Rwanda’s Economic Resilience: Turning the Threat of AGOA Withdrawal into an Opportunity for Trade Diversification and Economic Transformation

By: Dr. Manzi Rutayisire Antoine, Economist and Market Systems Development Expert

Rwanda’s resilience beyond preferential trade arrangements

The announcement by the United States Government on 2 November 2026 of its intention to terminate Rwanda’s participation in the African Growth and Opportunity Act (AGOA), effective 1 January 2027, represents a significant development in Rwanda–US economic relations. It raises legitimate concerns about the future of Rwanda’s access to the American market, particularly for exporters who have benefited from preferential trade arrangements.

However, this development should not be interpreted as a setback capable of derailing Rwanda’s broader economic transformation ambitions. Rather, it presents an opportunity for Rwanda to accelerate its economic diversification agenda, strengthen domestic productive capacity, expand regional and international trade partnerships, and reduce excessive dependence on preferential access to individual markets.

Importantly, the US announcement concerns an intended termination, not an already completed withdrawal. The American administration has cited concerns relating to trade and investment barriers, the rule of law, political pluralism, internationally recognized workers’ rights, human rights, and national security and foreign policy interests. Rwanda’s position and the possibility of further diplomatic engagement remain important considerations.

The fundamental question, therefore, is not whether Rwanda can continue to trade without AGOA, but how effectively the country can transform this challenge into an opportunity to build a more diversified, competitive and resilient economy.

Rwanda’s economic fundamentals demonstrate growing resilience

Rwanda’s economic performance provides an important foundation for navigating external trade shocks. According to the National Institute of Statistics of Rwanda (NISR), the country’s economy grew by 9.4% in 2025, reaching approximately FRW 23,387 billion, compared with FRW 19,918 billion in 2024. This performance reflects the contribution of several economic sectors rather than dependence on a single export market.

The services sector accounted for 52% of GDP, industry contributed 22%, and agriculture represented 20%. Manufacturing grew by 10%, while information and communication services expanded by 15%. These figures demonstrate an economy that is progressively diversifying its sources of growth. The expansion of services, manufacturing, financial services, construction and information technology provides opportunities to absorb external shocks and create new sources of export revenue.

The country’s export performance is equally encouraging. According to the National Bank of Rwanda, total merchandise export revenues increased by 16.7%, reaching USD 3.001 billion in FY 2024/2025, compared with USD 2.571 billion in the previous financial year. This growth was driven by coffee, minerals and manufacturing exports. Furthermore, Rwanda Development Board reported that total export receipts reached approximately USD 3.6 billion in 2025, supported by mining, agriculture and horticulture.

These achievements illustrate an important reality: Rwanda’s economic growth and export performance are increasingly supported by a broader range of productive activities and international markets.

The actual exposure to AGOA should be understood in perspective

While AGOA provides valuable preferential access to the US market, it is important to assess its actual contribution to Rwanda’s overall export economy.

Rwanda’s participation in AGOA has already experienced limitations. In July 2018, the United States suspended duty-free treatment for Rwandan apparel products following disagreements over Rwanda’s restrictions on imports of second-hand clothing. However, Rwanda remained eligible for other non-apparel AGOA benefits.

Figures demonstrate that, although AGOA has provided an important market opportunity, its direct contribution has remained relatively modest compared with Rwanda’s overall export earnings. This does not mean that losing AGOA is inconsequential. Preferential access can improve price competitiveness, support businesses, encourage investment and create employment.

Nevertheless, the figures suggest that Rwanda has room to absorb the shock through a combination of market diversification, productivity improvements and stronger trade partnerships.

Another important consideration is the existing bilateral trade relationship. US Trade Representative data indicate that US imports of Rwandan goods increased by 43.3% in 2025, reaching USD 43.3 million. This demonstrates that commercial opportunities between the two countries extend beyond the AGOA framework. AGOA withdrawal should therefore not be confused with the termination of Rwanda–US trade relations.

Regional integration offers an alternative pathway for growth

One of Rwanda’s strongest opportunities lies in its strategic position within the East African Community (EAC), the African Continental Free Trade Area (AfCFTA), and the wider COMESA market. With access to a combined African market of approximately 1.4 billion people under AfCFTA, Rwanda has considerable opportunities to expand trade in manufactured products, agricultural commodities, financial services, ICT, tourism and professional services.

Rather than relying heavily on preferential access to one developed economy, Rwanda can position itself as a regional production, distribution and services hub. There are already encouraging signs of this diversification. The DRC, for example, remains one of Rwanda’s important export destinations. According to NISR’s 2024 trade statistics, the DRC was among the five leading destinations for Rwandan exports and accounted for 94.6% of Rwanda’s total recorded re-exports in the third quarter of 2024.

The strategic importance of regional markets should not be underestimated. Growing demand in neighboring countries creates opportunities for Rwandan enterprises to expand production, develop supply chains and achieve economies of scale.

However, regional diversification should go beyond traditional commodity exports. Rwanda should actively promote manufactured goods, processed agricultural products, construction materials, pharmaceuticals, digital services and financial services.

The operationalization of regional transport infrastructure, including Rubavu and Rusizi ports, combined with improved border procedures and logistics systems, can further strengthen Rwanda’s competitiveness in regional markets.

Building domestic productive capacity is the real foundation of resilience

Perhaps the most important lesson from the AGOA development is that sustainable export competitiveness cannot depend exclusively on preferential trade arrangements. Preferential access may open doors, but domestic productivity, product quality, innovation, financing and supply-chain efficiency determine whether businesses can remain competitive.

Rwanda should therefore accelerate investment in the following areas:

First, strengthen manufacturing and value addition. The country should increase domestic processing of coffee, tea, agricultural products, minerals and other commodities before exporting them. This would increase the value retained within the economy and create employment.

Second, improve access to affordable finance. Export-oriented SMEs require financing to acquire machinery, improve production processes, meet international standards and access new markets. Strengthening financial intermediation, capital markets and innovative financing instruments will be essential.

Third, strengthen quality infrastructure and standards compliance. Rwanda should invest in certification, testing laboratories, sanitary and phytosanitary systems, traceability and internationally recognized quality assurance mechanisms.

Fourth, develop export-oriented industrial capabilities. Industrial parks, special economic zones and private-sector investment should be better connected to international value chains, with particular attention to textiles, agro-processing, pharmaceuticals, construction materials and light manufacturing.

Fifth, strengthen trade facilitation and logistics. Reducing transport costs, improving customs procedures, expanding air cargo capacity and developing efficient regional logistics systems will be important for making Rwandan products competitive in distant markets.

The country’s ambition should be to make Rwandan products competitive because of their quality, productivity and reliability, rather than because they benefit from preferential tariffs.

Turning the challenge into a national economic transformation agenda

The AGOA development should encourage Rwanda to accelerate several strategic priorities.

These priorities should be translated into a practical export diversification programme, with measurable targets, responsible institutions, private-sector participation and a clear implementation timeline.

Rwanda should also establish a mechanism to monitor the impact of the proposed AGOA withdrawal, particularly on employment, affected enterprises, export earnings and investment decisions. The immediate priority is to protect businesses already exporting to the United States while simultaneously preparing them to compete in alternative markets.

Conclusion: Rwanda’s resilience will be measured by its ability to adapt

The proposed termination of Rwanda’s AGOA benefits is undoubtedly a challenge, but it should not define the country’s economic future.

Rwanda has demonstrated its ability to navigate difficult economic circumstances, sustain economic growth, attract investment and expand its export base. The country’s 9.4% GDP growth in 2025, USD 3 billion in merchandise export earnings in FY 2024/2025 and USD 3.6 billion in total export receipts in 2025 provide encouraging evidence of an economy with growing productive capacity.

However, resilience should not be confused with complacency. The potential withdrawal of AGOA requires a proactive response, particularly to protect affected exporters, safeguard employment and sustain investor confidence. The country should seize this moment to accelerate economic transformation, strengthen regional integration, expand international partnerships and develop a more competitive private sector.

Ultimately, Rwanda’s economic future should not depend on the generosity of trade preferences granted by any single country, but on its ability to produce competitively, innovate continuously, add value domestically and trade successfully with the rest of the world.

AGOA may have opened an important window of opportunity, but Rwanda’s long-term ambition must be to build an economy that can compete and prosper with or without preferential access to any particular market.

The real measure of Rwanda’s resilience will not be the absence of external economic shocks, but its ability to transform those shocks into opportunities for sustainable growth and economic independence.

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