2011- The year when the economy recovered lost ground on investments

The year 2011 closed as Rwanda Development Board (RDB) worked over time, struggling to recover lost ground suffered that saw a huge slump in investment registration in 2010, a situation that was brought by the global financial crisis.
Fred Oluoch-Ojiwah
Fred Oluoch-Ojiwah

The year 2011 closed as Rwanda Development Board (RDB) worked over time, struggling to recover lost ground suffered that saw a huge slump in investment registration in 2010, a situation that was brought by the global financial crisis.

The provisional statistics availed to Business Times, revealed that RDB surpassed its ambitious target of US$550m for the year. Just prior to Christmas, Clare Akamanzi, RDB Chief Operating Officer (COO) revealed that investments stood at US$620m as at mid December 2011, up from US$598m. The statistics are part of the data originally availed to Business Times, indicating how RDB was sweating in order to close the huge gap that was created by its 2010 performance.

When one considers year on year, investment registration for the last 5 years, the year 2010 was the worst. The trend has been showing steady growth in investment registration  starting from 2007.Investments stood at  US$773 million in 2007,  climbing further  to US$831m in 2008 and eventually  topping  up at  US$1.1b in 2009,the best year ever, before nose diving in the wake of the global crisis to a paltry US$398m in 2010.

Naturally, the reaction from RDB, over such dismal performances, it seems, was for its top management to go back to the drawing boards in order to plot for a new course of action, as the year 2011 unfolded. RDB set a huge target of bringing in at least $550 million for the year 2011, along with a raft of new measures such as what its top management termed as a “new re-orientation strategy” that was more focused on more aggressive investment promotion.

This new form of aggressiveness could be seen by RDB’s top management sweating to close deals at the close of the year, even as a vast majority of Rwandans were shifting focus to end of the year to more leisurely festivities.

“What is important to note is that we have surpassed our targets significantly by $70 million. We still expect to close more investments before end of the year,” Clare said after RDB had just finalized a US$20m deal on agriculture.

That effectively means that the agriculture sector tops the list with deals in excess of US$137m. The latest data from RDB has brought out new realities of investor preference in Rwanda as the New Year beckons. Agriculture is now the sector catching the eye of investors away from other sectors such as construction and hospitality that has dominated Rwanda’s investment scene for the last couple of years.

This new reality in the investment scene actually resonates well with aspirations for Rwanda’s transformation, with the vision 2020 just less than 10 years away, for an economy that is predominantly agrarian.

While agriculture is known to support the livelihoods of over 60 per cent of Rwandans, investments into the sector have been somehow lukewarm over the last couple of years.

This is seen when one looks at investments for the last 11 years. The construction sector has traditionally taken the lion’s share with US$4.3b worth of investments registered over the last 11 years. Construction industry alone has managed to record investments worth US$915m as compared to US$255m within Agriculture.

Tourism comes second with projects worth US$866m in the last decade, closely followed by the energy sector at US$792m while other notable sectors include ICT with US$438m worth of projects and financial sector with US$322m.

In sharp contrast to the scenario of the last 11 years, the latest statistics for 2011 shows that agriculture that includes forestry, comes tops in the list with US$137.3m followed by ICT with US$109.6m and tourism with US$108.8m. Infrastructure sector registered deals worth US$85.5m and construction bringing in US$76m.

The emergence of agriculture as the dominant sector catching the eye of investors is the result of what RDB COO terms as concerted policy actions geared towards propping up a very critical sector mostly through increased private sector participation and intervention.

“A lot of work has been done by government to create a conducive business environment to attract investors into the key sectors of the economy a fact  that is even testified by  the new wave investors coming into the agricultural sector,” Clare added.

Topping up the list of investors into agriculture and forestry sector is New Forest Company(R) Ltd a US$58m  forestry plantation, conservation and charcoal production project that will make critical interventions within the sector. Stevia Investments comes second in the sector with a US$20m deal that is meant to produce sugar supplements while Mt.Meru Soya and Sunflower processing  project a US$10m investment comes third in the list.

Rutsiro Tea Factory a US$9.9m venture owned by Rwanda Mountain Tea Ltd follows and Aquaponics a US$9 m fish farming venture is also listed as one of the notable projects in the sector.

According to RDB’s provisional statistics, among the top five milestone deals of 2011 is Bharti Airtel’s entry into Rwanda, the biggest deal of the year at US$102 m  a prospect that will surely shake up fundamentally Rwanda’s telecoms industry next year. Next is what is listed as DSI Energy Ltd a US$73m deal within the energy sector that seeks to install a 30 MW solar power project in Rwanda.

Third on the top five  deals of 2011 is New Forest Rwanda, while  Opulent Rwanda Ltd is listed as the fourth top deal- a hospitality sector project worth US$30 million. Stevia Investments Ltd is listed by RDB as top fifth as a US$20 million deal.

However, the RDB provisional  statistics gives critical pointers on how sectors that have attracted little attention this year, would need greater forms of assistance ,with the onset of the new year. A case in point being education that attracted $2.9 million with RDB targets of a much lower figure of $1 million.

“For sure education is   very important for the economy due to the skills that are needed to drive economic growth. What we have seen in the past is that education has been perceived as a public investment area. But it is now emerging that there is increasing interest from the private sector to invest in education”, Clare said.

RDB reveals that as a  healthy pipeline of projects  have already been cultivated this year, the sector is very likely to see  increased investments next year.

The author is an editor with The NewTimes

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