Rwanda experienced a significant boost in Foreign Direct Investment (FDI) in 2021, attracting $399.3 million, marking a substantial 45.7 percent increase compared to the $274.1 million registered in 2020.
This remarkable growth in FDI can be attributed to favorable investment conditions and the utilization of both debt and equity instruments, resulting in an 8.5 percent surge in FDI stocks, which reached $2.9 billion.
These figures are contained in the Foreign Private Capital (FPC) census report of 2022, released by the Central Bank in early June 2023. The FPC census report encompasses equity and non-equity foreign investments, encompassing FDIs, portfolio investments, and other forms of investments.
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The largest portion of FDI originated from Mauritius, accounting for 30.5 percent, primarily invested in the financial, ICT, manufacturing, and electricity sectors. India followed with 17.9 percent invested in construction, and China with 17.6 percent invested in tourism and manufacturing.
Mauritius, Kenya, South Africa, the USA, and India were the major sources of FDI stocks.
FDIs remain the primary contributor to the country&039;s foreign private capital investments, displaying a strong recovery from $386.4 million in 2020 to $543.8 million in 2021, an increase of 40.7 percent.
"The rise in FPC inflows can be attributed to the recovery of economic activities from the poor performance induced by the COVID-19 pandemic in 2020. Rwanda's total FPC stock stood at $4.1 billion at the end of 2021," the report reveals.
However, the report acknowledges that the global business and cross-border investment landscape experienced significant changes in 2022 due to the Russia-Ukraine conflict, exacerbating the lingering effects of the COVID-19 pandemic. These factors have led to a triple crisis involving food, fuel, and finance in many countries across the world.
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The report also highlights that Rwanda&039;s return on investment (ROI) increased to 11.8 percent in 2021 from 9.7 percent in 2020, positioning it well above the global average despite the impact of the pandemic.
In contrast, Africa's FDI flows reached $83 billion in 2021, up from $39 billion in 2020, accounting for 5.2 percent of global FDI.
Despite the economic challenges, Rwanda remains committed to promoting various FDI opportunities, including manufacturing, infrastructure, energy distribution and transmission, off-grid solutions, agriculture and agro-processing, and ICT.
As an example, the Manufacture and Build to Recover program was introduced, providing tax incentives to investors in these priority sectors, resulting in $1.2 billion worth of investments during its initial phase.
Under the second phase of this program launched in March 2023, Rwanda aims to attract investments worth $2.5 billion.