Rwanda vs. Burundi

Rwanda is a rural, agrarian country with agriculture accounting for about 63% of export earnings, and with some mineral and agro-processing. Population density is high but, with the exception of the capital Kigali, is not concentrated in large cities - its 12 million people are spread out on a small amount of land (smaller than the state of Maryland). Tourism, minerals, coffee, and tea are Rwanda's main sources of foreign exchange. Despite Rwanda's fertile ecosystem, food production often does not keep pace with demand, requiring food imports. Energy shortages, instability in neighboring states, and lack of adequate transportation linkages to other countries continue to handicap private sector growth.

The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women, and temporarily stalled the country's ability to attract private and external investment. However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy well beyond pre-1994 levels. GDP has rebounded with an average annual growth of 6%-8% since 2003 and inflation has been reduced to single digits. In 2015, 39% of the population lived below the poverty line, according to government statistics, compared to 57% in 2006.

The government has embraced an expansionary fiscal policy to reduce poverty by improving education, infrastructure, and foreign and domestic investment. Rwanda consistently ranks well for ease of doing business and transparency.

The Rwandan Government is seeking to become a regional leader in information and communication technologies and aims to reach middle-income status by 2020 by leveraging the service industry. In 2012, Rwanda completed the first modern Special Economic Zone (SEZ) in Kigali. The SEZ seeks to attract investment in all sectors, but specifically in agribusiness, information and communications, trade and logistics, mining, and construction. In 2016, the government launched an online system to give investors information about public land and its suitability for agricultural development.

Burundi is a landlocked, resource-poor country with an underdeveloped manufacturing sector. Agriculture accounts for over 40% of GDP and employs more than 90% of the population. Burundi's primary exports are coffee and tea, which account for more than half of foreign exchange earnings, but these earnings are subject to fluctuations in weather and international coffee and tea prices, Burundi is heavily dependent on aid from bilateral and multilateral donors, as well as foreign exchange earnings from participation in the African Union Mission to Somalia (AMISOM). Foreign aid represented 48% of Burundi's national income in 2015, one of the highest percentages in Sub-Saharan Africa, but this figure decreased to 33.5% in 2016 due to political turmoil surrounding President NKURUNZIZA's bid for a third term. Burundi joined the East African Community (EAC) in 2009.

Burundi faces several underlying weaknesses - low governmental capacity, corruption, a high poverty rate, poor educational levels, a weak legal system, a poor transportation network, and overburdened utilities - that have prevented the implementation of planned economic reforms. The purchasing power of most Burundians has decreased as wage increases have not kept pace with inflation, which reached approximately 18% in 2017.

Real GDP growth dropped precipitously following political events in 2015 and has yet to recover to pre-conflict levels. Continued resistance by donors and the international community will restrict Burundi's economic growth as the country deals with a large current account deficit.

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