Rwanda’s economy is dominated by agriculture. The country enjoys strong annual growth rates, but these are particularly vulnerable to changing weather patterns and fluctuating commodity prices. The country is making efforts to diversify its economy.
As a landlocked country, Rwanda’s export potential is restricted and in the past, it has been dependent on aid to deal with its balance of payments deficit and to finance much-needed investment. At present, the EU’s relations with Rwanda focus mainly on development cooperation in areas of education, rural development, sustainable urbanisation, and governance, but also include an increasing emphasis on trade and investment as well as a regular political dialogue covering issues of home affairs, human rights and regional cooperation.
Rwanda is an important strategic partner for the EU; it is an outward-looking country that acts as a strong proponent of multilateralism. At the continental level, Rwanda holds significant influence and can potentially act as a catalyst in promoting a regional and global agenda among African countries across a range of political and economic areas.
The MIP seeks to ensure that the mutual interests of the EU and Rwanda are firmly advanced. With a well-articulated policy framework to guide its developmental aspirations, Rwanda’s Vision 2050 identifies the country’s overarching objectives to transform its economy and modernize the lives of Rwandans, to reach upper-middle-income status by 2035 and high-income status by 2050.
The EU's interventions under this Multiannual Indicative Programme will focus on three priority areas:
Education, Skills and Decent Jobs for the Youth
Rwanda’s low levels of human capital are one of the most critical obstacles to the country realising its developmental aspirations. The Government’s economic development strategy is largely aimed at diversifying the economy towards high productivity knowledge-based sectors, which requires a well-educated and highly skilled labour force.
A Green Deal for Inclusive Development
Two potential key drivers of poverty reduction and inclusive growth in Rwanda lie in the transformation of the country’s agricultural sector and in sustainable, inclusive urbanisation. Rwanda’s agriculture sector is still largely characterized by subsistence farming with low productivity, small landholdings, dependence on rainfall, land degradation and soil erosion issues. At the same time, Rwanda’s economic development policies will bring forth opportunities in urban areas, that can be harnessed.
Political and Economic Governance
Good governance and capable institutions are recognised by the Government of Rwanda as a prerequisite for socio-economic transformation. Rwanda’s effective governance has played a great role in fostering efficiency and a focus on implementation and results. Nevertheless, the government has acknowledged that more emphasis should be put on public accountability and citizen participation in decision-making processes. Addressing gaps in these areas could accelerate gains in terms of poverty reduction and economic development.
The Multiannual Indicative Programme (MIP) for the Republic of Rwanda for 2021-2024 amounts to €260 million.
Priority area 1: ‘Education, Skills and Decent Jobs for the Youth’ will support the access and quality of technical and vocational education and training, pre-primary and secondary education, inclusive entrepreneurship and research and innovation support.
Priority area 2: ‘A Green Deal for inclusive development’ promotes Rwanda’s agricultural transformation for social and environmentally inclusive food systems, while advancing the country’s environmental and climate sustainability, and supporting sustainable urbanisation in Rwanda.
Priority area 3: ‘Political and Economic Governance’ will support enhanced voice and accountability, democratic participation and civil society, Rule of Law, Human Rights and ending violence against women and girls. It also aims to strengthen economic governance to promote investment and a conducive business environment.
Furthermore, the multiannual financing decision, constituting the multiannual action plan in favour of the Republic of Rwanda for 2021- 2023 is adopted. The action plan includes the following actions: Economic Governance and the Business Environment in Rwanda, Transformational climate-smart and inclusive agriculture in Rwanda, and Technical Cooperation facility. The maximum EU contribution for the implementation of the action plan for 2021-2023 is set at €94,5 million.