Rwanda’s national pension fund has helped power the economy, but it faces new challenges

Rwanda is routinely celebrated as a growth miracle on the African continent.

The country’s GDP growth averaged 7.4% annually between 2000 and 2023, one of the fastest in Africa.

Three decades after the 1994 genocide , Kigali has been transformed.

It is a services hub, with a gleaming convention centre, a growing airline and a skyline of new hotels.

Most scholarship has argued that this has either been driven by party-affiliated firms or through foreign investment .

However, the most significant driver is Rwandan workers’ retirement savings through the country’s pension fund.

The Rwanda Social Security Board manages assets of roughly 2 trillion Rwandan francs (about US$1.4 billion to US$1.5 billion).

This makes it one of Rwanda’s largest institutional investors.

Its portfolio spans government securities, bank deposits, equities, real estate and other investments.

My research examines the politics of economic transformation under contemporary globalisation in eastern and southern Africa.

In a new paper , I describe how the ruling Rwandan Patriotic Front has used the country’s pension fund as an instrument of what political economists describe as the new state capitalism.

The state capitalism literature refers to how some governments have used state-controlled institutional investments (including pension funds) to invest in strategic assets in their own economies and not just act as regulators from the sidelines.

My paper shows how the Rwandan case demonstrates potential to use pension fund assets for strategic investments in the national economy.

However, it suggests that the potential gains of such investments will not be sustained unless they focus on employment-generating sectors.