With 12.95 million people, Rwanda has the second highest population density in Africa and does not have the luxury of space that most other countries enjoy. Rwanda is a hilly and high altitude country with a mix of agriculture-friendly zones and micro-climates. Despite strong economic growth and poverty declines due to clear-minded governmental planning and investments, undernourishment rates remain high at around 35% since the mid-2000s. While Rwanda is an example of good policy-driven development, it started from a low bar after the mid-90s genocide. 80% of the population still lives on less than $3.10 per day, and almost 70% depends on rural livelihoods. The agricultural sector still plays a significant role in overall economic growth, although it is decreasing.

Despite a pick-up in other sectors, Rwanda is mostly an agricultural economy. Coffee and tea are major foreign exchange earners for the country. The most common crops grown are sweet potatoes, maize, beans, cassava, paddy rice, and bananas. According to the 2021 seasonal survey report, crop production has increased, with paddy rice, beans, Irish potatoes, maize, banana, and cassava all seeing growth.

Rwanda has achieved its CAADP targets, and invested in infrastructure to support agricultural development, such as feeder roads and cooperative governance structures. The government has improved staple food production and is shifting towards higher yield goods such as horticulture, vegetables, poultry, pork, and fisheries. They are also improving the operating environment for private sector investment. However, challenges still remain such as land tenure reforms, regional crop specialization, and monocropping that can prevent smallholders from using and benefiting from their land.

The World Bank has warned that the country’s public sector-led development model has limitations, with public debt increasing in recent years. Due to Covid-19, Rwanda, like many African countries, has experienced balance of payment challenges as export and tourism earnings have been disrupted. To ensure economic growth, the private sector must play a bigger role. However, low domestic savings, skills limitations, and the high cost of energy are major constraints to private investment. A stronger private sector will help sustain high investment rates and accelerate growth, but inclusive growth remains a key challenge. To recover from the pandemic, a medium-term public investment strategy is necessary for efficient allocation of resources towards critical projects that promote broad-based and inclusive economic recovery, and to counteract weakened poverty reduction efforts in recent years.

Thanks to increased public investment, Rwanda has experienced an average economic growth of 7.2% over the past decade, with per capita GDP growing at an annual rate of 5%. This growth has led to significant improvements in social indicators such as poverty reduction, life expectancy, maternal and infant mortality, and primary school enrollment. Improvements in the ease of doing business and political stability have also attracted a lot of foreign investments resulting in higher inflows. According to the United Nations Conference on Trade and Development, inflows increased from $382 million in 2018 to $420 million in 2019, one of the highest amounts in sub-Saharan Africa.