Rwanda can weather financial storm

This week the German Minister for Environmental Affairs and Renewable Energy, Sigmar Gabriel, vowed to attract European businessmen to invest in the Rwandan energy sector. “Part of the reason I am here is to explore what can be done to attract investors from both Germany and across Europe to invest in Rwanda, especially in renewable energy,” Minister Gabriel said. In the light of an international financial crisis, are such promises unrealistic? The answer is no. While a global recession would be spell worldwide crisis, if that can be avoided Rwanda will remain an excellent place to invest. On the face of it, the credit crunch is having a noticeable impact in Africa. Stock markets across the continent have seen big falls since the start of the year. In South Africa, the Johannesburg Stock Exchange share index has fallen 40 per cent.

This week the German Minister for Environmental Affairs and Renewable Energy, Sigmar Gabriel, vowed to attract European businessmen to invest in the Rwandan energy sector.

“Part of the reason I am here is to explore what can be done to attract investors from both Germany and across Europe to invest in Rwanda, especially in renewable energy,” Minister Gabriel said.

In the light of an international financial crisis, are such promises unrealistic? The answer is no. While a global recession would be spell worldwide crisis, if that can be avoided Rwanda will remain an excellent place to invest. 

On the face of it, the credit crunch is having a noticeable impact in Africa. Stock markets across the continent have seen big falls since the start of the year. In South Africa, the Johannesburg Stock Exchange share index has fallen 40 per cent.

In Kenya, the Nairobi 20 share index has lost more than a quarter of its value.

Nigeria too has suffered. Until recently, sub-Saharan Africa’s second biggest economy was benefiting from a rapid influx of foreign investment. But the flow of funds is drying up.

However the gloom which has affected some of Africa’s key markets isn’t universally shared. In Ghana, for example, the GSE all share index has actually gained about 60 per cent this year.

What explains this inconsistency? The answer: Africa markets are affected by African issues. If we take Kenya as an example, we see that the financial downturn there is not a result of the global crisis but a direct result of the post election troubles at the beginning of the year.

As the Executive Director of capital Markets Advisory Council (CMAC) Robert Mathu pointed out, our market is not correlated to international markets.

While Africa in general and Rwanda in particular are not immune to what is happening elsewhere, this country remains an attractive investment destination. With friends like the Minister Gabriel, we will no doubt see an increase in foreign investment.

Ends

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