The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
Rwanda has a history of strong economic growth and a reputation for low corruption. Though Rwanda averaged high GDP growth of 7.1 percent from 2009-2019, its economy suffered from the COVID-19 pandemic. According to Government of Rwanda (GOR) statistics, GDP growth was 9.5 percent in 2019 before the economy went into its first recession since 1994 with a 3.4 percent GDP contraction in 2020. The Rwandan economy is now showing signs of recovery, as GDP grew 10.9 percent in 2021. Rwanda has relied on a multi-round domestic economic stimulus plan to fuel a recovery, though some worry about the effect of these policies on the country’s sovereign debt. In late 2020 and early 2021, the GOR took significant policy reforms intended to return the economy to growth, improve Rwanda’s competitiveness in selected strategic growth sectors, increase foreign direct investment (FDI), and attract foreign companies to operate in the newly created Kigali International Financial Centre.
The country presents several FDI opportunities in sectors including: manufacturing, infrastructure, energy distribution and transmission, finance, fintech, off-grid energy, agriculture and agro-processing, affordable housing, tourism services, and information and communications technology (ICT). Rwanda has a partnership with Qatar to construct a new greenfield international airport at Bugesera, just outside of Kigali (estimated completion in 2025 or 2026). This project has already generated significant opportunities for foreign investment and will continue to do so as related projects (roads, hotels, logistics, etc.) come online.
The Rwandan Investment Code calls for equal treatment for both foreigners and nationals in certain operations, free transfer of funds, and compensation in cases of expropriation. Some investors have voiced concerns that a new land law passed in 2021 may run counter to some of the provisions in the Investment Code and similar provisions in the 2008 U.S.-Rwanda Bilateral Investment Treaty (BIT).
Many companies report that although it is easy to start a business in Rwanda, it can be difficult to operate a profitable or sustainable business due to a variety of hurdles and constraints. These include the country’s landlocked geography and resulting high freight transport costs, a small domestic market, limited access to affordable financing, payment delays with government contracts, challenges with tax administration, low-level corruption, and issues in competing with state-owned or affiliated enterprises. Government interventions designed to support overall economic growth can significantly affect investors, with some expressing frustration that they were not consulted prior to the abrupt implementation of government policies and regulations that affected their businesses.
The American business community in Rwanda is well-established and represents a variety of sectors. The American Chamber of Commerce-Rwanda was founded in 2019. As of March 2022, it had 39 members.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.