2021 Index of Economic Freedom

Rwanda

OVERALL SCORE68.3
WORLD RANK47
Rule of Law

Property Rights68.7

Judicial Effectiveness75.2

Government Integrity59.1

Government Size

Tax Burden79.5

Government Spending78.5

Fiscal Health78.0

Regulatory Efficiency

Business Freedom62.3

Labor Freedom77.4

Monetary Freedom80.2

Open Markets

Trade Freedom61.2

Investment Freedom60.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 12.6 million
  • GDP (PPP):
    • $31.0 billion
    • 10.1% growth
    • 7.9% 5-year compound annual growth
    • $2,318 per capita
  • Unemployment:
    • 1.0%
  • Inflation (CPI):
    • 2.4%
  • FDI Inflow:
    • $420.2 million

Rwanda’s economic freedom score is 68.3, making its economy the 47th freest in the 2021 Index. Its overall score has decreased by 2.6 points because of a decline in trade freedom and other factors. Rwanda is ranked 2nd among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional and world averages.

Rwanda’s economy lost ground this year and fell back into the moderately free category. To climb back into the higher ranks, the government needs to focus on continued improvements in the business climate and implementation of the president’s commitment to fighting corruption in order to strengthen respect for the rule of law.

IMPACT OF COVID-19: As of December 1, 2020, 49 deaths had been attributed to the pandemic in Rwanda, and economic growth was forecast to decline to 2.0 percent for the year.

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Background

Decades of violence followed Rwanda’s independence from Belgium in 1959. In 1994, Paul Kagame’s Tutsi-led Rwandan Patriotic Front seized power after state-sponsored genocide killed an estimated 800,000 people, mostly Tutsis. Kagame has been president since 2000 and was reelected to seven-year terms in 2010 and 2017 amid allegations of fraud, intimidation, and violence. In 2015, voters approved a constitutional change that would permit the 62-year-old Kagame to govern until 2034 and strengthen his authoritarian rule. A border standoff with Uganda began in 2019 as each side accused the other of trying to overthrow its government. Tourism, minerals, coffee, and tea are the main sources of foreign exchange. Although poverty remains widespread, government figures indicate that it has been declining rapidly.

Rule of LawView Methodology

Property Rights 68.7 Create a Graph using this measurement

Judicial Effectiveness 75.2 Create a Graph using this measurement

Government Integrity 59.1 Create a Graph using this measurement

The law recognizes and protects all types of property rights. The inadequately resourced judiciary is not yet fully independent of the executive and suffers from capacity constraints and a heavy case backlog. Although graft remains a problem, Rwanda was ranked 51st out of 180 countries and one of Africa’s four least corrupt nations in Transparency International’s 2019 Corruption Perceptions Index.

Government SizeView Methodology

The top individual income and corporate tax rates are 30 percent. Other taxes include value-added and property transfer taxes. The overall tax burden equals 16.0 percent of total domestic income. Government spending has amounted to 26.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.4 percent of GDP. Public debt is equivalent to 38.6 percent of GDP.

Regulatory EfficiencyView Methodology

Rwanda has eliminated the trading license tax for the first two years of operation for smaller enterprises. The time it takes to obtain a water and sewage connection has been reduced. Hiring a worker has become more difficult, however. The IMF has forecast that government subsidies will consume 2.1 percent of GDP in 2020.

Open MarketsView Methodology

Rwanda has two preferential trade agreements in force. The trade-weighted average tariff rate is 14.4 percent, and 30 nontariff measures are in effect. Foreign investment is welcome, and the investment code provides for equal treatment of foreigners and nationals for many types of activity. The financial sector, dominated by banking, is expanding slowly. About 55 percent of adult Rwandans have access to an account with a formal banking institution.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Mauritius772.1
2Rwanda68.3-2.6
3Botswana67.6-2.0
4Seychelles66.32.0
5Cabo Verde63.80.2
6Namibia62.61.7
7Côte d'Ivoire61.72.0
8Tanzania61.3-0.4
9South Africa59.70.9
10Benin59.64.4
11Ghana59.2-0.2
12The Gambia58.82.5
13Nigeria58.71.5
14Uganda58.6-0.9
15Gabon58.11.4
16Senegal580.0
17Madagascar57.7-2.8
18Togo57.53.4
19Niger57.32.6
20Guinea56.50.0
21Burkina Faso56.5-0.2
22Djibouti56.23.3
23Mauritania56.10.8
24São Tomé and Príncipe55.9-0.3
25Comoros55.72.0
26Mali55.6-0.3
27Eswatini55.1-0.2
28Kenya54.9-0.4
29Guinea-Bissau54.91.6
30Angola54.22.0
31Lesotho53.5-1.0
32Cameroon53.4-0.2
33Malawi530.2
34Sierra Leone51.73.7
35Ethiopia51.7-1.9
36Mozambique51.61.1
37Republic of Congo50.78.9
38Chad50.40.2
39Zambia50.4-3.1
40Burundi49.90.9
41Equatorial Guinea49.20.9
42Liberia49.20.2
43Democratic Republic of Congo49-0.5
44Central African Republic48.8-1.9
45Eritrea42.33.8
46Zimbabwe39.5-3.6
47Sudan39.1-5.9
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