Local and foreign investors spent less in Rwanda in 2020, a year plagued by the coronavirus pandemic. PHOTO | CYRIL NDEGEYA
The value of investments in Rwanda fell drastically by almost half from $2.46 billion in 2019 to $1.3 billion in 2020 primarily due to the coronavirus pandemic that affected the economy and investors worldwide.
The new numbers released by Rwanda Development Board (RDB) on Thursday represent a sharp investment decline of 41 percent, as both local and foreign investors spent less in a year plagued by the coronavirus pandemic.
Foreign direct investments (FDI) to Rwanda, however, increased by 51 percent of the total investments from 37 percent in 2019.
The figure is a notch higher than the 49 percent fall in global FDI registered in the first half of 2020.
“Despite the global economic slowdown resulting from the Covid-19 pandemic, Rwanda registered significant investments in key sectors of our economy. This is a sign of continuous investor confidence in Rwanda by both local and foreign investors. We are optimistic that these investments will further accelerate economic recovery by boosting local production and creating needed jobs for our people,” Clare Akamanzi, chief executive of RDB said in a statement.
“Rwanda is committed to supporting businesses to recover through initiatives like the Economic recovery fund- a Rwf100billion facility - to support companies affected by the pandemic so that they can survive, restart work and safeguard employment.”
Joint ventures and local investments contributed 29 percent, and 20 percent respectively, while they represented 44 percent and 19 percent the previous year.
Real estate and manufacturing accounted for 68 percent of all investments while manufacturing accounted for 20 percent.
Major investments registered in 2020 included a farming investment by One Acre Fund valued at $193 million, Phoenix Plaza at $179 million, and French real estate developer Duval Great Lakes Ltd at $69 million.
Other key projects registered included $12 million by Swedish firm Norrsken to build an entrepreneurship and innovation hub in Kigali, $4.45 million by British firm Nexus to set up a professional aviation academy, $26.2 million by local brewer Bralirwa for its expansion.
The government targets a total of 24,703 jobs to be created by the new investments, representing a pinch of the 214,000 new jobs targeted every year.
The World Bank Ease of Doing Business 2020 report indicated that Rwanda simplified business by exempting newly formed small and medium entrepreneurs from paying trading licence fees for the first two years of operation.
Investors point out among their top bottlenecks in Rwanda as persistent inconsistencies between RDB and the Rwanda Revenue Authority in the application of tax incentives and import duties, according to a 2020 report by the United States Department of State.
Investments from local entrepreneurs in the small and medium sector have borne the brunt of the coronavirus pandemic and many have been forced to close due to the enforced lockdowns.
The recovery fund – which is a two-year government facility worth $100 million through which businesses can apply for funding – has been affected by red tape and eligibility bottlenecks that have made it difficult for businesses in need to access the funds.
A criterion under the fund requires businesses that were hit by at least 50 percent losses to access recovery loans.
However, most of such businesses have already shut down, which has made uptake of the loan facility very low.
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