InvestmentFactors Responsible for the massive foreign investments in Rwanda.

Joyce ObuyaFebruary 1, 202364713 min
Source: pexels

For the past 40 years, FDI (foreign direct investment) in the African region has been naturally chaotic and erratic. FDI’s volume have relatively increased in the past 40 years in the entire African region. There have been sudden increases accompanied by sudden decreases in the sequence of progress in successive years.

Additionally, there has been a decline in the movement of foreign direct investment to the African region as compared to other global regions that have been developing for the past several years. According to UNCTAD, FDI flows to Africa fell by 16 per cent to $40 billion yet Rwanda has had increased foreign investments.

According to Flexi Personnel, Rwanda’s economy collapsed after the genocide of 1994, which claimed over half a million lives. It resulted in widespread poverty among Rwanda’s people, wreaking havoc on the country’s already shaky economy, which fell by half in the year after the genocide, with per capita income falling to $80 per year.

Rwanda has experienced tremendous economic success and development since then as seen by the yearly growth rates of the Gross Domestic Product (GDP). Rwanda’s growth rate was 7.6 in 2012, 7.4 in 2013, and 7.8 in 2014, according to the Ministry of Finance and Economic Planning. The primary contributors to the increase were coffee and strong tea exports, as well as a successful government strategy.

Since 2008, Rwanda’s government has successfully undertaken regulatory changes. New intellectual property laws, a legislation creating the Kigali International Centre, a law on business arbitration and conciliation, and a new company law were all passed in 2009. As a result of these legislations, bureaucratic obstacles have been eliminated, resulting in a favorable climate for both domestic and foreign investors. Rwanda has made several bilateral and multilateral treaties with foreign investors for business transactions, and they include bilateral investments with Germany, Belgium, and the United States. Rwanda has Trade agreements with the USA, Germany, Netherlands, and Switzerland.

Rwanda has also signed tax treaties with Mauritius, South Africa, and Belgium to avoid multiple taxation, ensuring that businesses operating in Rwanda are not subject to double taxes. Rwanda is a member of The East African Community, the Common Market for Eastern and Southern Africa (COMESA), the African Union, the Africa Trade and Insurance Agency, and the World Trade Organization. Rwanda is a part of the World Intellectual Property Organization and the Paris Convention on Intellectual property. It has enhanced Foreign direct investment with establishing all these relationships .

Another factor to consider for the increased foreign direct investment in the Rwanda is the introduction of electrical cars as the country advances towards clean and green technology.

According to Flexi Personnel ,  Rwanda’s tax policy mandates that every resident individual pay income tax on all Rwandan earnings. Rwandan revenues, including work income, are subject to income tax withholding at a rate of 15% for all non-resident individuals. Rwanda legislation must be created or a foreign corporation’s headquarters must be established in Rwanda for it to be deemed a resident. Corporate income derived from overseas sources is taxed. After expenditures are deducted from total revenue, a company’s earnings are taxed at a rate of 30 percent.

Below are some Investment opportunities in Rwanda include but not limited to as stated by Flexi Personnel :

Agriculture Sector:

Rwandans rely on agriculture as their major source of income. It employs 90% of the workers and accounts for 35.9% of the country’s GDP. Because physical labor is easily accessible in Rwanda, the industry is a success. However, despite the government’s significant efforts in the education sector, competent professionals are scarce due to the country’s previous terrible genocide.

Rwanda’s major exports in this industry are coffee and tea, which account for a considerable portion of the country’s foreign exchange revenues. The United States and Europe are the key markets for coffee exports while the Middle East and Pakistan are the leading markets for tea exports. The industry also satisfies the country’s food requirements. Investment opportunities exist in the following agricultural sectors in Rwanda: Dairy, Poultry, farming, aquaculture, mechanization, crop sourcing, block chain, agro-tourism, manufacturing of agriculture equipment, and cold chain logistics.

Energy sector:

Rwanda’s energy industry is currently developing. More than 80% of its energy is derived from wood or its processed form, charcoal. Households are the primary users of this type of energy. The increasing demand for it has resulted in a shortage of wood for household and economic purposes. Rwanda is now experiencing significant energy issues, offering you an investment opportunity.

Banking and finance sector:

Because less than 20% of Rwanda’s adult population has access to financial services or has a bank account, investments in the banking and financial industry are limited. Despite this, the sector has made significant progress in upgrading its services. The industry is lucrative, well-capitalized, and liquid. The central bank, commercial banks, and the Development Bank make up this sub-sector. Other investment opportunities available in the banking sector are Agriculture financing, Real estate investment trust, SME financing and International bank representative office.

Telecommunication and ICT sector:

Rwanda’s government has designated ICT as a high-priority industry, and international firms such as MTN and Tigo Rwanda have been awarded licenses. Investors have played an important role in the government’s goal to improve economic knowledge in order to promote business in general. Rwanda’s goal to become a regional centre for ICT capacity building has prompted the government to invest in ICT infrastructure development.

Mining sector:

The Rwandan government sees the private sector as a key driver of economic growth and wealth creation. As a result, one of the most important aspects of the government’s economic reforms and reconstruction initiatives is privatization. Following the government’s decision to sell mineral concessions, numerous major players, primarily from multinational firms, have entered the mining sector both in exploration and exploitation. The exploration potential was made feasible by the Rwandan government’s funding in exploratory operations in promising target regions, which generated important geology data that mineral exploration firms could exploit. The good news is that minerals like niobium and tantalite must have at least 30% value-added in order to be traded. Precious minerals, such as gemstones, are only lightly investigated and mined. As a result, possibilities to set up cutting and polishing rocks arise.

Tourism sector:

Rwanda’s tourist industry has a well-developed strategy that focuses on high-end eco-tourism. The tourism sector offered initiatives to improve their tourist experience by providing eco-travelers, adventurers, and business travelers with high-value, low-impact experiences. The projects include cultural tourism infrastructure projects, vacation villages, hotels, eco-lodges, and resorts. The projects provide an investment opportunity, and Rwanda invites private investments into developing the sector.

In Rwanda, there are numerous untapped investment opportunities with the potential for investments. They offer you a diverse investment platform in many sectors.

Joyce Obuya

Relevant experience as a content writer. Highly proficient in Keyword Research and its tools. Experienced writer in both short-form and long-form blogs as well as Business Publications

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