensure mutual accountability (Box 1). - In 2010, a new “Division of Labor” policy sought to consolidate development partner (DP) sectoral engagement to reduce transactions costs and address duplication and gaps: - Development partners were asked/required to reduce their engagement to no more than three sectors, with the selection jointly determined by the country’s needs and donors’ areas of expertise. - Example: the World Bank Group was involved in 10 sectors prior to the reform and only 3 sectors afterward. - According to the government, streamlining improved efficiency and encouraged donors to be more committed and support larger projects when engaged in fewer activities. - Donors also agree that Rwanda’s coordination framework has led to better, albeit not perfect, results. - The government took a more directive approach in requesting and accepting technical expertise, initiating joint analytical work such as a 2008 governance assessment and a 2018 drivers of growth study, both with the World Bank. ### Practical tensions and outcomes with development partners - Putting recipient-led principles into practice has been difficult; donors have had strong influence over strategy, policies, and projects, but the government has proceeded in several cases with controversial spending and/or borrowing decisions where donors objected, including: - Upgrade of the Serena Hotel to five-star status - Construction of the Kigali Convention Centre - Investment in new planes and routes for RwandAir - Tourism marketing on football jerseys - Planned construction of a large new airport at Bugesera - Despite these differences, results have continued to accumulate and Rwanda’s ODA shares relative to other countries do not appear, on average, to have been affected over time (Figures 9 and 10). - When local views diverged strongly from those of development partners, Rwanda resisted donors’ attempts to “impose their own preferences.” - Donors did temporarily withdraw ODA in 2012 in response to concerns of mineral smuggling from the Democratic Republic of the Congo; the Rwandan government instituted a tagging system for mineral exports, and donors reengaged. ### Rwanda’s donor coordination framework (Box 1 highlights) - Development Partners Retreat: annual two-day retreat outside Kigali hosted by Minister of Economic Planning and Finance (MINECOFIN) to monitor program and discuss strategic planning. - Development Partners Coordination Group (DPCG): quarterly meeting to coordinate overall ODA delivery chaired jointly by MINECOFIN and a rotating development partner. - Sector Working Groups: quarterly meetings of DPs and line ministries for each sector, reporting feeds into the DPCG. - Joint Sector Reviews: twice per year forward- and backward-looking analysis of the performance of sector plans; outcomes are signed off by the DPCG heads. - Country Portfolio Performance Review: annual assessment of performance of all sectors combined. - Development Partners’ assessment: independent annual assessment at sector and combined level by DPs. - Development Assistance Database: ongoing centralized database that tracks ODA planning, disbursements, and project implementation. - Mutual accountability monitoring example: Performance on DPAF Indicators for FY 16/17 Actual vs Targets was presented (labels include A1, A2, B1–B5, C3, ES, G1, G3, G4). ### IMF engagement and macroeconomic management - Rwanda has sought almost continuous intensive program engagement with the IMF since 1995, despite very rare access to IMF financing (Figure 11). - The close policy dialogue with the IMF has helped craft nimble policy responses to external shocks: - Example: withdrawal of donor support in 2012 accelerated efforts and technical advice to increase domestic revenues and diversify exports to reduce reliance on hard currency aid inflows. - Example: external imbalances that became acute in 2015–16 put pressure on the Rwandan franc and international reserves; causes included higher mineral production costs due to tagging, a commodity price decline, and regional drought. - The Rwandan government and central bank agreed with IMF-recommended domestic adjustment policies to contain demand for imports, primarily through allowing greater exchange rate adjustment, supported by containment of public spending and a tighter monetary stance. - The government added home-grown policies to promote domestic production of previously-imported products and more diversified exports. - The policies served to reverse imbalances quickly and set external balances on a more sustainable path. - Rwanda’s engagement with the IMF has been increasingly handled as a partnership, with less-binding and directive policy prescriptions, requiring pushing traditional modes of operation within the IMF and vis-à-vis other development partners. - For the three-year “signaling” (non-financing) program agreed between Rwanda and the IMF in 2019, there was technical agreement that medium-term financing and spending goals should be modestly loosened, while maintaining public debt at manageable levels, to support implementation of Rwanda’s new development strategy. - While the program was eventually approved, this country-specific approach contrasted sharply with growing concerns within the Bretton Woods institutions about rising debt risks across the continent and “set off alarm bells.” ### Key programs and time markers referenced - Vision 2020 (post-conflict strategy design period) - 2006: new aid policy after the Paris Declaration - 2008: governance assessment (joint analytical work with World Bank) - 2010: “Division of Labor” policy implemented - 2012: temporary donor ODA withdrawal over mineral smuggling concerns - 2015–16: acute external imbalances episode - 2018: drivers of growth study (joint with World Bank) - 2019: three-year “signaling” (non-financing) IMF program - Continuous IMF engagement since 1995; Figure references include Figures 9, 10, 11, 12, 13 in the source. *Source: dplterea - conclusions, noting: (https://www.imf.org/-/media/files/publications/dp/2020/english/dplterea.pdf)* ### Conclusion ### Conclusion ### Growth performance and international support - Rwanda’s post-conflict growth "significantly outpaces the norm" and the "sustained and stable nature of growth performance is comparable to that of emerging Asian countries." - International support is one of several important factors enabling movement away from post-conflict fragility. - The government and development partners espoused the Paris Declaration principles, aligning support with home-grown strategies and creating structures for coordination, accountability, and results monitoring. - Home-grown solutions sometimes clashed with development-partner advice/agendas, but the arrangement and its outcomes are "viewed by both sides as a good model for engagement." ### Recreating institutions and policymaking infrastructure - Government and policymaking infrastructure had to be recreated after the conflict, drawing on precolonial traditions emphasizing: - strict accountability; - broad ownership; - goal-setting, adaptation, and innovation. - Policies and systems were enhanced by emulating best practices elsewhere and "careful monitoring of results to make pragmatic adaptations over time." - Strong policy institutions and a "firmly country-driven development agenda" enabled consistent implementation of reform policies over two and a half decades. - The RPF initially served as the effective government, organizing local executive committees to restore services and channel information and resources. ### Human capital, technical assistance, and developmental patrimonialism - Large-scale repatriation of a well-educated refugee diaspora between 1995–2000 significantly boosted human capacity and productivity; many high-level officials and private entrepreneurs were educated outside Rwanda. - The government relied heavily on long- and short-term technical advisors placed within ministries to transfer knowledge; advisors sometimes stayed for 1–2 years, and in at least one notable case for 20 years. - The government is selective about technical assistance, directing it to high-value areas and adopting a relatively large share of recommendations. - Early RPF investments in companies to stimulate private activity—termed "developmental patrimonialism"—saw profits reinvested in the country rather than pocketed by individuals. ### Accountability and governance architecture - Rwanda established a strict, far-reaching framework for government accountability, evolving to a "zero-tolerance policy for corruption." - Key accountability milestones and instruments: - 2003: creation of the Office of the Auditor General (OAG) with constitutional responsibility to report to parliament on public finance and financial reporting quality. - 2003: introduction of annual leadership retreats (Umwiherero) chaired by the president to self-assess progress and set annual "resolutions." - 2006: requirement that every public servant sign an annual performance contract (imihigo); contracts are published and failure can result in dismissal. - 2008: World Bank joint governance assessment provided a "generally positive view" while noting remaining challenges. - 2010: introduction of citizen-report cards for assessing service delivery. - 2011: creation of the Rwandan Governance Board (RGB) to administer imihigo and monitor community programs. - Monitoring and evaluation cadence: - Project implementation monitored quarterly. - Development strategies and budget implementation evaluated twice per year. - Detailed household surveys conducted every four years. - Governance innovations include planned "government command center" for real-time project and performance-contract information. ### Broad ownership and community participation - National dialogue (Umushyikirano) started in 2003: annual event chaired by the President with over 1,000 citizens attending in person and wider participation via internet, TV, and radio. - National Decentralization Policy (starting 2000) created local government layers and decentralized key public services (health, education, agricultural services, water and sanitation), with local medium-term plans approved through the imihigo process. - Community engagement mechanisms: - Umuganda: mandatory monthly community service on the last Saturday morning of each month, combining public works, social cohesion, and two-way communication. - Vision 2020 Umurenge Program (VUP): community-based program to eliminate extreme poverty with all households ranked into four income categories; bottom two categories cover poorer households with capacity or no capacity to work. - VUP three pillars: - (1) cash support in exchange for work, for those households capable; - (2) credit, to support gainful employment; - (3) direct cash support, for households unable to work. - Other community-level mechanisms include mediators and courts (Abunzi, Gacaca). ### Goal-setting, adaptation, and innovation in development strategy - Vision 2020 (launched 2000) aimed to reach middle-income status in 20 years and focused on five program pillars and three cross-cutting areas: - Pillars: Good governance; Human resource development; Private sector-led economy; Instrastructure development; Agricultural productivity; Regional and international integration. - Cross-cutting areas: Gender equality; Sustainable natural resource management; Science and technology. - Vision 2020 outcomes: - Not successful in achieving middle-income status by 2020, but supported a tripling of per capita income and achievement of the United Nations Millennium Development Goals. - Four-year strategies (PRSP 1 (2002–2006), EDPRS 1 (2008–2012), EDPRS 2 (2013–2018)) tied sectoral plans to annual budgets with embedded monitorable indicators evaluated twice per year. - PRSP 1 (2002–2006): Recovery from conflict; Major gains in health and education; Average growth of 8.3%; Poverty reduced from 60% to 57%. - EDPRS 1 (2008–2012): Average growth of 8.3%; Poverty reduced to 45%; Reduced inequality; Significant gains towards MDGs. - EDPRS 2 (2013–2018): Average growth of 7%; Poverty reduced to 38%; External imbalances reduced; Increased private sector investment; Focus on economic transformation. - Vision 2050 (launched late 2018): aim of reaching middle-income status by 2035 and upper-income status by 2050; implemented through seven-year strategies starting with NST-1 which embeds UN SDGs and seeks to institutionalize Rwanda’s accountability and ownership mechanisms. ### Innovation highlights and digital transformation - Health sector innovations led to near-universal health insurance coverage and rapid improvements in health outcomes. - Technology and service innovations: - Fiber optic cables alongside main roads and more than 95 percent of the population covered by 4G cellular networks. - Pioneer contract with Zipline (2016) for drone blood delivery: by mid-2019, more than 65 percent of Rwanda’s blood delivery outside of Kigali used Zipline. - irembo: electronic platform for 90 basic government services; example: a birth certificate can be ordered online and received in one day for US$0.50 paid via mobile app or credit card. - Government objective to move to a cashless economy with extensive digital literacy programs. ### Health sector: a case of adaptive innovation - Historical timeline and reforms: - Up until 1996 health services were free and of very poor quality. - 1996: cost recovery mechanisms introduced. - 1999−2000: health insurance schemes introduced for civil servants and pilots in three districts. - 2004: community-based health insurance schemes, Mutuelles de Sante, extended nationwide. - 2005: local health facilities given full responsibility for budgeting, service delivery, and hiring; financing tied to performance outcomes. - Mutuelles features: - Participation organized on a per household basis with an annual payment of 1,000 Rwandan francs (US$2) per family member (WHO 2008). - Voluntary insurance coverage rose from 7 percent in 2003 to, according to MINECOFIN, almost 90 percent in 2018. - Performance-based financing, decentralized responsibility, and local incentives produced strong demand to opt into insurance and rapid service-delivery improvements. *Source: IMF WEO database and staff calculations.* ### Box 2. Innovation and Adaptation: Mutuelles de Sante ### Box 2. Innovation and Adaptation: Mutuelles de Sante ### Vision 2050 and NST-1 - Vision 2050 is linked to the drivers of growth identified in a 2018 joint study by the World Bank and the Rwandan government, which include: building human capital; competitiveness and integration with outside markets; improving agricultural productivity; managing urbanization; a greater role for private sector activity; and continuing to build public sector institutions. - NST-1 is based on three pillars and several cross-cutting areas (Table 3.1), reflecting a core set of principles. ### Principles underlying NST-1 - Complete unfinished business of Vision 2020 and EDPRS-2 - Lay foundation for achieving Agenda 2063, Rwanda Vision 2050, EAC Vision 2050, and SDGs - Scale up home grown solutions, based on Rwandan culture, values, and context - Develop the private sector as the engine for growth - Ensure the sustainability and inclusiveness of results - Lay the foundation for a quality standard of living for future generations ### Pillar objectives and targets - Economic pillar: - Accelerate growth through more private sector activity - Promote a knowledge-based economy (jobs services, innovation, and industry) - Draw more on Rwanda’s natural resources (mainly agriculture and mining) - Embedded specific targets for: job creation, export growth, urbanization rates, tourism receipts, digital literacy, national savings rate, agricultural productivity, and financial inclusion - Social pillar: - Promote capable and skilled citizens, quality standards of living, and a stable and security society - Targets include: eradicating extreme poverty; 100 percent access to water, electricity and broadband; universal access to quality health care; family planning; and eliminating gender-based violence - Governance pillar: - Build a capable and accountable public sector; strengthen the judiciary; fight corruption; improve public resource management; provide more services for the Rwandan diaspora; promote safety and security in Africa; and fight against “genocide ideology” internationally ### Public investment: scale, composition, and contribution to growth - Public investment since 2000 has averaged about 10 percent of GDP. - This level is about 50 percent higher than the average for low-income countries (LICs). - Over the period 2000–14: - Annual investment (roughly half public, half private) contributed about 40 percent of annual real GDP growth - Labor force growth contributed about 25 percent - Total factor productivity (TFP) contributed about 35 percent ### Public investment management, appraisal, and oversight - Rwanda is judged to have a robust public investment management process based on four stages: project appraisal, selection, implementation, and evaluation. - For projects above a threshold (about US$750,000) and PPPs: - Detailed feasibility studies are prepared covering technical, financial, social, environmental, and economic aspects - Feasibility studies are assessed monthly by an investment committee chaired by MINECOFIN - Projects are evaluated with a quantitative score including social benefits, economic returns, and synergies with ongoing projects - The committee recommends financing arrangements and private sector involvement; scores inform annual and medium-term budget prioritization - Local government projects are assessed by a District Investment Advisory Committee; guidelines on project appraisal methodology are made public. - Approval for PPPs and joint ventures is granted by the Rwanda Development Board, in consultation with the Investment Committee. - Oversight and implementation framework: - MINECOFIN houses a project monitoring unit - Ministry of Local Government monitors and evaluates local projects - Quarterly project execution reports, bi-annual development strategy assessments, and an annual Public Financial Management Report provide public information and feedback into investment selection ### Public investment for human development — health - Public investment in the health sector has placed Rwanda’s health indicators well above the peer country average, despite overall lower income. - Infant and maternal mortality rates have fallen by more than 500 percent since 2000. - Life expectancy is 68.7 years, as of 2018, compared with the SSA average of 61. - Innovations in the health sector include: - Introduction of universal care for children younger than five - Blood delivery by drone - Use of privately run health clinics for routine service delivery in rural areas - Use of artificial intelligence for diagnostic purposes - Fiscal and demographic pressures: - Health system will face financial pressures due to expiring official grants and fast-rising life expectancies shifting disease burden toward old-age diseases - Government is considering measures to improve the cost efficiency of services and administration while increasing burden-sharing for beneficiaries ### Education outcomes and skills - Education outcomes have not been as strong as health despite good access to primary education: repetition rates are high and completion rates low. - Rwanda has generally spent less on education than peers, especially on salaries that are considerably lower than in neighboring countries. - Employers report significant gaps in problem-solving and targeted skills. - Interim responses and reforms include: - Allowing free flow of labor from other EAC countries to address skills deficits - Upgrading teachers’ skills, improving classrooms, and increasing access to laptops and the internet - Introducing digital solutions to education delivery and programs to foster innovation and digital literacy - Emphasis on math and science, and Technical and Vocational Education Training (TVET), with a goal of making Rwanda a “hub” for STEM research and development - Note: addressing education quality will take time and considerable resources. ### Public investment for growth-enhancing infrastructure - Public investment has been concentrated in electricity, water, and roads, which are at roughly 50 percent of the NST-1 goals for access and quality. - Under NST, the government’s goal for electricity is 100 percent access by 2024 (both on-grid and off-grid). - Rwanda currently has excess supply of energy, through a combination of PPPs for thermal generation and other sources. - World Economic Forum indicators show Rwanda’s gains in infrastructure rank well against peer countries, but spending needs to reach outcomes in line with best performers remain significant. *Source: dplterea - Box 2. Innovation and Adaptation: Mutuelles de Sante* ### 4. Teachers and Outcome, Secondary, Latest Value Available ### 4. Teachers and Outcome, Secondary, Latest Value Available ### Education indicators and raw values (as presented) - Graphic values (preserved verbatim as in source): 1, 60, 110, 105, 100, 95, 65, 75, 70, 90, 85, 80, 0, 40, 20, 100, 80, 60 - Labeled measures appearing in the figure: - Net enrollment—Primary (in percent) - Net enrollment—Secondary (in percent) - Teacher student ratio, primary, per 100 students - Teacher student ratio, secondary, per 100 students ### Structural transformation and public investment: key findings - Sub-Saharan Africa’s experience with structural transformation differs from late industrializers from East Asia in terms of pace and pattern, reflecting a different global environment characterized by rapid technological changes blurring lines between manufacturing and services. - Over the 2000–10 decade, sub-Saharan African countries saw a large shift of workers from agriculture to services and manufacturing, but movement from low- to high-productivity employment contributed far less to growth in SSA than in late industrializers (McMillan and Rodrik 2012; Fox, Haines, and Huerta-Munoz 2013). - In Rwanda specifically: - 70 percent of Rwanda’s workforce is engaged directly or indirectly in agriculture. - Since 2010, more employment has been created in manufacturing, although productivity levels remain low relative to peer countries. - Productivity was responsible for about one-third of Rwanda’s growth during 2000–14, boosted by repatriation of a well-educated diaspora and imported labor; those gains have waned over time. - The World Bank constructed an employment series from 2000−16 which suggests an annual decline of 1.5 percentage points in agriculture as a share of total employment. - Sectoral developments (from figures and discussion): - Movement into higher value-added sectors (wholesale and retail trade, construction, hotels and restaurants, manufacturing, transport, and mining) has occurred, but productivity within sectors has in some cases stagnated. - Services expansion in Rwanda includes modern services (finance, tourism, real estate) and basic services (health and education); limited linkages between these trajectories raise questions about sustainability of a services-led approach. - “Industries without smokestacks” (agro-processing and certain services) may offer high productivity, tradability, and import of know-how, and present strong growth potential. ### Public investment, private investment, and implications - Public investment has been a significant part of Rwanda’s growth story; private investment has increased significantly, but the public sector still accounts for about half of all investment. - Recent high public investment reflects large projects including the Kigali Convention Centre, the Kigali Arena, and investment in RwandAir expansion. - Waning ODA trends and the resulting build up in public debt limit room to sustain current high public investment levels. - Policy focus: shift to promote more productivity within existing sectors (agro-processing, horticulture, washed coffee, processed minerals, construction materials), stimulate financial services and information and communications technology, and invest more in education to create the needed skills base. - Institutional measures: establishment of the National Industrial Research and Development Agency (NIRDA) in 2013 to provide public support for industrial innovation and competitiveness. ### Labor productivity and employment dynamics (preserved descriptions) - Figure 28 and Figure 29 descriptions indicate: - Sectoral labor productivity relative to average is presented and changes in relative employment share are measured for 2000–10 and 2000–16 periods. - Rwanda’s sectoral shifts show declines in agriculture share and gains in trade, construction, transport, and services, with productivity gains uneven across sectors. - Figure 30 situates labor productivity and GDP per capita (2010 US$, PPP) across Rwanda and other countries; labor productivity is discussed in levels (2010 US$, PPP). ### Tax revenue mobilization: achievements and statistics - Rwanda’s tax revenue performance improved significantly over the past 25 years through measures to broaden the tax base and improve tax administration. - Key numeric milestones and values: - In 1992, Rwanda’s average tax revenue ratio was 9.3 percent of GDP. - By 2017, tax revenues reached a level slightly below the average of lower middle-income countries (LMIC). - Since 1992, Rwanda’s direct tax collection nearly tripled from 2.5 percent of GDP in 1992 to 6.5 percent of GDP. - Income tax receipts from individuals are the greatest contributor, with: - Income tax contribution rising by 2.7 percentage-points (as described in the source). - Corporate income tax collections rose by 0.7 percentage points. - Other direct receipts increased by 1 percentage point of GDP (receipts from licenses and property taxes decreased, per source text). - Drivers of success included consistent policy implementation, tax reform programs, creation of the Rwanda Revenue Authority (RRA), integration of technical assistance, and a strong accountability framework including imihigo contracts and leadership retreats. ### Conclusions and policy implications (as presented) - Public investment, largely financed by ODA, has been carefully chosen and executed to improve development outcomes, create infrastructure, and promote structural transformation; however, waning ODA trends make current levels of public investment difficult to maintain. - Private sector growth and productivity will need to serve as engines of growth going forward. - Improving domestic productivity and private sector activity will depend on: - Improving education, - Reducing input costs, - Expanding access to markets, - Mobilizing domestic revenues through sustained tax policy and administration improvements. *Source: dplterea - 4. Teachers and Outcome, Secondary, Latest Value Available (excerpt).* ### 0.5 percent of GDP over the horizon). ### Raising Domestic Resources ### Revenue performance and trends - Rwanda mobilized an additional 4.2 percent of GDP in taxes on goods and services since 1992. - Taxes on international trade have declined over the past 25 years, reflecting regional integration and policies preparing for Rwanda joining the East African Community (EAC) customs union in July 2009. - World Bank 2018 Doing Business Report ranking: Rwanda 31st among 190 countries on ease of paying taxes. - Large increases in tax revenues were supported by institution building and technical assistance from development partners, including the IMF. ### Modernization of tax administration - Rwanda Revenue Authority (RRA) established in 1997 to develop tax administration capacity as a dedicated agency. - Key modernization milestones: - Late 1990s: Restored customs and tax administration capacity; reinforced surveillance and anti-smuggling. - 2003: Implementation of Standardized Integrated Government Tax Administration Systems (SIGTAS). - 2010: Introduction of electronic filing and electronic tax registration. - By 2016: Migration from SIGTAS to E-Tax by TATA Consultancy services. - 2015: Introduction of Electronic Billing Machines (EBMs). - RRA activities include outreach on tax laws and regulations, providing tax advisers, and consultative meetings with large taxpayers. - Modernization supported compliance and provided cost-effective ways of tracking and enforcing tax liabilities. ### Sequencing and strategy for domestic revenue mobilization - Post-conflict sequencing emphasized by IMF (2017a): initial focus on fast gains (high-yielding excise taxes and customs duties), then adoption of VAT, broadening tax collection, building administrative capacity, and later modernizing fiscal administration supported by medium-term revenue strategies. - Rwanda’s strategy followed this sequencing: early reliance on goods and services taxes, later increasing direct tax revenues as administrative capacity improved. - The Large Enterprise Unit was created to collect taxes from the 150 largest corporate taxpayers. ### Reforms to direct taxes - Personal income tax (PIT) collections to GDP ratio nearly quadrupled since 1997 without major changes to relevant tax rates. - Corporate income tax (CIT) collections from small enterprises were 0.6 percent of GDP in 2016 and have nearly tripled since 2000. - Income tax law enacted in 2005 (Income Tax Law of 2005, Official Gazette, LAW Nº 16/2005, 2005) simplified PIT rates and set nominal income brackets which remained unchanged until mid-2018. - Example of progressivity effects noted: - The average per capita income rose to US$717 in 2017 from slightly below US$300 in 2005. - The lower threshold of the 20 percent income tax rate dropped from US$625 in 2005 to $433 in 2017. - PIT and CIT performance divergence coincided with early 2000s reforms that reduced high corporate tax rates and expanded the base of income taxes. - RRA modernization boosted compliance and PIT performance. ### Reforms to taxes on goods and services - VAT introduced in 2001 at 15 percent, replacing the turnover tax. - VAT rate increased to 18 percent in 2003; this increased VAT revenues by slightly more than 1 percentage point of GDP. - Performance was undermined by exemptions (including petroleum products removed in 2010/2011). - Measures to improve VAT compliance: - Quarterly filing and payment requirements for small VAT taxpayers. - Electronic Transaction Devices and permitting direct bank payment of tax liabilities with electronic data upload from banks. - Ongoing discussions around a nationwide VAT rebate program. - Fixed asset tax modified in 2017 to emphasize property value and expand the taxpayer base. - Efforts to improve mining revenues include a value-based scale for mining royalties, changes in exploration and licensing fees, and attention to transfer pricing. ### Reforms to taxes on international trade - Taxes on international trade as a share of GDP have steadily declined since 1997 due to regional economic integration. - Rwanda launched Revenue Authorities Digital Data Exchange (RADDEX) with regional peers to coordinate goods flow among EAC members. - Licensed industry import tax reduced to 5 percent from previous levels ranging from 15 percent to 30 percent. - After joining the Customs Union in 2009, Rwanda enacted policies to eliminate intra-region tariffs and establish common external tariffs. ### Challenges in revenue mobilization - VAT and CIT performance have not caught up with peers: - VAT C-efficiency ratio: 29 percent. - CIT Productivity: 5 percent. - VAT compliance problems persist despite EBMs (introduced in 2015) and lottery incentive schemes; compliance low due to lack of information and price penalties imposed for consumers requesting receipts. - Investment incentives have undermined CIT and VAT collection: - Rwanda Development Board (RDB) established in 2008; private investment rose from 4.5 percent of GDP in 2000 to roughly 15 percent in 2019. - Investment code (2011, revised 2015) introduced generous tax incentives (tax holidays or CIT reductions) for key sectors, large exporters, or large employers. - Evidence on effectiveness of tax incentives is limited; an International Growth Centre (IGC) study finds only 11 percent of associated tax expenditures went to firms whose investment decisions were likely affected by incentives, representing 3 percent of the total. - Estimated potential additional tax take: 1–3 percentage points of GDP (Steenbergen, von Uexkull, and Thum 2018; IMF 2018). - Recommendations from studies: - Make tax incentives more time-bound, transparent, and targeted. - Improve coordination between RDB and RRA to track whether firms benefit from incentives. - Develop a Medium-Term Revenue Strategy as a centralized process to resolve competing institutional interests (IMF technical assistance ongoing). ### Conclusion and policy implications - Rwanda has done well in raising tax revenues through institution building, technical assistance, and consistent reform implementation. - Additional tax potential exists through improved compliance and better-targeted investment incentives. - Rwanda faces structural constraints as a small, land-locked country with high energy and transport costs; balancing incentives and revenue is important. - Continued evaluation of costs and benefits of tax incentives, improved transparency, temporary nature of incentives, and close exchange of information between RRA and RDB are necessary. - MINECOFIN is developing a Medium-Term Revenue Strategy to serve as a roadmap for balancing competing interests and guiding revenue mobilization efforts. *Source: https://www.imf.org/-/media/files/publications/dp/2020/english/dplterea.pdf* ### Introduction ### Introduction ### Overview - Foreign aid (ODA) has been an important contributor to financing Rwanda’s development. - Research at the IMF on SSA low-income non-resource countries found that in a growth regression for the six fastest non-resource growing countries in SSA during 1999–2010, the aid ratio was highly significant and contributed ½ percent to per capita growth in Rwanda. - ODA inflows have already declined in real terms from 17 percent of GDP in FY2005/6 to less than 10 percent in FY2019/20. - ODA composition has been shifting away from grants toward loans, reflecting an IMF/World Bank joint assessment of debt sustainability as being at low risk. - In FY2012/13, development partners withdrew ODA temporarily, which adversely affected growth and underscored the importance of becoming less donor dependent. - A commodity price shock that suppressed mineral export receipts—accounting for about one-third of exports in 2014—nearly halved mineral export receipts in 2015, increasing pressure on international reserves. ### Implications of ODA trends - The downward trend in ODA creates a challenge for securing sufficient financing for strategic public investments and large import bills. - Additional financing combined with adjustment policies was needed to put fiscal and external sustainability on a firm footing after the export shock. ### Strategy: Transition to trade and investment - Government priorities include: - Bolstering domestic revenues (see Chapter 4). - Securing sustainable sources of external financing. - Addressing persistent external deficits. - Emphasizing export diversity, more domestic production to supplant imports, and attracting foreign investment. - Expanding the pool of domestic savings and investment to stimulate employment and growth and ensure self-reliant development financing. - Successive National Export Strategies (NES), developed by the Rwanda Development Board (RDB) and the Ministry for Trade and Commerce (MINICOM), aimed to "transform Rwanda into a globally competitive export economy." - NES II (2015) recommended: - Direct interventions in selected sectors with high export growth potential. - Measures to improve connecting Rwanda’s exports to high-potential markets. - Support to improve domestic firms’ capacity to compete in export markets. - Creation of an export financing facility. ### Strategic sectoral interventions - Special Economic Zones (SEZs): - SEZ law enacted in 2011 to address private sector constraints and provide reliable access to infrastructure and streamlined administration/customs procedures. - Kigali SEZ has helped strengthen industry and diversify exports, even without SEZ-specific tax incentives. - Caution: need to balance attraction of larger foreign firms with support for emergence of smaller domestic firms from the informal economy. - Existing sectors supported: - Coffee: A National Coffee Strategy (2002) increased the share of higher value-added coffee ("fully washed") from less than 1 percent in 2002 to 54 percent by 2017, supporting higher export values. - Mining: In 2017 the Rwanda Mines, Petroleum and Gas Board was established to better monitor and coordinate mining activities to raise recovery rates. ### Expanding domestic savings and financial sector development (Box 4) - Response to the ODA shock and financial depth limitations included: - Launch of the Agaciro Development Fund (AGDF) in 2012: - AGDF is a sovereign wealth fund financed by voluntary contributions from Rwandan citizens to "achieve self-reliance, maintain stability in times of national economic shocks and accelerate Rwanda’s socio-economic development goals." - AGDF invests domestically and internationally with a relatively conservative portfolio broadened in recent years to increase returns. - As of June 2018, the AGDF held RwF 50.7 billion (roughly US$60 million) in assets. - A 10-year financial sector development strategy launched in 2015 to: - Bolster domestic savings. - Increase access to broader financial services. - Move to a cashless economy. - Develop a domestic capital market. - Create skills for regional niche financial services. - Specific initiatives: - A government-sponsored long-term savings scheme (LTSS), launched in 2018, designed to provide pension benefits to roughly half of the population not covered by existing schemes and to bolster domestic savings; it is based on voluntary contributions with pension value linked to collective investment returns and offers, depending on income, a limited government matching contribution and life insurance. - Expanding access to financial services through financial technology and publicly sponsored risk-sharing schemes, particularly for the agricultural sector. - Promotion of a cashless economy: electronic transactions via mobile money have grown to about one-third of GDP in the past decade and digital financial services, such as consumer lending, are expanding rapidly. ### SEZ outcomes and implementation details - Kigali Industrial Park (2006) and Rwanda Free Trade Zone were merged into the Kigali Special Economic Zone (KSEZ) after EAC accession (2007) removed tax breaks for exports to neighboring EAC countries. - SEZ policy and regulatory framework supported by the 2011 SEZ law and the 2015 Investment Code offering tax incentives to investors in strategic sectors and exporters (incentives are not SEZ-specific). - KSEZ development: - Phase 1 (98 hectares) completed in 2013 and operating at full capacity with roughly 65 companies. - Phase 2 was under way and was nearly fully booked as of mid-2019, including Kigali Innovation City focusing on information and communications technology. - SEZs contain a mix of exporters and domestic producers; exporting firms contributed significantly to export diversification in textiles, processed foods, and light manufacturing. - Recent large investors assemble electric vehicles and mobile phones; new entrants have focused on construction materials. - Exporters have benefited from a nearby "dry port" providing storage, customs, and transportation facilities. - Based on Kigali’s success, several new SEZs are under development throughout Rwanda, including with private sector participation. *Source: dplterea - Introduction (dplterea - Introduction).* ### Box 5. Kigali Special Economic Zones ### Box 5. Kigali Special Economic Zones ### Made in Rwanda, industrial policy, and targeted interventions - Since 2015 the authorities have developed a Made in Rwanda policy building on a Domestic Market Recapturing Strategy (DMRS). - The MIR campaign has gradually expanded into a broad policy framework incentivizing the deepening of domestic supply chains and raising domestic product quality. - Targeted interventions focused on three priority sectors and several product markets: - Construction materials: investments in the part-publicly owned cement company (CIMERWA) to increase production and demand through MIR campaigns. - Light manufacturing: support for domestic clothing via higher tariffs on second-hand clothing, reduced VAT on fabric/textile inputs, and establishment of the Rwandan Center for Design and Clothing. - Agricultural development: reclamation of marshlands and organization of farmers into cooperatives to support rice production; land allocated to the existing sugar producer has doubled (albeit not all usable due to flooding); new foreign investors encouraged to enter the market. - Complementary policy measures linked to MIR: - Review of the EAC Common External Tariff to favor inputs and raw materials over finished goods. - Amendment of the Public Procurement Law to provide preference to domestically produced goods. - Reduction of industrial electricity tariffs. - Establishment of Community Processing Centers (CPCs) as sector-specific SME incubators. - Support for local food-processing firms to acquire international food quality standards. - Risks: fiscal costs or corruption; mitigations include careful selection, monitoring, and a zero-tolerance stance to corruption. Interventions in the energy sector have been identified as posing potential fiscal challenges for the government. ### Agricultural and horticultural export promotion - National Agricultural Export Development Board (NAEB) established in 2011 to develop exports of agricultural and livestock products and diversify commodity export revenues. - Example outcomes: - Gishali Flower Park created in 2016; the business exported about 20 million roses to Europe in 2018. - Avocado export support includes distribution of export-grade Haas avocado and mango seedlings and farmer education programs. - Stevia production supported through facilitation in seedling development. - Horticulture interventions are embedded within a national horticulture policy and strategic implementation plan. ### Services, tourism, and MICE strategy - Services prioritized as a driver of growth; RDB developed a Meetings, Incentives, Conferences and Events (MICE) strategy with World Bank support and established a dedicated Convention Bureau in 2014. - Public and private investments: - Completion of the US$300 million Kigali Convention Centre in 2016. - By end-2016 Kigali had 3,400 upper- and mid-range hotel rooms. - Outcomes: - Substantial growth in MICE business tourism; Rwanda ranked as the third most-popular destination in Africa for such events by 2016, an improvement of 10 places in just two years. - Tourism: foreign inflows since 1999 exceeded traditional exports; in 2015 total visits to national parks were 70 higher than 2008 levels. Tourism is the country’s largest foreign-exchange earner. - Marketing efforts include major deals with Arsenal Football Club and Paris St-Germain; recent efforts also sought to boost regional medical tourism. ### Improving access to markets and connectivity - Vision 2020 emphasized regional and international integration given a population of just 12 million and landlocked location. - Trade policy developments: - Removed export taxes in 1999. - Joined the East African Community (EAC) in 2007 and implemented the common external tariff (CET) in July 2009. - 98 non-tariff barriers (NTBs) were eliminated across the EAC between 2008 and 2016. - Rwanda was the first EAC member to adopt a national strategy for elimination of NTBs in 2011. - By 2020, Rwanda has the lowest burden of customs procedures in the EAC. - Transport and connectivity investments: - Expansion of the national airline with new planes servicing intra-African and long-haul routes (London, Brussels, Mumbai, Guangzhou); cargo revenues more than quadrupled between 2013 and 2017. - Qatar Airways acquiring a 49 percent stake in the company in early 2020 (noted as reducing fiscal exposure). - Construction commenced on a new international airport at Bugesera to alleviate capacity constraints at Kigali airport; plans advancing for a standard gauge railway link to Dar es Salaam. - Various road projects, including the Kivu Belt Road initiative, and a new large-scale inland cargo handling facility (dry-port) in Kigali improved internal infrastructure and reduced container turnaround and transport and storage costs. - Export finance: - Export Growth Fund (EGF) established in 2016 to ease export financing constraints, offering interest subsidies on investment loans, grants for market penetration and credit insurance guarantees; managed by the export department of the Development Bank of Rwanda (BRD). ### Competitiveness, institutions, and the role of RDB - Exchange rate and macro policy: - In 2015, the CPI-based real effective exchange rate appreciated by about 8 percent. - Since the start of 2016, the Rwandan franc has depreciated by about 15 percent against the US dollar, and by about 12 percent in real effective terms. - Institutional and regulatory improvements: - Rwanda improved from 158th place to 41st place in the World Bank Doing Business Report since 2007. - Rwanda’s rank in the World Economic Forum Global Competitiveness Index was 58 for 2017–18, an improvement of 22 places over the past 6 years. - Notable improvements in prevalence of trade barriers and transport infrastructure. - Days required to register a business reduced from 16 to 4 days. - Ranked 48th globally on Transparency International’s Corruption Perceptions Index and fourth in sub-Saharan Africa. - Rwanda Development Board (RDB): - Established in 2009 to eliminate inefficiencies, streamline bureaucracy, and support private sector development. - Consolidated elements of eight government agencies to provide a “one-stop shop” for investors and provide aftercare services. - RDB’s aftercare services have tentative evidence of positive relation to firm investment, employment and sales. ### Export outcomes and trade balance - Export performance: - Goods export growth averaged more than 20 percent per annum over the past 15 years. - Services export growth has been closer to 25 percent. - Diversification away from tea, coffee, and 3Ts (tin, tantalum, and tungsten) with an increasing number of products exported to an increasing number of product markets. - Within services, much of the increase in exports driven by growth in travel-related services. - Trade balance and current account: - Strong export growth combined with weaker import growth after completion of large projects supported a sharp narrowing in the trade deficit. - The current account deficit narrowed from 14.9 percent of GDP in 2016 to lower levels thereafter (trend documented in figures). *Box 5. Kigali Special Economic Zones* ### 6.8 percent in 2017 and have supported the faster than anticipated accumu- ### Gender Inclusion to Promote Growth ### Key findings and analysis - Greater gender inclusion in Rwanda has had a significant positive impact on economic growth: Rwanda’s real GDP per capita has grown on average 2.2 percentage more rapidly than the average EAC or sub-Saharan African country during 2005−14. - Cross-country empirical analysis suggests female legal equity and gender equality in opportunities and the labor market have contributed ½ percentage points to this growth differential—explaining almost one-fourth of why growth in Rwanda was ahead of its peers. - Gender inequality has declined rapidly over the past two decades as measured by the United Nations Gender Development Index and the United Nations Gender Inequality Index. - The World Economic Forum’s 2020 Gender Gap Index ranks Rwanda as the best performer in sub-Saharan Africa, and the ninth best performer globally. ### Gender outcomes and indicators - Female labor participation rates in Rwanda are virtually equal to that of men; the 2016/17 Integrated Household Living Conditions Survey reports the share of working females was even higher than that of males. - Sectoral distribution of female employment: - Most working women are in agriculture-related occupations, mostly as independent farmers, compared to about two-fifths of men. - Wage and income indicators: - Rwanda is closing the gender gap in wages and earnings but ranks less favorably in estimated earned income. - The female-to-male ratio among professional and technical workers is just above 6 in 10 (2020 Global Gender Gap Report). - Education: - In 2014, net enrollment of girls in primary school nearly equaled that of boys; in 2015, girls’ attendance exceeded that of boys at the primary and secondary level. - Female enrollment in Technical Vocational Education and Training (TVET) was nearly 42 percent in 2015—about 16 percentage points lower than male enrollment. - Only about four women are enrolled for each five men in postsecondary education. - Literacy rates among women were above 69 percent in 2015, up more than 20 percentage points from 2000 levels; male literacy was about 84 percent in 2016. - Youth literacy rates: more than 88 percent for females compared to just above 84 percent for males in 2016/17. - Health: - Maternal mortality reduced from more than 1,000 deaths per 100,000 births in 2000 to 210 in 2015. - Adolescent fertility (births per 1,000 women aged 15–19) fell from 49 in 2000 to 26 per-cent in 2015. ### Public interventions and institutional framework - Pillars supporting gender equality: Political Will and Leadership; Enabling Legal Framework; Proactive Public Policy; Supporting Institutions; Home-Grown Policies. - Institutional machinery: - Ministry of Gender and Family Promotion; Gender Monitoring Office; National Women Council; Forum for Women Parliamentarians operationalize gender policy and legislation and ensure implementation and accountability. - Programs and initiatives: - “He” for “She” initiative promoted by the president. - Ms. Geek competition and K-Lab to promote young female entrepreneurs in information technology. - Community health insurance (Mutuelle de Santé), community health workers (abajyanamab’ubuzima), kitchen gardens (akarima k’igikoni), community kitchens, and the Shisha Kibondo program to improve maternal and child health and nutrition. - Education policies: - Girls’ Education Policy, universal 12-year basic education, and TVET programs with gender-specific goals. - Rwanda is signatory to the 2017 Kigali Declaration targeting the closing of the gender gap in science and technology. ### Fiscal and social policy tools - Gender budgeting: - Implemented since 2002; first initiative led by the Ministry of Gender and Family Promotion with DFID support, integrated with the Medium-Term Expenditure Framework (MTEF). - Current process (launched in 2008) moved budgeting from “accounting” to “program budgeting”; ministries analyze major expenditures and develop budget statements with specific gender targets. - The 2010 National Gender Policy and the 2013 Organic Law on State Finances and Property institutionalized gender budgeting and mandatory Gender Budget Statements. - Success factors: MINECOFIN leadership, discretion for line ministries, annual reporting, and the Gender Monitoring Office for oversight. - Social protection: - Vision 2020 Umurenge Program and targeted transfer schemes identify poorer households; female-headed households are more likely to be poor (44 percent versus 37 percent) and more likely to be extremely poor (20 percent versus 15 percent). ### Risks, challenges, and policy implications - Sectoral concentration risk: - Policies have focused on producing goods and services around existing industries (tourism and agriculture) and moving up the quality ladder; it is unclear whether this will deliver the ambition of eradicating poverty and achieving high-income status within a generation. - Rwanda’s approach contrasts with the “moonshot” technological diversification seen in the Asian miracle. - Sustaining competitiveness and market access: - Progress in exchange rate flexibility and improving skill levels needs to be sustained; challenges may arise in maintaining a services-led development approach, requiring continued adaptation and monitoring of results. - Persistent gender gaps: - Female underrepresentation in non-farm wage sectors, professional and technical occupations, and lower presence in higher-value agricultural activities contribute to remaining gaps in estimated earned income. - TVET and postsecondary enrollment gaps: female TVET enrollment nearly 42 percent in 2015 and about four women enrolled for each five men in postsecondary education. *Source: dplterea - 6.8 percent in 2017 and have supported the faster than anticipated accumu-* ### Box 7. Gender Budgeting in Rwanda ### Box 7. Gender Budgeting in Rwanda ### Overview and key gender outcomes - In 2018, when the sub-Saharan African share of seats by women held in national parliaments was, on average, 24 percent, women held 61 percent of seats in Rwanda. - Women comprise more than 47 percent of ministerial positions. - In 2018, women accounted for 32 percent of Senators, 50 percent of judges and held more than 43 percent of city and district council seats. - Rwanda’s reforms have had a pronounced and sustained impact on economic growth through improved gender inclusion. ### Institutional framework for gender equality - The 2003 Constitution, as revised in 2015, enshrines gender equality and establishes 30 percent quotas for female representation in all decision-making structures. - Key institutions: - The Ministry for Gender and Family Promotion: central government institution for strategic coordination on gender, family, women’s empowerment, and children’s issues; promotes women’s economic and political empowerment including targeting girls’ education in science and technology and TVET, and increasing women’s access to finance. - The Gender Monitoring Office: mandated to monitor gender mainstreaming and gender-based violence trends; coordinates with the Rwanda National Institute of Statistics to increase gender-disaggregated statistics and thematic reports. - The National Women’s Council: represents women’s interests at all levels, disseminates information on laws/policies/programs, and builds capacity for gender advocacy; women’s representation at local government level rose to 43 percent, up from 24 percent before the 2006 election. - The Forum for Rwandan Women Parliamentarian: oversees and advocates enactment of gender-sensitive laws. - The National Gender Cluster: forum for government, development partners, private sector, and civil society to plan and prioritize gender policies. - Gender desks or gender focal points exist within central government entities; “gender and family promotion” officers operate at local government levels. ### Legal reforms and gender budgeting - Recent laws remove impediments to women’s access to physical assets and correct legally inscribed discrimination; they include provisions that: - Grant women equal access to own land and equalize inheritance rights. - Ensure equal pay and provide maternity leave. - Institutionalize gender budgeting (see Box 8 reference in source). - Selected legal changes (years as in source): - 2009: law to promote equal opportunities and equal pay and to prohibit sexual harassment in the workplace. - 2013: law leveling the playing field in land management and providing equal rights on land access, ownership and utilization; currently 26 percent of land is owned by women, 18 percent is owned by men, and 54 percent is owned jointly by spouses. - 2013: law prohibiting discrimination based on gender, sex, race, and religion in political parties. - 2013: gender responsive budgeting (law introduces accountability measures for gender sensitive resource allocation across sectors). - 2016: law granting equal inheritance rights within matrimonial regimes, donations within a family and successions. - 2016: maternity leave benefits allowing a mother to take 3 months fully paid maternity leave, up to one hour out of official working hours for a period of 12 months to spend time with her child, and four days additional leave for fathers during the wife’s maternity leave. ### Financial access, inclusion, and outcomes - Government targets and programs: - Financial Sector Development Strategy target: increase overall financial inclusion among the Rwandan population to 80 percent by 2017 (already achieved) and to 90 percent by 2020, with emphasis on women and youth. - Programs include the Women’s Guarantee Fund and Access to Finance Strategy for Women and Youth, which provide guarantees to increase women’s access to loans and microcredit. - Measured changes: - Between 2012 and 2016, gender-focused public interventions increased the share of women served by formal financial services by 27 percentage points. - Between 2012 and 2016, the share of women relying exclusively on informal mechanisms decreased by 25 percentage points (FinScope 2016). - About 39 percent of microfinance accounts are held by women. - Roughly equal share of men and women engage in saving, but men are much more likely to save using formal mechanisms. - About 60 percent of women rely on informal sources of borrowing. - While women constitute the majority share of agricultural workers, almost three-quarters of agricultural credit was extended to men in 2015. - Household land ownership (2016/17 household survey): - Land ownership by household head type: male-headed households 82 percent; female-headed households 80 percent. ### Composition of client accounts (Table 3, exact values preserved) - Banking: 2012 = 56.2; 2015 = 45.7; 2016 = 42.6 - Microfinance: 2012 = 43.8; 2015 = 54.3; 2016 = 57.4 - o/w Females: 2012 = 39.5; 2015 = 38.7; 2016 = 39.3 - Males: 2012 = 54.2; 2015 = 52.4; 2016 = 52.3 - Mix/Groups: 2012 = 6.3; 2015 = 8.9; 2016 = 8.4 - Source: BNR and IMF staff calculations. ### Outcomes, remaining gaps, and constraints - Gains: - Women are more likely to own property and provide loan collateral relative to neighboring countries (UN 2016). - A more equal distribution of property has advanced financial inclusion for women. - Remaining gaps and structural constraints: - Gender gaps remain across areas: women disproportionately represented in agriculture (lower value-added sector) and in lower value-added or unpaid activities. - Socioeconomic and cultural norms continue to shape women’s economic opportunities and endowment distribution. - Formal credit access remains constrained by historical limits on women’s ability to own land, though legal reforms have improved this. - Recent initiatives to collect sex-disaggregated financial data are underway to inform targeted policy design. ### Policy recommendations and opportunities to consolidate gains - Further enhance female labor force participation beyond agriculture by: - Advancing women’s access to quality health and education services. - Improving women’s access to technical and vocational training to increase participation in higher-value activities. - Close the gap in access to credit in the formal banking sector to support women’s entrepreneurship. - Ensure reforms in the formal institutional landscape are commensurate with informal institutional changes (legal, social, cultural) to enable women to exploit their full economic potential. - Maintain and strengthen gender-responsive budgeting and targeted financial inclusion programs. ### Financing implications for development and SDG achievement - NST-1 and financing: - The first National Strategy for Transformation (NST-1) estimated costs of roughly US$39 billion over 7 years. - Public share of costs is estimated to be 59 percent. - 41 percent of NST-1 costs are assumed to be covered by private investment, implying an increase to about 21 percent of GDP by FY23/24. - Domestic private investment rose from about 5 percent of GDP in 2000 to about 13 percent in 2018. - Private savings rate is currently below 10 percent of GDP. - IMF staff SDG costing and financing gaps: - IMF staff estimated that additional public spending needs for full SDG achievement could be as much as 20 percent of GDP by 2030. - A costing case study estimated additional annual public spending in 2030 of 19.6 percent of GDP to reach SDG outcomes comparable to highest performing peers. - Assuming grants stayed constant in percent of GDP through 2030 and domestic revenues increased by 4–5 percentage points of GDP, the remaining financing gap in 2030 could be about 7.5 percent of GDP. - Assuming the downward trend of ODA grants continues, the annual financing gap could be as high as 14 percent of GDP by 2030. - Assumption noted in source: gross external financing of 7 percent of GDP by 2030. - Government strategy to alleviate financing constraints: - Encourage external private investment via macroeconomic policies, special economic zones, Made in Rwanda campaign, and targeted marketing by the Rwandan Development Board. - Use ODA “de-risking” instruments to leverage more private resources without assuming further public balance sheet risk, changing the risk-return ratio to attract external investors. *Source: Box 7. Gender Budgeting in Rwanda, from the PDF content provided.* ### 1. Estimated Additional Spending Needs in Rwanda ### 1. Estimated Additional Spending Needs in Rwanda ### Key spending needs and totals - Health: 2.2 percent of 2030 GDP - Education: 7 percent of 2030 GDP - Road: 3.9 percent of 2030 GDP - Water: 4.5 percent of 2030 GDP - Electricity: 2 percent of 2030 GDP - Total: 19.6 percent of 2030 GDP ### Financing gap (Percent of 2030 GDP) - Financing Gap chart shows values spanning negative and positive ranges, with axis markers at –10, –5, 0, 5 (left panel) and 10, 15, 20, 25, 30, 35, 40, 45, 50, 55 (right panel). ### Domestic revenue and DRM potential - Rwanda 2018 Tax Revenues: 16.2% of GDP - Rwanda 2030 Tax Revenues: 18.2% of GDP - Additional DRM potential: 2% of GDP - Alternative figures shown: - Rwanda 2018 Tax Revenues: 16.2% of GDP - Rwanda 2030 Tax Revenues: 19.8% of GDP - Additional DRM potential: 3.6% of GDP ### Historical totals and changes (explicit figures in chart) - 2018 Total: 10.7% of GDP - 2030 Total: 3.9% of GDP - Change: –6.8% of GDP - Additional numeric entries visible: 7.6, 14.4, 5.0, 5.0, 14.6, 1.1, 13.5, 7.0, 5.0, –6.8, 7.0, 5.0 ### Notes on graphs and data sources - Charts and series sourced to: Rwandan authorities; staff calculations; OECD; Penn World Tables 9; IMF WEO database. --- ### 2. Grants and Concessional Loans; Domestic Revenue Mobilization Prospects ### Grants and concessional loans (Percent of GDP) - Visual series labeled "Rwanda: Grants and Concessional Loans, Net (Percent of GDP)" with vertical axis values from 0 to 16 and intermediate ticks at 2, 4, 6, 8, 10, 12, 14. - Accompanying indicators include "Tax revenues percent of GDP" and "Real GDP per capita" (graphical). ### Domestic Revenues (Percent of GDP) - "Rwanda: Domestic Revenues (Percent of GDP)" plotted with axis range 0 to 100,000 (real GDP per capita scale) and with month/year markers 2019, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30. - Scenario labels in Domestic Revenue Mobilization Prospects: - No change from last year - Trend continues - Aids scaled-up - Aid scaled-up & better targeted --- ### 3. Macroframe Present Value of Debt-to-GDP and Fiscal Implications ### Macroframe PV of Debt-to-GDP Ratio - Chart labeled "Macroframe PV of Debt-to-GDP Ratio (Percent)" presented as a panel but numeric series not tabulated in text. ### Implications - The Financing Gap and PV of Debt-to-GDP charts indicate tradeoffs between scaling up aid, targeting aid, domestic revenue mobilization, and debt sustainability considerations for financing the estimated spending needs. --- ### 4. Growth Targets, Historical Growth, and Long-Term Income Projections ### Historical and target growth rates - Rwanda’s growth rate has averaged 7.8 percent since 2000. - Targeted growth statements for Vision benchmarks: - Upper middle income by 2035 (USD 4,035 per capita) - High income by 2050 (USD 12,476 per capita) - Average growth of 9.1% over NST I - Average growth of 12% over 2025–35 - Average growth of >9% over 2036–50 - Figure 64 and Figure 65 indicate GDP per capita trajectories (Current prices, USD) comparing scenarios including "RWA Vision 2050", "RWA 7.5% real growth", and comparator countries (Maldives, China, Thailand, Indonesia, Mongolia). ### Projection implication - If growth could be sustained at an average of 7.8 percent (or higher per the targeted trajectories), Rwanda should, at a minimum, reach upper-middle-income status by 2050 according to the text. --- ### 5. Annex: Synthetic Control Methodology and Conflict Episodes ### Methodology summary - Approach follows and expands IMF April 2019 Regional Economic Outlook: Sub-Saharan Africa methodology, using IMF WEO data. - Constructs a synthetic, counterfactual “non-conflict” growth path by weighting comparator countries that resemble the conflict-affected country prior to conflict onset. - Comparator selection criteria: per capita GDP (PPP terms), trade openness, growth rates of trading partners in the year preceding the conflict, growth rates of the country in the four years preceding the conflict; comparator countries must be conflict-free for several years prior. - The synthetic control’s growth path begins to depart from the actual growth path in the first year of the conflict; the divergence is used to estimate cumulative output loss due to conflict. - The methodology does not account for geographical proximity, culture, or history; the future profile of control group countries is not considered. ### Findings on recovery patterns - Most conflict-affected countries do not recover cumulative output losses; per capita GDP often never reaches the synthetic country’s level. - Conflict-trap dynamics can deepen divergence from the synthetic path. ### Application in this paper - Synthetic control groups were re-constructed for eight countries in sub-Saharan Africa: Burundi, Democratic Republic of the Congo, Ethiopia, Guinea-Bissau, Liberia, Republic of Congo, Rwanda, and Sierra Leone. - Starting dates of conflict are specified in Annex Table 1; for Rwanda the conflict period is shown as four years (start year 1990) reflecting building tensions and preceding economic impacts. ### Annex Table 1. Conflict Episodes (Start Year and Event Description) - Rwanda: 1990 — Social tensions building in 1990, resulted in genocide in 1994. - Liberia: 1990 — Civil war which lasted till 1997. - Sierra Leone: 1991 — Civil war which lasted till 2002. - Burundi: 1993 — Civil war which lasted till 2005. - Democratic Republic of Congo: 1996 — First Congo War from 1996 to 1997, followed soon by the Second Congo War in 1998. - Republic of Congo: 1997 — Civil war which lasted till 1999. - Ethiopia: 1998 — Eritrean - Ethiopian War which lasted till 2000. - Eritrea: 1998 — Eritrean - Ethiopian War which lasted till 2000. - Guinea-Bissau: 1998 — Civil war which lasted till 1999. - Mali: 2012 — Northern Mali conflict, peace treaty signed in 2015. - Central African Republic: 2013 — Civil war, ongoing. --- *Source: dplterea - 1. Estimated Additional Spending Needs in Rwanda (excerpt).* ### References ### References ### Rwanda government documents - Republic of Rwanda. 2013. “Law N o 55/2013 OF 02/08/2013; On Minerals Tax.” Kilgali. - Republic of Rwanda. 2017. “National Strategy for Transformation, NSTP 1/2017−24”. Kilgali. - Rwanda Office of Accountant. General Annual Report 2015. Kigali. - World Bank Group and Government of Rwanda. 2008. “Rwanda: Joint Governance Assessment Report.” JGA report endorsed by Cabinet on December 9, 2008, Kigali. - World Bank Group and Government of Rwanda. 2019. Future Drivers of Growth in Rwanda: Innovation, Integration, Agglomeration, and Competition. 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Future Drivers of Growth in Rwanda: Innovation, Integration, Agglomeration, and Competition. Washington DC: The World Bank Group. ### Health sector and insurance references - World Health Organization (WHO). 2008. “Sharing the Burden of Sickness: Mutual Health Insurance in Rwanda.” Bulletin 86 (11): 823−24. - Sakabaraga, C., Soucat, A., Diop, F., and Martin, G. 2010. “Innovative Financing for Health in Rwanda: A Report of Successful Reforms.” World Bank, Washington, DC. *References (pages 97–99)* --- _Source: https://www.imf.org/-/media/files/publications/dp/2020/english/dplterea.pdf_