Why Does the Country of Rwanda Use Francs as Their Currency?

The currency of Rwanda, the Rwandan Franc, embodies the nation’s historical journey and economic evolution. Understanding why Rwanda uses a currency named the “Franc” involves exploring its colonial past and the decisions made during its path to monetary independence. This article will delve into the Rwandan Franc’s origins, trace its colonial influences, and examine how Rwanda established its own national currency. It will also cover the contemporary management of this currency, providing context for its continued role in the country’s economy.

Understanding the Rwandan Franc

The official currency of Rwanda is the Rwandan Franc (RWF). It is the sole legal tender for transactions within the country, ensuring all financial obligations and exchanges are typically expressed and settled in RWF. The Rwandan Franc is subdivided into 100 centimes, though these smaller units are rarely used in daily transactions due to practical currency management and inflationary effects.

Banknotes currently in circulation generally include denominations of 500, 1,000, 2,000, and 5,000 francs, with coins available in denominations ranging from 1 to 100 francs. The design of these banknotes frequently features national symbols, significant landscapes, and development priorities, reflecting Rwanda’s unique cultural and economic identity.

Colonial Roots of the Franc

Rwanda’s monetary landscape was significantly shaped by its colonial history, initially under German and subsequently Belgian administration. During the period of German East Africa, which included present-day Rwanda, the dominant currency was the German East African Rupee. This monetary system underwent a significant change with the onset of World War I.

Belgian forces occupied Rwanda in 1916, leading to the replacement of the German East African Rupee with the Belgian Congo Franc. This shift was a direct consequence of the change in colonial power, as the Belgian Congo Franc served as the currency for Belgium’s vast central African territories. The Belgian Congo Franc itself was linked to the Belgian Franc, a currency that, like the French Franc, carried the “Franc” denomination. This established a direct lineage for the “Franc” term within Rwanda’s monetary system.

Rwanda continued to use the Belgian Congo Franc for an extended period, until 1960. The pervasive use of this franc-denominated currency during decades of Belgian rule deeply embedded the “Franc” nomenclature into the local financial consciousness. When the region began its transition towards independence, the existing monetary framework, including the familiar currency name, provided a foundation for future currency decisions.

Establishing an Independent Currency

Following the period of colonial rule, Rwanda initially remained part of a broader monetary arrangement. Until 1960, Rwanda, along with Burundi and Congo, utilized a common currency known as the Rwanda and Burundi Franc. This shared currency facilitated economic integration among these newly independent or transitioning territories. The use of a common currency helped maintain a degree of monetary stability in the immediate post-independence era.

Rwanda gained full independence in 1962, and shortly thereafter, the nation began the process of establishing its own distinct monetary authority. In 1964, Rwanda officially introduced its own independent national currency, the Rwandan Franc. This move signified a crucial step towards greater economic autonomy and sovereignty, allowing the newly formed government to control its own monetary policy. While the currency became independent, the naming convention of “Franc” was retained, building upon the established monetary legacy rather than adopting an entirely new system.

The initial issuance of the Rwandan Franc involved practical measures, such as hand-stamping or embossing existing Rwanda-Burundi notes to designate them for use exclusively within Rwanda. This transitional approach allowed for a smooth shift to a fully independent currency. The decision to keep the “Franc” name reflected the historical continuity of currency denominations in the region, which had been accustomed to this term for decades under various colonial and transitional monetary systems.

Managing Rwanda’s Currency Today

The National Bank of Rwanda (Banque Nationale du Rwanda or BNR) serves as the central bank responsible for the issuance and regulation of the Rwandan Franc. The BNR’s primary objectives include maintaining price stability and supporting the country’s economic growth. To achieve these goals, the central bank implements monetary policies to control inflation and ensure the stability of the national currency.

Recently, the BNR reinforced the role of the Rwandan Franc as the country’s legal tender by implementing stricter regulations on foreign currency usage in domestic transactions. As of June 2025, businesses and individuals are generally prohibited from quoting, advertising, or accepting payments in foreign currencies without explicit authorization from the central bank. Violations of these regulations can result in fines, with initial offenses for unauthorized foreign currency pricing carrying penalties of up to Rwf 5 million, and repeat offenses potentially reaching Rwf 10 million. This measure aims to strengthen the Rwandan Franc, reduce reliance on foreign currencies, and enhance the effectiveness of the central bank’s monetary tools.