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Rwanda is one of Africa’s 'rising stars'. Since the civil conflict in the mid-1990s, the country’s economy has seen solid rates of economic growth. Strength in investment flows has followed in the path of macroeconomic and institutional stability.

A large part of Rwanda’s success has been the result of proactive policies undertaken by the Government of Rwanda in facilitating a good domestic investment climate, which have been conducive to strong rates of growth in foreign direct investment into the economy. Yet despite the country’s successes, developments in manufacturing have not been as encouraging: the sector’s share of the economy and exports is still small.

This report analyses Rwanda’s financial backdrop, and the composition of its investment flows into manufacturing, with a view to exploring the constraints and opportunities in manufacturing. The report concludes that high transport and utility costs, the elevated real effective exchange rate and weakness in bank lending are key challenges to be tackled. Looking ahead, special economic zones should continue to be a focus alongside export-oriented investments, and prudential measures could target manufacturing finance and disincentivise overly high levels of real estate lending.