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Rwanda's post-conflict economic transformation has been significantly shaped by deliberate policy reforms targeting the business environment. While improvements in global indices are documented, a granular analysis of the policy architecture and its governance mechanisms is required to understand sustainability and future challenges. This analysis aims to diagnose the core policy frameworks governing Rwanda's business environment, evaluate their implementation efficacy, and identify structural governance issues that may impede private sector development over the medium term. The study employs a mixed-methods policy analysis, combining a systematic review of legislative and regulatory documents with structured interviews of policy implementers and a longitudinal analysis of firm-level survey data to assess policy outcomes. A central finding is the critical tension between top-down policy imposition and bottom-up entrepreneurial adaptation. While regulatory efficiency improved markedly, survey data indicates that approximately 40% of formal enterprises perceive administrative compliance as disproportionately burdensome relative to benefits, highlighting a governance gap. The Rwandan model demonstrates the efficacy of a centralised, directive approach to rapid business climate reform, but reveals latent tensions in policy legitimacy and adaptive governance that require addressing to foster organic, resilient private sector growth. Policymakers should institutionalise a permanent private sector regulatory impact assessment unit, pilot sector-specific regulatory sandboxes, and enhance the role of business associations in the co-design of secondary regulations to improve policy buy-in. Policy analysis, business environment, regulatory governance, private sector development, institutional diagnostics This paper provides a novel diagnostic framework that disaggregates 'the business environment' into discrete policy and governance components, offering a replicable model for analysing the implementation gap in developmental states.