The global economy is still held hostage by very disturbing factors. The spills of the global financial crisis are yet to be finally laid to rest. The volatilities of international hard currencies such as the dollar and euro are still making headline news.
Such volatilities have a bearing on investments needed by countries such as Rwanda to transform their economies. For instance, according to the United Nations (UN), Foreign Direct Investments (FDIs) will only bounce back to pre-crisis levels in the next 2 years, though some regions show better recovery than others.
The reason is not financing constraints, but perceived risks and regulatory uncertainty in a fragile world economy. Yet we know that Rwanda’s transformation agenda , largely depends on FDIs in order to deliver on the promises and aspirations of Vision 2020.We also know that Vision 2020 is less than 10 years away from now.
The implication is that the greater challenge for governments in Africa generally and Rwanda in particular is to ensure that the African investment landscape has an even bigger impact on the planned transformation agenda. The question is-how will Rwanda ride through such storms that are largely externally induced?
While the investment picture, according to the UN, presents one of those major challenges for policy makers, brought by rapidly changing global environment, there is hope lurking in the horizon. The same UN says that since 2010, developing economies have absorbed close to half of global FDI inflows.
The UN adds that developing countries also generated record levels of FDI outflows, much of it directed to other countries in the South such as Rwanda. Here, we are talking about the rise of third world transnational companies making huge investments across the third world itself.
This noble observation demonstrates the growing importance of developing economies to the world economy. It also shows that South-South cooperation can be a critical component in driving transformation by countries such as Rwanda. The path breaking initiatives by truly third world transnational companies such as EcoBank International, Equity Bank, Serena Hotels, MTN group, KCB Group, Access Bank Plc and the rest of the pack comes to mind. Such brands have in one way or another provided Rwanda with very good case studies of effects of African transnational companies making a difference right here in Africa.
The 2011 World Investment Report shows that more than any other time, transnational corporations be in it first or third world, are engaging with developing economies with new but broadening systems of production and investment models. We are seeing the beginning of completely new modes of interactions between the third and first world, as a new measure to curb the volatilities in the world economy.
We are witnessing new relationships such as contract manufacturing and farming, service outsourcing, franchising and licensing away from the traditional FDI models. Trade and investment experts are saying that as a complement to FDIs, these relatively new phenomena present opportunities for developing countries like Rwanda to deepen their integration into the rapidly evolving global economy. Such new relations can strengthen the potential of third world countries to boost their home-grown productive capacities, and to improve their international competitiveness.
That way, the demons of volatilities of the world economy can be laid to rest. And countries such as Rwanda can continue with their transformation agenda without any major interruptions. In conclusion one can say that Rwanda can achieve Vision 2020 aspirations just by rapidly responding to an equally rapidly changing global environment, by directly responding favorably to how global investment landscape is changing.
The author is an editor with The New Times