REGIONAL INTERGRATION : World Investment Report and Rwanda

The United Nations Conference on Trade and Development (UNCTAD) recently released its annually anticipated report into the state of the global investment climate. The global overview was bleak, with overall Foreign Direct Investment (FDI) falling by 30 percent or $500 billion from $1.7 trillion in 2007 to $1.2 trillion in 2008.

The United Nations Conference on Trade and Development (UNCTAD) recently released its annually anticipated report into the state of the global investment climate.

The global overview was bleak, with overall Foreign Direct Investment (FDI) falling by 30 percent or $500 billion from $1.7 trillion in 2007 to $1.2 trillion in 2008.

For Africa, it was not as bad as was thought, the continent attracted $88 billion in FDI but suffered due to a fall in commodity prices such as raw materials and minerals.

In East Africa, Rwanda ranked highly in overall increase in FDI, ahead of Kenya for the first time. This was due to increases in Rwanda, but we must also remember that a significant portion of FDI into Rwanda is from Kenya.

The aftermath of the electoral crisis, which resulted in tribal violence deterred investors to a degree, but Kenya has started to regain investor confidence.

In Africa overall, it was West Africa that saw a 63 percent increase in FDI, much of that went into the oil industry with a number of countries in the region discovering oil.

In East Africa, Rwanda can proudly add this to its list of recent achievements, quite often we toil as a nation without seeing visible results, but now we can see progress in facts and figures.

In the report, Rwanda can be categorised in many spheres, as a least developed nation, as a landlocked developing nation—these nations are often logistically disconnected and dependant on a handful of limited revenue streams; this makes it essential for such countries to diversify their economies, Rwanda intends to sign mining contracts in the near future, this will further boost FDI.

The report states that the biggest potential growth sector is FDI into agricultural industries; this sector is nearly recession-proof as there will always be demand for food.

However, the biggest investment deals in Africa have been in the bio-fuels sector and this has been controversial because some claim it raises the price of basic foodstuffs.

Genetic modification is another issue in Africa, a sizable portion of investment in agriculture comes from firms that alter or modify their crops, and therefore they are viewed with suspicion by locals.

In Africa we have seen solid steps towards the integration of the various regions, bilateral investment treaties among African nations have increased to 13, and regional blocs are becoming harmonised in terms of policy and commercial law.

The report also states, although cautiously that FDI is likely to drop significantly in 2009, because of the global slowdown.

However, China is now a major investor in Africa, and it will use this crash in the price of assets to consolidate its position as the future economic superpower.

Africa could even buck the trend and increase investment, provided they can provide investors with confidence.

The global financial world has most of its capital locked in the northern hemisphere; this means that when a crisis happens, investors are not diversified in their investment risk and lose heavily.

Sadly, Africa could not take full advantage of this crisis because many of the essential policies had only just been put in place; the Far East nations were able to take advantage of this in a more efficient way.

This global crisis has shown the world the need for diversification in investment, with risk spread around the globe; we need to be a haven of investment. We have built it, let them come. 

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