Rwanda ranked fourth most attractive investment destination in Africa

On 23 September 2021 at 08:53

Rwanda has been ranked fourth on the list of the top ten investment-attractive economies in Africa published every year by Rand Merchant Bank (RMB).

RMB is a leading African corporate and investment bank which is part of Firsthand Bank, one of the largest financial institutions on the continent.

Rwanda has moved up from the ninth place last year.

Among others, Egypt was at the top of the 2021 list, followed by Morocco and South Africa while Rwanda is followed by Botswana, Ghana, Mauritius, Ivory Coast, Kenya and Tanzania respectively.

Figures from Rwanda Development Board (RDB) show that Rwanda registered 172 investments worth US$1.2 billion in 2020.

According to the author, RMB Africa economist Daniel Kavishe, a new world called for a new approach to the publication. Where previous reports positively projected Africa’s prospects – discerned through reliable and readily available data – COVID-19 has muddied the analytical waters and compelled the team to adapt their methodology.

The approach required an extra layer of sophistication. “We created a new set of rankings that incorporated some of the unavoidable COVID-19-induced challenges, of which the operating environment score was one,” says Kavishe.

A fiscal score was also part of the methodology. This, explains Kavishe, was essential because fiscal scores are important indicators of how governments respond to COVID-19. Thirdly, the publication needed to explore key themes emanating from Africa’s developmental aspirations. “Of these, three are central to fighting the pandemic and resuscitating economic conditions,” contends Kavishe. “They are government intervention, a focus on our triple-threat sectors and healthcare.”

Historically, investment destinations in Africa have been ranked based on the tenets of economic activity and business operating environment. Aimed at investors targeting real assets in an economy or looking to expand businesses that rely on physical infrastructure, the rankings offer a strong basis for investing.

This year demanded more nuance. In addition to traditional indicators, corporates and investors needed to be made aware of the state of a country’s government finances and its ability to aid its economy in crisis. “The inclusion of a fiscal score in our rankings aimed to score governments’ fiscal positions and provided a basis from which investors can understand specific jurisdictions,” notes Kavishe.

“Although the pandemic brought much devastation, it also enabled opportunities for reimagining policies and trade relationships. Increasingly clear now is that homegrown strategies to tackle poverty, inequality and unemployment across Africa must be implemented. If not, all of Africa suffers,” Kavishe says, adding that capital will flow naturally to economies offering a good mix of opportunity and ease of doing business.

The bird view of Kigali Special Economic Zone.