Rwanda : Toward Sustained Growth and Competitiveness, Volume 2. Main Report

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.