Kagame’s Double Trouble – Foreign Aid and Rwanda Currency Falling off the Cliff

By David Himbara

The sinking foreign aid and currency depreciation are hitting General Paul Kagame’s Singapore of Africa mightily. Rwanda’s biggest bilateral donor, the US disbursed US$215 million in 2019. However, by 2023, the US aid to Rwanda had sunk by almost by 50% to US$105 million. The Rwandan Franc is also depreciating sharply to US$1 for RWF1240. The steep drop in US foreign aid will be particularly painful for Rwanda’s 13.2 million people.

The shrinking US foreign aid to Rwanda will affect especially the health sector

Graphic 1 shows the top Rwandan sectors that received significant funding from the US government and its various aid agencies in 2019. Heading the list was the HIV/AIDS sector which received US$66.6 million followed by a US$32.5 million aid to Rwanda’s basic health.

Graphic 1: Top Sectors Supported by US Foreign Aid in 2019

Source: U.S. Foreign Assistance By Country, https://www.foreignassistance.gov/cd/rwanda/2019/disbursements/0

Graphic 2: US Foreign Aid to the key sectors fell off the cliff in 2023

Graphic 2 shows the drastic fall in the US support to the top sectors. By 2023, support for HIV/AIDS had plummeted to US$21.1 million from US$66.6 million in 2019, a nearly 50 percent drop. Support to basic health dropped from US$32.5 million in 2019 to US$14.2 million in 2023.

Source: U.S. Foreign Assistance By Country, https://www.foreignassistance.gov/cd/rwanda/2019/disbursements/0

Graphic 3: The Rwandan Franc is falling

Source: Convert USD to RWF at the real exchange rate, November 28, 2023 – https://wise.com/gb/currency-converter/usd-to-rwf-rate?amount=1

Graphic 3 shows the extent to which Rwandan Franc plummeted from 2018 to 2021. A much sharper depreciation rate was in 2022/2023 – as of November 28, 2023, US$1 was trading for RWF1240. And there is no end in sight. John Rwangombwa, Central Bank Governor, announced on September 20, 2023, that the RWF depreciated by 8.8% against the US dollar in the first 3 months of 2023.

It is a brainer that some fundamentals need to be addressed

Fundamental questions and real answers are urgently needed to account for what is going on in the Singapore of Africa. In a normal country with collective leadership, the government would be taken to task and challenged to explain. In the case of Rwanda which is run by Ironman Kagame, asking for accountability leads to imprisonment, disappearance, exile or mysterious death. Stay tuned.