Category: Economy

The Travel Expenditure Survey (TES), conducted by the National Institute of Statistics of Rwanda (NISR) in collaboration with key partners, provides detailed insights into travel-related spending, offering a comprehensive breakdown of both inbound and outbound travel expenditures.

For non-resident visitors in Rwanda, the survey categorises their spending on goods and services as credits or exports. Conversely, payments made by Rwandan residents while travelling abroad are classified as debits or imports.

The data collection process for the survey involved gathering expenditure details from a diverse sample of travelers. Spending was analysed across key categories, including accommodation, food and beverages, transportation, shopping, entertainment, sightseeing, education-related expenses, and health-related costs. Notably, international transportation expenses were excluded from the findings.

The latest report presents findings from the survey conducted between November 1, 2024 and January 30, 2025. These insights were used to estimate travel service earnings for the fourth quarter of 2024 and the entire year’s figures.

According to the report, Rwanda’s travel sector performed strongly in 2024, with travel service earnings in the fourth quarter alone amounting to $126.1 million. Holiday tourism was identified as the primary driver, generating $56.2 million.

The analysis of visitor spending patterns showed that tourists arriving by air accounted for 81.1% of total visitor expenditures, while those entering via land borders contributed the remaining amount.

Foreign visitors’ spending varied based on origin and mode of travel. Air travelers from Asia had the highest average daily expenditure at $197 per person, followed by those from North America and other African countries at $151 per day.

European visitors spent an average of $129 daily, while East African visitors had the lowest daily expenditure at $82. For land travelers, North Americans on holiday spent an average of $146 per day, while visitors from Asia and Europe spent $109 and $100 per day, respectively.

For the full year, travel exports amounted to $579.5 million, while travel imports stood at $363.8 million. This resulted in Rwanda recording a net surplus of $215.6 million in travel services.

In 2024, 44.6% of foreign visitors traveled to Rwanda for holidays, 28.1% visited friends and relatives, while 14.1% came for business purposes.

Rwanda aims to double its tourism revenue in the coming years, targeting an increase from $620 million in 2024 to $1.1 billion by 2029.

The latest findings are essential for, among other purposes, guiding policymakers, businesses, and other stakeholders in making informed, data-driven decisions to further enhance Rwanda’s tourism and travel sector.

This means that in 2024, roughly for every seven people in the labour force, there was one person unemployed. This represents a decrease of 2.3 percentage points compared to 2023.

The report indicates that Rwanda’s working-age population stands at approximately 8.3 million individuals. Of this, around 4.4 million are employed, while 780,000 remain unemployed.

Additionally, 3.1 million people are not part of the labour force. The labour force participation rate has also seen positive growth, rising to 62.9% in 2024, an increase of 3.6 percentage points from 2023, reflecting a larger share of the population engaging in the labour market.

However, the survey also highlights persistent disparities in the labour market. The gender gap in labour force participation remains significant, with males consistently outperforming females. In 2024, the gender gap stood at 15.5 percentage points, a figure consistent with 2023 levels.

The employment-to-population ratio has also improved, climbing to 53.5% in 2024, up from 49% the previous year. However, this ratio was notably higher among males (62.2%) compared to females (45.9%). It was also higher for adults (31 years and above) than for the youth (16-30 years).

Sectoral employment trends show that the services sector has become the primary driver of employment, accounting for 42.9% of total employment in 2024, up from 39.8% in 2023. On the other hand, employment in the agriculture sector has declined to 39.9%, down from 43.4% in 2023.

Despite the decrease in overall unemployment, it remains higher among females, who face an unemployment rate of 17.6%, compared to 12.6% for males. Additionally, the youth (16-30 years) continue to face higher unemployment rates at 18.5%, compared to 12.3% for adults.

Labour underutilization, which includes unemployment and other factors such as time-related underemployment, stood at 54.2% in 2024. This rate was higher among females (61.2%) and the youth (56.2%), compared to males (47%) and adults (52.8%).

The report also sheds light on the prevalence of informal employment, with 82.3% of the employed population working in the informal sector in 2024. This highlights the continued challenges of securing formal employment opportunities.

The enhanced sampling methodology used in the 2024 RLFS, which incorporated data from the 2022 National Population and Housing Census, offers a comprehensive overview of the nation’s labour market.

The insights provided in the report are crucial for policymakers and stakeholders as they seek to address challenges such as unemployment, labour underutilization, and gender disparities, while working towards ensuring decent work for all.

The event, themed “Think Before You Follow, Wise Money Tomorrow,” aims to equip the youth with the knowledge and skills necessary to make informed financial decisions.

Justice Oyakhilome Anthony, Country Director of the International Association of Students in Economics and Business (AIESEC) in Rwanda, emphasized the importance of financial literacy in shaping the future of the country’s economy.

He called on young people to be deliberate in their financial decisions and avoid being swayed by trends and misinformation.

“In today’s world, we are surrounded by financial advice and trends, but not all of it is valuable. It is crucial for young people to think critically before making financial choices. Financial security is not a product of chance but of deliberate, informed, and wise decisions,” he stated.

Anthony reiterated that AIESEC in Rwanda has been committed to financial education for over a decade. “For 13 years, we have championed this cause because we believe in the power of financial literacy to transform the leaders of tomorrow. Through this initiative, we are giving young people the tools they need to take control of their financial future,” he added.

Gladys Miria Usabase, a financial inclusion and education analyst at the National Bank of Rwanda, cautioned young people against making financial decisions based on social media influencers and urged them to be mindful of online scams.

“It is essential for the youth to be vigilant in the digital world. Scammers are everywhere, and protecting personal financial information should be a priority. We advise young people to start early by practicing budgeting, saving, and investing. Even the smallest savings can grow into meaningful investments,” she said.

She also highlighted the National Bank of Rwanda’s commitment to safeguarding young clients in their financial dealings. “We will continue to protect young people as they interact with financial institutions. For those seeking credible financial advice, our website offers resources to guide them in making informed decisions.”

Pierre Celestin Rwabukumba, CEO of the Rwanda Stock Exchange, expressed the RSE’s long-standing dedication to financial education. He emphasized the importance of educating the youth, noting that they represent the country’s demographic dividend and future economic stability.

“If you are not educating your youth, you are losing it. From the very beginning, we saw the need to serve this underserved population. Many young people are unaware of financial literacy, and it is our duty to ensure they understand they are the future of Rwanda’s economy,” Rwabukumba declared.

The launch of Global Money Week in Rwanda marks another milestone in the ongoing effort to promote financial literacy among the youth. With the collective support of government agencies, financial institutions, and education organizations, young people are being equipped with the knowledge and tools needed to make sound financial decisions.

As the week unfolds, participants will engage in workshops, discussions, and interactive activities designed to enhance their financial understanding.

The report was presented during the 57th session of the Economic Commission for Africa: Conference of African Ministers of Finance, Planning, and Economic Development in Addis Ababa, Ethiopia.

Zuzana Schwidrowski, UNECA’s director of macroeconomics, finance, and governance, highlighted that while African economies are resilient, growth rates are still insufficient to significantly drive social development across the continent.

She also pointed out ongoing risks such as global economic uncertainty, geopolitical tensions, and reduced aid, which could hinder growth.

Although intra-African trade is diversifying and becoming more vibrant in certain regions, overall trade’s contribution to growth has declined compared to past levels.

The report also revealed that, despite a decline in extreme poverty across the continent, it remains persistently high in most regions, with North Africa as the only exception.

Climate change poses an additional challenge, with rising temperatures expected to lower agricultural yields, exacerbating food insecurity in some regions.

Tsheole underscored the pivotal role of capital market in unlocking funding for fintech enterprises, emphasizing the importance of a structured regulatory environment to consolidate resources and support sustainable sectoral growth.

“We are establishing a market that enables private investors and funds to finance various businesses. Providers of capital require assurance that their investments remain secure,” he stated.

He further highlighted the necessity of fostering robust local networks for private capital, urging stakeholders to leverage fintech solutions in mobilizing funds. “People must utilize fintech solutions to facilitate funding,” he said.

As part of ongoing market reforms, Tsheole noted that the Capital Market Authority had revamped collective investment schemes, providing individuals with surplus capital the opportunity to access the market through other means.

They include private equity, specialized funds, or crowdfunding mechanisms which enhancements a more inclusive and dynamic financial ecosystem.

The Capital Market Authority remains committed to advancing regulatory frameworks and market structures that support private investment, innovation, and sustainable fintech development.

The Authority will continue to engage with stakeholders to build a resilient capital market that fosters economic growth and financial inclusion.

The Ministry of Finance and Economic Planning proposed increasing the funds to support emerging national priorities and enhance public service efficiency.

The additional funds will be allocated across various institutions to address gaps identified in various sectors.

As part of the adjustments, FRW 44.9 billion will be allocated to various institutions to fill gaps in employee insurance contributions.

Additionally, FRW 10 billion will be used for government subsidies on fertilisers and improved seeds, while FRW 5 billion will go towards various sports activities.

Other allocations include FRW 3 billion for the Rwanda Correctional Service (RCS) to address food shortages and FRW 1.1 billion for the National Rehabilitation Service (NRS) to support children in rehabilitation centres.

Additionally, FRW 3.5 billion has been set aside to cover taxes for the 63-kilometre Base-Butaro-Kidaho road, while FRW 5.8 billion will go towards social security contributions.

So far, the implementation of the 2024/2025 budget stands at 65%.

Reduction in Foreign Aid and Tax Revenue

The revised 2024/2025 budget highlights a decrease in expected foreign aid and tax revenue due to various factors.

Tax revenue is now projected to reach FRW 2,950.4 billion, down from the initially estimated FRW 2,970.4 billion—a decrease of FRW 20 billion.

This decline is attributed to the reduction in indirect taxes collected in the 2023/2024 fiscal year, as well as a drop in personal income tax revenue. The Rwandan government recently decided to exempt individuals earning less than FRW 60,000 from income tax, an increase from the previous threshold of FRW 30,000.

However, non-tax revenue is expected to increase by FRW 48.4 billion, rising from FRW 444 billion to FRW 492.4 billion.

This increase is primarily due to proceeds from privatising former government projects and a reduction in government spending on international peacekeeping efforts, which will decrease by FRW 3.6 billion.

Foreign grants are also projected to decline, from FRW 725.3 billion to FRW 621.2 billion.

Meanwhile, the Rwandan government anticipates an increase of 184.3% in foreign loans, particularly from the World Bank. Loans channelled through the national treasury and development projects will increase by approximately FRW 121.1 billion.

On the other hand, domestic borrowing is expected to decrease by around FRW 38 billion.

The Minister of Finance and Economic Planning, Yusuf Murangwa, made the revelation on Tuesday, February 11, 2025, as the government unveiled new tax reforms approved during a cabinet meeting chaired by President Paul Kagame on Monday.

Rwanda’s current tax-to-GDP ratio remains below the global benchmark of 16%, necessitating strategic reforms to expand the tax base.

The minister emphasized that raising the tax-to-GDP ratio is essential for funding the country’s transformation agenda under the Second National Strategy for Transformation (NST2).

Data from the Rwanda Revenue Authority (RRA) show that the government collected Rwf 2.62 trillion in tax revenue during the 2023/2024 fiscal year. The revenue is projected to exceed Rwf 2.97 trillion in the 2024/2025 fiscal year.

Minister Murangwa explained that lower-middle-income countries should maintain a tax-to-GDP ratio of at least 19%, upper-middle-income countries should target 23%, and high-income countries aim for at least 38%.

“In the short term, by the end of NST2, we aim to reach at least 18% or 19%, with further increases in the following years,” he said.

“To achieve upper-middle-income status by 2035, Rwanda will need a tax-to-GDP ratio of around 23%. By 2050, as a high-income country under Vision 2050, this ratio should reach approximately 38%.”

To meet these fiscal targets, the Rwandan government has introduced new tax policy reforms for the 2024/2025 fiscal year, focusing on broadening the tax base, enhancing revenue mobilization, and streamlining tax administration.

“These new tax policy reforms are part of the Government’s medium-term strategy to broaden the tax base, increase revenue mobilization, and streamline tax administration in order to meet Rwanda’s development goals,” Murangwa stated.

Key sectors affected by these reforms include consumer goods, transportation, telecommunications, tourism, and gambling. New levies have been introduced to ensure economic sustainability while driving national transformation.

One of the most notable changes is the introduction of a 15% excise duty on cosmetic and beauty products, including makeup, body lotion, and hair products. However, essential pharmaceutical beauty products will be exempted in consultation with the Ministry of Health.

Vehicle owners will also feel the impact of the reforms, as registration fees for all types of vehicles, including electric cars, will be increased. However, the exact figure was not immediately revealed.

Similarly, the fuel levy has been adjusted from a fixed fee of Rwf 115 per litre to 15% of the Cost-Insurance-Freight (CIF) to support road maintenance initiatives.

Mobile phone users will now have to pay 18% Value Added Tax (VAT) on mobile phones, which had been exempted since 2010. The government argues that while the exemption initially helped to boost digital penetration and smartphone affordability, the reintroduction of VAT will allow for more sustainable revenue collection without stifling smartphone access.

A similar VAT exemption introduced in 2012 on ICT equipment will also be revoked, though selected ICT devices will remain tax-free based on consultations with the Ministry of ICT and Innovation.

The gambling industry is set to face higher tax measures, with the tax on Gross Gambling Revenue (GGR) rising from 13% to 40%, and withholding tax on winnings increasing from 15% to 25%. The government said the move aims to encourage responsible gambling while also increasing tax revenues from the industry.

Additionally, the tourism sector will be subject to a new Tourism Levy, which imposes a 3% tax on accommodation costs. This measure aims to fund investments in the country’s tourism and hospitality industry, a critical pillar of Rwanda’s economic growth.

In a bid to encourage green mobility and reduce carbon emissions, the government has maintained a 25% import duty exemption for hybrid vehicles while introducing an age-based excise duty system. Under the new system, hybrid cars less than three years old will be taxed at 5%, those between four and seven years old at 10%, and vehicles older than eight years at 15%.

Additionally, VAT and a 5% withholding tax will be reinstated for hybrid vehicles, while fully electric vehicles will remain tax-exempt to encourage their adoption. However, this measure will only take effect in the 2025/2026 fiscal year.

Excise taxes have also been adjusted in other areas. The tax on cigarettes has increased from Rwf 130 to Rwf 230 per pack, along with an additional 36% tax on the retail price.

The excise duty on beer has risen from 60% to 65% of the factory price. For airtime, the tax has been raised from 10% to 12% in 2024/2025, with a gradual increase to 15% in the medium term.

Beyond these direct tax changes, the government has also signalled upcoming policy adjustments targeting financial services, transportation, and ICT in the next financial year.