On 18 December, Rwandans have voted overwhelmingly to amend the constitution so as to allow President Paul Kagame, who is now serving his final term in office, to run for up to three more terms. This comes as no surprise after the Rwandan parliament unanimously approved changes to the constitution on 18 November, following a petition signed by more than 3.6 million Rwandans. The amended constitution cuts the presidential term from 7 to 5 years and maintains the two-term limit. However, the new rules will only come into effect in 2024 allowing Kagame to run for a third seven-year term in 2017 and then start his two-term limit of 5 years. This means Kagame could possibly stay in power until 2034.

Impact on country risk

Kagame has already been president since 2000 but has held power since 1994, when his rebel force ended the country's genocide. The extension of the Rwandan presidential term limits is not likely to increase the risk of political instability. One of the main reasons is Kagame’s extensive popularity. Kagame has been credited with Rwanda's strong economic growth as the economy has expanded with an average 7.5% annually in the last decade. He has diversified the economy, which has been heavily dependent on tea and coffee, making Rwanda less vulnerable to weather conditions and price volatility in these commodities. Moreover, Rwanda's political environment has become increasingly repressive and the political opposition is weak. However, the amendments can put donor aid at risk as the EU and other Western donors criticise them. Rwanda has large external financing needs due to its current account deficits (estimated at -14.5% and -15.4% of GDP in resp. 2015 and 2016). These external financing needs are mostly covered by donor aid. However, it is unlikely that foreign donors reduce their financial assistance sufficiently to threaten government stability. Analyst: Jolyn Debuysscher, j.debuysscher@credendogroup.com