When the curtain fell on the Rwandan election campaigns on Sunday, August 8, one cannot rule out the fact that many of the new wave of investors who set up shop in Rwanda in the last seven years went to bed that very night with many questions.
Among this group, are leading regional and continental brands as well as international businesses that have pumped in millions of dollars as Foreign Direct Investment (FDI) into Rwanda. It is only natural to assume that, for this group of investors, the likely outcomes meant either a fatal loss of top dollar if the elections went sour, or continuity in trying to get a return on every dollar spent, in case of a successful poll.
If anything, sections of the world media, while focusing its glare on Rwanda prior to and during the election season, spoke about varying levels of uncertainty as the poll date approached. To be precise, this same section of media painted a gloomy picture for those who had already invested. Others went ahead and predicated outright doom for the Rwandan people after the polling day.
However, by Tuesday morning of the 10th August, it was clear that the prophets of doom had placed a wrong bet, at least from the perspective of investors. With President Paul Kagame back firmly into the driving seat, ready to continue with his aggressive reconstruction mission for another seven years, investors who had cast a doubt on Rwanda’s polls will now re-think their perception of Rwanda.
Within the East African Community (EAC), Rwanda is widely recognized as a virgin territory for investors. Opportunities abound in abundance in just about every sector. By emerging from the ashes of the Genocide 16 years ago, Rwanda has worked hard to attract hordes of investors as one way of actualizing its envisaged transformation into a middle-income economy by the year 2020.
The outcomes of the poll, the second since the Genocide, was bound to be an indicator of reinforcing or worsening Rwanda’s strong reforms in doing business. The election results will, no doubt, boost the optimism among the investor community.
In turn, the poll results should see a huge boost in FDI inflows leading to other trickle down effects such as gains for the entire economy and the overall strengthening of the Rwandan Franc.
Major firms that had opted to take a wait-and-see attitude before investing will now have to re-draw their strategies. FDI into Rwanda for 2009 was estimated at $119 million, according to the latest World Investment Report (WIR).
However, it must be pointed out that the WIR speculates that FDI into East Africa is set for a decline after a decade of growth. Overall FDI flows into Africa declined from a peak of $72 billion in 2008 down to $ 59 billion in 2009.
While the WIR paints a future of slow recovery of Africa’s lost ground in attracting FDIs, Rwandan public officials, buoyed by the outcome of the recent poll, are painting a rosy picture for the future.
Rwanda Development Board (RDB), the special purpose agency tasked to fast-track Rwanda’s economic transformation, says that the wide ranging reforms it has carried out since the start of this year should enable Rwanda’s economy to consolidate gains made towards attracting more investments, in the coming years.
Consequently, the country is bound to maintain its star rating within the EAC as a top reformer in doing business. Government officials are now saying that their focus is going beyond World Bank’s doing business reform indicators by looking at their underlying loopholes, for the express purposes of attracting more investments.
Further still, the Government seems to be placing its transformation agenda on new relations based on the South-South cooperation model. Africa’s resilience in the wake of the spills of the Global Financial Crisis (GFC) can be seen through Rwanda’s FDI records.
Rwanda’s ability to attract huge volumes of FDI from the southern hemisphere countries such as China, India and also from within Africa itself, partly explains how it managed to cushion itself from the adverse effects of the GFC.
In this new context of South- South cooperation, Rwanda has attracted over $200 million of FDIs from such sources within the last five years alone. Companies like Eco-Bank, Access Bank, KCB Group, Nakumatt, Serena, Tigo and Lap Green fall in this category.
Now that the playing field is clear with the outcomes of the elections, many more from the southern hemisphere such as Indian firm Opus Solutions, Nigerian Banking brand Diamond Bank, Kenya’s new financial kid on the block, Equity Bank, and a host of others will definitely bring in more millions of dollars.
This new source of investment is bound to boost Rwanda’s highly ambitious development agenda through opening up its exports to greater access to global markets. For instance Rwanda’s horticultural sector minus floriculture seeks a quantum leap from export receipts going beyond $10 million annually in the next few years from less than $1 million in 2008.
This is in tandem with Rwanda’s crop intensification programme which targets food security and increased market share from lucrative western markets. The implication is that this new source of investments will no doubt provide the country’s economy with a relevant complement for transformation of its economy away from dependency from traditional western FDI sources.
Planners are upbeat that Rwanda’s transformation that is premised on attracting FDIs of more than $200 million annually up till the year 2020, will be met given the fact that President Paul Kagame has secured his second mandate that runs to 2017.
One can say that as the struggle continues for Rwanda’s transformation, which is President Kagame’s election pledge, investor confidence is likely to improve in tandem with the nation’s starring rating in doing business reforms.
Fred Oluoch-Ojiwah is a Kenyan journalist based in Kigali