Private sector investment rose steadily over past five yearsDespite the global economic crisis of 2008, which still reverberated last year, private sector investment is going strong.
It is now almost a decade since Rwanda began seriously focused efforts to attract investments into the country as a way of ensuring that the country develops. The initiative started through the creation of the Rwanda investment and export promotion agency (RIEPA) which was charged to market the country’s investment potential to attract foreign direct investments.
However, to give investors the incentives RIEPA promised, other agencies had to factor in. For instance, Rwanda Revenue Authority, REMA, the immigration office had to post an employee at RIEPA to facilitate these investors.
This wasn’t particularly easy as the employees had to consult their agencies before issuing certain documents. This in turn led to interagency fights as each one of them thought they were relishing too much power to RIEPA.
All in all, some progress was madeespecially through the annual investment forums which attracted regional and international investors. These forums were meant to be a “take a look and see” for investors who would consider if the investment options were worth trying out.
Borrowing a leaf from the Asian “Tiger” nations on how they had modeled their solid development agencies that did wonders in the eighties and early nineties, the Rwanda Development Board (RDB) then came into existence. RDB was created by merging several development agencies under one roof which would report directly to the office of the president.
It brought together the Rwanda investments and export promotion agency (RIEPA); the Centre for Support to Small and Medium Enterprises (CAPMER); the Rwanda Commercial Registration of Service Agency (RCRSA); the Environmental Impact Assessment (EIA) unit and the Privatization Secretariat. Others are: RITA, ORTPN and a Unit of Human Resource and Institutional Capacity Development (HIDA).
The move to merge the development agencies has now begun to pay off substantially. For example, 117 investment projects worth US$ 250,000or more passed through RDB in 2008. And according to the one-stop-center, 39 of them were foreign direct investments.
The year 2008 registered foreign direct investment worth US$ 82.87 million compared to a mere US$ 2.59 in 2003. In financial terms, 2007 was the best year with total investments of US$ 200 million.
2008, on the contrary, was not a good year in terms of FDI. This was due to the effects of the economic crisis where the world economy shrunk bringing uncertainty to potential investors. A good example is Dubai World which had promised to invest more than US$ 350 million in the construction of a five-star hotel in Kigali as well as a high-end eco-lodge in Nyungwe forest. The investments never materialized as it was one of the consortiums to be hard hit by the economic crunch.
In 2009, a total of 109 investment projects were registered with an estimated level of investment worth Frw 645 billion (approximately US$1.2 billion). These investments are expected to create 11,901 jobs. So far, 58 projects are operational representing 53.2% with an estimated level of investment worth Frw 565b (approximately US$ 1m).
Of the registered projects, 39 are purely foreign direct investments including 36 projects undertaken by foreigners from abroad representing 44.9% in terms of numbers and 47.6% in terms of value. There are 3 projects undertaken by Rwandans living in the Diaspora, with a value of Frw 5b. As far as local investments are concerned, 2009 registered 59 projects representing respectively 55.6% in terms of numbers and 52.3% in terms of value, and expected to create 3,096 jobs. Joint ventures between local business and foreign investors scored 9.4% with a total of 10 investment projects totaling an investment value of Frw 17b.
Comparing 2008 and 2009, in terms of the value of projects registered there was an increase of 40.7% from Frw 458b in 2008 to Frw 645b. Yet in terms of the number of projects, there was a slight decline of 6.8% from 117 projects in 2008 to 109 projects in 2009.
Major projects registered last year include: Kivu Watt by the American company Contour Global company to generate electricity from methane gas in Lake Kivu; Luxemburg’s Tigo in telecommunications; German SAG in electrical construction; a South African company operating Rutongo mines; Tanzania’s Bakhresa grain milling; and a Rwandan shopping centre.
Other major foreign deals signed include a Jatropha bio-fuel project, the 5-star Marriott/New Century hotel and the Kigali Convention Centre and hotel.
There have also been major investment expansions in 2009. Companies that have been involved in expansion include: Real Contractors, CIMERWA, Kitabi Tea Company and Banque Populaire du Rwanda.