German businesses in Rwanda have showcased eagerness to ramp up investment in research and development (R&D) and services in the near future, a new survey has found. Dubbed AHK World Business Outlook, the survey was carried out in October 2023 by the Delegation of German Industry and Commerce for Eastern Africa, an institution that is closely connected to the Chambers of Industry and Commerce (IHKs) in Germany. Together, they support German companies by promoting and extending their business relations to foreign countries. ALSO READ: Rwanda attracted $399 million FDIs in 2021 The AHK World Business Outlook aims at gathering perspectives and feedback from German businesses. The makers of the survey interacted with 10 German businesses in Rwanda. One of the questions asked in the survey was about the areas in which the companies have made or plan to make significant investments. In response, half of the companies said they hope to invest in R&D and services like establishing shared service centres. ALSO READ: Govt mulls direct investment in low-cost housing projects German businesses’ interest in Rwanda was reported to be expanding. From 2000 to September 2019, the Rwanda Development Board registered 17 German investments (totalling above $257 million) across a range of sectors; energy, mining, services, construction, ICT, agro-processing and manufacturing. Some of the significant German companies in Rwanda include Volkswagen which assembles cars and Pfizer/BioNTech which is working to establish a vaccine factory. Germany is the fourth largest economy in the world after the United States, China and Japan and the largest economy in Europe. It is the third-largest export nation in the world. At 70 per cent, the service sector accounts for the largest share of the country’s gross domestic product. In 2022, German FDI flows abroad were worth €169 billion, despite being down slightly on the exceptionally high level of the previous year. By contrast, FDI flows from abroad to Germany almost halved to €44 billion. Rwanda is continuing to make efforts to attract more FDIs. In 2021, the country experienced a significant boost, attracting $399.3 million, marking a substantial 45.7 per cent increase compared to the $274.1 million registered in 2020, according to the Foreign Private Capital (FPC) census report of 2022, released by the central bank in early June 2023. The remarkable growth in FDI can be attributed to favourable investment conditions and the utilisation of both debt and equity instruments, resulting in an 8.5 per cent surge in FDI stocks, which reached $2.9 billion. The country presents several FDI opportunities in sectors including manufacturing, infrastructure, energy distribution and transmission, financial services, fintech, off-grid energy, health services; education, electric vehicles, agriculture and agro-processing, tourism, services, mining, and information and communications technology (ICT). The report also highlighted that Rwanda’s return on investment (ROI) increased to 11.8 per cent in 2021 from 9.7 per cent in 2020, positioning it well above the global average despite the impact of the pandemic.
