Investment is the one word that depending on how it is used, could guarantee your financial security or insecurity, to put it lightly. And although there are a lot of tricks to it, the famous phrase the star investors use is
“the higher the risk, the greater the return,” and they also chip in that “there is no risk-free investment.”
But how true is this? And does this mean that you should always invest despite the stakes involved? People have always questioned what to invest in and exactly how much to invest.
Can there be such a thing as too expensive an investment? And how do you navigate the system? You are not alone, governments of countries also go through these mind-boggling questions.
They constantly seek what sector of the economy to invest in more than others to bring in value-adding returns.
More often than not, we hear about risky investments made by governments and the probability of getting ROIs. Rwanda is no different.
Over the years, the government has begun to place a high value on its tourism sector due to the latter being its highest foreign exchange earner. In light of this value, many expensive investments have been made in the sector.
Some have received significant criticism due to their expensive nature, with many doubting the return on investment. Some of Rwanda’s investment towards the tourism sector:
Sponsorship of Famous International Football Clubs:
In 2018, Rwanda invested a whopping sum of about €34.5 million ($39million) on a three-year sponsorship deal with the famous English club Arsenal, which received a lot of international and domestic criticisms.
Many assumed that the country – still recovering from the effects of genocide should have made better use of the money to settle more pressing national concerns.
Rwanda had envisioned a future gain in this investment and had refused to entertain any criticism. The CEO of the Rwanda Development Board, Claire Akamanzi, had tweeted at the time that
“ Anyone who criticizes our deal with @Arsenal on account of Rwanda being poor or an aid recipient, either wishes for Rwanda to be perpetually so, or doesn’t understand that in any business, marketing costs are a key component of a company’s expenditures….”
The investment was taken as a smart approach to changing the global perception of Rwanda from that of a genocide-ridden country to a destination worth visiting and the slogan “Visit Rwanda” on the left sleeves of the Arsenal players captured this intent.
This was based on the fact that the Arsenal shirt is reportedly seen globally about 35 million times a day. The investment has shown to be profitable over time, with benefits totaling €36 million ($44 million) based on TV viewing and social media in only one year.
In the same year, the alliance was formed, Rwanda received around 1.7 million tourists. Visit Rwanda’s YouTube channel subscribers also increased by 100 percent, while its Twitter and Instagram followers increased by 72 percent and 577 percent, respectively. Because of these returns, Rwanda renewed and extended the partnership in 2021 by four more years.
Due to the benefits of the first sponsorship, the country proceeded to sign a similar three-year deal with the renowned French club Paris St. Germain (PSG) in 2019.
Although undisclosed, the deal was rumored to be between 8 and 10 million euros. This equally expensive partnership did not go without mild disapproval.
Claire Akamanzi referred to this partnership as a Lifestyle partnership, which provided another platform for Rwanda’s global recognition and promoted other Made-in-Rwanda initiatives like fashion, arts, coffee, and tea.
To this end, the partnership enabled Rwanda as the executive supplier of coffee and tea at Parc des Princes (PSG’s home stadium). The Club recently released a fantastic video on the campaign launched with Visit Rwanda, promoting Rwanda as an exceptional tourist destination.
Construction of world-class structures:
Rwanda has built some mind blowing architectural structures, including the Kigali Convention Center (KCC) and the Kigali Arena, as an additional effort to encourage tourism.
The Kigali Convention Center, completed in 2016, is famous for being the most expensive building in Rwanda and Africa, costing about $300 million.
The 32,200 square meters venue houses 18 conference areas, nearly 300 hotel rooms, multiple restaurants, and more.
HE. Paul Kagame, Rwanda’s president, was criticized for reportedly borrowing to fund the masterpiece, but its purpose has proven worth the effort. The building is a masterpiece of architecture that combines arts, culture, and modern design that hosts international events with guests worldwide.
Part of what makes it expensive are the LED lights that were used to make the dome, which lasts longer and saves a lot of energy. The toilets are flushed with recycled water, making it one of Africa’s most costly environmentally sustainable structures.
The center has hosted international conferences like The African Union Summit in 2016. It is set to host more conferences in 2022, including DigiBank Africa live summit, Africa Retail Forum, Sustainable energy for all forum, Build Expo Rwanda, and Cyber tech Africa among many others. These events bring tourists from all over the world, elevating Rwanda’s global image and proving a worthy investment.
The arena has also hosted numerous international sporting events, including the 2019 FIBA Under-16 Women’s African Championship, 2021 Afrobasket, and the 2021 African Nations Volleyball Championship. It has also hosted international entertainment shows with world-famous musicians like Adekunle Gold, Omah Lay, Rema and Bruce Melodie.
Rwanda is not alone in these investments, The United Arab Emirates, Dubai spent about 4.1 billion dollars on the construction of The Burj Khalifa.
From all these, you can infer the phrase “the higher the risk, the greater the return,” to be valid. However, a general rule of investment is not to invest in what you don’t know, and an important lesson is that investment requires patience to reap the returns like all good things in life.
With time, it can be a worthy expensive basket that hatches eggs instead of breaking them.
Deborah Akintayo is a young learner at African Leadership University passionate about storytelling. She believes storytelling to be a crucial tool in re-writing the African narrative. To this end, she has written a few short stories and is currently working on writing articles. Deborah is also interested in environmental conservation and how storytelling can make children more involved in caring for their environment.