The U.S. Department of State’s ICS 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. ICS 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
Many companies report 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 ruling party-owned, state-owned enterprises, and companies owned by individuals with strong ties with the government. Government interventions designed to support overall economic growth also adversely affected investors, with some expressing frustration with lack of consultation prior to the abrupt implementation of new government policies and regulations.
Rwanda has a history of strong economic growth and a strong 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. As it began an economic recovery in 2021, global shocks from Russia’s illegal invasion of Ukraine, climate change, and global supply chain disruptions sent inflation soaring to some of the highest levels in Sub-Saharan Africa and tempered the pace of recovery. Although some are concerned about the effects of recovery spending on the country’s sovereign debt (the debt-to-GDP ratio is around 80 percent), the IMF projects the Rwandan public debt to be sustainable given the country’s capacity to pay. Between 2020 and 2022, the Government of Rwanda implemented significant policy reforms intended to stimulate economic 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.
Rwanda presents several FDI opportunities in sectors including manufacturing, infrastructure, energy distribution and transmission, financial services, fintech, off-grid energy, health services; education, electric vehicles, agriculture and agro-processing, tourism, services, mining, and information and communications technology (ICT). Rwanda has a partnership with the State of Qatar to construct a new greenfield international airport at Bugesera, just outside of Kigali (estimated completion in 2026-2028). This project 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 voiced concerns a 2021 land law 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).
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 2023, it had 57 members.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.