Key statistics:
Rwanda is one of the most densely populated countries in mainland Africa, with a population of 13 million, and with high financial inclusion, there is significant potential for the development of inclusive microinsurance.
While Rwanda currently has low insurance penetration and an underdeveloped insurance sector, there is a strong political will to build on the key achievements to date around financial inclusion and health insurance coverage which provide a strong platform on which to develop inclusive insurance, particularly among low-income segments of the population.
Managing the socio-economic challenges
Currently classified as a low-income country, Rwanda’s ambition is to become a middle-income country by 2035 and high-income by 2050.
The country’s population of 13 million live predominantly in rural areas and Rwanda has one of the youngest populations in the world – half of whom are aged under 20 compared with the global median age of 31. Rwanda's economy is overwhelmingly rural and heavily dependent on agriculture; outside of agriculture, the principal sectors include energy, trade and hospitality, and financial services. Strong growth in the services sector over the past decade, particularly in construction and tourism, has contributed to overall economic growth. The employment-to-population ratio stands at just under 50% with a higher ratio in urban areas.
With the support of the International Monetary Fund and the World Bank, Rwanda has made progress with important economic and structural reforms and sustained its economic growth rates over the last decade until the impacts of COVID-19 threatened to reverse the trend. Rwanda was in the middle of an economic boom before the pandemic, but GDP fell in 2020, the first recession since 1994. The country achieved a strong economic recovery in 2021 but levels of unemployment continued to deteriorate.
Poverty reduction momentum has weakened in recent years, increasing the urgency for public investment strategies to achieve a more efficient allocation of resources targeted at projects critical for broad-based and inclusive economic recovery following the pandemic.
Risk exposure
Rwanda is extremely vulnerable to climate change with the frequency of droughts and floods expected to increase. This will inevitably affect access to water, which is essential for a growing, urbanised population, as well as impacting food security given the importance of agriculture.
To mitigate these risks, the government adopted the Green Growth and Climate Resilient Strategy in 2011 and in 2012, it also set up a Fund for Environment and Climate which provides technical support, grants and credit lines to projects related to environment protection and the fight against climate change. In addition, the government launched the National Agriculture Insurance Scheme in 2019 – a subsidised scheme, in partnership with private insurers, to protect smallholder farmers against climate risk and the impact of disease on crops and livestock.
Social protection in Rwanda includes social security schemes with mandatory and voluntary options; health insurance subsidies and non-contributory schemes for vulnerable populations; maternity insurance; short-term social assistance in case of disasters or one-off needs; social care services; and livelihood and employment support.
Enabling inclusive insurance market development
While insurance penetration in Rwanda remains very low – particularly in rural areas of the country where agriculture is the primary sector – the high financial inclusion rate presents an encouraging opportunity for microinsurance development.
It is vital, therefore, for public-private partnerships and development partners to work in tandem to drive forward meaningful change – with a strong emphasis in the immediate-term on awareness-raising activities and financial education programmes as well as building on the success of initiatives such as the National Agricultural Insurance Scheme.
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