The services sector has been the centrepiece of Rwanda’s development strategy since 2000. This chapter describes the evolution of the Rwandan Patriotic Front’s (RPF) goals of transforming its landlocked disadvantages into an opportunity through becoming land-linked. In particular, the goal involves Rwanda becoming a regional hub for transport, tourism, sports and finance. The chapter begins by providing a critical overview of services-based strategies, highlighting their merits and limitations. It then describes the contradictory tensions emerging within Rwanda’s services-based strategy, particularly because the progressive image the RPF attempts to portray is often at odds with domestic realities. The evolution of Rwanda’s tourism strategy is discussed, which focuses on attracting high-end tourists and transforming Kigali into a hub for transport, high-profile events and conferences. The chapter describes how services strategies have evolved in line with Rwanda’s political settlement: at first, providing opportunities to private Rwandan capitalists but then gradually relying on foreign investors and government-affiliated investors. The chapter highlights that Rwanda’s strategy failed to prioritise linkages, which is a result of the elite vulnerability shaping domestic state–business relationships.

This chapter introduces the ‘structuralist’ form of political settlements analysis employed in this book. The political settlements framework, initially developed by Mushtaq Khan, has gained increasing popularity but has evolved in very different directions. Political settlements analysis (PSA) was appealing to scholars because it encouraged analysis of power relations shaping development policy, highlighting how distributions of power among organised groups shaped how institutions operated. Influential donor-funded research programmes have aligned it more with neoclassical economics, and this has led to the obfuscation of the structuralist and historical materialist roots of the framework. This chapter elaborates the structuralist and historical materialist roots of political settlements analysis. It highlights the differences between non-structuralist and structuralist approaches to political settlements analysis in relation to the concept of holding power and its components: economic structure, rents, ideas and ideology, and violence and conflict. The chapter highlights how PSA can be used to help understand the contemporary transnational nature of vulnerabilities shaping late-development challenges.

This chapter describes Rwanda’s record within the manufacturing sector. Until recently, the Rwandan Patriotic Front (RPF) did not prioritise manufacturing-based growth because of the high transport costs associated with its landlocked geographical position. While there has been some attempt at refocusing on industrial policy since 2015, because of a rising trade deficit and the urgent need to create employment, there has not been substantial progress. Rwanda has not achieved significant advances in increasing industrial employment, production and exports. After presenting the evolution of Rwanda’s industrial policy, the chapter provides detailed examples of three sectors: apparels (textiles and garments), construction materials and pharmaceuticals. In line with dynamics in other sectors, domestic capital has been marginalised in favour of supporting RPF-affiliated firms or relying on foreign investors. Some foreign investors like Volkswagen and BioNTech have invested in Rwanda with much fanfare, but most success has been driven by RPF-affiliated firms. Rwanda’s hopes for structural transformation fall at a key domestic hurdle: building effective state–business relationships aimed at technological capability acquisition for latecomer firms.

This chapter describes the evolution of the mining sector in Rwanda, both its domestic mining sector and in relation to the trade of minerals from the neighbouring Democratic Republic of Congo (DRC). Trading minerals from mineral-rich Eastern DRC has benefited Rwanda’s domestic economy through providing access to foreign exchange revenues. However, dependence on minerals from the DRC has been a double-edged sword. While providing significant revenues and being central to national security interests, increased reliance on the DRC contributes to the empowerment of individual business and military elites that may later become threats to the RPF’s ruling coalition. The RPF has transformed the domestic minerals sector with increased investments in geological investigations, as well as significant increases in domestic production. Dynamics in the domestic minerals sector mirror the elite vulnerability characterising other sectors. Though individual elites initially benefited from privatisation efforts, there is increased reliance on government-owned firms (like Ngali) for its most ambitious upgrading strategies. Attempts at beneficiation have been impeded by difficulties in developing effective domestic state–business relationships and challenges in centralising control over supply chains.

This chapter provides a snapshot of Rwanda’s evolving political settlement and economic development trajectory. The chapter begins by highlighting significant structural vulnerabilities that shaped Rwanda’s domestic politics historically, including ethnicity-based inequalities and political contestation, historical divisions associated with the royal family and aristocracy, refugee issues, inadequate employment opportunities and regional inequalities. It then highlights the rapid growth that took place in Rwanda over the last three decades, which has also been accompanied by significant export diversification. It then provides a brief political settlement analysis of present-day Rwanda, highlighting how development is being contested transnationally, pointing to the key vulnerabilities characterising its hub-based strategy. In particular, it describes how increased elite vulnerability has meant that the government has been reluctant to support domestic capital. As a result, the Rwandan government has failed to develop effective state–business relations aimed at achieving structural transformation.

The book is motivated by the question of analysing how Rwanda’s development trajectory can contribute to our understanding of why structural transformation remains so elusive. This chapter introduces the central contributions of the book. First, the book employs structuralist political settlements analysis to highlight how contemporary late development is contested transnationally, prompting the need for analysis across different scales. Second, the book describes how African growth has been largely driven by the services sector and Rwanda is emblematic of contemporary African growth experiences, especially since, like elsewhere on the continent, structural transformation has remained elusive. Third, the book contributes to existing literature on Rwanda by highlighting that the Rwandan Patriotic Front prioritised services-based strategies partly to reduce its reliance on domestic businesspeople because of the elite vulnerability that has characterised its rule. This strategy has yielded growth and export diversification without achieving structural transformation because elite vulnerability has inhibited effective state–business relations. The introduction also includes a discussion of the methodology employed in the book and the structure of the chapters that follow.

This chapter describes how dependence on coffee and other primary commodities exacerbated foreign dependency, especially during fluctuations in global primary commodity prices. The chapter discusses the Rwandan Patriotic Front’s (RPF) origins, including the key paradigmatic ideological foundations of the party while discussing the civil war and the 1994 genocide. The chapter ends by outlining three periods of the evolution of political settlement under RPF rule. Between 1994 and 2000, RPF loyalists were rewarded, while there was increased concentration of power among Tutsi RPF members. In the 2000s, until the early 2010s, RPF leadership centralised control among a smaller clique within the RPF, with increasing elite fragmentation characterising this period. In the third phase after the early 2010s, there has been increased external reliance, and the visible threat of transnational coalitions, comprising RPF dissidents and disenchanted domestic elites, has emerged but been contained.

This chapter analyses the political economy of Rwanda’s financial sector. It presents the evolution of Rwanda’s national banking sector and the ways the Rwandan Patriotic Front has sought to mobilise domestic resources to invest in strategic sectors. It provides an overview of how African financial sectors have been transformed in varied ways through adapting to three kinds of financial sector reforms: policies influenced by the market-led consensus, developmentalist strategies and the influence of offshore sectors. Rwanda, in its attempt to transform Kigali into a financial sector while mobilising state-driven investments for strategic investments and adopting ‘best practice’ financial sector reforms, encapsulates the contradictions associated with being influenced by these three sets of policies concurrently. Next, the chapter describes how the Rwandan government has innovatively mobilised domestic resources to fund strategic investments. Innovations include its pension fund, the Rwanda Social Security Board. The chapter concludes by discussing how elite vulnerability has constrained the capacity of the Rwandan government to concentrate resources and financial expertise in one specific financial institution, thereby inhibiting the effectiveness of strategic investments.

This chapter describes the evolution of agriculture sector policies during the Rwandan Patriotic Front (RPF) rule. Most Rwandans still live in rural areas, and agriculture continues to employ most Rwandans. Prior to RPF rule, the Grégoire Kayibanda and Juvénal Habyarimana governments presented their parties as prioritising rural interests, as well as the production of cash crops for export (particularly coffee). However, since the RPF assumed power, policy priorities have shifted to diversifying agriculture exports (including producing higher-value coffee and tea) and encouraging the market-oriented commercialisation of agricultural production. The RPF’s attempts at reorganising rural society has been characterised by rural resistance and increasing inequality. However, there have been some successes, which have been driven by RPF-affiliated firms, sometimes in partnership with philanthropic investors. Successes include upgrading primary commodities and diversifying agricultural exports. However, agrarian policies have also been marked by increased land differentiation and rural inequality. Ultimately, sustained structural transformation is inhibited by elite vulnerability. The chapter highlights that there are few signs of the emergence of leading domestic agrarian capitalists.

This concluding chapter reiterates the main contributions of the book. Growth in most African countries has been characterised by a transformation from low-value agriculture to low-value services. As a result, structural transformation has remained largely elusive within Africa. Services has been the fastest-growing sector on the continent. Rwanda is unique among rapidly growing African countries in explicitly focusing on becoming a services hub. Using the case of Rwanda, this book shows that contemporary late development, which is more dependent on services, results in more transnational forms of dependence and political contestation than experienced in prior experiences of late development. The book ends with thoughts about the future of Rwanda. It argues that in the immediate short term, any instability will depend on what happens in the Democratic Republic of Congo (DRC). In the long term, Rwanda’s political stability depends not on the government’s capacity to contain domestic popular mobilisation alone but on the capacity of transnational coalitions of dissident elites and external actors capitalising on existing horizontal inequalities to challenge the Rwandan Patriotic Front rule.