Analysis of the Performance of Rwanda Trade in Services and Regional Integration

Abstract

Rwanda as a least developed country is in economic transformation process for which it aimed at moving from agrarian based economy to knowledge and private sector led economy thereby agricultural labor intensive activities get replaced by industry and service dominance. With economic reforms and policies aligned with vision 2020, service sector became major contributor of the Rwanda GDP (47% compared to 33% for agriculture and 14% for industry). Thus, our research on the analysis of the performance of Rwanda trade in services and regional integration was carried out with the aim of analyzing various trends in trade in services of Rwanda over five year period (2010 to 2014).  The results show that, trade in services value considerably improved (Frw1604 to 2536 billion) over five years 2010-2014, which makes service sector major contributor in the country’s GDP. The sector itself is dominated by trade and transport services (33% of total service value) while financial services which deemed to finance engine of the whole economy counts minor share (5% of total service value). Moreover, unlike trade in goods, external trade for Rwanda trade in services marked good performance by reducing trade deficit for about 4 times over five years 2010-2014. In conclusion therefore, Rwandan economy is becoming leveraged on trade in services. As it is facing limited natural resources endowments, Rwanda should continue to embody trade in services in its economic reform and policies. But still, industrialization particularly for agricultural harvest would add value even to service sector contribution.