A new investment strategy along with repositioning of RDB should deliver on  set target of attracting $550 million this year

Rwanda Development Board (RDB)’s latest figures on its investment registration activities over the last 11 years gives optimism and added impetus that the target to attract US$550 million this year is very likely to be achieved, despite registering a slump in investments last year. RDB  says in a report availed exclusively to  The Business Times that Rwanda managed to register a total of 766 local, foreign and joint venture  investment projects  worth US$4.35 billion since the year 2000.

Investment projects in energy, construction, and tourism dominated the statistics with over 59 percent of total value for all registered projects in the last 11 years. The report adds that projects of low value were registered in infrastructure including transport with US $20 million, education and  health with a combined value of US $33 million and media that is combined with advertising and printing with US $30 million and a category that brings together other remaining sectors such as hides, skin, fishery and textiles with a combined value of US $78 million.

 The RDB report indicates that investment in Rwanda has significantly grown over the period of review. From a low of US $27 million in the year 2000,  investments soared to US $471 million in 2005. This huge jump witnessed in 2005 was due to a surge in Foreign Direct Investments(FDIs) which accounted for more than 80 percent of total investments.

However, the report indicates that Rwanda witnessed two levels of investment registration reductions. The first reduction was witnessed between 2005-2007 with the other one last year. In 2006, investment registration declined to US$247 million worth of projects down from US$471 million registered the previous year.

An upward trend in investment registration resumed in 2007 where US$773 million worth of investment was recorded which jumps to US$831 million in 2008. Investments peaked at US$1.1 billion in 2009 before settling to a low of US$398 million last year.

While RDB attributes the sharp decline seen last year to what it termed as "low value of individual registered projects”, analysts are quick to point out that the main trigger that fed into the kind of decline witnessed last year can be traced to the volatilities arising out of the global financial crisis that has impacted negatively on global investment outlook.

The World Investment Report(WIR) 2011 that is published by the United Nations Conference on Trade and Development (UNTAD), says that global foreign direct investment (FDI) has not yet bounced back to pre-crisis levels, 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”, adding that, "FDI flows will recover to pre-crisis levels over the next two years.”

However, RDB states that its target for this year that is set at US$550 million is very likely to be met despite predictions to the contrary by WIR.

"It is important to note while it is true that last year we witnessed a drop, due to the after effects of the global financial crisis that we have been having steady growth over the last five years. This higher target is in direct recognition of the rather low figures for last year”, Clare Akamanzi, the RDB Chief Operating Officer (COO) said.

An indicator that the target set of US$550 million is very likely to be met according Akamanzi,  is in the rising investment rate closely accompanied by a healthy pipeline of projects.

Rwanda’s investment rate has been on a steady progression for the last five years.

Calculated as a percent of the Gross Domestic Product (GDP), the investment rate otherwise known as Gross Fixed Capital Formation (GFCF) rose from 16 percent in 2006 further rising to 18 percent in 2008. GFCF further peaked at 22.7 percent in 2009 before witnessing a slight reduction in 2009 which stood at 21.6 before settling at 21 percent last year. RDB says that GFCF is projected to hit 30 percent of GDP by the year 2020.

"Given the past performance one can say with confidence that hitting the projections for GFCF for the year 2020 in order to deliver on the promises set out in the larger Vision 2020 is highly achievable”, the RDB COO  said, adding that, "the picture is not bad. One way of saying that, is to look at the inflow of foreign debt into Rwanda as captured by the central bank, that has been on a steady rise further indicating growing confidence in our economy”.

Long term borrowing from foreign sources by the private sector has been on a steady growth over the last three years. Central bank says that from a low of US$3.4 million in 2007, the figure rose to US$9.5 million in 2008. The figure witnessed a huge jump to reach US$42.7 million in 2009 and soared to US$129 million last year despite a slump in FDIs  that reduced from US$118.7 million in 2009 to US$42 million last year.

RDB says that the projects that will mainly deliver the set target of US$550 million are largely based on a new investment strategy that includes reorganisation of RDB itself.

"We have reorganised ourselves to deliver better on our mandate. For instance, our senior management has undergone an intensive training by Singapore Economic Development Board” .It thus means that, RDB has repositioned itself at both institutional and at the strategy levels. For instance, RDB has organised its investment strategy around what it termed at  giving focus to priority clusters to deliver on its mandate.

"Reorganising ourselves after the training conducted by such a world renowned economic development agency is intended to maximise what  Rwanda can get from RDB. Its departments are now reorganised as clusters”. 

Consequently, RDB is looking at new markets to tap into FDIs. A case in point being opening a new office in Turkey while putting more attention to countries such as India, China, Thailand and the so called Asian Tigers.

This repositioning is focusing on projects in the pipeline that should deliver on the target. Top in the list is various pipelines within energy sector that should bring in a least a single biggest project of US$100 million in the coming days.

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