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
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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.
Minister of Finance and Economic Planning, Yusuf Murangwa, presented the revised budget proposal to the Parliament on Wednesday, highlighting adjustments aimed at strengthening resource allocation, supporting emerging national priorities, and improving public service efficiency.
Murangwa noted that Rwanda’s economy remains resilient despite global uncertainties, including climate change, inflation, and geopolitical challenges. Strong economic growth in the first three quarters of 2024 reflects this stability.
“The Government will continue to maintain macroeconomic stability and promote inclusive growth by investing in key areas such as agriculture, climate change, infrastructure, education, healthcare and social protection,” Murangwa stated.
{{Key changes in the revised budget}}
Overall, resources will increase by Frw 126.3 billion, from Frw 5,690.1 billion to Frw 5,816.4 billion. While tax revenue forecasts have been adjusted downward by Frw 20 billion, other revenue sources—including increased privatization proceeds and external concessional loans will help offset this decrease.
On the expenditure side, the revision includes adjustments in both recurrent and capital expenditures. The development budget will rise by Frw 80.6 billion, from Frw 2,007.3 billion to Frw 2,087.9 billion.
This change affects both foreign and domestically financed capital expenditures allocated under different sectors. Meanwhile, the recurrent budget will increase by Frw 45.7 billion, from Frw 3,682.9 billion to Frw 3,728.5 billion, primarily due to an increase in pension contributions.
The revised budget for the 2024/25 fiscal year is part of the updated medium-term macroeconomic framework.
The Government has pledged continued close monitoring of all components of economic performance that may affect the implementation of the revised budget and necessary actions to ensure its full execution while maintaining macroeconomic stability.
The growth, fueled by foreign investments in Rwandan businesses and assets, reflects the country’s increasing appeal to international investors and highlights the government’s efforts to improve its investment landscape.
FDI was the dominant contributor to Foreign Private Capital (FPC), making up 80.8% of total inflows. FPC increased by 33.8% to reach USD 888.9 million in 2023.
The report attributes the remarkable growth to several factors, including robust economic performance, with Rwanda maintaining an average GDP growth of 8.2% in both 2022 and 2023.
The growth in FDI inflows was driven by significant increases in equity capital, reinvested earnings, and intra-company borrowings. Equity capital alone grew by 22.7%, while reinvested earnings rose by 36.2%. Intra-company borrowings saw the highest jump at 72.9%, reflecting confidence among international parent companies in their Rwandan subsidiaries.
Sectors leading the charge included the financial sector, which attracted 21.4% of total FDI inflows, followed by manufacturing (19.1%), ICT (13.9%), and wholesale and retail trade (13.8%). Notably, real estate activities saw a drastic surge of 1,966%, demonstrating a growing demand for infrastructure development.
{{Countries driving the inflows
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Mauritius emerged as the top source of FDI, contributing 28.2% of total inflows in 2023. Investments from Mauritius were predominantly directed towards electricity, gas, financial services, and wholesale and retail trade.
India followed with a 12.2% share, focusing on ICT and education sectors, while Kenya accounted for 9.5% of the total, despite a decline compared to previous years. The United States, France, and Germany also significantly increased their investments, with growth rates of 86.6%, 408%, and a staggering 1,350%, respectively. These countries’ contributions were concentrated in real estate, manufacturing, and agriculture.
FDI’s impact extended beyond financial metrics, contributing to a 20.3% growth in employment within FPC enterprises. Over 10,000 new jobs were created, primarily in managerial and technical roles, underscoring the transformative potential of these investments in enhancing local skillsets and livelihoods.
The Rwandan government’s Second National Strategy for Transformation (NST2) aims to double private investment from $2.2 billion in 2023 to $4.6 billion by 2029.
Key initiatives, such as the Manufacture and Build to Recover Program (MBRP), are expected to sustain this momentum. With USD 2.38 billion already mobilized through MBRP, the government remains optimistic about meeting its targets.
The Foreign Private Capital (FPC) survey is conducted by the Central Bank, the Rwanda Development Board (RDB), and the National Institute of Statistics of Rwanda (NISR).
This increase marks a notable acceleration in urban inflation, which serves as the headline index for monetary policy decisions.
Despite the annual rise, urban prices experienced a 0.8% decline compared to November 2024, reflecting a slight monthly price relief for urban consumers.
NISR reports that several categories contributed to the annual increase in urban prices. Transport prices saw the largest increase, rising by 17.9%, primarily driven by higher fuel costs and transport services.
The Food and Non-Alcoholic Beverages category experienced a 6.0% increase, with significant price surges in meat (25.4%) and milk, cheese, and eggs (14.6%).
Vegetables rose by 6.9%, although they declined by 8.5% compared to November 2024. Additionally, the cost of Housing, Water, Electricity, Gas, and Other Fuels increased by 4.7%, reflecting sustained demand and higher costs in the utilities sector.
On a broader scale, Rwanda’s overall CPI, which combines both urban and rural areas, rose by 6.4% annually, while the rural CPI increased by 6.2%. However, on a monthly basis, rural prices dropped by 2.1%, contributing to a 1.6% decline in the national index.
The fresh products index, which captures seasonal price fluctuations, surged by 11.3% annually, driven by increased costs for fresh vegetables and other agricultural products. However, it fell by 4.4% on a monthly basis.
The core inflation index, which excludes volatile items like fresh food and energy, rose by 5.8% annually and 0.4% on a monthly basis, indicating sustained price pressure across non-volatile goods and services.
Despite the inflation pressures, Rwanda’s economy demonstrated robust growth throughout 2024, with real GDP increasing by 9.7% in the first quarter and 9.8% in the second quarter, driven by strong performances in the services and industrial sectors.
The third quarter continued this positive trend, with an [ 8.1% growth rate->https://en.igihe.com/economy/article/rwanda-records-8-1-economic-growth-in-q3-of-2024], bringing the average growth rate for the first three quarters of 2024 to 9.2%.
The International Monetary Fund (IMF) projects Rwanda’s real GDP to grow by 7.0% in 2025, following an estimated 8.3% growth in 2024.
The Index of Industrial Production (IIP) revealed that the surge in industrial output was driven by strong performance across key sectors.
Mining and quarrying led the way with an impressive 45.2% increase, reflecting heightened activity in resource extraction.
Manufacturing also experienced substantial growth, expanding by 18.4%. This was supported by a notable 26.3% rise in food processing and a 16.6% increase in the production of beverages and tobacco. However, the manufacturing of textiles, clothing, and leather goods saw a significant decline of 39.5%.
Electricity production and supply registered a 9.6% increase, underscoring steady progress in the energy sector. Additionally, water and waste management activities grew by 12.8%, reflecting improvements in utility services and environmental management.
The November growth far exceeded the annual average growth of 8.6%, demonstrating a particularly strong performance for Rwanda’s industrial sector.
The IIP serves as a vital tool for monitoring short-term industrial performance, measuring changes in production volumes relative to the 2017 base year.
While the index excludes construction activities due to data constraints, it offers a comprehensive overview of manufacturing, mining, electricity, and utilities.
“The Index of Industrial Production serves as a tool to measure the industrial production performance of industries and provides timely estimates of broad trends,” NISR stated, emphasizing the role of IIP in tracking economic health and progress.
According to the FAO, the Food Price Index for 2024 stood at 122 points, 2.6 points lower than the 2023 average.
Despite a general upward trend in most food categories—such as dairy, meat, and vegetable oils—this increase was not enough to counterbalance the declines in cereals and sugar.
The FAO Cereal Price Index saw a notable decrease of 13.3% in 2024 compared to 2023, while the Sugar Price Index dropped by 13.2% year-on-year.
The report attributes the decline in cereal prices to falling wheat and coarse grain prices, which had a major impact on the overall food price landscape.
The funding is designed to strengthen the private sector while fostering sustainable economic growth in line with Rwanda’s Vision 2050, which emphasizes building a competitive and environmentally sustainable economy.
A key focus of the project is to promote green investments that balance economic progress with environmental preservation.
This includes supporting Rwanda’s climate goals, such as reducing greenhouse gas emissions by 38% by 2030.
Additionally, the funds will help Rwanda prepare for the global carbon market, an innovative platform where emissions reductions can be traded for financial benefits. Such efforts provide opportunities for countries like Rwanda, disproportionately affected by climate change, to secure investments from industrialized nations.
The initiative also prioritizes inclusive growth by targeting support for women-led businesses and small enterprises.
As Rwanda works toward achieving middle-income status by 2035, this investment is seen as a vital step in empowering the private sector to drive national development.
NISR Director General Ivan Murenzi announced the statistics during a joint press conference with the Minister of Finance and Economic Planning, Yusuf Murangwa, on Tuesday, December 17, 2024.
The growth was primarily driven by strong performances in the services and industry sectors, signalling continued economic resilience.
DG Murenzi highlighted that the country’s GDP at current market prices is estimated at Frw 4.806 trillion, a notable increase from Frw 4.246 trillion in Q3 of 2023. The services sector maintained its dominance, contributing 49% to GDP, while agriculture and industry accounted for 24% and 20% respectively.
Rwanda’s Q3 performance builds on earlier successes in Q1 (9.7%) and Q2 (9.8%), bringing the average growth for the first nine months of 2024 to 9.2%.
The services sector emerged as the top performer in Q3, recording a 10% growth. Significant growth within the sector was observed in wholesale and retail trade (19%), hotels and restaurants (17%), financial services (15%), and information and communication services (19%). Additionally, public administration activities increased by 10%, further contributing to the sector’s overall performance.
The industry sector experienced notable growth of 8%, primarily fueled by a significant 26% increase in mining and quarrying activities. Within this segment, exports of key minerals recorded substantial gains, with Coltan exports rising by 42%, Cassiterite exports growing by 27%, and Wolfram exports increasing by 15%.
Manufacturing also showed positive results, particularly in the production of chemicals, rubber, and plastic products, which increased by 20%, while metal products and machinery grew by 14%. However, food processing experienced a slight decline of 1% compared to its strong growth of 16% in Q3 of 2023.
The agriculture sector reported a 4% growth, driven by a 16% increase in export crop production, particularly coffee exports, which surged by 22%. On the other hand, tea production faced a decline of 10% during the period.
