On November 18, 2024, John Rwangombwa, Governor of the National Bank of Rwanda (BNR), reported to Parliament that the Rwandan franc depreciated by 16.3% during the 2023/2024 fiscal year, a record decline in Rwanda’s history.
Governor Rwangombwa attributed the unprecedented depreciation of the Rwandan franc to several factors. These include the lingering effects of COVID-19, which disrupted global supply chains and slowed economic recovery to pre-2019 levels.
Additionally, global instabilities have negatively impacted agricultural yields, further straining Rwanda’s economy. The country’s persistent trade deficits, with imports significantly outweighing exports, have also limited foreign exchange inflows, making it more challenging to stabilize the franc.
For context, in the past 22 years, the exchange rate of 1 USD rose from 320 Rwandan francs to nearly 1,400 francs, highlighting a steep decline in the currency’s purchasing power.
Key factors driving inflation

Father Dr. Jean Marie Vianney Samarwa, an economist and Deputy Vice-Chancellor for Administration and Finance at ICK, discussed these dynamics in an interview:
1.Limited Exports: Rwanda’s low export volumes reduce foreign currency inflows. “When dollars are scarce, people are forced to offer more francs to access them,” explained Father Dr. Samarwa.
2.Foreign Currency Contracts: When domestic businesses negotiate contracts in foreign currencies like USD, demand for those currencies surges, further weakening the franc.
He added that investor behavior compounds the issue. For example, low export volumes may prompt investors to hedge by signing contracts in foreign currencies to protect against future depreciation.
Consequences of inflation
1.Loan re-payment challenges: According to BNR, Rwandan banks had suffering loans of Rwf 267 billion in 2023/2024, representing 5% of total loans.
Nelson Gahamanyi, head of BPR, Muhanga Branch noted that depreciation forces banks to raise interest rates, increasing repayment burdens.
He emphasized that loan defaults stem not only from depreciation but also from mismanagement, poor investments, and intentional non-repayment.
2.Loss of confidence in the Franc: Father Dr. Samarwa warned that a depreciating franc undermines public trust in the currency, leading people to avoid using it whenever possible. This lack of circulation stifles economic activity.
3.Inflated costs: A weakened franc forces consumers to carry more cash for purchases and exacerbates the trade imbalance, as more money flows out of Rwanda to pay for imports.
Should employers raise salaries?
Dr. Samarwa suggests that salary adjustments could mitigate the impact of inflation but must align with the country’s economic health. “If the economy is performing well, a 4% salary increase is feasible. However, during tough times, such raises could fuel further inflation,” he cautioned.
He illustrated the dilemma with an example: “If ICK raises staff salaries, it would necessitate increasing student tuition fees. Can families afford that, given existing challenges?”
Strategies for economic stability
1.Boost exports: Dr. Samarwa stressed the importance of exporting high-value, finished goods rather than raw materials, which fetch lower prices on global markets.
2.Strengthen BNR policies: The central bank should regulate the money supply to stabilize the franc’s value.
When foreign currencies are scarce, Rwanda could consider borrowing to ease pressure on the local currency. However, robust safeguards must prevent hoarding and speculative trading.
3.Action-oriented reforms: Seth Kwizera, head of EPRN, echoed this sentiment during a televised discussion: “Rwanda must prioritize quality and quantity in exports. The plans exist, but execution is what matters.”
Projections for 2024 indicate a slower depreciation rate of 9%, offering cautious optimism. However, experts stress that bold, actionable reforms are critical to achieving sustainable economic stability.