Ernst and Young (EY), the global leader in assurance, tax, transactions and advisory services, has urged regional governments to invest more in market integration to help absorb global economic shocks.
According to Allan Gichuhi, the Rwanda EY partner, ensuring more market integration while embracing innovative technologies will help the region become more economically resilient and thus attract more foreign direct investments.
Gichuhi said the global political, economic and investment landscape has entered an exceptional period of transition emanating from the UK vote to leave the European Union (EU), the election of Donald Trump as the US President and China’s entry into a new phase of slower economic growth among other factors.
He added that this will require regional states to embrace more innovative and prudent approaches to be able to absorb the shocks that may come as a result of these new developments.
Gichuhi was speaking during the official launch of the EY’s Africa Attractiveness report 2017 in Kigali, yesterday.
The report measures the FDI attractiveness of 46 African countries including Rwanda.
Rwanda was ranked 12th in terms of FDI attractiveness registering strong improvements on areas of macroeconomic resilience, business enablement, investment in infrastructure and logistics and economic diversification among others.
According to the report, the flow of foreign direct investments (FDI) into Africa recovered in 2016 after a dip in 2015.
During 2016, capital investment into Africa rose 31.9% while investment per project averaged $139m, against $92.5m in 2015.
“This surge was driven by several large capital intensive projects in the real estate, hospitality and construction, and transport and logistics sectors,” Gichuhi, said adding that the continent’s share of global FDI capital flows increased to 11.4% up from 9.4% in 2015.
This made Africa the second fastest growing destination when measured by FDI capital.
“Our view remains that Africa’s rise over the past 15 years is real. It is important to note that what we have witnessed has been a process of structural evolution rather than the kind of cyclical change that has marked previous boom and bust periods in Africa’s post-colonial history,” he added.
Experts believe that although exports from many African economies remain commodity orientated, private consumption has become a key growth driver as has investment in infrastructure.
They say many African economies have become more integrated into the global economy, an ingredient that will help counter the global financial meltdown.
Caleb Rwamuganza, the Permanent Secretary at the Ministry of Finance and Economic Planning, said government is very much aware of the pending global economic challenges and is putting in place measures that will help keep Rwanda’s economy resilient.
“We have done wide consultations and took a decision to continue investing in infrastructure, including energy, and now we are urging the private sector to take the lead in some of these investment projects to be able to achieve sustainable economic development,” Rwamuganza said.