Rwanda registered 45.7 percent increase in FDIs in 2021

On 14 June 2023 at 10:21

In a remarkable economic feat, Rwanda experienced an astounding surge in Foreign Direct Investment (FDI) during 2021, according to the latest report released by the Central Bank in early June 2023. The Foreign Private Capital (FPC) Census Report of 2022, unveils an impressive 45.7 percent increase in FDI, with a staggering $399.3 million pouring into the country, compared to the $274.1 million registered in 2020.

Amidst favorable investment conditions and the strategic use of both debt and equity instruments, Rwanda witnessed an 8.5 percent rise in FDI stocks, reaching an impressive $2.9 billion. This remarkable growth in FDI encompasses various foreign investments, including FDIs, portfolio investments, and other forms of capital.

Highlighting the source countries, Mauritius emerged as the top contributor, accounting for a significant 30.5 percent of FDI, primarily focused on the financial, ICT, manufacturing, and electricity sectors. Following closely is India, with a notable 17.9 percent investment in construction, and China with 17.6 percent invested in the tourism and manufacturing sectors.

Major FDI stocks also originated from countries such as Kenya, South Africa, and the USA, showcasing Rwanda’s attractiveness to a wide range of global investors.

FDIs remain the driving force behind Rwanda’s foreign private capital investments, demonstrating a remarkable recovery from $386.4 million in 2020 to a substantial $543.8 million in 2021, marking a 40.7 percent increase. The report states, "The rise in FPC inflows can be attributed to the recovery of economic activities from the poor performance induced by the COVID-19 pandemic in 2020." Remarkably, Rwanda’s total FPC stock stood at a commendable $4.1 billion by the end of 2021.

While acknowledging the challenges faced globally, including the Russia-Ukraine conflict and the enduring impact of the COVID-19 pandemic, the report sheds light on Rwanda’s resilience. Despite these obstacles, the country experienced a significant boost in return on investment (ROI), soaring to 11.8 percent in 2021, surpassing the global average of 9.7 percent. Rwanda’s ability to thrive in the face of adversity highlights its strong economic foundation and promising investment climate.

In contrast to global trends, Africa’s FDI flows amounted to $83 billion in 2021, doubling the figures from 2020 and accounting for an impressive 5.2 percent of global FDI. Rwanda’s outstanding performance in this landscape speaks volumes about the country’s potential as a prime investment destination.

In his introductory statement; Central Bank Governor, John Rwangombwa, emphasized the significance of the FPC census report for the Government of Rwanda, stating that it plays a vital role in shaping policy measures that attract FDI and enhance the business environment.

Undeterred by economic challenges, Rwanda remains steadfast in its commitment to promote diverse FDI opportunities.

This commitment is exemplified by programs like the Manufacture and Build to Recover initiative, which has already generated $1.2 billion worth of investments. With the launch of its second phase in March 2023, Rwanda aims to attract a staggering $2.5 billion in investments across priority sectors, including manufacturing, infrastructure, energy, agriculture, agro-processing, and ICT.

Rwanda’s remarkable FDI growth story serves as an inspiration to the world, defying global challenges and positioning itself as an enticing investment hub. With a thriving economy and promising returns, Rwanda stands tall as an exemplar of resilience and opportunity in the international business landscape.

The bird's-eye view of Kigali Special Economic Zone. Rwanda registered 45.7 percent increase in FDIs in 2021.