This strategic policy review critically examines the role of artificial intelligence (AI) in Rwanda’s broader economic transformation agenda, focusing on the alignment between national development goals and sectoral realities. Rwanda, still largely agrarian with 82% of employment in informal sectors, is pursuing an ambitious shift toward a knowledge-based economy as outlined in Vision 2050, the Smart Rwanda Master Plan, and the National Artificial Intelligence Policy (2023). These policy frameworks position AI as a catalyst for socioeconomic development, targeting key sectors such as agriculture, healthcare, education, finance, and public administration. The paper synthesizes labor force statistics, digital economy data, and sector-specific AI case studies to assess Rwanda’s current readiness for AI integration. While flagship initiatives—such as VIEBEG’s AI-enabled health logistics and Farmonaut’s precision agriculture tools—demonstrate localized impact, national-level adoption remains uneven. Key challenges include inadequate data infrastructure, limited AI skills, low awareness among SMEs, and a persistent rural-urban digital divide. Comparisons with Kenya and Ghana further contextualize Rwanda’s progress and limitations within the regional AI ecosystem. This review highlights that despite Rwanda’s strong political will and high-level coordination, significant barriers must be addressed to achieve inclusive AI adoption. It concludes with forward-looking policy recommendations centered on human capital development, regulatory frameworks, public-private innovation, and regional collaboration. The findings aim to inform policymakers, researchers, and development stakeholders seeking to leverage AI for inclusive growth and to align Rwanda’s digital trajectory with its Vision 2050 goals.