Rwanda - Economy

Rwanda has an agricultural economy with relatively few mineral resources. Coffee and tea are exports. During 1980–90, the Rwandan GDP annually grew by 2.3%, but the average growth rate declined by 3.6% between 1988 and 1998. The 1994 genocide threw the economy into a negative spiral, but foreign aid in the late 1990s brought about positive growth. Real growth rate of GDP in 2001 was 5%. The country has a high population density (the most densely populated in Africa), intensified by a1.6% annual population growth rate between 1992 and 1998, which puts pressure on the land and the economy. The manufacturing base is limited to a few basic products. Soil erosion has limited growth in the agricultural sector. Poor markets, lack of natural resources, underdeveloped entrepreneurial and managerial skills, and difficult transportation problems all inhibit economic growth, along with the ethnic massacres of 1994 and the subsequent displacement of population. However, the IMF estimated that during 1995 Rwanda had recovered 40% of its pre-1994 economy. In the late 1990s, the government began a privatization program, in association with the World Bank, although the country has found it difficult to attract foreign investment. Rwanda became eligible in 2000 for $810 million in debt relief under the IMF/World Bank Heavily Indebted Poor Countries (HIPC) initiative. Low world coffee prices in the early 2000s deprived Rwanda of hard currency derived from export earnings.