Rwanda Economy

Economy

Rwanda is a poor rural country with about 90% of the population engaged in (mainly subsistence) agriculture. It is the most densely populated country in Africa; landlocked with few natural resources and minimal industry. Primary foreign exchange earners are coffee and tea. The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women, and eroded the country's ability to attract private and external investment. However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy to pre-1994 levels, although poverty levels are higher now. GDP has rebounded and inflation has been curbed. Export earnings, however, have been hindered by low beverage prices, depriving the country of much needed hard currency. Despite Rwanda's fertile ecosystem, food production often does not keep pace with population growth, requiring food imports. Rwanda continues to receive substantial aid money and was approved for IMF-World Bank Heavily Indebted Poor Country (HIPC) initiative debt relief in late 2000. Kigali's high defense expenditures have caused tension between the government and international donors and lending agencies. An energy shortage and instability in neighboring states may slow growth in 2005, while the lack of adequate transportation linkages to other countries continues to handicap export growth.