RWANDA

COUNTRY OVERVIEW

LOCATION AND SIZE.

The Republic of Rwanda is a land-locked country located in central Africa. It is bordered on the east by the Democratic Republic of the Congo, with which it shares the shores of Lake Kivu; on the north by Uganda; on the west by Tanzania; and on the south by Burundi. Rwanda is a small country with an area of 26,338 square kilometers (10,169 square miles). Comparatively, Rwanda is about the size of the state of Maryland. The capital city of Kigali is in the center of the country.

POPULATION.

Rwanda's population was estimated at 7,229,129 in 2000. Already the most densely-populated country in Africa, Rwanda's population is growing at a rate of 3 percent annually, according to the U.S. State Department. At this rate the population is expected to reach 11.2 million by 2012, despite the fact that huge numbers of Rwandans are dying from AIDS-related illnesses. In 2000, there were approximately 34.78 births per 1,000 people. The fertility rate in Rwanda is high. An average Rwandan mother gives birth to 5 children in her lifetime. But this statistic is tempered by the fact that approximately 12 percent of Rwandan babies die at birth. The average Rwandan's life expectancy is equally dismal; on average, Rwandan males live to 38.58 years old and the average female has a life expectancy of 40.13 years.

Rwanda is populated by 3 ethnic groups: Hutu (84 percent), Tutsi (15 percent), and Twa, or Pygmoid (1 percent). Rwandans are predominantly Christian. Some 65 percent of the population is Roman Catholic, while 9 percent is Protestant. About 25 percent of the population practices indigenous and other beliefs, with only 1 percent being Muslim. Rwanda has 3 official languages: Kinyarwanda, French, and English. Kiswahili (an offshoot of Swahili) is spoken primarily in the country's commercial centers. Rwanda is one of the most densely populated countries in Africa, with 317 persons per square kilometer on average (or 820 people per square mile).

OVERVIEW OF ECONOMY

The single biggest factor in Rwanda's recent economic history is the 1994 genocide (see Politics, Government, and Taxation). In that year, Rwanda's ethnic majority, the Hutus, committed genocide against the Tutsi minority. The casualties of that genocide numbered more than half a million Tutsis. The genocide devastated Rwanda's already fragile economy by further impoverishing its population and unraveling its social fabric. The economy shrank by 50 percent within a year of the genocide, and per capita incomes dropped to US$80 a year.

Since the 1994 genocide, however, Rwanda has made significant headway in rehabilitating its economy. Annual gross domestic product (GDP) growth rates hit 37 percent in 1995, 12 percent in 1996 and 1997, and 10 percent in 1998. Inflation fell from its 1994 highs and government revenues increased. Agricultural production reached pre-war levels by 1998, though there is little new investment in this sector. Moreover, nearly 40 percent of the industries operating in 1994 have not resumed operations. Economic growth slowed in 1999, thanks to low prices for Rwanda's major exports and rising world oil prices.

Today, Rwanda remains a poor country dependent on agricultural production and foreign aid. It is primarily a rural country and about 90 percent of its population works in subsistence agriculture, and 65.3 percent of the population lived below the poverty line in 1998. Its main exports, coffee and tea, account for 70 percent of exports. Rwanda receives 75 percent of its budgetary requirements from foreign aid organizations. The Rwandan government, the International Monetary Fund (IMF), and the World Bank have agreed to a privatization program that is expected to invigorate Rwanda's economy. Future growth in Rwanda's economy, however, will depend on continued political stability, assistance from the IMF and the World Bank, and the strengthening of world coffee and tea prices.

POLITICS, GOVERNMENT, AND TAXATION

Rwanda's politics have long been colored by conflicts between the nation's 2 dominant ethnic groups, the Hutus and the Tutsis. In 1959, the Hutu ethnic majority toppled the ruling Tutsi king. After the king fled, the Hutus killed thousands of Tutsis, and more than 150,000 Tutsis fled into exile in neighboring countries. The children of these exiled Tutsis eventually formed a rebel group, the Rwandan Patriotic Front (RPF), and in 1990 returned to Rwanda to wage war against the Hutu government. This war, along with the assassination of Rwanda's Hutu President Juvenal Habyarimana and certain economic upheavals, compounded ethnic tensions which erupted in 1994. The Hutus massacred more than half a million Tutsis and some moderate Hutus (some estimates indicate that the number of dead was closer to 1 million). That same year, the RPF defeated the FAR (the Hutu regime's army) and the Interhamwe (the Hutu militia group that spearheaded the Tutsi genocide) and took military control of the country. The Tutsi ascension to power sparked a massive exodus of Hutus from Rwanda. Once defeated, the Hutus feared Tutsi retribution and approximately 2 million Hutu refugees, including armed members of the ex-FAR and Interhamwe, poured into the Democratic Republic of the Congo (the Congo) and trickled into Burundi, Tanzania, and Uganda. Most of these refugees have since returned to Rwanda. But the ex-FAR and the Interhamwe remain in the Congo and continue to threaten Rwanda's stability.

In 1991, the primarily Hutu Rwandan government ratified a constitution that provided for a multiparty democracy, a limited executive term, and independent legislative and judicial branches. In 1994, however, the Rwandan Hutu government collapsed and the Tutsi RPF seized power. Once it assumed control, the RPF prohibited all political parties that were determined to have participated in the Tutsi genocide. A multiparty Transitional National Assembly was installed to preside over a 5-year transition from military to civilian rule. In 1995, the Transitional National Assembly adopted a new constitution that was essentially a combination of the 1991 constitution and peace agreements signed after the 1994 war. In 1999, the government extended the transition period for another 5 years because ethnic tensions remained too high to hold elections.

Though still in the transition period, Rwanda held special elections in 2000 that gave Major General Paul Kagame of the RPF the presidency. Kagame received 81 of 86 votes from members of the National Assembly, who represent a variety of political parties. Kagame is expected to rule until regular elections can be held.

There are at least 4 factors that impede Rwanda's economic growth. First, Rwanda's economy depends far too much on foreign aid and will continue to do so for the near future. Currently, 75 percent of the Rwandan government's budget is financed by foreign aid. Second, the government expends a considerable percentage of its resources reintegrating the returning refugees into the folds of Rwandan society. This expenditure continues to divert from the Rwandan economy resources that could improve the country's infrastructure. Third, the government also spends much of its resources supporting rebel groups at war in the Congo. This funding could be diverted to invest in the economy. Fully 25.6 percent of the government's budget went toward the support of the Rwandan Patriotic Army in 2000, according to the U.S. State Department. Finally, Rwanda's prison population has swelled to 100,000, and the government expends considerable sums to house the inmates who were convicted of perpetrating the 1994 genocide.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Rwanda has a fairly good road system with approximately 14,900 kilometers (9,258 miles) of roads. For the most part, the primary roads are well maintained. But feeder roads have deteriorated due to the war, excessive loads by heavy-duty trucks, and a 1997 flood. Currently, though, the World Bank is providing financing for road rehabilitation and new construction in certain parts of the country.

Rwanda lacks a railroad system, although it is linked to the Ugandan-Kenya railroad system by road. Since Rwanda is landlocked, most of its international trade is transported through the Kenyan port of Mombasa. Rwanda has several airports, but the main international airport is in Rwanda's capital, Kigali.

The cost of electricity in Rwanda is exorbitant. Electricity in Rwanda costs 3 to 4 times that of neighboring countries. It therefore costs businesses more money to manufacture goods and as a result, the manufacturing sector has failed to attract significant foreign investment. To address this problem, the Rwandan water and energy utility company, Electrogaz, will be privately managed as early as 2001. Eventually, the Rwandan government intends to privatize Electrogaz. The Rwandan government, in conjunction with the private sector, is considering alternate sources of energy, such as harnessing the reserves of methane gas found in Lake Kivu.

Rwandatel, the government-owned telephone company, is the sole wire-based telephone company operating in Rwanda and is also the exclusive Internet service provider. There were only 15,000 main telephone lines in use in 1995, primarily in the capital area. To date, Internet service has proven unreliable and expensive. Thus, the Rwandan government intends to establish an agency that will privatize Rwandatel and liberalize the telecommunications sector. MTN Rwandacell provides mobile phone service to certain areas of the country. Additionally, 2 radio stations and 1 television station operate from Kigali.

ECONOMIC SECTORS

Rwanda's economy is dominated by the agricultural sector, which contributes 44 percent of GDP and 70 percent of exports, and employs 9 out of 10 of the country's workers. In 1998, agricultural exports accounted for US$36.5 million. Most of Rwanda's population is engaged in some form of subsistence agriculture, producing goods for their own consumption and not for sale.

Roughly 10,000 workers are employed in the industrial sector, which represents 20 percent of the country's GDP. The industrial sector is composed of small-to medium-sized companies, whose capital rarely exceeds US__BODY__ million and which produce primarily food-related

products. After the war, the industrial sector came to a halt. Since then, the Rwandan industrial sector has only been able to resume 40 percent of its pre-war levels. The services sector represents just 36 percent of GDP. Financial services are weak, and tourism nearly nonexistent thanks to the country's reputation for violence.

AGRICULTURE

The Rwandan people depend on subsistence agriculture for survival, but do produce several key crops for export. The crop that generates the most foreign exchange is coffee. In 1999, about 14,500 metric tons of coffee were produced. Most coffee is grown on small farms by independent farmers. Tea is the other major export, and Rwanda also produces pyrethrum, plantains, maize, soybeans, sugar cane, wheat, beans, cassava, sweet potatoes, and sorghum. The country has approximately 980,000 goats, 500,000 cattle, 270,000 sheep, and 80,000 pigs.

INDUSTRY

MANUFACTURING. The manufacturing sector primarily produces beer, soft drinks, hoes, cigarettes, soap, wheel-barrows, cement, plastic pipe, mattresses, textiles, and roofing materials. Most manufacturing is geared toward import substitution —providing goods that must otherwise be imported. Like every other sector, industry came to a halt in 1994, but had returned to 75 percent of its capacity by mid-1997.

MINING. After agricultural products, minerals generate the most foreign exchange. Rwanda has significant reserves of cassiterite (tin ore), wolfram (tungsten ore), gold, and beryl. But due to a drop in the global price of cassiterite in 1986, this metal ceased to be mined. In 1987, the wolframite mines suffered the same fate. Since 1991, some cassiterite and wolframite began to be exported, but not at their pre-1987 and 1991 levels. The mining of other mineral ores was also gravely disrupted by the 1994 genocide and have also yet to reach their pre-1994 levels of production.

Efforts have been made to explore the possibility of producing methane that is emitted from Lake Kivu, but these have yet to reach their potential. Because it is a mountainous country with many rivers, Rwanda has the capacity to produce hydroelectric power, and is currently exploring hydroelectric projects with neighboring Burundi and the Democratic Republic of the Congo.

SERVICES

Most tourists go to Rwanda to see its mountain gorillas. However, Rwanda's tourism came to a halt during the 1994 war. There is hope that if Rwanda continues to benefit from its current levels of stability, the hotel and restaurant industry (the primary beneficiaries of tourism) will grow as tourism resumes its pre-war levels.

The banking system has been liberalized by the government, and there are few barriers to the flow of foreign exchange. Rwanda has a central bank and 5 commercial banks, 1 development bank, and a credit union system. In 1999, the Rwandan parliament passed a new set of liberalization measures that in part ensure that the private banks operate under the close supervision of the National Bank of Rwanda. All in all, the progress is encouraging, given Rwanda's recent history and the continuing conflict

in the neighboring Congo. Retail services improved in the late 1990s as returning Rwandan refugees opened a variety of small enterprises.

INTERNATIONAL TRADE

Rwanda's main export partners are Brazil, Germany, Belgium, Pakistan, Spain, and Kenya. Most of Rwanda's coffee and tea are shipped to Germany and other European countries. Rwanda's main import partners are Kenya, Tanzania, the United States, the Benelux countries, and France. Rwanda imported motor vehicles, textiles, fuels and machinery. In 1998, Rwanda generated US$58 million in exports, but imports cost Rwanda more than US$240 million that same year.

Tea and coffee continue to be the country's most important exports. In 1999, they represented 70 percent of Rwanda's exports. Lately, Rwandan businesses have been exploring other agriculturally-based exports that would be equally suited to the country's small farms, steep slopes, and cool climates. The feasibility of many of these new proposals to expand the agriculture industry is limited by the country's high transportation costs.

Although Rwanda's primary partners have been African and European countries, recently there have been significant purchase imports from the United States. Northrop Grumman sold a US$16 million commercial radar system and Lucent Technologies made a sale of US$25 million for a wireless air loop telephone system. It remains to be seen whether Rwandan-U.S. trade will continue.

MONEY

The local currency is the Rwandan franc, and it is allowed to float freely on the world currency market. The exchange rate in 1998 was 312 Rwandan francs for 1 U.S. dollar. The National Bank of Rwanda is the country's central bank and determines monetary policy for the country. Inflation, which had been extremely high follwing

the 1994 war, has since been stabilized and was about 5 percent in 2000.

POVERTY AND WEALTH

Rwanda is, by all measures, a poor country. The 1994 war obliterated the country's economy, social fabric, human resource base, and institutions. Almost 90 percent of the population lives on less than US$2 per day and half of its population lives on less than US__BODY__ per day. Government statistics indicated that 65.3 percent of the people lived below the poverty line in 1998.

Though the Rwandan government reports that 87 percent of the population lived within 2 hours walking distance of a health care facility in 1996, the quality of the Rwandan people's health is quite poor. Life expectancy is low, and malnutrition is high. Malaria and respiratory diseases—which are rarely the cause of death in more developed countries—are the biggest killers in Rwanda. Not only are the people unhealthy, they are also poorly educated. According to government reports, only 46 percent of Rwandan teachers are qualified, teaching materials are poor, and drop-out rates are high. Only 7 percent of eligible students were enrolled in secondary schools in 1998.

In an effort to curb Rwanda's poverty, the IMF, the African Development Bank (ADB), and the World Bank have taken certain steps to assist Rwanda in its efforts towards economic recovery. Thus, in 1998 the IMF approved

the Poverty Reduction and Growth Facility, the ADB approved a structural adjustment credit of US$20 million, and the World Bank agreed to provide US$75 million to Rwanda. These efforts are designed to reduce rural poverty, pave the way for private sector growth, and promote prospects for national reconciliation by opening up economic opportunities to all Rwandans.

WORKING CONDITIONS

The Rwandan constitution permits professional associations and labor unions, and the Rwandan government generally respects this right. Rwanda has no uniform minimum wage, and wages vary in accordance with the position. In any event, the vast majority of wages paid to workers in Rwanda are insufficient to support a decent standard of living for a worker and his or her family. The majority of families supplement their earnings by working in subsistence agriculture. Pressured by labor unions, the Transitional National Assembly has considered creating a new labor code to provide protections for workers but, as with much else in Rwanda, completion of this work awaits greater political and economic stability.

Women make up 54 percent of the Rwandan population, but discriminatory practices in education and employment have meant that women bear a disproportionate brunt of the poverty in the country. The government has plans to craft laws to protect the rights of women, but these laws are still pending as of 2001.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1894. The first European, German Count Von Geotzen, visits what is present-day Rwanda.

1918. Following World War I, Rwanda becomes a protectorate of the League of Nations under Belgian rule.

1926. The Belgian colonizers issue identity cards distinguishing the Tutsis from the Hutus.

1959. The Hutus rebel against the Belgian colonizers and the Tutsi elite, forcing the Tutsi monarch and more than 150,000 Tutsis to flee the country.

1961. Rwanda is established as a republic. The Party of the Hutu Emancipation Movement (PARMEHUTU) wins a majority of the seats in the National Assembly, and the assembly votes against the return of the Tutsi king.

1962. Belgium grants Rwanda independence, and the PARMEHUTU party changes its name to the Democratic Republican Movement whose leader, Gregoire Kayibanda, becomes the country's president.

1963. Exiled Tutsis unsuccessfully attempt to take over Rwanda, and the Hutus respond by massacring the Tutsis.

1973. General Juvenal Habyarimana topples President Kayibanda, accusing him of favoring southern Hutus, and suspends all political activities.

1975. Habyarimana creates the National Revolutionary Movement for Development (MRND) as the country's lone political party.

1978. President Habyarimana is given another 5-year term in single-party elections and a new constitution is ratified. Habyarimana is reelected in 1983 and 1988.

1989. Coffee prices plummet, famine increases, and the country turns to the World Bank for assistance. Following a World Bank reform plan, Rwanda liberalizes trade, divests state enterprises, devalues the Rwandan franc, and reduces government subsidies.

1990. Central African nations and Belgium send troops to Rwanda to help the Habyarimana regime defend itself against an attack from a rebel group of Tutsi exiles from Uganda.

1991. A new constitution is ratified that states Rwanda is a multiparty democracy.

1992. The price of coffee continues to plummet and Rwandan coffee trees are uprooted because coffee growers are unable to earn a living. The World Bank imposes more privatization, with proceeds going to service Rwanda's external debt. Ethnic tensions between Hutus and Tutsis rise.

1994. President Habyarimana dies after his plane is shot down. The Hutus set out to massacre all Tutsis within the country, and hundreds of thousands of Tutsis are killed. An external Tutsi rebel group, the Rwandan Patriotic Front, takes control of Rwanda, and forms the Transitional Government of National Unity to oversee a return to normalcy.

1996. The Rwandan government tacitly supports a rebel, Laurent Kabila, from Zaire (now the Democratic Republic of the Congo) to assist in securing Rwanda's border from the Interhamwe and ex-FAR operating from the Congo. Rwanda backs Kabila's efforts to overthrow the government of the Congo. At the same time, huge numbers of refugees who had fled during 1994 return to the country.

1998. President Kabila expels Rwanda's forces from the Congo and Rwanda in turn supports rebel groups in the Congo seeking Kabila's ouster.

2000. Major General Paul Kagame, a Tutsi, is elected president of Rwanda in a special parliamentary vote, but the government is still considered to be in transition.

FUTURE TRENDS

After the 1994 war and genocide, the Rwandan government focused on establishing peace within its territory and repatriating refugees, mostly from the Congo. The Rwandan economy, as a result of the war, had reached rock bottom. In 1995, the GDP rebounded by 37 percent after the cessation of hostilities allowed the Rwandan citizenry to return to its normal affairs. This normalization of the Rwandan economy continued in 1996 and resulted in a GDP growth of 15.8 percent. That year, the agricultural sector grew by 10 percent, livestock production by 17 percent, and the manufacturing sector by 25 percent. In 1998, Rwanda set upon an ambitious privatization program encouraged by the World Bank and also signed an Enhanced Structural Adjustment Facility with the IMF, both of which were designed to provide order to the economy and encourage economic growth. This same year, Rwanda's economy grew by 9.5 percent and in 1999 by 5.9 percent. Unfortunately, the country experienced a drought which caused extensive crop failure in 2000. The economy, however, is still expected to grow by at least 5.8 percent for the next 3 years. After the 1994 war, inflation had risen to 64 percent. Since then, inflation has come down to around 5 to 7 percent. Admirably, by 1998, the country's GDP surpassed its pre-war level.

Rwanda faces 2 major threats to its continued economic progress: its support of the rebel groups at war with the government of the Congo, and HIV/AIDS. With respect to the first threat, the IMF blames Rwanda's poor coffee production on the fact that Rwanda has diverted indispensable resources needed for coffee production to fund the rebel groups operating in the Congo. Particularly, the IMF contends that unless funding for the rebel groups ceases, Rwanda will be unable to finance the replacement of the aging Arabica trees with newer high-yield trees, and if that is not done, Rwandan coffee production will continue to fall. Both the IMF and the European Union have warned Rwanda that if it does not keep its military expenditures below 2 percent of GDP, they may curtail their funding. With respect to the second threat, 11 percent of the rural Rwandan population is infected with the AIDS virus and that number is growing exponentially. If the Rwandan government fails to implement effective prevention and treatment programs, Rwanda may begin to experience very severe strains on its labor and budgetary expenses.

Prior to 2000, Rwanda had fallen behind in some of its external debt repayments in some bilateral agreements. But as of 2000, Rwanda was not in arrears to either the World Bank or the IMF. Based on this good credit, the IMF has approved a 3-year program with total disbursements of US$56.3 million. Equally important to Rwanda's continued progress is the fact that the IMF and the World Bank have stated that Rwanda qualifies for debt relief under the Highly Indebted Poor Countries program. But these donors, however, made clear that this debt relief is contingent on Rwanda disentangling itself from the Congo war.

DEPENDENCIES

Rwanda has no territories or colonies.

BIBLIOGRAPHY

Action Programme for the Development of Rwanda, 2001-2010. Kigali: Government of Rwanda, 2001.

Economist Intelligence Unit. Country Profile: Rwanda. London: Economist Intelligence Unit, 2001.

Official Website of the Republic of Rwanda. <http://www.rwanda1.com/government/rwandalaunchie.html>. Accessed September 2001.

Rwanda: The Embassy of the Republic of Rwanda, Washington, D.C. <http://www.rwandemb.org>. Accessed September 2001.

The Rwandan Economy Website. <http://www.rwanda1.com/economy>. Accessed September 2001.

U.S. Central Intelligence Agency. "World Factbook 2000: Rwanda." <http://www.odci.gov/cia/publications/factbook/geos/rw.html>. Accessed February 2001.

U.S. Department of State. Background Notes: Republic of Rwanda, March 1998. <http://www.state.gov/www/background_notes/rwanda_0398_bgn.html>. Accessed February 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Rwanda. <http://www.state.gov/www/about_state/business/com_guides/2001/africa/index.html>. Accessed February 2001.

—Michael David Nicoleau

Raynette Rose Gutrick

CAPITAL:

Kigali.

MONETARY UNIT:

Rwanda Franc (RFr). One Rwanda franc equals 100 centimes. There are coins of 1, 5, 10, 20, and 50 francs and notes of 100, 500, 1,000, and 5,000 francs.

CHIEF EXPORTS:

Coffee, tea, hides and skins, cassiterite, pyrethrum.

CHIEF IMPORTS:

Food, machinery and equipment, steel, petroleum products, cement and construction material.

GROSS DOMESTIC PRODUCT:

US$5.9 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$70.8 million (f.o.b., 1999 est.). Imports: US$242 million (f.o.b., 1999 est.).