2017 Index of Economic Freedom

Rwanda

overall score67.6
world rank51
Rule of Law

Property Rights64.4

Government Integrity45.9

Judicial Effectiveness68.8

Government Size

Government Spending77.3

Tax Burden79.8

Fiscal Health83.3

Regulatory Efficiency

Business Freedom59.0

Labor Freedom81.8

Monetary Freedom80.0

Open Markets

Trade Freedom70.3

Investment Freedom60.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 11.4 million
  • GDP (PPP):
    • $20.4 billion
    • 6.9% growth
    • 7.0% 5-year compound annual growth
    • $1,807 per capita
  • Unemployment:
    • 2.4%
  • Inflation (CPI):
    • 2.5%
  • FDI Inflow:
    • $471.2 million
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Rwanda’s adoption of structural reforms has facilitated the emergence of entrepreneurial activity and transformed the once conflict-ridden country into a more open economy. Personal and corporate tax rates are moderate. With a sound regulatory framework that is conducive to private-sector development, Rwanda has achieved annual economic growth of approximately 7 percent over the past three years.

Overall economic freedom, however, is held back by lingering institutional weaknesses that are interrelated. Although foreign investment is welcome, political instability is a major deterrent. There have been ongoing efforts to strengthen the financial sector, create infrastructure, and improve expenditure management, but tangible progress has been elusive. The judicial system lacks independence and transparency.

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Background

Paul Kagame’s Tutsi-led Rwandan Patriotic Front (RPF) seized power in July 1994 in the wake of the state-sponsored genocide that killed an estimated 800,000 people, mostly Tutsis. Kagame has been president since 2000. He was reelected in August 2010 amid allegations of fraud, intimidation, and violence, and his RPF won a resounding victory in the September 2013 parliamentary elections. In 2015, in a move that drew criticism from countries concerned about Kagame’s increasingly authoritarian rule, Rwandans voted overwhelmingly to amend the constitution to allow Kagame in theory to govern until 2034. Although it still remains widespread, poverty has been declining rapidly.

Rule of LawView Methodology

Property Rights 64.4 Create a Graph using this measurement

Government Integrity 45.9 Create a Graph using this measurement

Judicial Effectiveness 68.8 Create a Graph using this measurement

The law protects and facilitates the acquisition and disposition of private rights in property. There have been some recent improvements in the judicial system, including improved training and revisions of the legal code, but the judiciary has yet to secure full independence from the executive. Rwanda is among the least corrupt countries in Africa and is ranked 44th in the world in Transparency International’s 2015 Corruption Perceptions Index.

Government SizeView Methodology

The top personal income and corporate tax rates are 30 percent. Other taxes include a value-added tax and a property transfer tax. The overall tax burden equals 14.9 percent of total domestic income. Government spending has amounted to 27.5 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.0 percent of GDP. Public debt is equivalent to 34.6 percent of GDP.

Regulatory EfficiencyView Methodology

Regulatory reform measures have contributed to a more favorable business environment, although the pace of reform has slowed in recent years. Labor regulations are relatively flexible, but a more vibrant formal labor market has yet to develop. The government subsidizes agriculture, maintains price controls, and subsidizes power for the 20 percent of the population that has access to electricity.

Open MarketsView Methodology

Trade is moderately important to Rwanda’s economy; the value of exports and imports taken together equals 45 percent of GDP. The average applied tariff rate is 7.4 percent. Foreign investors may lease but not own land. Many state-owned enterprises have been privatized. The financial sector continues to evolve, but the high costs of financing and limited access to credit still pose serious challenges for potential entrepreneurs.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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