The World Bank in Rwanda

Rwanda is a country situated in central Africa, bordered to the north by Uganda, to the east by Tanzania, to the south by Burundi and to the west by the Democratic Republic of Congo. Rwanda’s total area is 26,338 km², with a population density estimated at 445 people per km². It is a hilly, fertile, and landlocked country, and a member of the East Africa Community (EAC).

Political Context
Rwanda has maintained its political stability since the 1994 genocide against the Tutsi. Presidential and parliamentary elections were jointly held in July 2024 after the government decided to synchronize the voting dates. President Paul Kagame, of the ruling party RPF-Inkotanyi, was re-elected for a fourth consecutive term. This one will only last five years, following a 2015 constitutional amendment that reduced presidential terms down from seven years and set a two-term limit. The ruling RPF-Inkotanyi coalition also won the majority of seats in parliament, securing 68.8% of them.

Economic Overview
Rwanda aspires to become a Middle-Income Country by 2035 and a High-Income Country by 2050. It plans to achieve this through the implementation of the second National Strategies for Transformation (NST-2), a five year-development agenda underpinned by sectoral strategies focused on meeting the UN’s Sustainable Development Goals (SDGs).

Rwanda's economy continued to stage a strong growth in the first half of 2024. After growing by an average of 8.2% in 2022-2023, real GDP increased by 9.7% in the first half of 2024. GDP growth is expected to maintain momentum in 2025–26, with a projected average of 7.7%, thanks to a recovery in global tourism, new construction projects, and manufacturing activities.

Development Challenges
Despite remarkable growth performance in recent years, creation of jobs in Rwanda is insufficient and the level of productivity remains low, reflecting infrastructure gaps, limited progress in innovation, and sub-optimal allocative efficiency. Furthermore, the inclusiveness of growth remains a key challenge, as the poverty reduction momentum has weakened in recent years. The benefits of structural transformation have tended to accrue to more educated workers, worsening inequality. The World Bank’s Human Capital Index, which measures the amount of human capital that a child born today can expect to attain by age 18, places Rwanda at 160th out of 174 countries. High public debt levels (over 73 % of GDP in 2023), vulnerability to climate change, and the increasing pressure on natural resources will make it difficult to achieve the country’s targets of becoming an upper middle-income country by 2035 and a high-income country by 2050. Overcoming these challenges will require greater reliance on private sector investment to enhance productivity growth, raise incomes, and provide the financing to address infrastructure shortfalls.

Last Updated: Oct 10, 2024

The World Bank Group’s (WBG) Country Partnership Framework (CPF) FY21–FY26 focuses on five thematic areas:

• Improved Human Capital
• Improved Conditions for Private Sector Development
• Expanded Access to Infrastructure and the Digital Economy
• Increased Agricultural Productivity and Commercialization, and
• Intensified Urban Agglomeration and Enhanced Resilience.

The CPF, prepared by the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), aims to catalyze higher volumes of private resources to support Rwanda’s development. It builds on the government’s National Strategy for Transformation (NST 1) and on its proposed division of labor among development partners.

The World Bank's portfolio in Rwanda currently comprises 25 national and 3 regional projects, with a total net commitment of $3.35 billion. Investments are in infrastructure, urban management, social protection, health, energy, and education, among others.

Recently approved projects

The Priority Skills for Growth and Youth Empowerment (PSGYE) Program for Rwanda ($200 million), approved on September 9, 2024, aims to improve employability for target beneficiaries and strengthen institutional capacity for enhanced service delivery in skills development. The Program’s scope draws from lessons learned and evidence of five principles for building an effective and efficient tertiary education system and optimizing its contribution to equitable and green growth.

The Health Emergency Preparedness, Response and Resilience Project ($120 million), approved on May 24, 2024, aims to strengthen health system resilience and multisectoral preparedness and response to health emergencies in Rwanda.

International Finance Corporation (IFC)
As of June 30, 2024, the International Finance Corporation’s (IFC) investment portfolio in Rwanda totaled $109 million across several key sectors such as financial services, tourism, retail, agriculture and infrastructure. IFC also has an advisory portfolio of $5.66 million. The advisory program has significantly enhanced IFC's investments in promising sectors such as financial services, agriculture, climate, and health. IFC is actively involved in bolstering Rwanda's health sector by partnering with the government in the development of a pharmaceutical sector and in long-term investment plans for climate-smart agriculture and sustainable urbanization.

Multilateral Investment Guarantee Agency (MIGA)
As of August 31, 2024, the Multilateral Investment Guarantee Agency (MIGA) is actively engaged in Rwanda with a total gross exposure of $40.7 million across three sectors: water, financial services, and tourism/hospitality. The three existing projects include a bulk-water public-private partnership (PPP) project, a fintech mobile money project across 14 countries (with MIGA covering 13 including Rwanda), and the acquisition and development of a hotel project. MIGA has also supported a regional development bank, the Trade and Development Bank (TDB), of which Rwanda is a member. MIGA’s support has mobilized $747 million of commercial financing for TDB to expand its trade finance activities with clients in member countries, including support of COVID-19-related trade finance transactions.

As part of the new World Bank Group Guarantees platform, which will be housed at MIGA, MIGA will also leverage deeper collaboration across the World Bank Group to de-risk foreign investment, paying close attention to projects that support climate finance and boost job creation.

Last Updated: Oct 10, 2024

The World Bank's steadfast partnership with Rwanda began six decades ago and has contributed to the country’s economic transformation, including the reconstruction of the country after the genocide against the Tutsi of 1994. The World Bank has financed investment and policy operations across sectors, including human capital, infrastructure, agriculture, resilience, and private sector development, to the tune of $9 billion. The IDA resources and analytic and advisory services have contributed to substantial development impact. Here are some examples:

Energy sector: Over the past 15 years, Rwanda's energy sector has witnessed an impressive transformation and the World Bank has played a key convening and financing role, providing over $1 billion in credit, grants, and technical support to the sector. These interventions have helped:

• Connect 3.2 million people to electricity after 358,000 and 360,000 households were added to grid and off-grid electricity, respectively
• Generate 61 MW of hydroelectricity through new infrastructure and preparing to add, using World Bank funding, 10 MW through the rehabilitation of an existing hydro station
• Connect 100% of all large and medium-sized customers to advanced metering, enabling accurate, timely billing and real-time consumption data, reducing commercial losses by 3.39%
• Provide 120,000 households with access to cleaner cooking
• Strengthen high-voltage transmission networks, resulting in higher stability and reduced voltage fluctuations and ensuring connectivity to other countries, thus advancing the regional integration agenda.

Agriculture: In the last three decades, the World Bank has provided Rwanda with $1.6 billion in IDA and $257 million in grants, technical expertise, and data to enhance agricultural practices, productivity, and farmers' livelihoods, with notable results:

• 18,000 hectares of marshland, hillside, and small-scale irrigation systems and technologies have been developed.
• 61,000 hectares of terraced hills and land husbandry technologies have helped control erosion and enhanced productivity for hillside farmers.
• 49 Water Users Associations have been created for the sustainable operation and maintenance of irrigation systems.
• The Sustainable Agricultural Intensification and Food Security Project (SAIP), that closed in August 2024, reached 46,000 farming households, benefiting approximately 229,000 people.

Human Capital Development: With a remarkable commitment to human capital development, and the support of the World Bank, Rwanda has advanced sequenced reforms in social protection, health, nutrition, and education. These investments have had real impacts on the lives of people across the country, especially women and children.

Education: In the past seven years, the Bank has provided $1 billion and $65 million in IDA loans and grants, respectively, as well as technical expertise and data in the education sector, contributing to the growth of human capital. In just two years (2019 to 2021), the World Bank investments helped:

• Add 22,000 classrooms, decongesting schools.
• Improve student-to-classroom ratio from an average of 73:1 (2019) to 56:1 (2021)
• Build 31,000 gender-specific restrooms to give students access to improved sanitation
• Provide 2 million 5-14-year-old children with access to a school within a 2 km radius of their home. Previously, 68,000 children walked between 5 and 7 kilometers to reach school
• Enhance accessibility for students with disabilities
• Improve teacher competency
• Enrich the quality of learning and learning outcomes, with 37.5% of grade 3 students achieving grade-level proficiency in English from a baseline of 10% in 2021

Social protection:

Over the past 15 years, Rwanda's social protection initiatives have been significantly strengthened. The World Bank has invested over $850 million to support them, specifically via the Vision Umurenge Program (VUP), ensuring that vulnerable households gain access to essential economic inclusion services and human capital development. The VUP now offers a diverse range of impactful services including cash transfers, public works, and sustainable livelihood programs, benefiting over half a million households.

Key results include:

• Unconditional cash transfers available in all 416 sectors reaching all 112,000 eligible households, 73% of which are headed by women.
• The introduction of child-, gender- and nutrition-sensitive safety nets, benefiting:
  • 131,000 children under 2 and 40,000 pregnant women in 20 districts who received nutrition support.
  • 1.49 million children who gained access to home and community-based early childhood development services, an increase from 19% in 2020 to 62% in June 2022.
  • 94,000 households in 304 sectors who are enjoying expanded public works, including employment opportunities in Home-Based Early Childhood Development Centers.

Health, Nutrition and Population: The World Bank has so far committed over $348 million in investment project financing for the implementation of key strategies in the health sector since 2018. The investments have:

• Contributed to the remarkable reduction in the stunting rate among children under five years of age in the 13 targeted districts.
• Provided 5.2 million people (40% of the Rwandan population), of which over 1.3 million women of reproductive age and 600,000 children aged 0-5 years, with critical health and nutrition services at community and health-facility levels.
• Contributed to the provision of essential health services to vulnerable groups (such as mothers, infants, and children), including the integration of non-communicable diseases at the primary health care level.
• Supported the national efforts to respond to health emergencies, including the COVID-19 pandemic (over 3.5 million vaccine doses procured and successfully deployed) and natural disasters.
• Contributed to the strengthening of the national health system, including the implementation of the national medical oxygen plan.

Last Updated: Oct 10, 2024

Many of Rwanda’s ongoing development projects are supported by the World Bank in partnership with various development partners, including Power of Nutrition and the Global Financing Facility, Global Partnership for Education, African Development Bank, Arab Bank for Economic Development in Africa, European Union, European Investment Bank, Government of Denmark, Belgium, Japan, the Netherlands, OPEC Fund, and Saudi Fund to name a few. The World Bank also coordinates with development partners in-country, such as the United Nations and other multilateral and bilateral agencies, through a formally established framework, the Development Partners Coordination Group. The division of labor between development partners, as established by the government in 2013, supports and eases inter-development partner coordination, alignment, and harmonization.

Last Updated: Oct 10, 2024