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Economy of Rwanda

Rwanda is a rural country with about 90% of the population engaged in (mainly subsistence) agriculture. It is the most densely populated country in Africa; is landlocked; and has few natural resources and minimal industry. Primary exports are coffee and tea. By 1994, farm size, on average, was smaller than one hectare, while population density was more than 450 persons per square kilometer of arable land.

The Rwandan economy is based on the largely rain-fed agricultural production of small, semi-subsistence, and increasingly fragmented farms. It has few natural resources to exploit and a small, non competitive industrial sector. While the production of coffee and tea is well-suited to the small farms, steep slopes, and cool climates of Rwanda and has ensured access to foreign exchange over the years, farm size continues to decrease.

Sectors

Agriculture and Primary resources

In 2012 agriculture accounted for 33% of the economy of Rwanda.

Rwanda has long relied on coffee as a cash crop. The crash of coffee prices in 1989 caused a great decrease in purchasing power, and increased domestic tensions.

Rwanda is a country of few natural resources, and the economy is based mostly on subsistence agriculture by local farmers using simple tools. An estimated 90% of the working population farms, and agriculture comprised an estimated 42.0% of GDP in 2010.

Crops grown in the country include coffee, tea, pyrethrum, bananas, beans, sorghum and potatoes. Coffee and tea are the major cash crops for export, with the high altitudes, steep slopes and volcanic soils providing favourable conditions. Reliance on agricultural exports makes Rwanda vulnerable to shifts in their prices.

Energy and electrification

Rwanda has made tremendous strides in improving electrification in the 21st century. A great number of new areas has become electrified through an expansion of infrastructure.

Depletion of the forests will eventually pressure Rwandans to turn to fuel sources other than charcoal for cooking and heating. Given the abundance of mountain streams and lakes, the potential for hydroelectric power is substantial. Rwanda is exploiting these natural resources through joint hydroelectric projects with Burundi and the Democratic Republic of the Congo.

Industry

The industrial sector is small, contributing 16% of GDP in 2012.

Rwanda's manufacturing sector is dominated by the production of import substitutes for internal consumption. The larger enterprises produce beer, soft drinks, cigarettes, hoes, wheelbarrows, soap, mattresses, plastic pipe, roofing materials, and bottled water. Other products manufactured include agricultural products, small-scale beverages, soap, furniture, shoes, cement, plastic goods, textiles and cigarettes.

Tourism and Services

Rwanda's service sector suffered during the late-2000s recession as banks reduced lending and foreign aid projects and investment were reduced. The sector rebounded in 2010, becoming the country's largest sector by economic output and contributing 43.6% of the country's GDP. Key tertiary contributors include banking and finance, wholesale and retail trade, hotels and restaurants, transport, storage, communication, insurance, real estate, business services and public administration including education and health.

Tourism is one of the fastest-growing economic resources and became the country's leading foreign exchange earner in 2011. In spite of the genocide's legacy, the country is increasingly perceived internationally as a safe destination; The Directorate of Immigration and Emigration recorded 405,801 people visiting the country between January and June 2011; 16% of these arrived from outside Africa. Revenue from tourism was US$115.6 million between January and June 2011; holidaymakers contributed 43% of this revenue, despite being only 9% of the numbers.

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Economy Of Rwanda"

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