Rwanda Economic Update
Modernizing Agriculture to Accelerate Structural
Transformation in Rwanda
April 2025
© 2025. World Bank Group
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TABLE OF CONTENTS
Acronyms.......................................................................................................................................................................................................................... i
Acknowledgments ........................................................................................................................................................................................................ ii
Abstract ............................................................................................................................................................................................................................. iii
Executive Summary....................................................................................................................................................................................................... iv
PART I: RECENT ECONOMIC DEVELOPMENTS ................................................................................................................................................ 1
1.1. Global and regional context ............................................................................................................................................................ 1
1.2. Real sector developments ............................................................................................................................................................... 2
1.3. Labor market developments ........................................................................................................................................................... 4
1.4. External sector developments......................................................................................................................................................... 7
1.5. Inflation and monetary policy developments............................................................................................................................ 8
1.6. Fiscal developments and debt sustainability............................................................................................................................. 10
1.7. Rwanda’s economic outlook and risks........................................................................................................................................... 11
PART II: MODERNIZING AGRICULTURE TO ACCELERATE STRUCTURAL TRANSFORMATION ........................................... 16
2.1 State of agriculture in Rwanda ........................................................................................................................................................ 16
2.2 Key drivers of agricultural productivity and growth ............................................................................................................... 21
2.3 Current policy orientations and regional commitments........................................................................................................ 31
2.4 Recommendations .............................................................................................................................................................................. 35
References ........................................................................................................................................................................................................................ 38
Annex ................................................................................................................................................................................................................................. 39
LIST OF FIGURES
Figure 1.1: Rwanda’s GDP growth......................................................................................................................................................................... 3
Figure 1.2: Agriculture growth recovered after two years of contraction.............................................................................................. 4
Figure 1.3: Selected labor market indicators.................................................................................................................................................... 4
Figure 1.4: Sectoral employment ......................................................................................................................................................................... 4
Figure 1.5: Selected quarterly labor market indicators................................................................................................................................. 5
Figure 1.6: Headline inflation has moderated.................................................................................................................................................. 8
Figure 1.7: Changes in interest rates ................................................................................................................................................................... 9
Figure 1.8: Decomposition of public debt accumulation............................................................................................................................. 11
Figure 2.1: Rwandan export structure ................................................................................................................................................................ 17
Figure 2.2. Sectoral employment of labor force.............................................................................................................................................. 18
Figure 2.3: Educational attainment in Rwanda’s agricultural workforce compared to peers ......................................................... 18
Figure 2.4: Crop yields comparison with peers and best performing countries in Africa and Asia.............................................. 22
Figure 2.5: Value added per worker..................................................................................................................................................................... 23
Figure 2.6: Fertilizer consumption per hectare in 2021................................................................................................................................ 23
Figure 2.7: Inflation in Rwanda correlates with adverse weather events............................................................................................... 26
Figure 2.8: Household production sold across farm size ............................................................................................................................. 27
Figure 2.9: Government agriculture expenditure........................................................................................................................................... 32
LIST OF TABLES
Table 1.1: Global growth and commodity prices ........................................................................................................................................ 1
Table 1.2: Labor Market Indicators in Rwanda: 2019 Q4 to 2024 Q4 .................................................................................................... 5
Table 1.3: The structure of employment in Rwanda: Male and female................................................................................................ 6
Table 1.4: Balance of payments, 2022–24....................................................................................................................................................... 7
Table 1.5: Rwanda’s public finance, FY21/22-FY24/25 ............................................................................................................................... 10
Table 1.6: Tax policy: measures and timeline ................................................................................................................................................ 12
Table 2.1: Average annual growth rate of agricultural sub-sectors (%) .............................................................................................. 17
Table 2.2: Crop yields comparison with peers and best performing countries in Africa and Asia............................................. 22
Table 2.3: Discrepancies between men and women in the agricultural sector (percent)............................................................. 30
LIST OF BOXES
Box 1.1: Rwanda’s recently approved tax policy reforms....................................................................................................................... 12
Box 2.1: Agricultural mechanization status in Rwanda and potential policy options................................................................. 25
Box 2.2: Agricultural commercialization and land ownership in Rwanda ...................................................................................... 27
Box 2.3: Lessons from cold storage infrastructure development ....................................................................................................... 28
ACRONYMS
AfCFTA African Continental Free Trade Area
CAADP Comprehensive Africa Agriculture Development Programme
CBR Central Bank Rate
CDAT Commercialization and De-Risking for Agricultural Transformation
CEM Country Economic Memorandum
CIF Cost, insurance, and Freight
CPI Consumer Price Index
DFS Digital Financial Services
DRC Democratic Republic of Rwanda
DSA Debt Sustainability Analysis
EAC East African Community
EBM Electronic Billing Machine
EMDEs Emerging Market and Developing Economies
FDI Foreign Direct Investment
FY Fiscal Year
GDP Gross Domestic Product
IMF International Monetary Funds
MICE Meetings, Incentives, Conferences and Exhibitions
MINAGRI Ministry of Agriculture
MINECOFIN Ministry of Finance and Economic Planning
MPC Monetary Policy Committee
MVD Marburg Virus Disease
NAEB National Agricultural Export Development Board
NAIS National Agricultural Insurance Scheme
NISR National Institute of Statistics of Rwanda
NPL Non-performing Loan
NST National Strategy for Transformation
PSTA Strategic Plan for Agriculture Transformation
R&D Research and Development
RAB Rwanda Agriculture Board
REU Rwanda Economic Update
RICA Rwanda Institute for Conservation Agriculture
Rwf Rwandan Franc
SAIP Sustainable Intensification and Food Security Project
SMEs Small and Medium-sized Enterprises
SNS Smart Nkunganire System
SSA Sub-Saharan Africa
SSIT Small-Scale Irrigation Technology
US$ United States Dollar
VAT Value Added Tax
Rwanda Economic Update • Edition No. 24 i
ACKNOWLEDGMENTS
The Rwanda Economic Update (REU) is a semiannual publication of the World Bank aimed at informing
a non-technical audience about, and broadening participation in, mainstream policy discussions. The
Update is widely cited by the media, academia, international partners and other stakeholders and therefore
plays a crucial role in shaping public discourse on economic and policy issues. Part 1 of each issue provides
an update on recent economic developments and changes to the outlook, while Part 2 has a thematic
focus and summarizes policy-relevant findings from recent World Bank analysis. The special topic for the
24th of REU is “Modernizing agriculture to accelerate the structural transformation”. The current edition, led
by Calvin Zebaze Djiofack and Peace Aimee Niyibizi, is a collective endeavor and involved staff from several
parts of the World Bank. The team includes Esdras Byiringiro, Asa Giertz, Vera Kehayova, Erwin R. Tiongson,
Migle Petrauskaite and Kaushiki Singh. The team is grateful to William G. Battaile (Lead Country Economist)
for invaluable inputs on the structure and messaging of the report.
The team also benefited from invaluable support and inputs from Abha Prasad (Practice Manager, EAEM1)
and Izabela Leao (Acting Practice Manager, SAEA2) who supervised the preparation of different aspects of
the report. Sahr Kpundeh (Country Manager, Rwanda) and Qimiao Fan (Country Director for Kenya, Rwanda,
Uganda, and Somalia) provided overall guidance.
The team is grateful to Kene Ezemenari (Senior Economist, OPSCE), Irina Schuman (Lead Agriculture
Economist, SCAAG) and Joshua Gill (Senior Economist, SAGGL) for their comments and advice on earlier
drafts. The team benefited from inputs and support provided by Alice Umuhoza, Lydie Ahodehou A., Karima
Laouali Ladjo, Denyse Umuhuza, Juliette Karitanyi, and Robert Waiharo.
The REU team is grateful to the Ministry of Finance and Economic Planning (MINECOFIN), the National
Statistics Institute of Rwanda (NISR), the National Bank of Rwanda (BNR), and Ministry of Agriculture
(MINAGRI) for providing the data, which made this work possible, and for their insights and comments.
Views expressed in the REU are those of the authors and do not necessarily reflect the views of the
World Bank Group, its Executive Directors, the countries they represent, or the Government of Rwanda.
ii Rwanda Economic Update • Edition No. 24
ABSTRACT
Rwanda’s economy remained resilient in 2024, with GDP growth reaching 8.9 percent, driven by strong
performances in services, industry, and a rebound in agriculture. Despite strong export growth, the current
account deficit widened due to decline in official transfers. This necessitated continued reliance on forex inflows
from FDI and external concessional borrowing. Inflation moderated, averaging 4.8 percent in 2024, due to lower
food prices and tight monetary policy, allowing the central bank to ease interest rates by reducing the Central
Bank Rate (CBR) from 7.5 percent to 6.5 percent in 2024. The fiscal position improved with higher tax collections
supporting fiscal consolidation, though public debt is projected to peak at 80 percent of GDP in 2025, despite
reduced borrowing needs, before gradually declining, driven by past deficits and exchange rate depreciation.
Rwanda’s agriculture sector remains a cornerstone of the economy, employing 43 percent of the workforce
and contributing 27 percent to GDP. Despite diversification beyond traditional cash crops like coffee and tea,
agricultural productivity remains constrained by land fragmentation, limited mechanization, post-harvest
losses, and climate change impacts. While agricultural exports account for 37 percent of total export revenues,
trade remains vulnerable to price fluctuations, and regional market integration is underdeveloped. The sector
has much more potential to deliver higher growth, better jobs and boost forex earnings. Part 2 of this report
focuses on how to unlock this potential. It examines key drivers of agricultural productivity, including input
use, irrigation expansion, mechanization, and digital innovation, while evaluating persistent challenges
such as limited access to finance, weak extension services, and climate vulnerability. It assesses policy efforts
under the Fifth Strategic Plan for Agriculture Transformation (PSTA5), which aims to modernize production,
enhance market access, and transition toward a more private sector-driven model. Key recommendations
include strengthening seed systems, expanding irrigation, investing in agro-logistics, improving financial
access, and implementing regulatory reforms to attract private investment. By addressing these structural
bottlenecks and aligning policies with regional and global trade opportunities in the East African Community
(EAC) and the African Continental Free Trade Area (AfCFTA), Rwanda can build a resilient, competitive, and
sustainable agri-food sector that supports economic transformation and food security.
Rwanda Economic Update • Edition No. 24 iii
EXECUTIVE SUMMARY
Rwanda’s economy demonstrated resilience in 2024, Rwanda’s strong economic growth has not yet
maintaining strong growth despite lingering global translated into sufficient improvements in job
uncertainties from geopolitical tensions and tighter quality, particularly in rural areas where agriculture
financial conditions, as well as domestic challenges remains the dominant employer. Most jobs in
arising from the mpox and Marburg outbreaks. Real agriculture remain informal, seasonal, and low-paying,
GDP is estimated to have expanded by 8.9 percent, constraining income growth and poverty reduction.
driven by robust private consumption, investment, The services sector surpassed agriculture as the
and strong performances in services, industry, and largest employer in 2024, accounting for 43 percent
a recovering agriculture sector. The services sector of jobs, while agriculture’s share declined to 40.0
remained the primary driver of growth, contributing percent. Despite this shift, many workers in agriculture
over half of GDP expansion, particularly in ICT, trade, are unable to transition into higher-paying jobs due
transport, and hospitality. Industrial growth was to low education levels, weak value chain integration,
supported by construction, manufacturing, and and limited access to financial and technical resources.
mining, while agriculture rebounded after two years Mechanization, irrigation, and expanded agribusiness
of weak performance, expanding by 5.3 percent training will be critical to improving rural incomes and
in 2024, driven by improved weather conditions supporting labor reallocation into more productive
and expanded cultivated land. Inflation declined sectors. Without targeted interventions, structural
significantly, averaging 4.8 percent in 2024, down transformation will remain slow, and agriculture will
from double-digit levels in the previous two years, continue to underutilize labor, reinforcing the cycle of
largely due to lower food prices and reduced global underemployment and low wages.
inflationary pressures. This allowed the central bank to
ease monetary policy and lower the policy rate by 100 Looking ahead, Rwanda’s growth is projected to
basis points to 6.5 percent in August 2024, supporting average 7.1 percent over 2025–27, supported by
credit growth and economic activity. continued expansion in services and industry, along
with stable agricultural growth driven by productivity
Despite these positive trends, Rwanda’s external improvements and greater market integration,
position remains a key vulnerability. The current rather than reliance on subsidies. Inflation is expected
account deficit widened to 12.7 percent of GDP due to to stabilize within the central bank’s 5 percent target,
a decline in current transfers. While exports grew by while fiscal consolidation measures, including tax
21.7 percent, this was outpaced by import growth, base expansion and spending rationalization, will help
keeping the trade deficit high. Foreign direct contain the deficit near 5 percent and reduce debt
investment (FDI) inflows increased by 28 percent, vulnerabilities. The current account deficit is forecast
and concessional borrowing helped finance the to remain elevated as investment needs persist,
external deficit, though foreign reserves declined though FDI and concessional financing should help
slightly. Rwanda’s fiscal position improved, with cover external financing requirements. However, risks
higher tax revenues and steady expenditures remain, including external shocks from geopolitical
reducing the fiscal deficit to 4.8 percent of GDP in tensions, limited access to concessional financing,
the first quarter of FY2024/25. However, public debt and climate-related disruptions to agriculture.
is projected to peak at 80 percent of GDP in 2025 Strengthening domestic resource mobilization,
before gradually declining, reflecting the impact of enhancing external competitiveness, and improving
past deficits and exchange rate depreciation, even as economic resilience will be crucial for sustaining
borrowing needs decline. Rwanda’s growth trajectory in the medium term.
iv Rwanda Economic Update • Edition No. 24
Executive Summary
Rwanda’s agriculture sector is fundamental to Job quality and productivity in agriculture remain
the country’s economy, employing 43 percent low. The sector employs around 40 percent of the
of the workforce and contributing 27 percent to workforce, yet 65 percent of agricultural workers
GDP, with the potential for increased productivity, have little to no formal education, limiting
higher-value exports, and greater rural job productivity and wage growth. Mechanization is
creation through modernization and private particularly underdeveloped—only 0.8 percent
sector investment. Agricultural production remains of plots are plowed by tractors, and agricultural
dominated by smallholder farmers, with food crops, labor productivity lags behind regional and
cash crops, and livestock forming the backbone global benchmarks. While fertilizer use and
of the sector. Over the past decade, agricultural irrigation expansion have improved, adoption
income has grown significantly, reaching US$419 rates remain too low to drive sustained
million, while production has diversified beyond productivity gains. The Government has invested
traditional cash crops like coffee and tea to include in irrigation through the Small-Scale Irrigation
high-value commodities such as macadamia, fruits, Technology (SSIT ) program, but significant gaps
and vegetables. However, agriculture remains remain, with only 6 percent of cultivated land
characterized by low productivity and limited under irrigation. Modernizing agriculture is not
mechanization, holding back broader structural just about increasing output; it is about improving
transformation. While agriculture contributes 37 rural incomes, raising wages, and enabling labor
percent of Rwanda’s export revenues, trade remains to transition into more productive sectors of
vulnerable to global price fluctuations, and regional the economy. Expanding agribusiness training,
market integration is still underdeveloped. Expanding digital agriculture solutions, and private sector
regional trade through the East African Community participation in irrigation and mechanization
(EAC) and the African Continental Free Trade Area will be critical for improving rural incomes and
(AfCFTA), increasing value addition, and modernizing enhancing agricultural resilience.
production systems will be critical to sustaining
agricultural transformation.
Rwanda Economic Update • Edition No. 24 v
Executive Summary
Despite strong policy support, the sector faces to private investment in agro-processing and
persistent structural constraints, including limited export logistics are essential for strengthening
access to finance, weak market linkages, and high Rwanda’s agricultural trade. Additionally, regulatory
vulnerability to climate shocks. Agricultural finance inefficiencies—such as lengthy approval processes for
remains one of the most underdeveloped areas, with new agricultural inputs—continue to hinder private
credit to the sector accounting for only 6 percent of sector engagement. Addressing these bottlenecks
total lending in 2024. High non-performing loan through streamlined regulations and trade
(NPL) ratios have made agriculture a riskier sector facilitation reforms will be key to unlocking Rwanda’s
for lenders, leading to limited credit availability and export potential.
high borrowing costs. Without stronger risk-sharing
mechanisms or productivity improvements that The Fifth Strategic Plan for Agriculture
enhance expected returns, financing constraints will Transformation (PSTA5) provides a comprehensive
persist, reinforcing the cycle of underinvestment roadmap for addressing these challenges. Its
in agriculture. The Government has implemented priority areas include modernizing production,
de-risking mechanisms such as the National strengthening market linkages, and creating an
Agricultural Insurance Scheme (NAIS) and partial enabling environment for private sector growth.
credit guarantees, but uptake remains low, with only Achieving these objectives requires shifting from a
4 percent of farmers covered by crop insurance1. state-led model to a private sector-driven approach,
Spending on agricultural research and development with a focus on increasing commercial credit to
(R&D) remains limited at just 0.06 percent of agriculture, expanding irrigation investments,
agricultural GDP2, significantly below the global and strengthening regulatory frameworks. Policy
averages of 0.34 percent for low-income countries and implementation should prioritize efficiency in public
0.24 percent for middle-income countries. Enhancing expenditure, ensuring that subsidies and grants do
financial services, developing private sector-led not crowd out private investment. The Government’s
extension models, and strengthening research commitment to regional integration under the EAC
institutions will be essential for improving productivity and AfCFTA presents opportunities to expand markets,
and long-term sectoral growth. particularly for high-value crops and processed
agricultural goods.
Trade and market access challenges further limit
agricultural competitiveness. While agricultural To sustain Rwanda’s agricultural transformation
exports reached US$599 million in 2022, intra- and enhance its contribution to economic growth,
African trade remains low, and key export crops a set of targeted policy actions is required,
such as maize and rice face challenges due to aimed to modernize agricultural production,
high production costs and price distortions from strengthen value chains, improve market
government-set minimum prices. Rwanda has access, and foster private sector investment. In
invested in agro-logistics, including cold chain the near term, modernizing the seed sector is a
infrastructure and post-harvest handling facilities, key priority. Establishing a value chain-oriented,
but gaps remain in transport, storage, and market market-driven research system will enhance private
access. Expanding certification programs, improving sector participation in seed multiplication and
farmgate price mechanisms, and reducing barriers facilitate international seed variety exchanges.
While research has improved self-sufficiency for
1
RAB.2024. CDAT progress report – implementation of the agriculture some crops, regulatory barriers to germplasm
insurance scheme.
exchange and seed registration must be addressed
2
Team calculations based on numbers from Backward-Looking
Agriculture Joint Sector Review Report (2023). to accelerate progress. Strengthening private sector
vi Rwanda Economic Update • Edition No. 24
Executive Summary
engagement will ensure sustainable seed system Expanding credit lines and partial credit guarantees
development and improve access to high-yielding, tailored to irrigation financing will incentivize private
climate-resilient varieties. investment. Simultaneously, improving post-harvest
handling and cold chain infrastructure will reduce
Strengthening value chains will be essential for losses and enhance market access. In the near term,
long-term agricultural transformation. Farmer investments should focus on improving existing
organizations need greater support to enhance storage and distribution networks, while in the
access to markets, inputs, and extension services. longer term, public-private partnerships should drive
The government should scale up the integration of investment in refrigerated transport, modern storage
“Farming as a Business” principles into extension units, and market linkages. Strengthening domestic
programs, linking farmers to off-takers and private food safety standards and aligning them with regional
advisory services. While customized extension export requirements will further improve Rwanda’s
services have shown early success, sustained trade competitiveness.
funding is necessary for scaling up. Policies should
encourage specialization in high-value crops where Regulatory reforms and agricultural finance will be
Rwanda has a comparative advantage. Lessons from essential for sustaining long-term sectoral growth
the Sustainable Intensification and Food Security and attracting investment. Fast-tracking agricultural
Project (SAIP) show that structured value chains input approvals, harmonizing regulations with the EAC,
drive investment in productivity-enhancing inputs. and finalizing the agrochemical law will create a more
Additionally, the government should facilitate business-friendly environment. Over time, gradually
private sector financing models, ensuring that reducing input subsidies while providing targeted
matching grants complement rather than crowd support for vulnerable farmers will improve supply
out commercial lending. Strengthening institutions efficiency and encourage private sector participation.
like NAEB to better support value chains and private Expanding concessional credit lines, digital financial
sector development will also be key. services, and risk-sharing mechanisms will enhance
smallholder access to finance. Strengthening
Expanding irrigation and agro-logistics could help regional trade integration under the EAC and AfCFTA,
solidify productivity gains, climate resilience and facilitating aggregation models, and supporting
food security. The Small-Scale Irrigation Technology business development services will boost Rwanda’s
(SSIT) program should evolve beyond emergency export competitiveness. By addressing these structural
drought response to become a core component of bottlenecks and strengthening institutional capacity,
commercial farming. While irrigation investments Rwanda can build a more resilient, competitive, and
have been linked to yield and profit increases of up to sustainable agri-food sector that drives economic
70 percent, adoption remains low without subsidies. growth, job creation, and food security.
Rwanda Economic Update • Edition No. 24 vii
PART ONE
RECENT ECONOMIC DEVELOPMENTS
AND OUTLOOK
viii Rwanda Economic Update • Edition No. 24
Recent Economic Developments
1.1. Global and regional context3 in oil prices last year reflected ample potential oil
The global economy is stabilizing, with inflation supply amid decelerating global oil consumption.
easing and growth projected at 2.7 percent annually A significant further decrease in oil prices is expected
over 2025–26. Commodity prices, including oil and in 2025–26 as production expands while global
food, declined in 2024 and are expected to soften oil demand growth remains modest. Base metals
further. Sub-Saharan Africa’s (SSA) growth rose to 3.2 prices are set to stabilize over the forecast horizon,
percent in 2024 but remained below expectations due mirroring steady global growth. Meanwhile, prices
to conflict and country-specific challenges. Recovery is for staple food crops, having fallen notably in 2024,
expected to strengthen, though fiscal constraints and are expected to post a small further decline.
risks from geopolitical tensions, trade disruptions, and
climate shocks pose ongoing threats. Growth in SSA picked up from 2.9 percent in 2023
to an estimated 3.2 percent in 2024. This was 0.3
The global economic context has become percentage point lower than projected in June
modestly more favorable since mid-year 2024, reflecting the ongoing violent conflict in
2024, following several years characterized by Sudan as well as various country-specific challenges
overlapping negative shocks. Global growth is that weighed on the region’s economic recovery last
stabilizing as inflation returns closer to targets year. Consumer price inflation diverged across the
and monetary easing supports activity in both region, with the majority of countries experiencing
advanced economies and emerging market and moderate and declining price increases, while
developing economies (EMDEs). This should give food price inflation remained relatively high.
rise to a broad-based, moderate global expansion However, sharp price rises persisted in some larger
over 2025–26, at 2.7 percent per year, as trade and economies—partly reflecting significant currency
investment firm. However, growth prospects appear depreciations. In countries where inflation has
insufficient to offset the damage done to the global declined, many central banks eased monetary policy
economy by several years of successive negative rates; however, policy rates were hiked in other
shocks, with particularly detrimental outcomes in cases. Food insecurity remained elevated across the
the most vulnerable countries (Table 1.1). region, partly because of adverse weather events,
such as droughts in Southern Africa and floods
Aggregate commodity prices softened by elsewhere. Violent conflict exacerbated hunger
about 3 percent in 2024, primarily reflecting vulnerability, particularly in East Africa.
improving supply conditions for energy and food
commodities, despite heightened geopolitical Growth in SSA is forecast to pick up in 2025–26
tensions. Commodity prices are projected to ease as industrial commodity exporting economies
further over the forecast horizon. A small decline recover, while non-resource rich countries are
Table 1.1: Global growth and commodity prices
2022 2023e 2024f 2025f 2026f
Real GDP growth (percent changes)
World 3.2 2.7 2.7 2.7 2.7
Advanced economies 2.8 1.7 1.7 1.7 1.8
EDMEs 3.7 4.2 4.1 4.1 4.0
Sub-Saharan Africa 3.8 2.9 3.2 4.1 4.3
Source: Global Economic Prospects (Jan. 2025); upcoming Macro Poverty Outlook (2025), respective EAC countries economic updates and Commodity Markets Outlook
(October 2024).
This section draws on the World Bank Global Economic Prospects
3
January 2025 edition.
Rwanda Economic Update • Edition No. 24 1
Recent Economic Developments
expected to expand above their long-term trend. Services continued to be the main growth driver,
Primary fiscal balances are expected to improve expanding by 10.3 percent and contributing over half
amid continued fiscal consolidation efforts and of GDP growth, with strong performances in ICT, trade,
higher growth. Improvements in income per capita transport, and hospitality. Industrial activity also
will remain unevenly distributed with modest grew steadily, supported by mining, manufacturing,
increases for most LICs. Against the backdrop of and construction. After two weak years, agriculture
decreasing inflation, a gradual easing of policy rebounded with 6.4 percent growth, driven by
interest rates should bolster private consumption increased food production and livestock output. On
and investment in many SSA economies during the demand side, private consumption grew by 4.2
the forecast horizon. At the same time, limited percent, investment growth accelerated, and net
fiscal space, resulting from high debt levels and exports contributed positively on GDP growth too.
increased borrowing costs, will continue to weigh
on government spending across the region. Fiscal Rwanda’s GDP growth remained strong in 2024
balances are expected to continue to improve, despite health emergencies encountered in the
though at a moderating pace. Primary fiscal deficits year. In the second half of the year, Rwanda declared
are, on average, forecast to close over the forecast two outbreaks of mpox and Marburg Virus Disease
period, with declining deficits in non-resource rich (MVD) on 24 July, 2024 and September 27, 2024,
countries and increasing surpluses in commodity- respectively. The health emergency command
exporting countries. post was quickly activated, the rapid response
team was deployed, and a mechanism for resource
Risks to the outlook are tilted to the downside. mobilization and partner coordination was
Global growth could be weaker than projected on established. These efforts yielded positive results
account of heightened uncertainty and the potential in just a very short period. The MVD outbreak was
for adverse changes in trade policies. Further declared over on December 20, 2024.4 In total,
downside risks include a sharper-than expected the country reported 66 confirmed cases, and
economic slowdown in China; escalating global 15 deaths, representing a case fatality ratio of 23
geopolitical tensions, especially an intensification percent.5 This is the lowest rate ever recorded in all
of the conflict in the Middle East; and worsening the outbreaks reported on the African continent,
political instability and an escalation of violent followed by South Africa (33 percent, 1975), and
conflicts in the region, especially in East Africa and Uganda (56 percent in four outbreaks). Despite
the Sahel. Furthermore, more persistent inflation these challenges, Rwanda’s economic growth
than expected could keep global interest rates remained strong, with 8.9 percent in 2024, after
elevated, compounding the challenges confronting averaging 8.2 percent in 2022–2023 (Figure 1.1A). In
highly indebted countries, while greater frequency 2024, economic growth is estimated to have reached
and intensity of adverse weather events could more than 8.5 percent. This growth performance
exacerbate poverty in many countries across SSA. was accompanied by improvements in labor market
and a rapid deceleration in food prices, as well as
1.2. Real sector developments continued strong expansion in investment.
Rwanda’s economy remained resilient in 2024,
4
WHO. Marburg outbreak in Rwanda declared over. https://www.
achieving an 8.9 percent growth despite health afro.who.int/countries/rwanda/news/marburg-outbreak-rwanda-
emergencies, including mpox and Marburg Virus declared-over
5
WHO. Disease Outbreak News. Marburg virus disease – Rwanda. https://
Disease outbreaks, which were swiftly contained. www.who.int/emergencies/disease-outbreak-news/item/2024-DON543
2 Rwanda Economic Update • Edition No. 24
Recent Economic Developments
Rwanda’s strong economic growth was driven agriculture, boosted food production in 2024,
by robust investment as well as households increasing the sector’s contribution to overall GDP
spending. Private consumption expanded by 4.2 growth. After growing by less than two percent
percent in 2024, supported by improvement in labor for two consecutive years—in 2022 and 2023—
market condition as well as inflation deceleration. agricultural output increased by 5.3 percent in
Meanwhile, public consumption grew at 14.8 2024, primarily due to a strong performance
percent. Investment recorded a strong growth in food production (7.5 percent) and livestock
rate—16.0 percent in 2024 compared to -0.2 (7.4 percent; Figure 1.2A). Food production,
percent in 2023—fueled by strong construction representing about 60 percent of the agricultural
activities. Net exports also contributed positively output, saw its volume increasing by 5.4 percent
to the overall GDP growth, as import growth in 2024 after two years of contraction. In volumes,
remained strong. the main drivers of the increase were maize (23.3
percent), sweet potatoes (6.5 percent), and beans
On the supply side, growth in services continues (7.5 percent), which accounted for about a third
to be strong in 2024, driving overall GDP of total food production (Figure 1.2B). Rwanda’s
growth. Services have been the biggest driver of output of export crops reported a health growth of
growth over the last four years, in line with pre- 6.8 percent in 2024.
crisis trends (Figure 1.1B). In 2024, the services
sector expanded by 10.3 percent, contributing Despite growth vulnerabilities, the agriculture
significantly (approximately 5.2 ppts or about 59 sector remains the backbone of the Rwandan
percent) to the overall GDP growth of 8.9 percent. economy in terms of contributions to national
This strong performance was mainly driven by four gross domestic product (GDP) and employment
sub-sectors—information and technology, trade, and income generation for the majority of
transport and hospitality—that generated about 60 households. Agriculture contributed 25.2 percent
percent of the overall services growth and about 35 to national GDP during the 2015–23 period, despite
percent of the overall GDP growth. Industrial growth contributing moderately to Rwanda’s economic
also remained solid, benefitting from a broad-based growth (1.0 percentage point during the same
expansion in quarry and mining, manufacturing period). In 2024, the sector was the second largest
and construction activities. contributor to total employment in the country
(about 40 percent of 8.3 million total employment).
Growth in agriculture bounced back after two The role of the agriculture sector in the Rwandan
consecutive years of weak performance. Favorable economy and its recent trends are further developed
weather, together with the use of all idle lands for in the second part of this economic update.
Figure 1.1: Rwanda’s GDP growth
A. GDP demand components (Percent y/y; percentage points, constant prices) B. GDP sectoral decomposition (Percent y/y; percentage points, constant prices)
20 12
10
10 8
6
4
0
2
0
-10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -2
2022 2023 2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2022 2023 2024
Government consumption Private consumption GDP growth
Gross capital formation Net exports Agriculture Industry Services Net taxes GDP growth
Source: WBG staff computation based on NISR database Source: WBG staff computation based on NISR database
Rwanda Economic Update • Edition No. 24 3
Recent Economic Developments
Figure 1.2: Agriculture growth recovered after two years of contraction
A. Growth in GDP food production, % B. Changes in main drivers of food production (annual change in 2024, %)
6.7 Maize 23.3
6.4
Beans 7.5
Sweet
6.5
Potatoes
Banana 5.6
0.4 0.0
Cassava -3.3
-0.9 Irish
-4.4
2020 2021 2022 2023 3Qs-2024 Potatoes
Source: WBG staff computation based on NISR database Source: WBG staff computation based on NISR database
1.3. Labor market developments As Rwanda experienced rapid economic growth in
Rwanda’s labor market improved in 2024, with 2024, the labor market created over a half million
unemployment declining to 14.9 percent and new jobs on a year-on-year basis (Table 1.2). During
labor force participation rising to 62.3 percent, this period, the working-age population and the
though gender and urban-rural disparities labor force increased by 230 thousand and 470
persist. Services overtook agriculture as the largest thousand workers, respectively, as employment
employer, accounting for 43 percent of jobs, driven increased by 510 thousand, led by wholesale and
by trade, transport, hospitality, and education, while retail trade, transport and storage, construction and
agriculture’s share fell to 39.9 percent. manufacturing (Table 2). This substantial increase in
jobs led to a nearly 5-percentage point improvement
In 2024, Rwanda’s labor market demonstrated in the employment to population ratio and a
a strong improvement, marked by a reduction 2-percentage point fall in the unemployment
in overall unemployment, and an increase in rate. Combined with comparable gains in 2023,
labor force participation, though gaps remain.6 this means that in the post-pandemic period and
since the end of 2022, the labor market of Rwanda
Figure 1.3: Selected labor market indicators
Percent has created over a million jobs, equivalent to a
62.3
10-percentage point increase in employment.
53.4 52.8 Figure 1.4: Sectoral employment
45.2 Percent
39.1 35.1 35.9 39.8
43.6 42.9
15.2 15.3
17.2 17.3
20.5 16.7
18.7 17.2
LFP rate Employment Unemployment
rate rate
2019 2020 2021 2022 2023 2024 47.7 46.8 43.4
37.7 40.4 39.9
Source: Rwanda Labor Force Surveys, various issues
2019 2020 2021 2022 2023 2024
6
In 2023, the sampling frame switched from the 2012 population Agriculture, forestry and shing Manufacturing Services
census to the 2022 census, with a much larger sample and weights in
urban areas. In addition and to reflect changes in population size and Source: Rwanda Labor Force Surveys, various issues.
density since 2012, the 2022 census reclassified some rural areas as
urban. These changes affected the comparability of estimates for 2023
with previous years.
4 Rwanda Economic Update • Edition No. 24
Recent Economic Developments
Table 1.2: Labor Market Indicators in Rwanda: 2019 Q4 to 2024 Q4
2019 2020 2021 2022 2023 2024
Q4 Q4 Q4 Q4 Q4 Q4
Working age population (16+ years) 7,320,999 7,563,918 7,812,993 8,043,091 8,163,246 8,393,124
Labour force 4,025,992 4,277,113 4,768,769 4,718,838 4,900,206 5,374,510
Employed 3,405,877 3,407,789 3,633,132 3,571,236 4,074,629 4,585,316
Unemployed 620,115 869,324 1,135,637 1,147,601 825,577 789,194
Labour force participation rate (%) 55.0 56.5 61.0 58.7 60.0 64.0
Employment-to-population ratio (%) 46.5 45.1 46.5 44.4 49.9 54.6
LU1-Unemployment rate (%) 15.4 20.3 23.8 24.3 16.8 14.7
Source: National Institute of Statistics of Rwanda (NISR), Labour Force Survey
This strong employment growth has been widely unemployment rates fell across the board, female
shared, benefiting both women and men alike, and rural unemployment rates decreased slightly
in urban and rural areas (Figure 1). The jobs more sharply, by 2.7 and 2.5 percentage points,
created the past year were more or less evenly split respectively.
between men and women (Table 2). As a result,
between the last quarters of 2023 and 2024, male Employment growth in Rwanda reflects not just
and female employment rates increased to 63.1 and strong job creation, but a recovery of its structural
47.1 percent while urban and rural employment transformation, as the services sector regained its
rates grew to 61.6 and 51.6, respectively. And while position as the largest employer in 2024, a status
Figure 1.5: Selected quarterly labor market indicators
Employment to population ratio (Percent) Unemployment rate (Percent)
70 25
60
20
50
15
40
30 10
20
5
10
0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2023 2024 2023 2024
Male Female Male Female
Employment to population ratio (Percent) Unemployment rate (Percent)
70 25
60 20
50 15
40 10
30 5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2023 2024 2023 2024
Urban Rural Urban Rural
Source: WBG staff computation
Rwanda Economic Update • Edition No. 24 5
Recent Economic Developments
Table 1.3: The structure of employment in Rwanda: Male and female
All Female Male
2023 2024 2023 2024 2023 2024
Q4 Q4 Change Q4 Q4 Change Q4 Q4 Change
Total 4,074,629 4,585,316 510,687 1,851,749 2,096,062 244,313 2,222,880 2,489,255 266,374
Agriculture forestry and fishing 1,883,567 1,883,270 -297 975,746 1,040,050 64,303 907,821 843,221 -64,600
Mining and quarrying 62,486 72,734 10,248 5,041 17,448 12,407 57,445 55,286 -2,159
Manufacturing 209,962 258,578 48,617 99,573 122,416 22,843 110,389 136,163 25,774
Electricity gas stream and air conditioning
5,324 6,928 1,605 1,832 2,068 236 3,491 4,860 1,369
supply
water supply, gas and remediation services 2,114 8,130 6,016 355 2,683 2,328 1,759 5,447 3,689
Construction 304,377 399,299 94,922 35,588 51,205 15,618 268,790 348,094 79,304
Whole sale and retail trade; repair of motor
491,311 663,110 171,799 279,248 371,444 92,197 212,063 291,666 79,603
vehicles and motorcycles
Transportation and storage 201,361 309,553 108,192 7,679 18,995 11,315 193,681 290,558 96,877
Accommodation and food services activities 141,801 137,311 -4,489 71,825 70,190 -1,636 69,975 67,122 -2,854
Information and communication 8,119 16,900 8,781 1,629 4,392 2,763 6,491 12,508 6,017
Financial and insurance activities 44,063 37,518 -6,545 23,388 20,844 -2,544 20,674 16,674 -4,001
Real estate activities 5,278 9,020 3,742 1,116 1,658 542 4,163 7,362 3,200
Professional, scientific and technical
32,105 30,380 -1,725 15,624 9,451 -6,172 16,482 20,929 4,447
activities
Administrative and support activities 70,167 113,595 43,428 18,018 45,582 27,564 52,148 68,013 15,864
Public administration and defense;
64,675 83,908 19,233 18,723 17,674 -1,049 45,953 66,235 20,282
compulsory social security
Education 189,779 191,274 1,494 103,142 97,241 -5,900 86,638 94,032 7,395
Human health and social work activities 58,766 53,729 -5,036 28,622 29,558 936 30,144 24,172 -5,972
Arts, entertainment and recreation 10,493 8,149 -2,344 4,526 2,261 -2,266 5,967 5,889 -78
Other services 105,853 132,876 27,023 43,482 59,705 16,224 62,371 73,171 10,800
Activities of households as employers 177,788 166,425 -11,363 116,212 110,223 -5,990 61,576 56,203 -5,373
Activities of extraterritorial organizations
5,240 2,626 -2,614 381 975 595 4,860 1,651 -3,209
and bodies
Source: National Institute of Statistics of Rwanda (NISR), Labour Force Survey, and WB staff calculations.
it last held in 2019. As documented in the 2024 sector share of employment at about 41 percent
CEM7, Rwanda’s structural transformation—or now exceeding its pre-COVID level of 37 percent.
the movement of labor into more productive Meanwhile, the industry sector employed 17
sectors—was interrupted by the COVID pandemic, percent of the workforce, primarily in construction
as agriculture employment expanded, creating jobs and manufacturing. Agriculture, previously the
and providing a safety net during the economic dominant employer from 2020 to 2023, saw its
downturn, while industry and service sector share of employment decline from 43.4 percent in
employment fell. However, the data suggest that the 2023 to 39.9 percent in 2024. With value- added per
industry and service sector shares of employment worker in industry and in the service sector 3 to 5
have increased in recent years, with the service times that of the agriculture sector8, these recent
developments suggest the reallocation of labor
See World Bank (2024) Rwanda Economic Memorandum: Pathways to
7
towards higher value-added sectors.
Sustainable and Inclusive Growth in Rwanda (Washington: The World
Bank), pp. 117 to 150. Data on employment by sector reported in the
CEM included subsistence agriculture workers following a particular
methodology. As a result, those numbers might not be strictly The data are from the World Development Indicators. The valued-added
8
comparable to those published by the NISR, though the broad patterns per worker (in constant 2015 US$) in agriculture, industry and services
are consistent. are $1,033, $3,568 and $5050, respectively.
6 Rwanda Economic Update • Edition No. 24
Recent Economic Developments
The overall movement of labor and structural With a 22.0percent expansion in export earnings in
transformation mask important variations 2024, surpassing 13.0 percent of imports, the trade
between male and female workers. Between 2023 deficit slightly narrowed. In 2024, the trade deficit
and 2024, as employment in agriculture contracted slightly dropped to 15.8 percent of GDP, thus one
while expanding sharply in industry and services, percentage point lower than in 2023. Public transfers
agriculture employment among women increased and remittances had both declined by 29.8 percent
by 64 thousand (Table 1.3). As a result, while and 0.4 percent, respectively, in 2024. These trends
agriculture employment now accounts for about contributed to the current account deficit widening
a third of male employment, it is still about half to 12.7 percent of GDP in 2024, thus 1.2 percentage
of female employment. And nearly all of the jobs points higher than in 2023 (Table 1.4).
created in construction and transport and storage
were taken by male workers. Foreign direct investment (FDI) and government
borrowing were sufficient to finance the current
1.4. External sector developments account deficit, leading to an accumulation of
Rwanda’s current account deficit widened to 12.7 foreign reserves. FDI inflows grew by 24.8 percent
percent of GDP in 2024, due to declining public transfers. in 2024, reflecting improved economic activity.
Sufficient FDI and government borrowing to cover Concessional borrowing from development partners
external financing needs, foreign reserves increased helped bridge the gap, with the overall financial
despite a 9.8 percent depreciation of the Rwandan franc. inflows being 3.6 percent of GDP higher than in 2024.
As a result, foreign reserves increased, easing the
Rwanda’s current account deficit widened in pressure on the Rwandan franc, which depreciated
2024, primarily due to lower current transfers. by 9.8 percent against the US dollar in 2024. This
The current account deficit rose to 12.7 percent of depreciation, though slower than the 18 percent
GDP in 2024 from 11.5 percent in the previous year. decline in 2023.
Table 1.4: Balance of payments, 2022–24
Percent of GDP, unless otherwise indicated
2024
2022 2023 2024
Q1 Q2 Q3 Q4
Current account balance -12.5 -11.5 -12.7 -14.7 -12.6 -13.8 -9.7
Trade balance (goods and services) -18.0 -15.9 -15.8 -17.0 -17.4 -16.1 -12.9
Exports 22.6 24.5 30.0 24.8 28.1 34.2 32.8
o/w tourism 3.0 3.9 4.1 3.6 3.9 5.3 3.5
Imports 40.6 40.3 45.8 41.7 45.6 50.3 45.8
Primary income -1.8 -1.9 -2.3 -2.4 -2.6 -2.3 -2.2
Secondary income 7.4 6.3 5.5 4.6 7.4 4.5 5.4
o/w external grants to government 3.9 2.7 1.9 0.8 3.4 1.3 1.9
o/w remittances inflows 3.5 3.5 3.5 3.2 3.5 2.8 3.0
Capital account balance 2.4 2.8 2.7 3.0 3.0 2.4 2.4
Financial account balance 5.3 9.2 12.8 7.3 21.3 2.8 19.8
Direct investment 2.3 3.2 4.0 4.9 3.9 3.7 3.6
Portfolio investment -0.5 -0.5 -0.2 -0.1 -0.3 -0.3 0.0
Loans 3.5 6.5 8.9 3.4 13.7 1.3 19.0
o/w government borrowing 2.8 6.6 9.4 0.0 -0.2 0.0 -0.1
Net errors and omissions 3.8 0.3 1.2 0.0 0.0 0.0 0.0
Change in reserves (+: increases) -1.0 0.7 4.0 -7.3 10.7 -4.2 16.9
Source: WBG staff calculation based on NBR and NISR data.
Rwanda Economic Update • Edition No. 24 7
Recent Economic Developments
1.5. Inflation and monetary policy December 2024 driven by meat prices. Meanwhile,
developments underlying inflationary pressures persist, with core
Inflation in Rwanda moderated to 4.8 percent in 2024, inflation exceeding headline inflation—between
down from over 13 percent in the previous two years, January and November 2024—reflecting transport
driven by lower food prices, easing global inflation, inflation as the government of Rwanda removed
and monetary tightening, though core inflation its subsidies on bus transport fares. Starting from
remained elevated due to rising transport costs October 2024, headline inflation edged higher, and
following the removal of government subsidies. The reached at 7.4 percent in January 2025, as food
banking sector remained stable, with private sector produces delayed to reach the market due to a
credit growing by 20.3 percent, non-performing prolonged rainy season.
loans at 5 percent, and banks maintaining strong
liquidity and capitalization, reflected in a liquidity The central bank rate (CBR) was kept at 6.5 percent
coverage ratio of 305.9 percent and a capital for the second time in a row—in November 2024
adequacy ratio of 22.8 percent, well above regulatory and February 2025—despite a recent pick up
thresholds. in headline inflation. In 2024, the NBR lowered
its benchmark rate—the central bank rate—by
Inflation edged higher in recent months—after a cumulative cut of 100 basis points from 7.5
gradually declining in the first quarters of 2024— in April 2024 percent to 6.5 percent in August
but remains within the target rate of the National 2024. Since then, the CBR was maintained at 6.5
Bank of Rwanda (Figure 1.6). After two years of percent. With inflation declining, the real central
high inflation, headline inflation dropped to 2.5 bank rate remained positive through November
percent in September 2024—the lowest since 2024, indicating the appropriateness of the
January 2022. Such disinflation was primarily driven monetary stance under prevailing macroeconomic
by lower food prices, reflecting improved supplies conditions. The rate cut also led to a decline in
of fresh food items, especially vegetables, lower interbank rates and government borrowing costs,
imported inflation as price growth cooled globally, aligning with the central bank’s policy trajectory
and the tightening of monetary policy. The fall (Figure 1.7). However, lending rates remained
in food prices has been more noticeable in rural static, with an average of about 16 percent in 2024,
areas, where food items constitute the bulk of the similarly to the year 2023. The recent meeting of
consumption basket (about 48 percent). Notably, the monetary policy committee (MPC), of February
rural inflation was in negative zones from March 11, 2025, maintained the CBR, for the second time in
to October 2024, before rising to 6.2 percent in a row, at 6.5 percent.
Figure 1.6: Headline inflation has moderated
A. Inflation and Central bank rate A. Inflation and Central bank rate
25
21.6
20.8
20.7
19.3
17.8
20
14.1
13.9
13.7
12.3
11.9
11.2
15
9.2
7.4
6.8
6.4
10
6.3
5.8
5.0
5.0
5.0
5.0
4.9
4.9
4.5
4.2
3.8
2.5
5
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
Feb-24
Apr-24
Jun-24
Aug-24
Oct-24
Dec-24
Feb-25
0
Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24
Headline in ation Core in ation Central bank rate Fresh products Energy Core Headline
Source: World Bank staff calculation based on NISR CPI data
8 Rwanda Economic Update • Edition No. 24
Recent Economic Developments
Figure 1.7: Changes in interest rates year, by the end of November 2024. Averaging by
(2023 and 2024, percentage points)
20.3 percent in the first eleven months of 2024, this
-1.94
0.99
364 day TB pace of credit growth is higher than the average
-2.14
growth of 14.4 percent observed throughout 2023.
182 day TB
1.30
The increase was supported by the new loans,
-2.04
1.93
91 day TB especially to trade and transport services, which
are among the biggest drivers of economic growth
-2.05
28 day TB
1.83
in 2024. However, the level of credit to agriculture
-1.54
Interbank rate is still relatively low at less than 2.0 percent of new
1.21
loans of the first nine months of 2024.
-1.00
CBR
1.00
2024 2023
Access to financial services has increased in recent
Source: National Bank of Rwanda interest rates database. Note: TB: treasury bills. years, driven by digital financial services (DFS),
Bank asset quality remains healthy, with banks but has room for further improvement especially
having sufficient buffers to withstand potential in terms of savings. According the 2024 Rwanda
adverse shocks as of December 2024. The non- Finscope report, 92 percent of adult Rwandans are
performing loans (NPLs) ratio stood at 3.1 percent formally served by the financial sector in 2024, up
as of December 2024, the lowest level since January from 77 percent in 2020. This increase was more
2022. The capital adequacy ratio (CAR) stood at remarkable in non-bank formal financial services,
19.0 percent, well above the regulatory minimum with only 22 percent having a bank account—a
of 12.5 percent. The level of provisions was at 102.6 level unchanged since 2020. The portion of adult
percent of NPLs in December, providing ample Rwandans, who are formally served, but non-
loss-absorption capacity. The banking system has banked, increased to 70 percent in 2024 up from 55
also maintained adequate liquidity and funding percent in 2020, mainly driven by the mobile money
positions. The liquidity coverage ratio (LCR) and usage. Though the level of adult population
the net stable funding ratio (NSFR)—designed to savings formally has increased to 59 percent in
gauge the bank liquidity conditions in times of 2024 from 54 percent in 2020, the 2024 Rwanda
stress—stood at 338.88 percent and 148.4 percent, Finscope report reveals that the level of savings
respectively, by end-December 2024. Both remain via banks has declined to 18 percent of the adult
above the 100 percent regulatory minimum. population in 2024 from 21 percent in 2020. The
Banking deposits increased steadily throughout largest share of adult population savings to the
2024 with annual average growth of 24.7 percent in banking sector could hinder Rwanda’s progress
December 2024. in terms of domestic saving mobilization.
This could hamper the availability of financial
Simultaneously, the profitability of the Rwandan resources for businesses, particularly small
banking sector remained stable in 2024, as and medium-sized enterprises (SMEs), which
resilient lending growth rates continue to support often identify access to finance as a significant
the economy. In December, return-on-assets (ROA) obstacle to their growth.9
and return-on-equity (ROE) stood at 4.9 percent
and 20.8 percent, respectively. Credit to the private
sector has expanded throughout 2024. Total See Rwanda’s most recent Country Economic Memorandum (CEM) and
9
the 22nd edition of Rwanda economic Update focusing on Mobilizing
outstanding loans grew by 17.4 percent, year-on- Domestic Savings to Boost the Private Sector in Rwanda.
Rwanda Economic Update • Edition No. 24 9
Recent Economic Developments
1.6. Fiscal developments and debt Rwanda’s fiscal position strengthened in the
sustainability first half of FY2024/25, driven by higher tax
Rwanda’s fiscal position improved in early FY2024/25 collections and fiscal consolidation efforts (Table
with tax revenue rising to 15.1 percent of GDP in 1.5). Revenue amounted to 21.9 percent of GDP, 1.5
July-December 2024, supported by Electronic Billing percentage points higher than the same period in
Machine (EBM) enforcement and VAT policy measures, the previous fiscal year, largely due to the expanded
while expenditure declined, reducing the fiscal deficit use of Electronic Billing Machines (EBM). On the
to 4.8 percent. Despite moderate debt accumulation expenditure side, total outlays amounted to 26.7
driven by primary deficits, public debt remains percent of GDP, in line with the budget, reflecting
sustainable due to strong GDP growth and favorable the government’s ongoing efforts to streamline
concessional financing, though risks from external spending. As a result, the fiscal deficit narrowed to
financing uncertainty, domestic revenue challenges, 4.8 percent of GDP, and the primary balance deficit
and exchange rate pressures persist. to 2.8 percent of GDP.
Table 1.5: Rwanda’s public finance, FY21/22-FY24/25
(percent of GDP)
FY24/25 H1 H1
FY2022/23 FY2023/24
budget FY2023/24 FY2024/25
REVENUE 22.2 21.6 21.8 20.4 21.9
Taxes 15.0 14.7 15.7 13.6 15.1
Taxes on income, profits, & capital gains 6.7 6.7 7.3 6.1 6.5
Taxes on property 0.1 0.2 0.2 0.1 0.3
Taxes on goods & services 6.7 6.7 7.1 6.4 7.0
Taxes on international trade & transactions 1.4 1.1 1.1 1.0 1.3
Other taxes 0.0 0.0 0.0 0.0 0.0
Grants 4.7 4.3 3.2 3.8 3.7
Other revenues 2.6 2.6 2.9 3.0 3.2
EXPENDITURE 28.6 27.9 26.8 24.4 26.7
Expenses 18.7 17.9 17.9 16.2 17.5
Compensation of employees 2.4 2.6 2.9 2.7 2.8
Use of goods and services 4.9 4.5 4.3 4.1 4.6
Interest 2.0 2.4 2.6 2.2 2.3
Subsidies 2.0 1.7 1.7 1.5 1.6
Grants 6.3 5.6 5.3 4.7 5.1
Social benefits 0.3 0.3 0.3 0.3 0.3
Other expense 0.8 0.8 0.7 0.8 0.7
Net Investment in nonfinancial assets 9.9 9.9 8.9 8.2 9.2
Foreign financed 5.0 6.2 5.6 5.6 5.8
Domestically financed 4.9 3.7 3.3 2.6 3.4
Net lending (+) / borrowing (-)
Including grants -6.4 -6.3 -5.0 -4.0 -4.8
Excluding grants -11.0 -10.6 -8.2 -7.8 -8.5
Primary balance -4.4 -4.0 -2.4 -1.8 -2.5
Net financing 6.4 6.3 5.0 -4.0 -4.8
Domestic 0.6 -0.5 -0.8 -1.8 -5.8
Foreign 5.7 6.8 5.9 5.8 10.6
Source: WBG staff computations based on MINECOFIN various budget executions reports and budget framework papers.
10 Rwanda Economic Update • Edition No. 24
Recent Economic Developments
Tax revenue collection during the July–December underscoring the need for sustainable fiscal and risk
2024/25 period benefited from macroeconomic management strategies.11
stability, policy incentives, and administrative
measures. On the policy side, VAT rewards and 1.7. Rwanda’s economic outlook and risks
stricter enforcement of Electronic Billing Machine Rwanda’s economy is projected to grow at 7.1 percent
usage boosted VAT and goods and services tax in 2025–27, driven by agriculture, services, and
collection. Voluntary disclosure initiatives further industry, while fiscal consolidation aims to stabilize
contributed to tax compliance. Macroeconomic public debt after peaking at 80 percent of GDP in
factors, including lower inflation, supported 2025. The current account deficit will remain high
higher consumption tax revenues, while increased due to investment-related imports but should narrow
turnover growth drove additional VAT collections. with sustained FDI and concessional borrowing.
Additionally, higher imports of finished goods led to Key risks include geopolitical tensions, tighter global
increased revenue from international trade taxes.10 financial conditions, and climate shocks, which could
disrupt growth and food security.
Public debt remains sustainable, supported
by strong GDP growth and favorable financing Rwanda’s real GDP is projected to grow at an
terms. The December 2024 Debt Sustainability average of 7.1 percent in 2025–27, driven by
Analysis (DSA) maintained Rwanda’s moderate continued expansion in agriculture, services,
debt risk rating, despite an increase in debt levels and industry. Favorable weather conditions and
primarily driven by the larger primary deficit (Figure ongoing government support for fertilizer subsidies
1.8). However, high economic growth and low- and priority food crops will sustain agricultural
cost concessional financing, which accounts for growth. Under the second National Strategy for
over 85 percent of external debt, have kept debt Transformation (NST-2), Rwanda aims to scale
service manageable. Looking ahead, external risks up manufacturing and high-value production,
to concessional financing, challenges in domestic reducing import dependence while strengthening
revenue mobilization, and exchange rate pressures its position as a global hub for Meetings, Incentives,
could heighten risks of debt distress. Additionally, Conferences, and Exhibitions (MICE). Despite these
climate shocks remain a significant vulnerability, efforts, the current account deficit is expected
Figure 1.8: Decomposition of public debt accumulation
to remain high, reflecting Rwanda’s continued
(Percent of GDP)s reliance on imports to finance its ambitious
60 development agenda. However, strong FDI inflows
Residual and concessional financing will support external
40
Other identi ed financing needs. Inflation is projected to gradually
debt-creating ows
20 Real exchange rate
stabilize within the National Bank of Rwanda’s
depreciation
medium-term target of 5 percent, with a symmetric
Real interest rates
0 band of ±3 percent.
Real GDP growth
-20
Primary de cit
-40 5-year 5-year
historical projected Change in public sector
change change debt
Source: WBG staff estimates based on the 2024 DSA Source: Joint IMF and World Bank Rwanda Staff Report for the
11
Fourth Reviews under the Policy Coordination Instrument and the
Arrangement under the Resilience and Sustainability Facility, and
Republic of Rwanda, Ministry of Finance and Economic Planning.
10
Second Review under the Arrangement under Standby Credit Facility
Budget Execution Report, July-September 2024/25. – Debt Sustainability Analysis. December 18, 2024.
Rwanda Economic Update • Edition No. 24 11
Recent Economic Developments
The government remains committed to fiscal reforms will focus on broadening the tax base, in
consolidation in the medium term, focusing on line with the Medium-Term Revenue Strategy (Box
rationalizing spending and improving revenue 1.1). As a result, public debt is expected to peak
administration. Efforts include temporary savings at 80 percent of GDP in 2025 before gradually
in current and development expenditures, such declining over the medium term.
as reducing costs related to official travel and
conferences by increasing reliance on virtual The current account deficit is projected to
meetings and expanding the digitalization of expand to 11.3 percent of GDP in 2024 before
public services. Additionally, the government gradually narrowing. Rwanda’s structural external
is enhancing management, oversight, and deficits reflect its high investment needs, which
monitoring of public investments to improve are primarily financed by foreign savings. While
efficiency and ensure that priority projects deliver government spending is expected to decline in the
their intended impact. Revenue administration medium-term, investment momentum will persist,
Box 1.1: Rwanda’s recently approved tax policy reforms
Effective from FY2024/25, the Rwandan cabinet approved tax reforms to broaden the tax base, improve
revenue collection, and streamline administration over the medium terms . Accordingly, these reforms will
enable Rwanda to finance the economic growth and livelihoods transformation of all citizens, as envisaged in
the second National Strategy of Transformation (NST2). Below are the proposed tax measures and timeline.
Table 1.6: Tax policy: measures and timeline
VAT Excise Other tax reforms
Re-introduce VAT on mobile Tax on cosmetic and beauty Increase the tax on Gross gaming
telephones products (15% of CIF); revenue (GGR) for gambling
Re-introduce VAT of ICT Excise tax on cigarettes (Rwf operators (13% to 40%);
equipment 230 per pack + 36% of retail Increase withholding tax on
prices; gambling winnings (15% to 25%);
FY2024/25 Excise tax on beer (65%); Registration fees for imported
Excise tax on airtime (12%, vehicles;
14%, 15%). Road maintenance and strategic
fuel reserve levies;
Introduce a tourism levy (3%) on
accommodation.
Reinstate VAT on hybrid vehicles Introduce an environmental levy
VAT on fee-based financial (0.2% of CIF);
services Revise capital gain tax from 5% to
FY2025/26 Reinstate VAT of fossil fuels 10% on sale of shares and similar
instruments;
Reinstate VAT on transport service
of goods by road Introduce annual motor vehicle
road user charge.
Repeal VAT exemptions on Introduce digital services tax.
FY2026/27 business inputs (machinery and
capital assets, raw materials)
Excise of 15% on fees charged
FY2027/28
for financial transactions.
Reinstate VAT on zero-emission
FY2028/29
vehicles
Reinstate VAT on energy
FY2029/30
equipment (e.g., solar panels)
Source: MINECOFIN, Note on tax policy reforms
12 Rwanda Economic Update • Edition No. 24
Recent Economic Developments
driven by private sector activity and foreign direct Rwanda’s agriculture sector holds significant
investment (FDI) in projects such as the new airport potential to strengthen the country’s economic
construction. This will increase import demand outlook. Increased agricultural productivity
as foreign grants decline. As a result, the current can drive GDP growth by improving food
account deficit is expected to remain around 10 security, reducing reliance on food imports, and
percent of GDP in the medium-term. However, expanding agribusiness opportunities. As the
foreign reserves are expected to remain sufficient, largest employer, agriculture plays a central role
as concessional borrowing and FDI will continue in job creation, yet many of these jobs remain
to cover Rwanda’s external financing needs. The informal, low-paying, and vulnerable to climate
construction of Bugesera Airport is expected to shocks. Modernizing the sector—through
further boost FDI in 2024–25. improved mechanization, irrigation, and value
chain development—can enhance farm incomes,
The outlook is subject to substantial downside create higher quality rural employment, and
risks. An intensification of the conflict in the facilitate labor shifts into higher productivity
Middle East and the Democratic Republic of Congo sectors. Furthermore, agriculture’s contribution
could lead to further disruptions in the global to Rwanda’s external sector is critical. Despite
economy, thus affecting Rwanda through a reduced recent export gains, the country remains reliant
global demand for its exports. Limited access to on imports, contributing to external imbalances.
concessional resources and lower external demand Strengthening agricultural value chains and
fueled by monetary tightening in advanced increasing exports of high-value processed goods
economies pose further downside risks. The main can help narrow the trade deficit, boost foreign
risk on the domestic front is linked to the increasing exchange earnings, and improve external stability.
frequency of weather and climate shocks, which Targeted policy actions to enhance productivity,
could disrupt agricultural output, again negatively promote agribusiness, and expand market access
affecting incomes and food security for rural will be essential for unlocking agriculture’s full
households, and reigniting inflationary pressures potential as a driver of growth, job creation, and
on food. macroeconomic resilience.
Rwanda Economic Update • Edition No. 24 13
Growth In Rwanda
PART TWO
MODERNIZING AGRICULTURE
TO ACCELERATE STRUCTURAL
TRANSFORMATION
14 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
Agriculture is a cornerstone of Rwanda’s economy, approximately 37 percent of food consumed
driving income generation, economic growth, domestically was imported.17 Over the past few
and poverty reduction. The sector remains the years, food availability has been significantly
primary source of employment and livelihoods challenged by global shocks, including the
for 67.8 percent of the working-age population,12 COVID-19 pandemic, the Russia’s invasion of
contributing 27 percent to GDP13 and 36 percent of Ukraine, and food export restrictions from some
export revenues.14 Historically, agriculture has been regional countries. Additionally, in 2022 and
a key driver of consumption growth and poverty 2023, Rwanda faced unprecedented inflation,
reduction. Between 2001 and 2011, increased largely driven by soaring food prices. Food price
agricultural production and commercialization inflation peaked at 64.45 percent in November
accounted for one-third of household consumption 2022, contributing to an overall Consumer Price
growth, reducing poverty by 2.4 percentage points Index (CPI) increase of 33.8 percent—the highest
annually. However, between 2011 and 2017, poverty recorded level. Beyond global and regional supply
reduction slowed to 1.3 percentage points annually, chain disruptions that reduced agricultural input
despite steady agricultural GDP growth averaging availability and restricted food trade, unfavorable
4.8 percent per year. Agricultural income growth weather conditions exacerbated price pressures.
stagnated, labor productivity remained low, and During these two years, Rwanda experienced
average household agricultural yields declined by severe floods, droughts, and dry spells, further
1 MT/ha.15 By 2016/17, the total value of household straining food production and affordability.18
harvests had dropped by 23 percent compared
to 2010/11, likely contributing to the slowdown Achieving Rwanda’s vision of becoming an
in poverty reduction. Today, agriculture remains upper-middle-income country by 2035 and a
the dominant economic activity, employing high-income country by 2050 will require rapid
51.4 percent of Rwanda’s total workforce, with growth and transformation in the agri-food
54.3 percent of agricultural workers engaged in sector. To sustain economic progress, agriculture
subsistence farming.16 The sector accounts for 33 must embrace competition, innovation, and
percent of new jobs created, and expectations higher productivity, both on-farm and through
are high for agriculture not only to sustain rural investments in value chains and agribusiness
employment but also to generate higher quality development. Historically, agricultural land
off-farm jobs that support Rwanda’s structural expansion has driven food production growth.
transformation. However, with food demand expected to double
and the population projected to increase by 47
Rwanda relies heavily on food imports, making percent by 2040 (National Institute of Statistics
it vulnerable to global shocks that disrupt of Rwanda (NISR), 2023), land competition will
food availability and drive inflation. In 2022, intensify. This necessitates a strategic shift toward
high-value crops and animal products with strong
12
NISR, Main Indicators: 5th Rwanda Population and Housing Census; market potential and comparative advantage. Such
https://statistics.gov.rw/file/13787/download?token=gjjLyRXT
13
NISR, GDP National Accounts, 2023; https://www.statistics.gov.rw/
a transition presents opportunities for quality job
file/15441/download?token=gZ1Fwa0I creation along agricultural value chains, fostering
14
MINAGRI Annual Report (FY23): https://www.minagri.gov.rw/index.
php?eID=dumpFile&t=f&f=87019&token=4b614ef2bca23247b-
new food services and higher value-added
616cacb693bbdcd909e9e33; and NISR; GDP National Accounts (FY23): activities.
https://www.statistics.gov.rw/file/14323/download?token=_Nz4UbBE
15
World Bank (2020), Bolstering Pover ty Reduc tion in R wanda
A Pover ty Assessment (https://documents1.worldbank.org/curated/
en/749051603952259889/pdf/Bolstering-Poverty-Reduction-in-
Rwanda-A-Poverty-Assessment.pdf ) NISR, Rwanda Food Balance Sheet 2022, https://www.statistics.gov.rw/
17
16
NISR, Labour Force Survey 2004-Q3: https://www.statistics.gov.rw/ publication/rwanda-food-balance-sheets-fbs-dashboard-2022
file/16206/download?token=okv60fOs NISR, Consumer Price Index, 2023.
18
Rwanda Economic Update • Edition No. 24 15
Growth In Rwanda
The Fifth Strategic Plan for Agricultural steadily, expansion over the past decade has been
Transformation (PSTA 5) lays the foundation primarily driven by area expansion rather than
for modernizing Rwanda’s agriculture by productivity gains, with smallholder mixed farming
strengthening cross-sectoral linkages and dominating the sector. Despite strong export
promoting agribusiness development. The performance, particularly in coffee, tea, and
plan integrates key sectors such as health, horticulture, agricultural trade remains vulnerable
environment, finance, private sector development, to global price fluctuations and is constrained by
ICT, and education into agricultural transformation limited value addition and infrastructure gaps. At
efforts. It adopts an agri-food systems approach, the same time, rising food imports highlight the
emphasizing modern agribusiness technologies, importance of boosting domestic production to
professionalizing farmers, and enhancing the enhance food security and reduce dependence on
entire agricultural value chain—from production external markets.
and aggregation to processing, distribution,
consumption, and waste management. Pattern of production
Rwanda’s agricultural production is diverse, but
The chapter is structured around three key remains dominated by smallholder mixed farming,
dimensions. First, it examines intensification contributing 27 percent to GDP as reported by the
by analyzing production patterns and drivers MINAGRI and Rwanda Development Board. The
of productivity, including irrigation, on-farm sector grew at an average annual rate of 4 percent
innovations, mechanization uptake, and climate- from 2010 to 2023 (Table 2.1), with food crop
resilient practices. Second, it identifies gaps in output rising by 7.8 percent in 2024, reversing a 3.2
diversification and value addition within the sector, percent decline in 2023 due to full land utilization
highlighting their impact on commercialization and favorable weather.
in both domestic and export markets, and
discusses how effective agricultural lending and The livestock sector has expanded rapidly, with
risk mitigation mechanisms and a conducive government programs driving improvements in
policy environment can contribute to addressing both production and productivity. Cattle numbers
these gaps. Lastly, the chapter provides targeted have risen from 172,000 before 1994 to 1.5 million
recommendations to overcome identified in 2022 according to the Ministry of Agriculture
constraints and enhance performance across all and Animal Resources, largely due to the Girinka
three dimensions. It emphasizes the importance of program, which has provided over 380,000 cows to
demand-driven production systems over supply- farmers. This expansion has led to a surge in milk
driven approaches, illustrating how demand-driven production, from 7.2 million liters per year in 1994
strategies can encourage productive investments, to over 1,000 million liters in 2023, as reported
improve efficiency, and generate employment by MINAGRI (2024). Similarly, fish farming has
opportunities along agricultural value chains. experienced significant growth, with production
increasing from 7,000 metric tons before 1994 to
2.1 State of agriculture in Rwanda 46,495 metric tons in 2023. Despite these gains,
Rwanda’s agriculture sector remains the backbone further expansion in livestock may be constrained
of the economy, contributing 27 percent to GDP by limited availability and accessibility of animal
and employing 43 percent of the population. While feed, unless crop production increases substantially
agricultural income and production have grown to support feed supply.
16 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
Table 2.1: Average annual growth rate of agricultural sub-sectors (%)
Average
Sub-sector 2000-04 2004-08 2008-12 2012-16 2016–23
2010–23
Food crops 5.5 4.9 6.6 4.7 3.0 4.0
Export crops 12.9 -1.4 1.8 2.3 1.0 3.0
Livestock and animal production 4.8 3.6 4.2 8.3 9.0 8.0
Forestry 8.7 5.9 2.9 3.4 5.0 4.0
Fishing 5.3 1.5 1.4 3.9 4.0 3.0
Total 5.9 4.6 6.0 4.7 4.0 4.0
Source: National Agricultural Policy, 2018 and NISR (2024)
Agriculture remains a major driver of Rwanda’s coffee, malt, tea, and rice (Figure 2.1B), but reliance
exports, accounting for 37 percent of total export on primary commodities exposes Rwanda to global
revenues. The country has diversified beyond coffee price fluctuations. Expanding agro-processing,
and tea to include horticultural products, cereals, branding, and market access is critical to enhancing
and animal products. In 2016, agriculture-related competitiveness and stabilizing earnings.
exports (such as vegetables, tea, coffee, food stuffs,
animal hides, wood products, animal products, Rwanda’s agricultural trade potential within
paper goods, animal and vegetable bi-products) Africa remains largely untapped. While major
totaled US$252 million (52 percent of total goods export destinations remain outside Africa, AfCFTA’s
exports), with 65 percent from formal trade and 35 impact assessment suggests intra-African exports
percent from informal cross-border trade, mainly could rise by 22 percent, particularly in wheat,
with the DRC. Informal exports include livestock, flour, dairy, cereals, and rice. The EAC also presents
potatoes, dairy, and edible oils, while horticulture major trade opportunities, with agriculture
(fruits, vegetables, flowers) is emerging as a high- contributing 25-40 percent of GDP across member
value formal export sector. Despite export growth, states and supporting over 80 percent of the
earnings remain vulnerable to price volatility. In regional workforce. Rwanda plays an active role
2022, agriculture, forestry, and fishing accounted in EAC agricultural policies, including the Food
for 33 percent of total exports (US$599 million of Security Action Plan and Nutrition Strategy, further
US$1.77 billion; Figure 2.1A). Major exports include strengthening regional integration.
Figure 2.1: Rwandan export structure
A. Share of major exports, % B. Agricultural exports by products, %
Source: Observatory of Economic Complexity 19
https://oec.world/en/profile/country/rwa&lt
19
Rwanda Economic Update • Edition No. 24 17
Growth In Rwanda
At the same time, Rwanda’s agricultural (Figure 2.2), including a large proportion of low-
productivity remains below potential, hindered by educated workers (Figure 2.3), with 65 percent of
structural constraints. Average farm sizes are just agricultural workers having no formal education.
0.45 hectares20, limiting economies of scale. Post- Median monthly wages vary by education level
harvest losses reach up to 13.8 percent for stapples with upper secondary graduates earning around
and 30 percent for some vegetable products, and Rwf 100,000, lower secondary graduates earning
low access to finance restricts investment in modern Rwf 40,000, and those with only primary education
inputs. Urbanization and population growth are earning Rwf 26,000. The Labor Force Survey of
increasing food demand, but land fragmentation is November 2024 indicates that agriculture employs
reducing available agricultural land. a large share of these lower-income workers,
underscoring the need for skills development to
Climate change is a growing threat to agriculture. improve productivity and wages. Strengthening
Extreme weather events, including droughts, training in agribusiness, food processing, and
floods, and shifting rainfall patterns, affect crop mechanization will be crucial to expanding
yields and livestock production. Soil degradation, employment opportunities in agriculture and
exacerbated by steep terrain and acidic soils, improving income levels.
reduces land productivity, despite efforts like
terracing. Addressing these risks through climate- Expanding agribusiness training is key to
smart practices, improved soil management, and unlocking Rwanda’s agricultural potential. The
expanded irrigation will be crucial to ensuring long- Second National Strategy for Transformation
term resilience. (NST2) aims to create 250,000 jobs annually, with a
substantial share derived from investments in agro-
Job creation in agriculture processing. However, these opportunities must
Agriculture remains Rwanda’s largest employer, align with labor market demands. In particular,
yet improving job quality and workforce skills is training programs should focus on agribusiness
essential for long-term growth. As of the fourth management, livestock handling, food processing,
quarter of 2024, 4.5 million people out of 8.4 million and mechanization, as well as technician training
working-age population were employed, of whom for irrigation systems, cold-chain logistics, and farm
1.8 million were in the agriculture sector As such, equipment maintenance. Additionally, specialized
the sector employs over 40 percent of the workforce training in agricultural sensor technology, electrical
Figure 2.2. Sectoral employment of labor force Figure 2.3: Educational attainment in Rwanda’s agricultural
(Percent) workforce compared to peers
Korea
Agriculture, forestry and shing 2023
Thailand
Mining and quarrying 2022
Vietnam
Manufacturing 14 2022
4
43 Uganda
3
Construction 2021
Kenya
Whole sale & retail; repair of 2019
motor vehicles and motorcycles;
19 Ethiopia
transporttion and storage 2013
Accomodation and service activities Botswana
2023
Education 10 Rwanda
2022
Other services 6 1
0 10 20 30 40 50 60 70 80 90 100
Less than basic Basic Intermediate Advanced
Source: WBG staff computation from the Labor Force Survey 2023 Source: WBG staff computation from the Labor Force Survey 2023
MINAGRI.24. Fifth Strategic Plan for Agricultural Transformation
20
(PSTA5).
18 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
and mechanical maintenance, and food safety processing, and export certification, will enhance
regulations is increasingly necessary as Rwanda Rwanda’s competitiveness in regional and
modernizes its food production systems. The international markets. Additionally, integrating
PSTA5 envisaged Farm Service Centers, the Gabiro “Farming as a Business” principles into vocational
Agribusiness Hub and Kigali Wholesale Market will curricula will equip farmers with the financial and
require a skilled workforce, but education levels management skills needed to scale operations.
remain a major barrier—farmers average just three By investing in education, training, and industry-
years of schooling, limiting their ability to adopt specific skill development, Rwanda could transform
digital tools and business management practices. agriculture into a higher-productivity sector that
Expanding rural education, vocational training, provides sustainable employment and strengthens
and certification programs for agri-technicians national food security.
and agronomists will be essential for sustaining
agricultural transformation. Drivers of agricultural modernization
Rwanda’s agriculture sector is transitioning
Beyond direct agricultural production, Rwanda’s from subsistence farming to commercialized,
agro-processing industry presents significant value-added production. Government initiatives
employment opportunities. Investments in like Girinka and small livestock distribution have
tea and coffee processing, cassava production, boosted productivity, while investments in cold-
and horticulture require skilled workers in food storage facilities and agro-processing plants have
technology, packaging, distribution, and branding. expanded market access. As a result, tea production
Additionally, increasing demand for cold-storage has grown from 11,000 metric tons in 1994 to
facilities, post-harvest infrastructure, and precision 40,003 metric tons today21, and coffee revenue
farming solutions will drive job creation in logistics, has increased from US$38 million to US$78.7
maintenance, and agro-engineering. Developing million.22 At the same time, the government has
technical certification programs for agricultural promoted diversification in agricultural exports,
equipment repair, irrigation system maintenance, encouraging farmers to shift from traditional cash
and solar-powered farm technology could further crops to a broader mix of high-value commodities.
strengthen employment prospects. Moreover, the These efforts have contributed to a steady increase
financial sector plays a critical role in agricultural in foreign exchange earnings, with agriculture
growth, with emerging opportunities in agricultural accounting for 37 percent of Rwanda’s total exports
insurance, credit risk assessment, and finance for in 2021–22. However, to sustain this progress, further
farm expansion. Strengthening financial literacy and investments in technology-driven agriculture and
training rural entrepreneurs in farm management processing efficiency are necessary.
and value-chain financing will be key to unlocking
new business opportunities in the sector. Agro-processing and export diversification are
key modernization drivers. Beyond traditional cash
To fully capitalize on Rwanda’s agricultural crops, flowers, macadamia, fruits, and vegetables
workforce potential, a holistic approach to skills are now recognized as export commodities,
development is needed. This includes targeted strengthening Rwanda’s position in high-value
investments in agricultural extension services, agricultural markets. However, limited infrastructure
digital training for farmers, and entrepreneurship and insufficient technical skills remain barriers to
programs focused on high-value agri-products. fully leveraging Rwanda’s natural advantages, such
Encouraging private sector involvement in
agricultural training, particularly in food safety, MINAGRI Annual Report 2023-2024.
21
Ibid.
22
Rwanda Economic Update • Edition No. 24 19
Growth In Rwanda
as fertile soils and favorable climatic conditions. The million for commercial beef production23. These
regulatory environment also presents challenges, investments align with Rwanda’s 2024–29
as lengthy approval processes for new agricultural agricultural transformation strategy, prioritizing
inputs and restrictive policies on germplasm resilience, sustainability, and job creation while
exchange slow down innovation and private strengthening export capacity and attracting
sector participation. Addressing these constraints private sector participation.
through streamlined regulations, technical
training, and expanded market access will be Beyond these investments, agriculture remains
critical for Rwanda to compete more effectively in a key driver of Rwanda’s trade and economic
regional and global markets. growth. Food demand is projected to double from
US$6.5 billion in 2020 to US$13 billion by 2040,
Compared to regional peers, Rwanda lags in agro- fueled by population growth, urbanization, and
processing but is making progress. Kenya, Uganda, shifting consumption patterns toward livestock,
and Tanzania have more developed value chains horticulture, and processed foods. However, land
due to stronger investments in agro-processing constraints present a challenge: at current yield
and supply chain efficiency. These countries levels, 103,000 km²—four times Rwanda’s total land
have successfully scaled up production through area—would be needed to meet food demand
structured value chains and extensive private by 2050, while only 15,000 km² will be available.
sector engagement, allowing for a higher degree Much of the projected increase in demand
of value addition before exports. Rwanda’s focus on reflects a dietary shift from cereals and beans
productivity gains, digitalization, and infrastructure toward greater consumption of livestock-sourced
investment puts it on a promising trajectory, but products, horticultural produce, and processed
further investments are needed to close the gap. foods and beverages, as well as an increase in meals
Increasing private sector participation, expanding eaten outside the home. Consequently, boosting
cold-chain infrastructure, and strengthening productivity through high-value crops, improved
market linkages will be essential to Rwanda’s technology, and stronger market integration—
competitiveness. With continued strategic including regional trade—will be essential. The
investments and policy reforms, Rwanda has the shifts in food consumption present significant
potential to position itself as a leading exporter of opportunities for job creation, higher value-added
high-value agricultural products, enhancing rural activities, and the emergence of new food-related
incomes and driving economic transformation. services. Consequently, agriculture—supported
by both on-farm and off-farm investments—could
Trade and investment opportunities substantially contribute to economic growth,
Rwanda is expanding its agricultural trade provided that appropriate policies, enabling
and investment potential through targeted environments, and public services are in place.
government initiatives. Under the FAO Hand-in-
Hand Initiative, the government has identified Rwanda’s export markets remain concentrated
US$785 million in investment opportunities, outside Africa, but regional trade opportunities are
including US$289 million for tea production, growing. AfCFTA is expected to increase Rwanda’s
US$169.8 million for livestock (poultry and intra-African agricultural exports by 22 percent,
pigs), US$63.8 million for potato production and
processing, US$222.3 million for horticulture MINAGRI.2024. Rwanda presents five key investment opportunities
23
(https://www.minagri.gov.rw/updates/news-details/rwanda-
(avocados and chili peppers), and US$40.2 presents-five-key-investment-opportunities-in-agriculture-worth-
785-million).
20 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
particularly in wheat, flour, dairy, cereals, and rice. 2.2 Key drivers of agricultural productivity
The EAC also plays a critical role, with agriculture and growth
contributing 25-40 percent of GDP across member Rwanda’s agricultural growth over the past decade
states and supporting 80 percent of the workforce. has been driven by land expansion, but productivity
Rwanda is actively engaged in regional food has remained stagnant due to land fragmentation
security programs, strengthening its position in and declining yields for key crops. While the use
intra-African trade. of improved inputs like fertilizers and seeds has
increased, adoption levels remain lower than in
Cross-border trade is expanding, but food import leading African and Asian countries, limiting efficiency
dependence remains high. Between 2015 and gains. Irrigation and mechanization have expanded
2022, food imports rose from US$400 million to but remain underutilized, with only 6 percent of
US$1.1 billion, increasing the import dependency cropped land irrigated and less than 1 percent of
ratio from 30.4 percent to 38.7 percent. In contrast, farmers using mechanized equipment. Poor market
food exports grew to US$857 million by mid–2023, access, weak cooperatives, and high post-harvest
but their share of total exports declined from 46.5 losses hinder commercialization, reducing farmers’
percent in 2015 to 27.2 percent. The DRC accounts ability to benefit from value chains and investing
for 75 percent of Rwanda’s food exports, while in productivity enhancing measures on their farms.
Tanzania supplies 70 percent of its food imports. Climate change and environmental degradation,
Expanding intra-African trade, particularly in high- including soil erosion and extreme weather, further
value agricultural products, will be key to improving threaten productivity, underscoring the need for
Rwanda’s trade balance. sustainable land management. To achieve higher
agricultural productivity and resilience, investments
Employment in agriculture is growing, but skills in irrigation, mechanization, climate adaptation, and
gaps remain a barrier to sector transformation. market linkages must be scaled up.
While agriculture is Rwanda’s largest employer,
with 40 percent of the workforce, job quality Land use and agricultural productivity
and earnings remain low. Only 2.8 million out of Rwanda’s agricultural GDP has grown at an
8.1 million working-age individuals are employed average of 5.2 percent annually over the past
full-time, and 65 percent of agricultural workers decade (2013/14–2023/24), but land constraints
lack formal education. To address this, Rwanda limit future expansion. Cultivated area increased
must expand agribusiness training, vocational by 13 percent between 2014 and 2024,24 yet land
programs, and technical education. Investments availability remains a major challenge. Rwanda’s
such as the Gabiro Agribusiness Hub and the high population density has led to increasing land
Kigali Wholesale Market will require skilled fragmentation with 77.6 percent of households
labor in irrigation, cold-chain logistics, and farming less than 0.5 hectares (NISR, 2021). The
mechanization, but low rural education levels— share of households with under 0.3 hectares grew
with farmers averaging just three years of by 10 percentage points between 2011 and 2017,
schooling—remain a constraint. Expanding further reducing economies of scale (World Bank
training in agribusiness management, SCD, 2019). While crop yields increased modestly
mechanization, and food processing is essential after 2014, productivity stagnated or declined
for increasing productivity, creating higher for key crops, except for maize, which showed
quality jobs, and unlocking Rwanda’s full an upward trend in 2023 and 2024. Agricultural
agricultural potential.
Comparison by authors of season agricultural surveys data: https://
24
www.statistics.gov.rw/datasource/seasonal-agricultural-survey
Rwanda Economic Update • Edition No. 24 21
Growth In Rwanda
yields for key crops such as maize, beans, and Irish Rwanda outperforms its four neighbors in
potatoes are also generally lower than those of agricultural value-added per worker (2015–2022)
neighboring African countries and leading Asian but lags Kenya, Benin, Ghana, Vietnam, and
nations. However, Rwanda’s rice and cooking banana Bangladesh, highlighting gaps in innovation and
yields are notably higher than the continental efficiency (Figure 2.5).
average and many African counterparts (Figure 2.4.
and Table 2.2).
Figure 2.4: Crop yields comparison with peers and best performing countries in Africa and Asia
Maize yields (Kg/ha) Rice yields (Kg/ha)
Southern Asia Eastern Asia
Africa Southern Asia
Eastern Africa
Africa
Kenya
Tanzania
Rwanda
Rwanda
Tanzania
India
India
Bangladesh
South Africa
China Kenya
Bangladesh China
0 2000 4000 6000 8000 10000 0 1000 2000 3000 4000 5000 6000 7000 8000
Maize yields (Kg/ha)
Potatoes yields (Kg/ha) Tomatoes yields (Kg/ha)
Southern Asia Eastern Asia
Africa Southern Asia
Eastern Africa Eastern Africa
Africa
Rwanda
Rwanda
Tanzania
Tanzania
Kenya
Bangladesh
China
Kenya
Bangladesh
India
India
China
South Africa South Africa
0 5000 10000 15000 20000 25000 30000 35000 40000 0 10000 20000 30000 40000 50000 60000 70000
Source: FAOSTAT (2023 updates)
Table 2.2: Crop yields comparison with peers and best performing countries in Africa and Asia
Cooking
Beans Soya beans Wheat Tomatoes
banana
Bangladesh 1,003 1,821 3,495 15,062 15,680
China 1,781 1,953 5,781 60,508
India 417 1,145 3,521 24,058
Kenya 706 893 2,963 18,747 12,124
Rwanda 719 419 1,256 8,489 15,547
South Africa 1,371 2,412 3,811 65,637
Africa 789 1,459 2,862 12,228 5,295
Source: FAOSTAT (2023 updates)
22 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
Figure 2.5: Value added per worker Figure 2.6: Fertilizer consumption per hectare in 2021
Average between 2015 and 2022 (US$) -
Benin 450 14
Use, Kilogram per hecatre of arable land
Ghana 400 12
Percentage of increase of use
Viet Nam 350
between 2014 and 2021
10
Kenya 300
8
Bangladesh 250
6
Rwanda 200
Africa Eastern and Southern 4
150
Tanzania 100 2
Uganda 50 0
Burkina Faso 0 -2
Congo, Dem.Rep.
Uganda
Tanzania
Burundi
Rwanda
Ghana
Cote D’Ivoire
Kenya
Nepal
Singapore
India
Bangladesh
Viet Nam
Congo, Dem. Rep.
Burundi
0 500 1000 1500 2000 2500 3000
Use of fertilizers (2021) Use increase 2014-2021
Source: authors with data from World Development Indicators
Source: World Development Indicators
Productivity and efficiency factors in agriculture a partnership between the Government, the Agro-
Despite increasing adoption of improved Processing Trust Corporation (APTC) Ltd, and
agricultural technologies, Rwanda’s usage Morocco’s Office Cherifien des Phosphates (OCP),
remains low compared to leading African and began operations in December 2023, focusing on
South Asian countries. In 2024 (Season A), only fertilizer production, marketing, and distribution.
39.7 percent of farmers used improved seeds, The company is updating soil maps to improve
while 39.8 percent applied pesticides. Fertilizer fertilizer recommendations, moving away from
adoption is higher with 64.5 percent of farmers blanket application strategies that have proven
using inorganic fertilizers, but application rates ineffective in meeting region-specific needs.
remain low, covering only 41.6 percent of cultivated
land (NISR, 2024). In contrast, organic fertilizers are Irrigation coverage remains limited, despite
widely used, applied by 89.1 percent of farmers on past investments. Only 6 percent of cropped
over 79.1 percent of agricultural land. However, land (72,913 ha, MINAGRI (2024) was irrigated in
optimal nutrient application—combining organic 2024, falling short of the 102,284 ha target under
and inorganic fertilizers—is still lacking. While PSTA-4. Although Rwanda’s proportion of irrigated
Rwanda surpasses its four neighboring countries cropland aligns with the African average, it remains
in fertilizer consumption per hectare, it still lags significantly lower than that of leading Asian
behind regional leaders like Kenya, Côte d’Ivoire, countries such as India and Bangladesh, where
and Ghana, as well as South and Southeast Asian approximately 42.3% and 78.9% of agricultural land
comparators like India, Vietnam, and Singapore is irrigated, respectively25. While the government
(Figure 2.6). Nonetheless, fertilizer use has shown aims to expand irrigation by 85 percent under NST2,
an 11 percent increase per hectare between 2014 inefficiencies in Water User Associations (WUAs) and
and 2021, indicating a positive trend. weak market linkages hinder sustainability. Over 40
percent of farmers still rely on traditional irrigation
The fertilizer market is expanding, but unmet methods, limiting efficiency. Strengthening Water
demand for soil-specific fertilizers and User Associations (WUAs) to sustainably manage
micronutrients remains. Soil nutrient maps irrigation schemes, improving market linkages
highlight deficiencies in calcium, magnesium, for irrigated crops, and increasing private sector
sulfur, copper, and boron, underscoring the need investment in on- and off-farm agribusiness are
for customized fertilizer blends (Nkurunziza, 2020). critical for ensuring long-term viability.
In response, the Rwanda Fertilizer Company Ltd,
25
World Bank 2021. World Development Indicators.
Rwanda Economic Update • Edition No. 24 23
Growth In Rwanda
Lessons from the Sustainable Intensification Rubengera increased earnings from Rwf 10,000 per
and Food Security Project (SAIP) demonstrate week (open-field farming) to Rwf 150,000 per week
that value chain integration enhances farmer (greenhouse farming, [MINAGRI, 2022]). Expanding
incentives to invest in irrigation. World Bank access to protected agriculture could further
Development Impact Evaluation (DIME) studies enhance resilience and productivity.
show that hillside irrigation can increase yields and
cash profits by 70 percent, with dry-season yields Mechanization and digitalization
rising by 90 percent in irrigated plots. Additionally, Mechanization in Rwanda remains extremely low,
farmers with irrigation access are four times more limiting efficiency and productivity. Only 1 percent
likely to grow horticultural crops in the dry season of farmers use mechanical equipment (NISR, 2024),
and twice as likely in the rainy season. Small-Scale with just 0.1 percent of plots under 1 hectare plowed
Irrigation Technologies (SSIT) have also boosted by tractors in 2022 (see Box 2.1). Given that 93
productivity and incomes, with adopting farmers percent of plots are below 1 hectare, mechanization
earning an additional Rwf525,000 annually. uptake is minimal, restricting productivity gains
However, without subsidies, demand for irrigation (IFPRI, 2024). The SAIP matching grant facility has
technologies remains low, limiting broader encouraged investment in mechanization rental
adoption (RAB, 2024). Additionally, suitable financial services, supporting larger-scale farmers, who can
products from financial institutions for smallholder service at least 10 hectares, either independently or
irrigators remain almost nonexistent. Compounding through farmer groups.
these challenges, underdeveloped supply chains
and services for irrigation technologies, along However, mechanization programs must be
with inadequate produce aggregation and weak tailored to Rwanda’s varied topography and
linkages with buyers and off-takers, further farm sizes rather than relying on a one-size-fits-
constrain uptake.26 These barriers are consistent all approach. Demand for SAIP mechanization
with findings in various regions, where factors such support was highest in the Eastern Province, where
as lack of capital, weak supply chains, and limited nearly 90 percent of the land benefiting from the
market access hinder the adoption of agricultural project’s mechanization program was located.28
technologies by smallholder farmers.27 One key factor may have been the province’s
gentler and flatter slopes compared to other
Beyond open-field irrigation, protected agriculture regions, characterized by steep slopes. Additionally,
offers another climate-resilient irrigation solution farm sizes in the Eastern Province tend to be
for small-scale farmers. Greenhouse farming larger, with approximately 13.8 percent of farmers
mitigates risks from extreme weather, reduces owning between 1 and 5 hectares, compared to
pest damage, and increases yields. Under SAIP, 185 only 6.6–6.8 percent in other provinces29. Bhutan,
greenhouses were installed near large irrigation like Rwanda, is characterized by rugged terrain and
schemes, enabling efficient water use through drip steep slopes, making agriculture labor-intensive
and sprinkler irrigation. Farmers using greenhouse because such conditions hinder mechanization.
technology for horticulture have seen substantial To address this challenge, Bhutan has adopted
revenue gains; for example, a tomato farmer in Sustainable Land Management (SLM) practices such
26
World Bank. 2021. Assessment of Farmer-Led Irrigation Development
in Rwanda (https://openknowledge.worldbank.org/entities/
publication/5e177095-4729-51ef-acf1-561aa04f75d4)
27
FAO. 2023. What factors shape small-scale farmers’ and firms’ adoption
of new technologies? (https://www.fao.org/support-to-investment/ RAB.2024. SAIP Implementation Completion Report.
28
news/detail/en/c/1652579/) NISR. 2021. Agricultural Household Survey 2020.
29
24 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
Box 2.1: Agricultural mechanization status in Rwanda and potential policy options
The 2022 Seasonal Agricultural Survey data indicates that only 0.8 percent of plots in Rwanda were plowed by
tractors, covering 10 percent of total farm area, meaning larger plots are more likely to be mechanized. Among
small plots (under 1 ha), which account for 93 percent of all plots, only 0.1 percent were plowed by tractors, covering
just 0.3 percent of mechanized area. Even for medium-sized plots (1–10 ha), tractor use remains low, at just 8 percent.
This limited adoption highlights significant gaps in Rwanda’s agricultural mechanization.
Share among each size range Share among total farms
of plots (%) (%)
Plot size Share Share of Share of
Share of total Share of total
of plots plot areas mechanized
plots farm area
mechanized mechanized area
Less than 1ha 0.1 0.3 92.8 7.4 0.3
1ha or greater but smaller than 10ha 8.0 9.9 5.3 - 10.3
10ha or above 14.5 10.9 1.9 82.3 89.5
Total 0.8 10.0 100.0 100.0 100.0
Mechanization is mostly used for cereal and legume crops, which are better suited to medium- and large-scale
farming. Maize, rice, soybeans, and bush beans make up 62 percent of mechanized plots and 90 percent of total
mechanized areas, primarily relying on tractors. In contrast, potatoes and vegetables account for 4 percent and 7
percent of mechanized plots, respectively, but contribute only 1 percent each to total mechanized areas, showing that
mechanization remains minimal in high-value crops.
Rwanda’s low mechanization levels stem from thin markets for agricultural machinery and custom-hiring services,
creating an opportunity for targeted government intervention. Expanding research and development (R&D) on
machinery suited to Rwanda’s diverse soils, topography, and farm sizes will be crucial. Mechanization programs should
move beyond a one-size-fits-all approach and instead focus on small-scale, affordable solutions, such as two-wheel
tractors and mini-tillers, to meet the needs of smallholder farmers.
The government could play a key role in developing competitive custom-hiring markets and strengthening spare
parts and repair service networks to ensure machinery remains accessible and functional. Farmer training on machine
selection, operation, and maintenance should be scaled up, and value-chain financing should be expanded to make
mechanization more affordable. Targeted policies for women and youth will also be essential, as inclusive mechanization
could increase productivity, create off-farm business opportunities, and attract young people to agriculture.
Source: IFPRI; Agricultural Mechanization Policy Options in Rwanda, April 2024.
as bench terracing and hedgerow planting30. These Digitalization and Agritech solutions remain
interventions not only facilitate mechanization underutilized, despite their potential to
but also improve soil fertility by reducing soil improve market access, financial inclusion, and
erosion caused by rainfall. Adapted agricultural productivity. Rwanda has fully digitalized the
machinery and equipment—including power supply chain for subsidized inputs through the
tillers, mini-tractors, mini power tillers, and hand Mobile Ordering Processing Application (MOPA)
tools—are effectively utilized on these terraces. and Smart Nkunganire System (SNS), linking farmers
Rwanda could similarly benefit from adopting SLM to suppliers and improving efficiency. However,
practices and tailored agricultural machinery and broader adoption of Agritech solutions remains
equipment to accelerate mechanization uptake low due to limited digital literacy, infrastructure
across the country. constraints, and high costs. The Hanga Agritech
UNDP. 2019. Turning slopes, dry land into viable agricultural land in
30
Trongsa (https://www.undp.org/bhutan/stories/turning-slopes-dry-
land-viable-agricultural-land-trongsa?utm)
Rwanda Economic Update • Edition No. 24 25
Growth In Rwanda
Innovation Challenge (2023) was launched to Commercialization and agriculture value chain
support agri-tech startups, aiming to expand access development
to real-time market information, digital extension Limited market access and weak cooperatives
services, and financial products like mobile banking hinder farmers from fully benefiting from
and digital insurance. agricultural production and ultimately
disincentivizes on-farm investments.
Fintech solutions could transform access to credit Smallholder farmers face challenges related to
and risk management in agriculture. Many farmers low production volumes, inconsistent quality,
struggle to access formal financial services, making and high transportation costs, making it difficult
mobile banking, digital payments, and Insurtech to integrate into higher-value markets (Box 2.2).
products crucial for de-risking the sector. The While cooperatives help aggregate production and
development of AI-powered advisory tools and provide market linkages, many struggle with poor
precision agriculture applications could further management, financial mismanagement, and side-
improve input efficiency, weather forecasting, selling, which reduces their ability to secure long-
and pest management, but widespread adoption term contracts with processors and exporters.
depends on affordable access to digital tools and Ultimately, weak market access and low return
targeted farmer training programs. on production disincentivize productivity-
enhancing investments. Strengthening
Climate change and soil degradation cooperative governance, improving access
Extreme weather events are a major driver of food to financing, and enhancing aggregation
price inflation and productivity losses. Since 2009, strategies are critical to unlocking better market
food inflation spikes have correlated with adverse opportunities for farmers.
weather in 8 out of 11 cases (Figure 2.7). Rwanda’s
steep terrain makes it highly vulnerable to erosion, Post-harvest losses and inadequate
with soil loss increasing by 54 percent since 1990. processing infrastructure limit staple crop
While 90.6 percent of farmers use some erosion commercialization. In 2024, maize production
control measures, only 5.2 percent of plots have increased by 30 percent, but poor post-harvest
bench terraces (NISR, 2024), indicating a need for handling led to significant quality deterioration.
greater investment in land conservation. Currently, Africa Improved Foods (AIF) and
Figure 2.7: Inflation in Rwanda correlates with adverse weather MINIMEX, Rwanda’s two largest maize processors,
events source only 5 percent of their maize supply
30
locally, relying on imports to meet demand.
25
To address these gaps, the government in
Average monthly in ation (%)
20
partnership with the private sector launched the
15
Commercialization and De-Risking for Agricultural
10
Transformation (CDAT) project, offering 50
5
percent matching grants for investments in
0
post-harvest infrastructure, such as grain drying,
-5
sorting, and cleaning facilities. The initiative has
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
2022/23
attracted 51 business proposals worth Rwf 10
Unfavorable climate Favorable climate billion, reflecting strong private sector interest.
Source: Calculations based on various inflation reports
26 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
Box 2.2: Agricultural commercialization and land ownership in Rwanda
Rwanda’s agricultural sector is characterized by small landholdings. Approximately one-third of farmers own
less than 0.1 hectares, another one-third hold between 0.1 and 0.3 hectares, and the remaining one-third cultivate
0.3 hectares or more. At the upper end of the scale, only 12 percent of households own between 0.5 and 1 hectare,
while just 8 percent report owning more than 1 hectare.
Despite their small land sizes, many of Rwanda’s Figure 2.8: Household production sold across farm size
smallest farmers participate in markets, though (percent)
their level of engagement varies. Among those with
4% 8%
0.1 hectares or less, 40 percent do not sell any of 14%
14% 16%
25%
their produce, while 22 percent sell up to 25 percent, 22%
and another 21 percent sell up to 50 percent. This 21% 22% 23%
suggests that even the smallest landholders engage
in market activities, supplementing their livelihoods 22%
30% 41%
through alternative income sources. Households in 39% 37%
this category are over five times more likely to earn
25%
income from farm wage labor compared to those with
40% 13% 25%
the largest land sizes (62 percent versus 12.5 percent). 16%
16%
11% 9% 6% 2%
Non-farm wages also play a role in rural incomes, 0-0.2 Ha 0.1-0.3 Ha 0.3-0.5 Ha 0.5-1 Ha 1 Ha and above
though they are less common than farm wages. On 0% sold 1-25% sold 26-50% sold 51-75% sold 76-100% sold
average, 24 percent of households engage in non-farm Source: IFPRI, Rwanda Smallholder Agriculture Commercialization Survey, 2023
wage activities with participation reaching as high as
64 percent in Kigali City, where employment opportunities outside agriculture are more prevalent. These trends
highlight the diverse income strategies adopted by smallholder farmers, including agricultural labor, non-farm
employment, and small-scale market participation.
Processing gaps persist across key value only 7 percent of agricultural exports, far below
chains, limiting Rwanda’s ability to add value to the US$205 million target for 2024 (MINAGRI
agricultural products. The potato and bean markets (2024), MINAGRI (2023) and NAEB (2019). 31 Close
remain dominated by unprocessed products with to 70 percent of the vegetable and fruit produce
a few emerging processors like Farm Fresh and is either kept for own consumption by farmers
Hollanda Fair Foods exploring value addition. The or traded in open markets in Kigali or rural areas
rice sector struggles with low domestic quality (World Bank, 2023). Supply chain bottlenecks,
compared to imports, reducing its competitiveness high post-harvest losses (20–49 percent), and
in urban markets. To mitigate excess supply issues, inadequate cold storage infrastructure remain
the government purchased 26,000 tons of surplus key barriers. The Kigali Wholesale Market
paddy rice in 2024 and distributed it through for Fresh Produce (KWSMFP), which secured
school feeding programs. However, investments US$69 million in EU funding in 2023, aims
in research, seed development, and processing to improve logistics and market access, but
efficiency are needed to boost competitiveness and further investments in packhouses, refrigerated
meet growing demand. transport, and export logistics are needed to meet
quality and safety standards.
Horticulture presents a high-potential sector but
faces challenges in market access and logistics.
Despite 136 percent growth in export revenues Overall agriculture exports increased by 38% from US$ 622 million
31
to US$857 million during PSTA 4 implementation (2018-2023),
over five years, horticultural products account for constituting about 34% of total goods exports by 2023.
Rwanda Economic Update • Edition No. 24 27
Growth In Rwanda
Strengthening trade facilitation is crucial for One of the biggest constraints is limited air
enhancing Rwanda’s agricultural competitiveness cargo space, as exports must compete with
and expanding exports, particularly in the passenger traffic, restricting the volume of
horticulture sector. Regional initiatives, such as the perishable goods that can reach international
EAC’s Market Access Upgrade Programme (MARK- markets. Strengthening air cargo infrastructure
UP) and the COMESA’s Alliance for Commodity and reducing logistical bottlenecks will be critical
Trade in Eastern and Southern Africa (ACTESA), are for unlocking Rwanda’s horticulture potential and
supporting trade integration, while domestic efforts driving sustainable export growth. Additionally,
under PSTA 5 emphasize food systems-oriented postharvest management is a major bottleneck,
agriculture. Additionally, RwandAir’s expanded as inefficient handling, cold storage limitations,
cargo capacity has improved export logistics, but and poor supply chain coordination contribute
further measures are needed to address persistent to high spoilage rates. While significant
challenges. Currently, only 4.7 percent of Rwanda’s investments have been made in cold chain
horticulture production is exported, despite the infrastructure, much of it remains underutilized
sector’s rapid expansion, with export volumes due to fragmented value chains and a lack of
increasing by more than 130 percent between private-sector involvement (Box 2.3).
2018 and 2024. However, the sector remains under-
professionalized and bureaucratic, with exporters To fully capitalize on Rwanda’s agricultural trade
lacking centralized farm-to-airport logistics services opportunities, key priorities include developing
and facing fragmented documentation processes and enforcing technical regulations for fresh
that increase transaction costs. produce, strengthening food safety standards,
Box 2.3: Lessons from cold storage infrastructure development
The Government of Rwanda financed the construction of solar-powered cold storage facilities near irrigation sites
in 2019. These facilities were intended to be managed by neighboring cooperatives, providing producer groups in
irrigated areas with cold storage for high-value crops. The goal was to attract traders supplying higher-value markets,
demonstrating a public-sector investment aimed at bridging market failures in a credit-constrained sector.
However, utilization of these facilities has been mixed. Many remain underutilized, even though some do not
charge a service fee for produce storage. A fundamental design issue was that not all parts of Rwanda receive
sufficient sunlight for solar-powered storage to function efficiently. Additionally, the location of several facilities
was suboptimal, failing to align with key market access points. There was also no clear operational and management
framework, leading to inefficiencies. Cold storage requirements vary by crop, yet the infrastructure lacked proper
temperature control mechanisms, limiting its effectiveness. A diagnostic study of publicly funded agricultural
infrastructure (MINAGRI, 2021) found that up to 25 percent of cooling storage facilities were operational, further
highlighting these challenges ( (MINAGRI, 2021).
The study Energy Efficient Cold Storage in Agriculture identified several key recommendations to improve
utilization, which could inform future investments. These include: (i) addressing technology gaps through phased
improvements, upgrades, and scheduled maintenance; (ii) transitioning to private-sector-driven management to
improve efficiency and accountability; (iii) developing standard operating procedures for post-harvest handling
of fruits and vegetables to reduce food losses and support different farm systems, from smallholders to large
agribusinesses; and (iv) aligning regulations with investment priorities through better coordination between
regulatory agencies and a clear policy framework to encourage future investment in cold storage infrastructure.
Source: ESMAP - Energy Efficient Cold Storage in Agriculture, 202232
Presentation by ESMAP: Efficient, clean, cooling Program and World Bank cooling facility: https://united4efficiency.org/wp-content/uploads/2022/03/
32
Sustainable-Cold-Chain-in-Africa-Summit-presentations-20220318.pdf (this box refers to the content from slide 82).
28 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
and expanding cold storage and air cargo capacity. marketable surpluses, expanding support through
Additionally, formalizing value chains through agricultural knowledge dissemination and
improved regulation, stronger private-sector appropriate technologies, and financial products will
participation, and targeted public investments will be crucial to enable them to improve productivity.
create a much-needed “pull” effect, ensuring that Additionally, scale-appropriate strategies tailored
infrastructure investments translate into increased to smallholder farmers—such as climate adaptation
exports and market competitiveness. The Kigali- programs and targeted input subsidies—could in
based African Center for Excellence for Cold Chain addition to enhancing productivity, improve food
Infrastructure must also be fully operationalized to security, and strengthen resilience against climate
train professionals and provide technical expertise shocks. For farmers with very small landholdings,
for the sector. Rwanda’s postharvest management whose main occupation is not their own agriculture
strategy, developed in 2022–23, remains stalled production, or households that are unable to work,
due to funding delays, underscoring the need for e.g., elderly households, other interventions may be
greater policy coordination and financial support more suitable such as skills strengthening or social
to reduce losses and improve export quality. protection programs. Developing farm household
By addressing these challenges, Rwanda could profiles will be important to appropriately target
position itself as a regional leader in high-value different policies.
agricultural exports while ensuring sustainable
and inclusive sectoral growth. Enhancing women’s participation in agriculture is
key to unlocking the sector’s full potential. While
Importance of equitable and inclusive policies Rwanda has made significant progress in gender
Equitable and inclusive policies are essential equality, disparities persist. Female-managed
for ensuring broad-based growth in Rwanda’s farms are 12 percent less productive than male-
agricultural sector. Currently, two-thirds of managed farms, with half of this gap attributed to
Rwandan farmers cultivate plots of 0.3 hectares or women’s lower access to inputs and services. Fewer
less (IFPRI, 2024). limiting their ability to transition women than men farm on land protected against
beyond subsistence farming. To address this, well- soil erosion or equipped with irrigation, and
adapted social protection programs and skills women remain underrepresented in institutions
development initiatives are critical. Targeted governing irrigation services. Additionally,
gender-inclusive policies could further promote financial disparities hinder women’s ability to
women’s access to training, financial resources, invest in agriculture. Lower financial literacy
and technology, ensuring equal land rights and and limited awareness of financial services have
market opportunities to bridge the gender gap in resulted in significantly fewer female applicants
agricultural productivity. for commercial bank loans—as observed during
the CDAT preparation process. Addressing these
Rwanda’s labor survey indicates that 54 percent gaps through inclusive financial policies, capacity-
of farmers are subsistence farmers with low building programs, and improved access to
productivity (NISR, 2025), but this group is diverse agricultural infrastructure is critical to ensuring
and requires a diverse set of interventions. women’s full participation in Rwanda’s agricultural
For those groups of farmers seeking to achieve transformation (see Table 2.3).
Rwanda Economic Update • Edition No. 24 29
Growth In Rwanda
Table 2.3: Discrepancies between men and women in the agricultural sector (percent)
Access to/use of: Women Men
Improved seeds 8% 18%
Inorganic fertilizers 15% 20%
Organic fertilizers 45% no data
Irrigation 6.4% 11.5%
Cultivating on land protected against soil erosion 62.5% 70.2%
Bank account (approx.) 20% 33%
Savings & Credit Cooperatives (among bank account holders) 66% 57%
Commercial financial institutions (among bank account holders) 26% 33%
Loans from a formal source 3% 6%
Loans in the size of < 5000 Rwf* 30% 17%
Loans in the size of 200,000-500,000 Rwf* 18% 23%
Loans for agricultural inputs 1.5% 3.3%
Source: Rwanda Agriculture Gender and Youth Mainstreaming Strategy (2019); Assessing the Implementation, Accountability of “Gender and Youth mainstreaming
strategy in agriculture 2019–2026” (2021)
Note: * Among those receiving a loan from a formal source
Agriculture finance and de-risking mechanisms farmer resilience have contributed to loan portfolio
Limited access to agricultural finance remains deterioration, reducing lenders’ willingness to
a major constraint to sector transformation. In expand credit to the sector. In 2016–17, NPLs
2019, formal credit to production accounted for in agriculture exceeded 18 percent, prompting
only 4.1 percent of agricultural GDP, rising to 7 a pullback in commercial bank lending. Some
percent when loans for agricultural trading and financial institutions focus on well-organized value
processing were included; by 2024, credit to chains, such as maize, rice, and potatoes, leveraging
agriculture investments made up just 6 percent of off-taker agreements, but overall agriculture
total lending. According to the 2020 Agricultural credit growth has been slower than total private
Household Survey, 39 percent of agricultural sector credit for the past five years. Many lenders,
households requested loans, yet fewer than 20 particularly MFIs and SACCOs, lack expertise and
percent applied to formal lenders (banks, MFIs, tailored financial products to serve the sector
and SACCOs), highlighting a major financing gap. effectively.
Agricultural SMEs—critical for transformation—
also use formal financial services through banks Strengthening financial institutions’ capacity and
less frequently than other SMEs (World Bank, 2016). expanding de-risking mechanisms are critical
Barriers include limited financial experience among for improving agricultural finance. Programs
farmer organizations, weak data availability for under the Business Development Fund (BDF) have
risk assessment, inadequate financial products for introduced partial credit guarantee schemes,
seasonal cash flows, and high mortgage registration yet private financial institutions (PFIs) remain
costs for collateral-backed loans. reluctant to invest due to perceived high risks and
the seasonal nature of agricultural revenues. The
Agricultural lending is perceived as high-risk, CDAT project supports affordable credit access and
discouraging private sector participation. In enhances PFIs’ ability to assess agricultural risks,
June 2022, agriculture had a non-performing loan helping expand their loan portfolios. A practical
(NPL) ratio of 7.8 percent, higher than the banking step toward strengthening agricultural finance
sector average (4.3 percent) and MFIs’ sector is recruiting more loan officers with agricultural
average (5 percent). Past climate shocks and weak backgrounds (e.g., from agricultural universities)
30 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
and training them in financial risk assessment. agricultural inputs, while price floor policies for key
Additionally, the government should evaluate the crops have resulted in market distortions and unsold
impact of matching grant programs to prevent surpluses. To accelerate transformation, Rwanda
them from crowding out private lending by offering must strengthen research, improve financial access,
free grants for investments that could otherwise and balance state-led support with private sector-
qualify for commercial loans. driven solutions.
Progress has been made in scaling up agricultural Agricultural transformation strategy: objectives
insurance as a de-risking tool, but broader uptake and priority areas
is needed. The National Agriculture Insurance The Fifth Strategic Plan for Agriculture
Scheme (NAIS), launched in 2019, is 40 percent Transformation (PSTA5), launched in December
subsidized by the Government of Rwanda. Between 2024, aims to create a resilient and sustainable
July 2023 and June 2024, insured livestock increased agri-food system to tackle climate change,
to 244,183 animals (51,231 cows, 214,499 chickens, enhance food security, and drive economic
and 8,453 pigs), while crop insurance covered growth. The strategy identifies six key challenges
33,629 hectares (24,636 ha rice, 1,738 ha Irish limiting the sector’s potential (MINAGRI, 2024):
potatoes, and 5,690 ha maize). However, farmer land scarcity, low productivity, high post-harvest
participation remains low, with less than 4 percent losses, climate change impacts, limited access
of farmers holding active crop insurance policies. to finance and insurance, and weak market
While awareness campaigns have increased integration. Land constraints are worsening due to
coverage, PFIs need to integrate insurance products population pressures, while crop yields remain at
into agricultural loan risk assessments, and a shift only 40–50 percent of their potential. Post-harvest
toward private-sector-led insurance development losses remain high, affecting 13.8 percent of maize,
is necessary for long-term sustainability. 12.4 percent of rice, 11.3 percent of beans, and
over 25 percent of Irish potatoes and vegetables.
2.3 Current policy orientations and regional Climate-related losses amount to 2–10 percent
commitments of agricultural GDP annually, with soil erosion
Rwanda’s agricultural transformation strategy alone costing Rwf 810 billion per year. Meanwhile,
(PSTA5) aims to modernize the sector through agriculture remains underfinanced, receiving just
increased productivity, better market integration, 6 percent of total commercial lending, while only
and enhanced resilience, but key challenges include 11 percent of farmers have agricultural insurance.
land scarcity, low yields, post-harvest losses, and Market integration is also weak, with only 25
limited access to finance. Despite strong commitment percent of farmers linked to organized value chains,
to regional agreements like the CAADP, Rwanda’s despite market participation being crucial for food
agriculture expenditures have remained below the security—subsistence farmers experience food
10 percent target, and its latest performance in the insecurity at 32 percent, compared to 12 percent
Biennial Review declined. Investments in research and among commercial farmers.
extension services are minimal, limiting innovation
and the adoption of modern farming practices. The To address these constraints, PSTA5 prioritizes
government’s input subsidy program has increased three key areas to drive agricultural
fertilizer use but remains fiscally unsustainable, transformation (MINAGRI, 2024). The first
prompting delayed reform efforts to transition focuses on modernizing agriculture and livestock
toward private sector-led supply systems. Regulatory production to enhance climate resilience, aiming to
inefficiencies continue to slow the introduction of new expand irrigated land by 15 percent and increase
Rwanda Economic Update • Edition No. 24 31
Growth In Rwanda
fertilizer use by 7 percent to 75 kg/ha, with a Implementation of regional commitments
target of doubling productivity for key crops and Rwanda has been the most progressive country in
livestock. The second priority seeks to reduce Africa in implementing the Maputo and Malabo
post-harvest losses by 50 percent and increase commitments under the Comprehensive Africa
farmer participation in organized value chains Agriculture Development Programme (CAADP).
from 25 percent to 60 percent. The third focuses These initiatives aim to increase agricultural
on strengthening enablers for efficient agri-food investment, achieve food security, promote
system delivery, including increasing agricultural agricultural research and innovation, and enhance
credit from 6 percent to 14 percent of total lending resilience in agriculture.32 The Maputo Declaration
and expanding insurance coverage from 11 percent (2003–2013) set targets of at least 6 percent annual
to 30 percent. Implementation of PSTA5 will be agricultural growth and a minimum of 10 percent
supported by three flagship programs: Farm Service of national budgets allocated to agriculture. These
Centers (FSCs) to provide access to inputs and goals were reaffirmed in the Malabo Declaration
advisory services, Agri-Hubs and Food Basket sites (2014–2025). Over the past decade, Rwanda’s
to enhance value addition and trade integration, agriculture sector has grown by an average of
and the Customized Agricultural Extension System 5 percent annually, but its performance against
(CAES) to deliver tailored extension services. CAADP commitments has been mixed. While
Additionally, the five fruit trees per household Rwanda met the targets in 2014, 2018, and 2021,
initiative aims to combat malnutrition, improve its agricultural spending fell short of the 10 percent
household incomes, and promote environmental target, averaging just above 8 percent between
sustainability. Through these efforts, MINAGRI 2014 and 2022 (Figure 2.9). Despite outperforming
targets an annual agriculture sector growth rate other East African Community (EAC) countries and
of 6 percent by 2029, with a strong emphasis on exceeding the continental average, it trailed behind
gender equity, youth inclusion, climate adaptation, Ethiopia and Malawi, which consistently met the
and digital innovation. 10 percent benchmark. Other strong performers
included Nigeria, Burkina Faso, Mali, and Sudan,
To achieve higher and more sustainable with spending averaging over 9 percent.
agricultural growth, Rwanda must leverage
Figure 2.9: Government agriculture expenditure
economies of scale, expand irrigation coverage, % of total expenditure
strengthen market infrastructure, and attract 25.0
private sector participation. The government
should focus on public goods—such as market- 20.0
driven research, extension services, and climate
15.0
resilience investments—while private sector efforts
should drive technology adoption, mechanization, 10.0
and specialized production. Ensuring that
5.0
government-led matching grants do not crowd
out private investment will be crucial, and such 0.0
ia
so a
a
ia
initiatives should have clear exit strategies to
Iv te
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i
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Fa rkin
an
aw
er ica
r
ga
op
e
e
d' Cô
ge
er C
oi
et
ag
ag
Ta AA
an
Gh
av EA
ne
av fr
al
hi
Ni
Bu
A
Rw
M
C
Et
Se
transition toward market-based solutions. A
Source: Regional Strategic Analysis and Knowledge Support System (ReSAKSS) data
private-sector-driven agriculture model will
allow faster adaptation to market signals, greater
efficiency, and expanded value-added production,
ReSAKSS (2023), African Food Systems Transformation and the
32
positioning Rwanda’s agriculture sector for long- Post-Malabo Agenda (https://www.resakss.org/sites/default/
f i l e s / 2 0 2 3 % 2 0 A n n u a l % 2 0 Tr e n d s % 2 0 a n d % 2 0 O u t l o o k % 2 0
term competitiveness and resilience. Report%20%28ATOR%29.pdf )
32 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
Rwanda has consistently ranked among the income countries and 0.24 percent for middle-
top performers in the CAADP Biennial Reviews income countries (excluding Brazil, China, and India,
(BR), earning an “on track” rating in 2018, 2020, where it stood at 1.95 percent, 0.45 percent, and 0.3
and 2022.33 However, in the latest 2024 Biennial percent, respectively). In high-income countries,
Review,34 its performance declined to “not on the R&D investment rate is substantially higher at
track,” scoring 8.07 out of 10, below the required 2.8 percent.
9.29 threshold. Of the seven CAADP commitments,
Rwanda was only “on track” in mutual accountability Rwanda has expanded farmer training
for actions and results. The country performed programs, but greater investment in modern
weakest in Investment Finance in Agriculture (5.05 extension services is needed to achieve sector
out of 9.50) and Eradicating Hunger (6.01 out of transformation. The Farmer Field School (FFS)
9.26). The biggest gaps in investment finance were approach has been scaled nationally to train
in domestic and foreign private sector investments, facilitators and establish schools across the
scoring just 1.48 and 1.76 out of 9, respectively. country. Additional initiatives, such as Farmer
Under Eradicating Hunger, Rwanda performed Business Schools (FBS), focus on enhancing farmers’
lowest in food security and nutrition (2.56 out business skills and promoting income-driven
of 9) and sanitary and phytosanitary measures decision-making through cost-benefit analysis.
(5.04 out of 9). Despite these challenges, Rwanda The Farm Service Centers (FSCs) provide farmer
remained the highest ranked country in Africa training, farm input supply, and livestock feed
for implementing the Malabo Declaration on distribution. To strengthen the extension system,
Agriculture Transformation and was among the 12 Rwanda has partnered with Rwanda Youth in Agri-
countries that have shown steady improvement Business Forum (RYAF) and Horticulture in Reality
since 2018.35 Corporation (HORECO) to engage young university
graduates from agricultural programs in providing
Implementation of research and extension programs technical support, particularly in irrigated areas.
Public spending on agricultural research and
extension in Rwanda remains low, despite Expanding private sector-led extension models
strong evidence of its high returns for sector is crucial for scaling up modern, technology-
growth. Investments in research and extension are intensive agronomic practices. The envisioned
globally recognized as key drivers of agricultural agricultural transformation will require stronger
productivity, yet in 2023/24, Rwanda allocated only technical assistance for farmers, promoting
2.6 percent of its agriculture budget to these areas, a “farming as a business” approach. This will
a level consistent with previous years. Spending on necessitate increased public sector investment
agricultural research and development (R&D) was in market-driven, value chain-oriented research
just 0.06 percent of agricultural GDP, significantly systems, while strengthening private-sector-
below the global averages of 0.34 percent for low- led extension through off-taker and out-grower
production models. Out-grower farming schemes
provide farmers with bundled input support—
33
JICA Ogata Sadako Research Institute for Peace and Development
(2024), Lagging Agricultural Development in Africa and the Way including seeds, pesticides, and fertilizers—along
Forward: Progress and Challenges for the Comprehensive Africa
Agriculture Development Programme (CAADP) (https://www. with training, with costs deducted at harvest.
jica.go.jp/english/jica_ri/publication/knowledge/__icsFiles/ Expanding such models will be critical for improving
afieldfile/2024/12/20/Knowledge_Report_No10.pdf )
34
AUDA-NEPAD (2024), 4th CAADP Biennial Review Report 2015–2023 productivity, increasing market integration, and
(https://au.int/sites/default/files/documents/43556-doc-EN_4th_ enhancing resilience in Rwanda’s agriculture sector.
CAADP_Biennial_Review_Report-COMPLETE.pdf )
35
Other countries were Comoros, Lesotho, Cabo Verde, Zimbabwe,
Gambia, Nigeria, Uganda, Egypt, Morocco, Burundi and Kenya.
Rwanda Economic Update • Edition No. 24 33
Growth In Rwanda
Inputs subsidy programs: implementation and subsidies between 2024 and 2026, with a full
planned reforms phase-out thereafter. However, the Russia’s invasion
Rwanda introduced fertilizer subsidies in 2007 as of Ukraine triggered a sharp 78 percent increase
a key strategy to boost agricultural productivity in agricultural input prices, delaying reforms
under the Crop Intensification Program (CIP). indefinitely.39 The Government had planned to
Initially, subsidies covered six priority crops—maize, prepare farmers for the transition by (i) strengthening
wheat, rice, Irish potatoes, beans, and cassava—but extension services to improve fertilizer use
have since expanded to include soybeans, bananas, efficiency, (ii) enhancing access to finance through
fruits, and vegetables.36 The main subsidized mechanisms such as contract farming, and (iii)
fertilizers—Urea, DAP, and NPK 17-17-17—were increasing private sector involvement in input
initially subsidized at 50 percent for Urea and DAP, distribution. A targeted approach to subsidies—
and 20 percent for NPK.37 These rates remained based on land size, household type, and cropping
unchanged for six years before being reduced to 35 portfolios—was also planned to protect vulnerable
percent for DAP, 30 percent for Urea, and 15 percent farmers during the transition, ensuring continued
for NPK 17-17-17 until 2021. As global fertilizer prices support for very poor farming households.
surged—Urea rose by 26 percent, while DAP and NPK
increased by 16 percent between 2017 and 2021, The Government remains heavily involved in
before nearly doubling between 2021 and 2022— input markets, but planned reforms aim to shift
the Government absorbed 50–60 percent of the responsibility to the private sector. While a
price increase to prevent a decline in fertilizer use. In private fertilizer distribution network exists, the
January 2022, subsidy rates increased to 40 percent Government, through APTC, Rwanda Agriculture
for Urea, 42 percent for DAP, and 35 percent for NPK Board (RAB), and NAEB, plays a dominant role
17-17-17. By July 2024, fertilizer prices dropped by in procurement and distribution.40 APTC, a
22 percent for Urea, 16 percent for NPK 17-17-17, government-owned company, manages fertilizer
and 10 percent for DAP, prompting a reduction in subsidies, overseeing supply and demand. It
subsidy rates to 33 percent, 3 percent, and 5 percent, coordinates with district agronomists to track
respectively. Despite these adjustments, the subsidy fertilizer needs via the Smart Nkunganire System
program’s share of the agriculture sector budget (SNS), introduced in 2017. The system is integrated
for FY2024/25 declined only marginally, from 11.7 with the Mobile Ordering and Processing
percent in 2022 to 10.8 percent, reflecting increased Application (MOPA), which allows agrodealers to
fertilizer demand among farmers. check inventory and locate inputs. APTC also acts
as a fertilizer distributor by sourcing inputs from
Recognizing the fiscal burden of continuing government-approved importers. Meanwhile, NAEB
subsidies, the Government proposed a phased oversees fertilizer distribution in the coffee sector,
reform of the Input Subsidy Program (ISP) in 2022, contracting major importers to secure supplies.
but implementation has been delayed (MINAGRI,
2022)38. The reform aimed to gradually reduce Planned reforms seek to liberalize the fertilizer
market, reduce inefficiencies, and address
36
IRDP, Crop Intensification Program (CIP), Citizen’s Satisfaction farmer challenges. By phasing out subsidies,
Survey–2018, available at http://www.irdp.rw/wp-content/
uploads/2019/02/Final-printed-CIP-report.pdf
37
Subsidy rates were sourced from different MINAGRI ministerial 39
AGRA – Hub for Agricultural Policy Action (2023), Review of Agricultural
instructions related to the distribution and usage of subsidized seeds Subsidy Programmes in Sub Saharan Africa: The Impact of the Russia’s
and agrochemical fertilizers (https://www.minagri.gov.rw/updates/ invasion of Ukraine (https://agra.org/wp-content/uploads/2023/01/
announcements) HAPA-Review-of-Agricultural-Subsidy-Programmes-in-Sub-Saharan-
38
(i) MINAGRI (2022), Agricultural Inputs Subsidy Program In Africa.pdf )
Rwanda: A Proposal For Reforms, and (ii) Government cabi- 40
Unique Land Use (2022), Rwanda Value Chain and Regulatory
net approval of subsidy reforms (March 2022): https://www.pri- Assessment (report prepared on behalf of IFC, and can be accessed
mature.gov.rw/index.php?eID=dumpFile&t=f&f=79790&token=00d- via: https://www.unique-landuse.de/wp-content/uploads/2024/10/
379b64550358a4d06d7810b4fb353a006309b). Rwanda-Value-Chain-and-Regula.pdf )
34 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
the Government aims to reduce public sector and MINAGRI, leading efforts to draft a revised
involvement in procurement and distribution, agrochemical law. This new law is expected to
allowing the private sector to take over these improve regulatory efficiency, support local
functions. However, inefficiencies in the current agrochemical production, and facilitate input
input supply chain remain a concern.41 Farmers importation. It will be essential that the revised
report soil quality deterioration requiring higher law aligns with the East African Community’s
fertilizer doses than allocated through SNS, while (EAC) Fertilizer Policy and Bill, which were drafted
rental farmers are often excluded from subsidies as and validated at the national and regional levels
SNS does not recognize informal land agreements. in 2020.44 A key provision includes the mutual
Agrodealers also face restrictions on selling outside recognition of fertilizers already registered in other
designated areas and limited flexibility in restocking EAC countries, a reform that could significantly
fertilizer supplies. Addressing these issues will be reduce registration time, lower costs, and improve
critical to ensuring a smooth transition to a market- the availability and quality of agricultural inputs.
driven input distribution system.
2.4 Recommendations
Regulations on agricultural input registration and Raising agricultural productivity
market impacts Modernizing Rwanda’s seed sector is a short-term
Regulatory bottlenecks in agricultural input priority to boost crop yields and enhance climate
registration continue to hinder supply chain resilience. This requires a value chain-driven,
efficiency and market competitiveness. The market-oriented research system, greater private
2019 Enabling the Business for Agriculture (EBA) sector involvement in seed multiplication, and
assessment found that registering a new fertilizer streamlined international seed variety exchanges
product in Rwanda takes up to 730 days, largely to improve genetic resources. While efforts have
due to lengthy efficacy trials and laboratory reduced reliance on imported seeds, productivity
testing. There is little evidence of significant gains remain limited due to misalignment
improvements since then, as recent assessments between seed research and market needs. Key
indicate that while the minimum registration time reforms should remove barriers to germplasm
is one year (two agricultural seasons), the process exchange, accelerate input registration, and
often extends to two to four years, averaging promote knowledge-sharing. Strengthening
three to four agricultural seasons.42,43 The lack of private sector participation will ensure a more
coordination between these agencies has led sustainable and efficient seed system, driving
to protocol misalignments, rejected trials, and investment in agricultural production. However,
applicant frustrations, discouraging new product it is crucial that these advancements align closely
submissions. with environmental sustainability objectives,
ensuring agricultural expansion does not
To streamline the process, enhanced negatively impact ecosystems.
collaboration between RAB and Rwanda Institute
for Conservation Agriculture (RICA) is needed, Expanding farmer-led irrigation development
along with regional harmonization of regulations. is another key step toward raising yields and
The Government has taken steps to address these mitigating climate risks. The Small-Scale Irrigation
challenges, with RICA, in coordination with RAB Development (SSIT) program has helped farmers
41
Ibid.
Agriculture Inputs System Development, article consulted on
44
42
Ibid. EAC website in December 2024: https://www.eac.int/agriculture/
43
Discussions with RICA in November 2024. agricultural-inputs-system-development
Rwanda Economic Update • Edition No. 24 35
Growth In Rwanda
improve resilience to irregular weather and increase farmers’ access to inputs, advisory services, and
off-season production. However, irrigation remains secure market opportunities. Integrating the
underutilized, with many farmers lacking access “Farming as a Business” model into Rwanda’s
due to high costs. The program must transition extension services will help farmers adopt more
from an emergency drought response measure to a commercial approaches, increasing productivity
commercial farming input by scaling up credit lines, and private sector participation. Policies should
partial credit guarantees, offering tailored financial promote high-value crops, facilitate financing for
products for private irrigation investments. technology adoption, and use matching grants to
Evidence from SAIP shows that irrigation access bridge market gaps. Institutions like NAEB need
can increase smallholder crop yields and cash technical support to strengthen value chains and
profits by 70 percent, yet uptake remains low due attract investment. Collaboration is particularly
to financial constraints. important for initiatives like the Kigali Wholesale
Market, where market management models
Implementing the Irrigation Strategic Plan remain underdeveloped.
will improve water use efficiency and enhance
irrigation scheme management. Many public Expanding agro-logistics and cold chain
irrigation investments, particularly hillside irrigation infrastructure will reduce post-harvest losses and
schemes, remain underutilized due to weak market improve access to high-value markets. Upgrading
connections and a lack of farmer incentives. agro-logistics requires targeted investments in
Strengthening Water User Associations (WUAs), certification training, packaging, and cooling
improving irrigation governance, and integrating solutions such as thermal boxes for farm collection
irrigation schemes with agricultural output centers. Enhancing storage facilities, road
markets will help maximize returns on investment. connectivity, and renewable-energy-powered
Expanding access to irrigation, alongside better cold chain solutions—including insulated
market access for irrigated crops, will drive long- trucks—will improve efficiency. Enforcing
term productivity improvements. technical regulations and quality standards
for fresh produce handling will encourage
Reforming input subsidy programs is also private investment and enhance Rwanda’s
necessary to enhance productivity while ensuring competitiveness in regional and global markets.
fiscal sustainability. The gradual removal of
input subsidies, paired with targeted support for A food policy strategy is needed to balance
vulnerable farmers, will improve supply efficiency higher value agricultural production with food
and create space for private sector investment security and affordability. Aligning price policies
in input supply chains. A more market-driven with market conditions while maintaining stability
approach will encourage competition, promote measures will improve flexibility. A comprehensive
innovation, and reduce reliance on government-led food policy should prioritize investments in local
fertilizer procurement and distribution. market infrastructure, food safety regulations, and
institutional capacity, supporting smallholder
Strengthening agribusiness, processing, and private farmers while integrating Rwanda into regional
sector investment and international trade.
Rwanda’s agricultural transformation requires
shifting from raw commodity production to Unlocking private sector investment can help
higher value agribusiness and processing. sustaining long-term agricultural growth. Rwanda
Strengthening farmer organizations and market must improve access to finance, strengthen
linkages will support this transition by improving agribusiness ecosystems, and create an enabling
36 Rwanda Economic Update • Edition No. 24
Growth In Rwanda
environment for commercial agriculture. and reduce trade barriers, ensuring a more
Finalizing and approving the Agriculture Finance predictable and efficient business environment
Strategy could help improve coordination for input suppliers. Providing technical and
between grants, concessional credit, and private financial support to RICA will accelerate policy
investment. The strategy should strengthen implementation and improve enforcement.
private-sector-led financing mechanisms while Strengthening RICA’s capacity will enable more
preventing public grant programs from crowding timely assessments of new agricultural inputs,
out commercial lending. enhance compliance monitoring, and improve
farmer access to high-quality fertilizers and
Improving market access pesticides. Additionally, investments in inspection
Removing key barriers to export expansion systems, digital tracking of product approvals, and
can help maximize Rwanda’s agricultural trade training programs for regulatory staff will enhance
potential. Short-term interventions should efficiency and transparency. These measures will
include increasing certification capacity through create a more business-friendly environment,
training local certifiers, providing financial encourage private sector participation, and
support for certification and farm infrastructure ensure that farmers benefit from improved input
improvements, and enhancing regulatory availability and affordability.
enforcement. Expanding access to financing
for horticultural exporters, particularly for cold As part of PSTA-5, Rwanda should conduct an
chain investments, is also necessary. Additionally, agriculture and food security risk assessment to
targeted business development services would identify the most pressing risks across regions
help exporters professionalize operations and and value chains. A comprehensive assessment
establish stronger marketing networks abroad, would help the government anticipate and respond
improving Rwanda’s competitiveness in regional to climate shocks, market volatility, and supply
and international markets. chain disruptions, ensuring more effective resource
allocation. Countries that have undertaken similar
Rwanda must fast-track approvals for new assessments have successfully implemented policies
agricultural inputs, harmonize regulations with that enhance food security while supporting higher
the EAC, and finalize the agrochemical law to value agricultural production. Developing a well-
facilitate private sector engagement in the structured risk management framework would allow
agricultural supply chain. Lengthy and complex Rwanda to balance national food security priorities
approval processes for fertilizers, agrochemicals, with opportunities for expanding commercial
and other essential inputs discourage investment agriculture. By integrating risk assessments into
and delay the adoption of productivity-enhancing policy planning, the government can strengthen
technologies. Aligning regulatory frameworks with resilience, improve market stability, and enhance
EAC standards will improve market integration the sector’s long-term sustainability.
Rwanda Economic Update • Edition No. 24 37
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38 Rwanda Economic Update • Edition No. 24