Rwanda is the fifth-best destination for investment in the world, according the 2013 Baseline Profitability Index. The ranking is topped by Hong Kong, with Botswana in second, and Ghana (10th), as the only other African country in the Top 10. Uganda (15) and Kenya (67) are the only EAC countries on the list.

High returns of investment are accessible and to a great degree, retrievable to investors in Rwanda, according to latest global report. 

The Baseline Profitability Index (BPI), by the Foreign Policy Magazine, published on Monday, ranked Rwanda among the top 10 countries  for investment in the world. 

Rwanda is in fifth position with 1.18 BPI value out of 102 countries surveyed across the world. 

The index puts Hong Kong in the first position with 1.23 BPI value, followed by Botswana (1.22). Taiwan (1.21), and Singapore (1.19) , third and fourth, respectively, complete the top four positions ahead of Rwanda. 

The report says for the first time, the BPI index takes into account to suggest attractive places in the world to invest in. 

"Hong Kong and Singapore, which regularly top indexes like the World Bank’s Doing Business rankings and the World Economic Forum’s Global Competitiveness Report, take two of the first four spots in the BPI. But three of the top 10 are African countries–Botswana, Rwanda, and Ghana,” reads part of the report.

The BPI ranks countries by their overall attractiveness as targets for a generic foreign investment and offers a better idea of how far countries are from each other. 

The countries are ranked by the three main components of the index: asset growth, preservation of value, and repatriation of capital. 

Countries whose currencies are expected to appreciate rank higher for repatriation of capital, all other things equal. The time horizon predicted for investment is five years. 

"This ranking is encouraging. It is a result of extensive efforts by government to continuously provide an investor-friendly climate and improve service delivery, in order to make Rwanda an even more attractive destination for both domestic and foreign investments,” Rwanda Development Board acting Chief Operating Officer, Tony Nsanganira, told The New Times yesterday.

Feasible investment

According to Zulfat Mukarubega, the proprietor of Rwanda Tourism University College, investing in the country is worthwhile because the climate is conducive to both local and foreign investors. 

"The government supports the growth of the private sector through attracting and facilitating investments. We are comfortable investing in this country and our investment returns are feasible,” she said. 

Patrick Sebatigita, the chief executive officer of Ujenge, a real estate and construction company, also said Rwanda has put in place mechanisms to guarantee favourable climate for investment. 

"We have been in real estate investment for the last two years but when we compare Rwanda with other countries where we have invest, the country is still the best place to do business. We don’t regret investing in Rwanda,” he said. 

However, according to the report, the BPI is not the final word on where to invest; it only offers simple summary statistics to investors who have no time to research all of the102 markets surveyed. 

The ranking team say difficulties of doing business in countries well-known for rapid economic growth such as China, South Africa and India can cut into foreign investor’s return.   

India ranks seventh in the BPI, China 21, and South Africa 41. 

The survey says when investors are looking for high returns in emerging markets, they do not pay enough attention to factors such as conflict and corruption. 

Impact of policies

The BPI compares how local policies and conditions would affect similar investment in different countries and assumes that the investor reinvests the asset’s returns during the five-year period, then sells the asset and brings all the money home. 

The recent ‘Doing Business Report  2013’ on  East Africa Community partner countries ranked  Rwanda as the easiest country in the region to start a business. 

Rwanda has been on several occasions positioned as the most reformed country and a place to do business by the World Bank’s Doing Business Report 2013. 

Last year, the World Bank survey ranked Rwanda in 52nd position out of 185 economies for doing business.

The country, last year, implemented nine new reforms out of 10 indicators. It also zeroed on areas where it did not perform well, such as resolving insolvencies and issuing construction permits.