This year’s World Investment Report (WIR) has brought various forms of arguments within the public arena. One is whether, indeed Rwanda’s Vision 2020 will be achieved given the global decline in Foreign Direct Investments (FDI’s) which play a key role in the overall transformation agenda for Rwanda.
The WIR is published by United Nations Conference on Trade and Development, UNCTAD.
When one reads the WIR 2011, there is no doubt that there are several issues that any country would consider important as it evaluates progress.
However, it very clear that the WIR authors, this year, failed to incorporate critical elements, specifically the context in which Rwanda’s economy is operating in relation to the efforts that were put in to pull the economy from the abyss of 1994.
Though the report runs a disclaimer to the effect that it UNICTAD does not consider the content as the gospel truth and that the designations of any country into any grouping are intended solely for statistical or analytical convenience and do not necessarily express a judgment about the stage of development reached by a particular country in the development process, it is still not an excuse to get the facts wrong.
After all, not many readers of such sensitive reports care to read disclaimers.
That is why you will find some of the so called journalists who follow events in Rwanda, jumping to conclusions that by WIR saying that FDIs to Rwanda are declining it means outright doom for the country, without taking their time to analyze critically and deeply the underlying issues.
In the WIR 2011, Rwanda is categorized with other 48 of the so called Least Developed Countries (LDCs).
At the very bottom of the table for LDCs is a section with two fifth of the LDCs that attracted less than US$100 million, Rwanda inclusive.
Here are states such as Afghanistan, Central African Republic, Eritrea, Lesotho, Togo, Nepal, Vanuatu, Gambia, Burkina Faso, Sierra Leone, Djibouti, Burundi, Mauritania, Bhutan, Comoros, Guinea-Bissau, Kiribati, São Tomé and Principe, Samoa, Tuvalu and Yemen. You will immediately notice why a journalist like me would have serious concerns with Rwanda falling in this category.
My take is that this is where the crop of what can be termed as failed states are lumped together. I am talking about countries such as Afghanistan or Yemen where Al-Qaeda affiliates hold sway. At the very least, one can add that Rwanda was in that situation 17 years ago. This is the major reason why the disclaimer I talked about earlier comes into play. It is a well known fact that Rwanda cannot in any way be lumped into the category of the failed states.
However, this particular report has very good pieces of advice for a country such as Rwanda. The delay in recovery of FDI flows to LDCs from the pre-crisis levels is a matter of grave concern. FDI is a key element of Rwanda’s transformation agenda as the country seeks to achieve middle income status by the next decade or so.
It is also refreshing to be told that substantial shifts are taking place in global FDI patterns, due to the emergence of FDI from developing economies.
Meaning that, South-South FDI is likely to play an increasing role for LDCs in the future, and holds the potential to boost productivity and significantly affect development patterns in LDCs. The report says that such forms of FDIs (from the southern hemisphere) that Rwanda has adopted into its investment promotion strategy, is known to be less volatile than that from developed countries, and was even more resilient during the recent global economic crisis, partly because it is less dependent on debt financing.
It is equally important to note that FDI prospects for LDCs remain challenging. Not just for a country like Rwanda. It is a global challenge. However, it should be made clear that Rwanda without a doubt is working extra hard to bring in FDIs in order to deliver on the promises of Vision 2020.
For instance, Rwanda has worked hard to effect far reaching reforms in doing business, substantive measures that are at par with those in other leading developing, as well as developed countries.
The author is an editor with The New Times