An Overview of Rwanda's Innovation Vitality

An Overview of Rwanda's Innovation Vitality

Rwanda is fast-becoming Africa's new darling in terms of its budding entrepreneurial ecosystem. But why is this the case? To answer this burning question, we assessed Rwanda's Innovation Vitality.

Ease of Starting a Business

Starting a Business Score: 93.2

Starting a Business Rank: 35

In the World Bank's final Ease of Doing Business report 2020, Rwanda performed admirably across all the vital performance metrics. It ranked 35 in the world and was the fifth-highest ranked African Nation in 2020. Its high ranking was due to the number of days required to start a business, few procedural requirements and low cost of starting a business.

GDP Performance (2010-2020)

Before economies were shaken by the pandemic, Rwanda was experiencing steady growth between 2010 to 2019. The economy shrunk slightly in 2020 but grew by 10% in 2021. This suggests the allure of Rwanda could be attributed to a vibrant economy with growth potential, it also conveys that the economy continues to get more productive in terms of economic activity.

Between 2010-and 2019, Rwanda's GDP/Capita grew by 4.47% on average. During this period, Rwanda's GPD/Capita growth fluctuated. Unsurprisingly, GDP/Capita shrunk by 5.78% in 2020 due to the pandemic and consequent lower economic activity. Rwanda's decline in GDP/capita was not as drastic as other African nations: for instance, Libya's GDP/Capita plummeted by 32.24.

New Business Registrations (2010-2018)

In 2018, Rwanda had the 8th highest number of new business registrations in Africa. In 2010, there were less than 4000 new businesses registered, that figure grew by a whopping 191.37% by 2018 (representing a CAGR of 14.3% over the 8-year period). New venture creation is extremely important to economic growth as it indicates citizens and companies are actively creating solutions to problems and competition generally leads to a wider range of options for consumers.

High Tech Exports (2010-2019)

The graph illustrating the percentage of High-tech exports in Rwanda between 2010 and 2019, highlights how its trade strategy and performance regarding high-tech exports have consistently shifted over time. Nonetheless, in Africa, only Burkina Faso (25.8%), Sao Tome and Principe (17.03%) and Cote d'Ivoire (11.23%) had a higher percentage of High-Tech exports than Rwanda (10.55%) in 2019.

ICT Service Exports

This measures the value of Information, Communication and Technology services that are exported by a nation. It includes services related to telecommunications, courier, and news-related services. Rwanda lags far behind the Continent's Top 10 countries in this performance metric. A key observation is that the largest African nations also lead this metric. ICT is important to a Nation’s innovation efforts because it facilitates knowledge sharing and connectivity. In 2010, the value of Rwanda's ICT service exports was approximately $13.3M and we estimate that increased to approximately $15.5M in 2020.

Human Capital

The capabilities of a nation’s labour force play a significant role in determining its innovation vitality. Nations with a relatively high proportion of researchers, firms that invest in R&D, and people in R&D tend to be more innovative as they spend more time creating new solutions to problems. World Bank estimates suggest that tertiary enrolment in Rwanda is only approximately 6.2%, which means alternative forms of skills development need to be implemented. Democratising access to digital skills training needs to be at the forefront of entrepreneurs’ minds. According to International Labour Organisation, 17.6% of Rwanda’s youth were unemployed in 2020.

Access and Connectivity

Since 2013, access to electricity has increased by 148.6%. Although only 37.8% of Rwanda's population has access to electricity, the tremendous growth is very positive. As more startups from Rwanda get more international recognition and investments, the hope is that the overall well-being of the nation will improve as well.