Country Report Rwanda November 2009

Outlook for 2010-11

The president, Paul Kagame, is expected to win re-election in August 2010 by a massive majority and there will be little real political opposition to the governing Rwandan Patriotic Front (RPF). Diplomatic relations with the Democratic Republic of Congo (DRC) will be warmer but it is increasingly unlikely that the Congolese government will invite the Rwandan army back into eastern DRC to combat the Forces democratiques de liberation du Rwanda (FDLR; an anti-Rwandan government militia), which will slowly rebuild its strength. Real GDP growth is forecast at 6% in 2010, picking up to 7.5% in 2011 on the back of increased agricultural production and higher external demand. The inflation rate is forecast to average 8.5% in 2010-11 but this remains vulnerable to changing weather patterns and the risk is on the upside. Trade, particularly with the East African Community, will pick up and the current-account deficit is forecast to remain at around 6% of GDP in 2010-11.

The political scene

It has been announced that the presidential election will be held on August 9th 2010. Mr Kagame reshuffled his cabinet in July, removing the minister of education, Daphrose Gahakwa. A revised media bill, a marked improvement on the original, was signed into law in August. Improved relations between Rwanda and the DRC were marked by their first bilateral summit since 1996.

Economic policy

Rwanda was classed as the world's leading reformer in the latest World Bank Doing Business rankings, jumping from 139th place to 67th; it now takes only two procedures and three days to open a business. A new labour law has increased the cap on working hours from 40 to 45 per week and reduced fully paid maternity leave from 12 to six weeks. The government plans to privatise companies in the tea, telecommunications, insurance and drinks industries.

The domestic economy

A domestic liquidity squeeze and lower demand for exports are the main reasons that the central bank gave for lowering its real GDP growth forecast in 2009 from 7% to 5.3%, less than half the 11.2% growth recorded in 2008. Heavy rains battering the country since late September have hurt agricultural production. In August Kigali was connected by microwave to the SEACOM fibre-optic undersea cable, Rwanda's first high speed Internet connection.

Foreign trade and payments

The trade deficit has widened in the first half of 2009, as commodity price falls led to a sharp fall in exports. A common market protocol for the East African Community has been agreed, paving the way for a common market in 2010.

This report covers the following industry codes:
SIC Code: 53;59;49;60;1
NAICS Code: 44;22;52;11