The main objectives of this study are to (i) gain a thorough understanding of the dynamics of
the economy – employment – poverty nexus in Rwanda as a crucial dimension of the
country’s rapid economic and social transformation, and (ii) against the backdrop of the
conclusions and lessons from this development and projections assess the need for productive
employment growth to achieve the Vision 2020 targets to reduce poverty and to identify the
main challenges and constraints that will need to be addressed to achieve these targets.
Economic regression and falling living standards characterized development in Rwanda for several
decades in the late 20th century. Since the turn of the millennium, this dismal trend has been
decisively broken, and Rwanda has embarked on a growth path that resembles that of the
Asian tigers’ in their early phases of economic development. Agriculture has served as the
main driver of growth and increased income, and the importance of the sector as a source of
livelihood and employment for Rwandans can hardly be over-stressed. The result has been a
broad-based growth of incomes that has lifted large numbers of Rwandans out of often extreme
income poverty and which has boosted domestic demand and stimulated growth of the nonagricultural
sectors. Notwithstanding these impressive developments, Rwandan agriculture still
remains largely subsistence-oriented. The share of agriculture in total GDP growth declined in the
second half of the decade as economic diversification and a growth of the non-farm sectors have
started to gain pace. However, the role of manufacturing as a driver of growth as well as in the
economy as a whole still remains very modest