Rwanda has seen a dramatic rise in investment inflows, according to the World Investment Report (WIR) 2009. The report released recently said that inflow increased from $16m in 2006 to $67m in 2007 and $103m last year, surpassing for the first time giant Kenya.
For the third year running, Uganda has led the East Africa region in attracting foreign direct investment, according to the WIR.
Uganda fetched $787m in foreign investments in 2008, up from $733m in 2007 and $644m in 2006.
Tanzania came second in the region. It attracted $744m in 2008. This was an improvement from the previous year when $728m was fetched.
Kenya only came fourth. Its foreign investments fell to $96m in 2008, from $728m as the country suffered the consequences of post-election violence.
Burundi still has a negligible inflow as the country tries to hold together a fragile post-conflict government and find its feet in the greater East African Community.
In both 2007 and 2008, Burundi attracted only $1m in foreign investment. Kenya’s poor performance might explain the fact that over-all investments in East Africa remained stagnant in 2008 compared to the previous year.
“In East Africa, FDI inflows amounted to $4 billion - almost the same as in 2007. This represents 5 percent of total inflows into Africa, making it the lowest recipient among African sub-regions,” says the report.
Despite the rise in foreign investments in some countries, East Africa did not escape the effects of the global financial crisis which started in the US in September 2008.
In Uganda, inflows started to fall in the last quarter of 2008, to $159m in the fourth quarter, down from $211m in the third quarter.
There are signs of slight recovery in 2009. According to figures from the World Investment Report, foreign investments went up again in the first quarter of 2009, to $183m.
Over-all, Africa registered another record level in foreign direct inve
stments despite the global financial crisis.The continent attracted a total of $88b in 2008, a rise from $69b in 2007 and $57b in 2006.
Africa’s share in attracting foreign direct investment also rose - from 3.5 percent in 2007 to 5 percent in 2008.
“Cross-border mergers and acquisitions were an important contributing factor in the increased inflows,” the report said.
“Transnational corporations, mainly from Europe and to a lesser extent Asia, stepped up mergers and acquisitions of firms in the region in early 2008, particularly in the manufacturing sector.”
The report also attributes the increased foreign investments in Africa to policy measures adopted by several African countries to make the business environment more conducive.
The top 10 recipient countries in Africa accounted for nearly 82 percent of the total foreign investments in the continent, according to the report.
A large proportion of the inflows to these countries targeted petroleum exploration and mining activities.
Nigeria tops the list with foreign investments amounting to $20b in 2008. It is followed by Angola ($16b), Egypt and South Africa (both $9b). The others include Libya, Tunisia, Algeria, Congo and Sudan.