RWANDA

RISK RATING
Moderate
Default High Risk Score 3.00
Normal Average 2.09
Weighted Average 1.96
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Despite the threat of persistent coronavirus lockdowns in 2021, sustained development partner support and a stable political environment puts the country is in an advantageous position to navigate the challenges. However, the virus has in many ways exacerbated internal tensions and distracted attention away from key governance issues. One of the key issues in Rwanda concerns President Kagame‚Äôs extended rule. After 20 years in power with a constitutional amendment that would allow him to govern until 2034, concerns around succession abound. Kagame has not groomed a successor and Rwanda‚Äôs popular political elites have been systemically side-lined via exile, targeted assassinations, or imprisonment. For the time being, such political risks are unlikely to play out, particularly as President Kagame enjoys significant popularity ‚Äď boosted by his decisive approach to the coronavirus.

  • Political instability will increase as a result of divisions within the ruling RPF party and the military. Persistent lockdowns have brough socio-economic frustrations into the open through social media, while there have been questions over social welfare spending transparency. However, voicing discontent in Rwanda remains rare. There are other senior military and political leaders that have been side-lined from the senior leadership and are seeking to replace Kagame as president. We expect such rival factions to grow in political influence and appeal over the next few years and form a serious challenge to the current political system dominated by President Kagame. Foreign donors are unlikely to reduce their financial assistance to the Rwandan government sufficiently to threaten government stability.
  • Poor relations with neighbouring countries frustrate Rwanda‚Äôs security outlook. President Kagame has staked his political credibility on a bilateral dispute with Uganda. Both Rwanda and Uganda have deployed military forces along their joint border. There are growing fears of accidental shoot-outs and rapid escalation between the forces in case the border dispute continues to escalate. Moreover, deployment of forces alongside the Ugandan border and inside Congolese territory raise escalation risks. In response to the continued threat posed by the Democratic Forces for the Liberation of Rwanda (FDLR) that is also operational in eastern DRC, Rwanda has deployed its own Special Forces to South Kivu. In doing so, it allegedly supports local Mai-Mai militia as well as an anti-Burundian rebel group, known as the Red Tabara, in incursions against the P5 opposition group.
  • The economy will gradually recover in 2021 driven by a resurgence in industry and a steady increase in domestic consumption. Tourism and aviation have taken the biggest knock, with travel to Rwanda falling by some 70 percent in 2020. Border disruptions with Uganda have also restricted trade flows. Rwanda‚Äôs Economic Recovery Plan (ERP) has been backed by international development partners, helping to buffer the impact of the pandemic on public budgets. The government will focus on building up key export sectors, such as mining and agriculture. The primary threat to economic recovery is persistent lockdowns, since a planned full vaccination programme targeting 70 percent of the population is unlikely to get underway before the end of 2021.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
2.0
Expropriation, Nationalisation, Confiscation & Deprivation
1.5
Contract Frustration & Breach
1.8
Taxation
1.8
Bribery & Corruption
2.0
Regulatory Burden
2.0
Strikes, Riots & Civil Commotion
1.8
Security
2.0
Sovereign Default
3.0
Economic Volatiliy
3.0

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