Mauritian investors currently have the most investments in the country with a majority of their investments spread in tourism, energy, wholesale and manufacturing.
This is according to a Foreign Private Capital survey conducted by the Central Bank to determine the direction, magnitude and trends of Foreign Private Investment.
Mauritius accounted for 25.8 per cent of Foreign Private Capital inflows for 2017 at about $117 million, according to the Central Bank study.
Foreign Private Capital (FPC) are inward investments into the country in terms of equity and non-equity (debts) from non-residents.
It is composed of foreign direct investment which is the most important component, portfolio investment and other investments.
The total capital inflows for 2017 were estimated at $452.2 million which was a slight drop from $541 million in the previous year.
However, the stock, total foreign private capital grew by 12.2 percent, from $2,527.9 million recorded in 2016 to $2,836.1 million for in 2017.
China was second to Mauritius with an 18. 4 per cent share at $83 million mostly in manufacturing. India was third with most investments in the ICT sector at about $31 million.
The findings indicate that the sectors that attracted the most external investments include manufacturing, financial and insurance, wholesale and retail trade as well as ICT.
In terms of total stock of foreign private capital, Mauritius takes the lions share at $609 million followed by Kenya at $218 million with South Africa third.
The growth of foreign investments was found to have created over 66,500 jobs up from 56500 in the previous year.
According to the Central Bank, in 2017, the overall net profit of the foreign firms amounted to $141 million, rising by 7.2 per cent from $ 131.4 million in 2016.
Foreign investors also had a major impact towards reducing the trade deficit and growing exports.
“The exports covering imports of goods and services from private companies receiving foreign investment improved from 51.1 per cent 2016 to 67.5 per cent in 2017. In addition, foreign investment to private companies increased employment by 17.7 per cent in 2017,” the study noted.
Wilson Kamali the Director of Statistics Department at the National Bank of Rwanda told The New Times that the firms were registering good performance in terms of profitability.
Commenting on whether increased borrowing by the firms in foreign currency could have played a role in the depreciation of the Rwandan Franc against the dollar, Kamali said they are often long-term with the interest paid from these debts being very small and they are not related to the current depreciation of the Franc.
“In the Foreign Private Capital 2018 Census, there are two kind of debt: debt from affiliated and debt from non-affiliated. Debt from affiliated are the debt that companies have from their parent investors, these are considered as equity,”
“The debt from non-affiliated mainly come from international financial institutions, and considered as non-equity. Considering that most of it are in foreign currencies, both these kind of debt are for long-term, the interest paid from these debt are very small and they are not related to the current depreciation of the Franc,” he told The New Times.