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 rural development, energy 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.
EU development cooperation with Rwanda is based on the 2014-2020 National Indicative Programme for Rwanda, which outlines the main priority areas with an allocation of up to €460 million under the 11th European Development Fund (EDF) over the 7 year period. The 3 main areas identified jointly with the Government of Rwanda are:
- energy and infrastructure, where the focus of interventions is on power generation through renewable energy, access to electricity, energy efficiency and sustainable management of biomass
- rural development and food security, where the focus of interventions is on the improvement of food and nutrition security and agricultural intensification
- governance, civil society and human rights, where the focus of interventions is on strengthening public accountability and democratic governance, as well as the development of a vibrant civil society and respect for human rights
About 80% of EU development assistance under the 11th EDF is allocated through sector budget support programmes. The rest is allocated through calls for proposals and tenders. In parallel, Rwanda also benefits from support allocated through development programmes of EU member countries and has access to EU regional funds as well as thematic and global budget lines for support of research and innovation, education, training, youth and sport, human rights, and others.
The EU actively and substantially supported the implementation of Rwanda's first Economic Development and Poverty Reduction Strategy (EDPRS 1) which guided the country's medium-term development ambitions to reach the Millennium Development Goals (MDGs). After the adoption of the second Economic Development and Poverty Reduction Strategy (EDPRS 2) in 2013, the EU continued its level of support to Rwanda by working closely with all levels of Government, development partners, civil society and the private sector.
For instance, Rwanda joined the Scaling Up Nutrition (SUN) movement in early 2012. In Rwanda, the EU strengthened linkages between the agricultural and social protection sectors, leading to improved nutrition security during the 1,000 day period between a mother's pregnancy and her child's second birthday.
Rwanda has recorded strong results in terms of social and economic development over the past 2 decades. Poverty levels decreased from 60.4% to 38.2% between 2001-2017. Rwanda also achieved all but one of the MDGs, making significant gains in areas such as education, increasing the years of free education up to 12 and improving enrolment rates for primary education. In the field of energy, in which the EU has been one of the country's leading supporters, access to electricity has gone from less than 10% in 2010 to over half the population accessing electricity today.