The growth, fueled by foreign investments in Rwandan businesses and assets, reflects the country's increasing appeal to international investors and highlights the government's efforts to improve its investment landscape.
FDI was the dominant contributor to Foreign Private Capital (FPC), making up 80.8% of total inflows. FPC increased by 33.8% to reach USD 888.9 million in 2023.
The report attributes the remarkable growth to several factors, including robust economic performance, with Rwanda maintaining an average GDP growth of 8.2% in both 2022 and 2023.
The growth in FDI inflows was driven by significant increases in equity capital, reinvested earnings, and intra-company borrowings. Equity capital alone grew by 22.7%, while reinvested earnings rose by 36.2%. Intra-company borrowings saw the highest jump at 72.9%, reflecting confidence among international parent companies in their Rwandan subsidiaries.
Sectors leading the charge included the financial sector, which attracted 21.4% of total FDI inflows, followed by manufacturing (19.1%), ICT (13.9%), and wholesale and retail trade (13.8%). Notably, real estate activities saw a drastic surge of 1,966%, demonstrating a growing demand for infrastructure development.
Countries driving the inflows
Mauritius emerged as the top source of FDI, contributing 28.2% of total inflows in 2023. Investments from Mauritius were predominantly directed towards electricity, gas, financial services, and wholesale and retail trade.
India followed with a 12.2% share, focusing on ICT and education sectors, while Kenya accounted for 9.5% of the total, despite a decline compared to previous years. The United States, France, and Germany also significantly increased their investments, with growth rates of 86.6%, 408%, and a staggering 1,350%, respectively. These countries' contributions were concentrated in real estate, manufacturing, and agriculture.
FDI's impact extended beyond financial metrics, contributing to a 20.3% growth in employment within FPC enterprises. Over 10,000 new jobs were created, primarily in managerial and technical roles, underscoring the transformative potential of these investments in enhancing local skillsets and livelihoods.
The Rwandan government's Second National Strategy for Transformation (NST2) aims to double private investment from $2.2 billion in 2023 to $4.6 billion by 2029.
Key initiatives, such as the Manufacture and Build to Recover Program (MBRP), are expected to sustain this momentum. With USD 2.38 billion already mobilized through MBRP, the government remains optimistic about meeting its targets.
The Foreign Private Capital (FPC) survey is conducted by the Central Bank, the Rwanda Development Board (RDB), and the National Institute of Statistics of Rwanda (NISR).
Wycliffe Nyamasege
Source : https://en.igihe.com/economy/article/rwanda-records-44-surge-in-foreign-direct-investment
