Abstract:
Rwanda has experienced significant economic progress, with an annual average GDP growth rate of 8.2% from 1999 to 2023. By 2035, around 65% of Rwanda's population is projected to be within the working-age group (ages 15-64), creating an opportunity for the country to harness the "demographic dividend". However, the realization of this potential depends on sufficient investments in education, healthcare, and employment opportunities.
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This study employed Auto Regressive Distributed Lag method and the Demographic Dividend (DemDiv) model to analyze secondary data from different sources such as the National Institute of Statistics of Rwanda (NISR), the World Bank, the International Monetary Fund (IMF), World Health Organization (WHO) and International Labour Organization (ILO). The analysis focused on how population growth, fertility rates, life expectancy, and gross fixed capital formation impact GDP. Findings indicate that while primary and secondary education positively contribute to long-term GDP growth, tertiary education exhibits a negative impact, suggesting a mismatch between higher education and labor market needs. Life expectancy improvements also enhance economic productivity, but high fertility rates continue to strain resources and limit the potential of the working-age population. The DemDiv model highlights the importance of policy interventions, showing that Rwanda’s economic success depends on strategic investments in education, family planning, and healthcare. The Policy which integrates economic reforms with family planning and educational initiatives, was identified as the most effective pathway for maximizing GDP growth by 2050. The study concluded that effective management of Rwanda’s demographic transition is crucial for sustaining economic growth and achieving its Vision 2050 goals.
