Rwanda : Toward Sustained Growth and Competitiveness, Volume 1. Synthesis and Priority Measures

Abstract

Rwanda established targets for Gross
 Domestic Product (GDP) growth and poverty reduction, to be
 achieved by the year 2020; these were to (i) raise real per
 capita income from $230 to $900; and (ii) reduce the poverty
 incidence by half. To reach these targets, the Government
 projected in its 2002 Poverty Reduction Strategy Paper
 (PRSP) that GDP growth will to be in the range of 6 to 7
 percent over the medium term. The PRSP focused on six
 priority areas: (i) rural development and agricultural
 transformation; (ii) human development; (iii) economic
 infrastructure; (iv) good governance; (v) private sector
 development; and (vi) institutional capacity development.
 While increased spending in the social sectors led to
 substantial improvements in outcomes there has been only
 limited spending for economic services, including investment
 to improve productivity in agriculture and manufacturing.
 Improvements in poverty have been marginal, due to a number
 of factors: (i) lack of investment in infrastructure during
 the recovery and stabilization phase, to complement the
 reforms undertaken to improve the business environment; (ii)
 lack of investments in capacity, institutions, and
 land/water management in the agricultural sector; (iii)
 continued low use of inputs; (iv) instability within the
 region; (v) delays in Rwanda's accession to the East
 Africa Community (EAC); and (vi) a slower than expected pace
 of reform in key sectors such as the tea industry. The PRSP
 anticipated that growth in the agricultural sector will
 proceed with progressive commercialization, with ensuing
 demand for agricultural and non-agricultural goods and
 services in rural areas, resulting in increasing non-farm employment.