Christian Bering
Professor Baugus
ECON 360
2 October 2021
Week 6: Milestone 3
Rwanda is considered as a small trading partner compared to other larger one like the U.S., China, and European countries, but the country has come leaps and bounds from where they were in 1990’s. According to the OEC (2019), in 2014 Rwanda exported $713 million and in 2019 they exported $1.35 billion making them the 147th largest exported in the world. Obviously, they are still far behind other countries, but they growing as an economy. The majority of their exports go to the United Arab Emirates, the Democratic Republic of the Congo, Uganda, and Thailand. Most of Rwanda’s imports come from China, India, Kenya, and Tanzania. The three top imports are refined petroleum ($411M), gold ($242M), and raw sugar ($73M).
The Rwandan government spending as a percentage of their annual GDP in 2020 was 28.5 % totaling at 1,418,000,000 RWF. Most of the government’s money was focused on the expenditure of public services and goods, adjusting taxation, creating new budget targets, and expanding the size of public works services in the hope that it increases the economic growth within the country. As with most governments, the primary source of income is from the revenues of the personal income tax rate. And knowing the other tax policies are important for having an understanding of the government’s income. According to Trading Economics (2020), the personal income tax rate is 30%, the sales tax rate is 18%, the social security tax rate is 8%, and the corporate tax rate is 30%.
Based on all the data discussed starting a business in Rwanda is a viable option compared to other African nations that struggle. According to the East African Business Consultants (2020), a business can easily be registered legally and established through a two-step procedure in a very short amount of time, making Rwanda eighth in the world for ease of starting a business.
References
(2020). “Rwanda Personal Income Tax Rate”. Trading Economic. https://tradingeconomics.com/rwanda/personal-income-tax-rate.
(2019). “Rwanda”. OEC. https://oec.world/en/profile/country/rwa.
(2020). “Starting a Business in Rwanda as a Foreigner”. East Africa Business Consultants. https://www.eastafricabusinessconsultants.com/starting-a-business-in-rwanda-as-a-foreigner/.
Christian,
I enjoyed reading your post. It was very concise and straightforward. Rwanda's economy grew at an annual rate of roughly 8% between 2001 and 2014, making it one of the fastest growing economies in Central Africa (Hutt, 2016). Also, Rwanda's private-sector-driven economy makes it perfect for entrepreneurs looking to penetrate the overseas market, as entrance obstacles are essentially non-existent (Antoun, 2020). Furthermore, Rwanda's untapped opportunities provides a myriad of commercial possibilities. Rwanda's well-disposed business climate, market access, and rich geographic location are just a few of the reasons why it is a viable option for business establishments (Antoun, 2020).
Additionally, to elaborate on your breakdown of government spending, poorer districts spend slightly more on health and education as health and education is the top fiscal spending area in the nation. In a study conducted to investigate the effects of fiscal policy and growth on indicators of household welfare throughout the Rwanda expenditure distribution, it was discovered that public expenditure variables did not enhance growth for the low and middle classes. Only the top quintile of the expenditure distribution received advantageous benefits (Almanzar et al., 2017). Do you believe that aggregate level of government spending is inversely related to economic growth in Rwanda ?
References
Almanzar, M., & Torero, M. (2017). Distributional Effects of Growth and Public Expenditures in Africa: Estimates for Tanzania and Rwanda. World Development, 95, 177–195. https://doi.org/10.1016/j.worlddev.2017.02.019.
Antoun, N. (2020, June 21). The Great Debate: Why Rwanda may be the Best Country to Launch and Scale Your Tech Startup! Medium. Retrieved from https://medium.com/the-gps/the-great-debate-why-rwanda-may-be-the-best-country-to-launch-and-scale-your-tech-startup-25439a41a4.
Hutt, R. (2016, April 7). 5 things to know about Rwanda’s economy. Retrieved September 30, 2021, from World Economic Forum website: https://www.weforum.org/agenda/2016/04/5-things-to-know-about-rwanda-s-economy/.