Unpacking Rwanda’s public investments & tax reform roadmap

Rwanda, East Africa's fastest-growing economy, is on a mission to propel the country's economic growth to new heights. With plans to increase the tax to GDP rate from 14 per cent to 18 per cent, the Rwandan government aims to accelerate economic growth to an impressive 9.3 per cent per annum. In an exclusive interview with CNBC Africa, Tesi Rusagara, the Minister of State for Public Investments and Resource Mobilization, shared the country's ambitious goals and strategies to achieve them. One of the key objectives set by Rwanda is to double exports to reach $7.3 billion, double private investments to make up 21.5 per cent of GDP, and create 250,000 new jobs annually for the youth population. To support these ambitions, the government has introduced comprehensive tax reforms over the next five years to widen the tax base and increase domestic resource mobilization. Sectors like financial services and ICT, which previously enjoyed tax exemptions, are now being included in the tax reforms to align with the country's growing economy and ensure sustainable funding for development initiatives. Minister Rusagara emphasized the importance of taxation as a means to finance investments and attract more private sector participation. While the tax reforms aim to raise more revenue to support the country's growth trajectory, the government is also mindful of the impact on consumers and businesses. Special attention is given to sectors sensitive to inflation, such as fuel and food, with ongoing monitoring to mitigate any adverse effects. Additionally, the tax reforms include measures to influence behavior positively, like incentivizing the adoption of green mobility through tax waivers on electric vehicles. On the other hand, Rwanda recognizes the importance of public-private partnerships (PPPs) in driving economic development. Despite global trends showing a decline in grants, Rwanda has seen a rise in both local and foreign investments, indicating investor confidence in the country's diverse sectors like manufacturing, agriculture, and ICT. Minister Rusagara highlighted the significance of PPPs in leveraging capital, expertise, and innovation to advance various industries and public infrastructure projects. The government's strategic focus on infrastructure development is geared towards realizing its vision of a transformed economy. Investments in roads, ICT, and hospitality infrastructure not only enhance connectivity and accessibility but also stimulate the growth of ancillary industries and employment opportunities in Rwanda. Looking ahead, Rwanda is steadfast in its pursuit of becoming a lower-middle-income country by 2035 and an upper-middle-income country by 2050. The government remains optimistic about the future, with key initiatives like building an international financial sector to attract investors and bolster Rwanda's position as a stable and lucrative market in Africa. With a clear roadmap and unwavering commitment to growth and development, Rwanda is poised for a promising future.