VZCZCXYZ0004
PP RUEHWEB

DE RUEHLGB #0708/01 2811215
ZNR UUUUU ZZH
P 071215Z OCT 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 5663
INFO RUEHDS/AMEMBASSY ADDIS ABABA 0201
RUEHBS/AMEMBASSY BRUSSELS 0311
RUEHJB/AMEMBASSY BUJUMBURA 0410
RUEHDR/AMEMBASSY DAR ES SALAAM 1222
RUEHKM/AMEMBASSY KAMPALA 1993
RUEHKI/AMEMBASSY KINSHASA 0548
RUEHLO/AMEMBASSY LONDON 0324
RUEHNR/AMEMBASSY NAIROBI 1325
RUEHFR/AMEMBASSY PARIS 0582

UNCLAS KIGALI 000708 
 
SENSITIVE 
SIPDIS 
 
PASS TO AF/EPS ABREITER, GMALLORY 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD PGOV RW
SUBJECT: AGOA COUNTRY ELIGIBILITY REVIEW - RWANDA 
 
REF: STATE 79630 
 
¶1. (U)  This cable responds to queries in reftel. 
 
 
Country Background Summary 
-------------------------- 
 
2.(U)  With 85 percent of its population engaged in 
subsistence agriculture, Rwanda's economic priorities include 
poverty alleviation, encouraging private investment and 
infrastructure development.  Small handicraft businesses are 
exporting to the U.S., but on the whole, Rwanda still has 
significant steps to take before it can be considered as a 
success story.  A land-locked post-conflict nation still 
recovering from the 1994 genocide, Rwanda joined the Common 
Market for Eastern and Southern Africa (COMESA) in 2004 and 
joined the East African Community (EAC) in 2007.  President 
Kagame currently chairs the EAC.  Rwanda has a strong labor 
code, but enforcement remains weak.  There continue to be 
human rights concerns in Rwanda.  Since August 2004, Rwanda 
has deployed troops to Darfur under the auspices of the 
African Union-led protection force and the United Nations. 
 
 
3.(U) Market-based Economy/Elimination of Barriers to Trade 
   --------------------------------------------- ----------- 
 
 
¶A. Major Strengths Identified: 
 
-  U.S.-Rwanda relations are strong.  The U.S. has been the 
largest bilateral donor to Rwanda since 2005, and has 
designated Rwanda as one of 15 focus countries to receive 
targeted assistance under the President's Emergency Plan for 
AIDS Relief (PEPFAR).  Rwanda received USD 17 million in 2007 
to fight malaria under the President's Malaria Initiative 
(PMI).  In 2008, the Millennium Challenge Corporation (MCC) 
approved a $24.7 million MCC Country Threshold Plan (TCP) for 
Rwanda. 
 
-  The International Monetary Fund (IMF) estimated Rwanda's 
GDP growth rate for 2007 at 6 percent, and inflation at 9.1 
percent.  In 2008, the IMF projects that GDP will grow to 8 
percent and inflation will rise to 15 percent (however the 
most recent inflation numbers reported by the Rwandan Central 
Bank of 18.3 percent in July and 20 percent in August suggest 
inflation will be higher than the 15 percent projected by the 
IMF for the year). 
 
-  The Rwandan currency and exchange rate have remained 
stable for the past few years.  By the end of 2006, most 
bilateral donors and multilateral institutions had forgiven 
Rwanda's debt.  However, these debt forgiveness initiatives 
limit Rwanda,s ability to take on future debt such as loans 
for major infrastructure projects. 
 
-  Through the Rwanda Investment and Export Promotion Agency 
(RIEPA) and the Private Sector Federation (PSF), Rwanda has 
been proactive in encouraging foreign investment by producing 
comprehensive information materials, holding trade fairs at 
home and abroad, and establishing investment promotion 
offices in Rwanda to encourage and assist investors. 
 
-  A law on the use and management of land was enacted in 
September 2005.  A new investment code and related customs 
law incorporating investment and customs tax incentives were 
enacted in June 2006. 
 
-  Rwanda joined the Common Market for Eastern and Southern 
Africa (COMESA) in 2004, the East African Community (EAC) in 
2007 and has applied for membership in the British 
Commonwealth.  One of the end goals in joining these 
organizations is to diversify Rwanda's economy and promote 
Qorganizations is to diversify Rwanda's economy and promote 
export-oriented jobs through foreign direct investment. 
 
-  Rwanda has value-added taxes (VAT--18 percent) and some 
tariffs on imported goods.  These sources of revenue are an 
important part of the GOR's overall budget, although Rwanda 
must eventually reduce customs tariffs to standardize with 
the East African Community.  Foreign investment is 
encouraged.  RIEPA set up a "one-stop center" for both 
foreign and Rwandan investors in 2000 and it became fully 
operational in 2004, although it has yet to record many 
success stories. 
 
-  The Rwandan Private Sector Federation is an influential 
organization funded in part by the government that advocates 
on behalf of the private sector. 
 
-  Small-scale cloth, textile, and basketry handicraft 
businesses are starting to export their products to the U.S. 
under AGOA. 
 
-  The Embassy, USAID, and its USAID-East and Central Africa 
(ECA) Global Competitive Trade Hub partners are working 
diligently to assist Rwanda in expanding its AGOA 
opportunities. 
 
 
¶B.    Major Issues/Problems Identified: 
 
-  Rwanda's economy remains fragile and is heavily dependent 
on foreign aid (approximately 50 percent of the government's 
budget, according to the IMF). 
 
-  Macro-economically, Rwanda's current account has been 
worsening in recent years due to low exports and increasing 
imports. The IMF projects the current account deficit will 
grow to 20 percent of GDP in 2008 from 15 percent in 2005. 
 
-  Local and foreign businesses have difficulty in accessing 
credit. 
 
-  Costs of production, primarily due to geographic location, 
a small local market, poor infrastructure and high energy 
costs, make doing business in Rwanda very challenging. 
 
-  There is a widely held perception that the government and 
the predominant political party, the Rwanda Patriotic Front 
(RPF), either dominate or have significant influence 
throughout the private sector. 
 
 
¶4. (U)  Political Reforms/Rule of Law/Corruption 
--------------------------------------------- --- 
 
 
¶A. Major Strengths Identified: 
 
-  In September 2008, national elections were held for the 
Chamber of Deputies with the RPF winning an overwhelming 
majority in a peaceful and orderly election. 
 
-  The GOR senior leadership maintains a consistent policy of 
combating corruption. 
 
-  According to Transparency International's 2007 annual 
survey of business leaders, citizens, and experts, Rwanda's 
ranking improved by 10 places from 121 to 111 out of 178. 
 
-  The Parliament takes an active role in investigating 
public officials accused of corruption and, in concert with 
the Ombudsman's Office established in 2003, has exposed 
corrupt public officials. 
 
-  The Government adopted a code of conduct and rules of 
disclosure for public officials. 
 
-  In 2008, the government implemented a new commercial court 
system to address the backlog of commercial disputes. 
 
-  The GOR implemented significant judicial reforms over the 
last several years aimed at addressing a large backlog of 
cases, increasing the independence of judges, and increasing 
training across the judicial sector. 
 
-  The GOR has plans to increase the numbers of lawyers 
throughout the country (currently only 305, based mostly in 
the capital) to improve access to legal services and to 
establish circuit courts throughout the country, especially 
in the rural areas, to reduce the backlog of pending civil 
cases (approximately 39,000 in 2007). 
 
 
¶B. Major Issues/Problems Identified: 
 
-  Citizens' right to peacefully change their government 
remains effectively restricted.  In 2007 the government 
passed legislation allowing political parties to organize 
down to the lowest administrative level.  Parties took 
advantage of this change in preparation for the 2008 Chamber 
of Deputies elections albeit with little impact on the 
political landscape -- the RPF won 79 percent of the vote in 
these elections.  The 2008 Chamber of Deputies elections were 
peaceful and orderly but National Electoral Commission (NEC) 
rulings during the twenty-one day electoral campaign period 
restricted the ability of opposition parties to effectively 
spread their message.  The national ballot tally lacked 
transparency with some election observers prevented by NEC 
and other government officials from monitoring the ballot 
counting above the polling station and polling center level. 
 
-  While the judiciary suffers from inefficiency and a lack 
of resources, the government is making substantial efforts to 
improve the legal sector which collapsed during the war and 
genocide of 1996. 
 
-  Prolonged pretrial detention remains a problem, although 
the incidence has significantly declined.  There are 
insufficient numbers of lawyers to provide defense counsel in 
what are otherwise fair public trials.  Constraints on the 
judiciary's independence have lessened in recent years. 
 
-  The 2007 Department of State's Human Rights Report cited 
arbitrary arrest and detention by the National Police as 
problems. 
 
-  Gacaca courts serve as the government's primary judicial 
process for addressing the huge numbers of genocide cases. 
The great majority of cases had been adjudicated by the end 
of 2007.  Most observers agree that the gacaca courts are 
providing a much-needed measure of justice for the country. 
There remain concerns, however, that there are limited due 
process protections and that some persons have used the 
gacaca system to settle scores. 
 
-  Prison and detention center conditions are harsh. 
Over-crowding lessened considerably by the end of 2007, 
however, as the government released many persons to serve the 
initial portion of their sentences at home.  There are now 
approximately 59,000 persons in Rwanda,s 14 prisons. 
 
¶5. (U)  Poverty Reduction 
------------------------- 
 
¶A. Major Strengths Identified: 
 
- The GOR enacted a Poverty Reduction Strategy Program in 
¶2000.  A final version of its current Economic Development 
and Poverty Reduction Strategy (EDPRS) was completed in 2008. 
 
-A framework law on the use and management of land was 
enacted in September 2005, but some key implementing laws 
remain pending in parliament. 
 
-The Government established the Fund for Assistance to 
Genocide Survivors to help with education and health care 
costs. 
 
 
¶B. Major Issues/Problems Identified: 
 
-  Poverty remains a major problem in Rwanda, with nearly 
56.9 percent of the population living under the poverty 
level, which is set at RFR 250/day - about $0.45. 
 
-  More than 85 percent of the population is involved in 
subsistence farming and annual per capita income is 
approximately $350 according to recent IMF estimates. 
 
-  Only 64 percent of the population has access to potable 
Q-  Only 64 percent of the population has access to potable 
drinking water. 
 
-  Obstacles in the fight against poverty include poor energy 
production and distribution, limited access to capital, and a 
government and workforce with limited administrative and 
managerial capacity. 
 
-  Agriculture in Rwanda, largely subsistence farming, 
remains vulnerable to weather, market fluctuations, and a 
rapidly expanding population.  The average plot size is 
approximately a half hectare. 
 
 
¶6. (U)  Workers' Rights/Child Labor/Human Rights 
--------------------------------------------- --- 
 
 
¶A. Major Strengths Identified: 
 
-  Rwanda has signed all International Labor Organization 
(ILO) conventions relating to workers rights and has a strong 
labor code. 
 
-  The law provides for the right to create professional 
associations and labor unions, and the government is 
supportive of this right.  Some workers exercise this right 
in practice. 
 
-  The government sets minimum wages in all modern sectors, 
according to the nature of the job.  The GOR regulates hours 
of work and occupational health and safety standards in the 
modern wage sector. 
 
-  The GOR prohibits forced or bonded labor, and the Ministry 
of Labor has a plan to combat the worst forms of child labor. 
 There is a National Advisory Committee on child labor, the 
GOR employs labor inspectors in each of its thirty districts, 
and some districts established by-laws preventing child 
labor.  Child labor reduction benchmarks were integrated into 
district performance contracts and local government child 
development committees were trained on child labor 
monitoring. 
 
-  Except for subsistence agriculture, the GOR prohibits 
children under the age of 16 from working without their 
parents' or guardians' permission. 
 
-  The GOR also prohibits children under 16 from 
participating in night work or any work deemed hazardous or 
difficult, as determined by the Minister of Labor.  Since the 
majority of Rwandans engage in subsistence agriculture, many 
children worked as laborers on family holdings. 
 
-  There is no specific anti-trafficking law, but laws 
against slavery, prostitution by coercion, kidnapping, rape, 
and defilement are available to prosecute traffickers.  The 
GOR has labor inspectors in each district and police receive 
training on identification of potential trafficking victims. 
 
-  The government makes efforts to address continuing 
problems of societal violence and discrimination against 
 
women. 
 
 
 
¶B. Major Issues/Problems Identified: 
 
-  While Rwanda has a strong labor code it does not have the 
capacity to effectively enforce the law and government 
inspectors do not consistently enforce occupational health 
and safety standards. 
 
-  The law specifically excludes civil servants from 
organizing, and although the law provides workers the right 
to negotiate collective bargaining agreements, this right was 
severely limited in practice. 
 
-  The law prohibits unions from having political 
affiliations and from publicly expressing their political 
opinions. 
 
-  Child labor remains prevalent, but statistics are 
 
difficult to verify.  According to a 2006 UN report, 36 
percent of children aged 5 to 14 are engaged in child labor. 
 
-  In addition to poverty, there is a common belief that 
children must work to help ensure family survival and Rwandan 
law does not specifically prohibit forced and compulsory 
labor by children. 
 
-  Although the law provides for the right to strike, public 
service workers and workers in the broadly defined "essential 
services" were not allowed to strike.  In addition, the 
process required for workers to conduct a legal strike 
essentially prohibits strikes (there was one strike during 
the year).  A union's executive committee must approve any 
strike, and the union must first try to resolve its 
differences with management according to steps prescribed by 
the Ministry of Public Service and Labor. 
 
-  Anti-union discrimination is prohibited by law, but there 
are neither functioning labor courts nor other formal 
mechanisms to resolve complaints involving anti-union 
discrimination.  There has been an improvement in the 
government's attitude toward the rights of unions and in 
respect for workers' rights and safety, but many employers 
were still opposed to the idea of trade unions operating 
freely.  Government-associated entities own shares in some of 
these companies. 
 
-  Child prostitution, trafficking in persons (including in 
children), and child abuse were problems, according to the 
2007 Human Rights Report. 
 
-  Prisoners volunteer for work details.  While national 
prison policy prohibits work at private residences and 
businesses, informal arrangements are sometimes made to do 
so.  Prisoners may receive some pay in return for their work. 
 
-  The 2007 human rights report cited reports of unlawful 
killings by police and local defense forces; these diminished 
in 2008 particulary by the police.  Reports of the use of 
torture and excessive force by security forces have 
diminished considerably in recent years. 
 
-  The 2007 human rights report cited restrictions on 
freedoms of speech, press, assembly and association as 
problems.  Restrictions on civil society were also cited. 
 
 
 
¶7. (U)  International Terrorism/U.S. National Security 
--------------------------------------------- --------- 
 
¶A. Major Strengths Identified 
 
-  The government has been responsive on efforts to combat 
terrorism financing and has increased its border control 
measures to identify potential terrorists. 
 
-  Rwanda established an intergovernmental counterterrorism 
committee and has an antiterrorism section in its police 
intelligence unit. 
 
-  Laws exist for commercial banks to report large deposits 
from abroad. 
 
 
¶B. Major Issues/Problems Identified: 
 
-  None currently identified. 
SIM