Constraints and Opportunities in Rwanda’s Industrial Sector: Evidence from Firm-Level Data

The purpose of this paper is to explore the constraints and opportunities facing the industrial sector in Rwanda by analysing patterns of productivity, exports and investment using data from the first comprehensive industrial survey in Rwanda (2011). The findings are then compared with the performance of manufacturing firms in Ethiopia and Kenya. The industrial sector in Rwanda has remained fairly stagnant in the past decade and accounted for 14% of GDP in 2010. The main production activities are focussed on agro-processing and construction, and exports rely on volatile commodities like tea, coffee and minerals.

Kamarudeen and Soderbom find significant differences in performance across manufacturing firms in Rwanda – firms with any foreign ownership, those located in Kigali and exporters tend to outperform their counterparts. Their findings also show that large firms in Rwanda have higher levels of labour productivity which could be explained by the fact that they have on average higher capital stock per worker, more foreign ownership and tend to export.