Rwanda: Investing in Rwanda
Although FDI stocks have increased in recent years due to Rwanda's political stability and measures focused on improving the business climate, FDI flows still remain rather weak. According to UNCTAD 2022 World Investment Report, inflows fell from USD 274 million in 2020 to USD 212 million in 2021, following the global economic crisis triggered by the Covid-19 pandemic. Over the same period, the number of Greenfield Investments doubled, as it went from 5 in 2020 to 10 in 2021. Furthermore, by the end of 2021, the stock of FDI was estimated at USD 2.9 billion. Investments are mainly targeting the sectors of mining, construction and real estate, infrastructure and information and communication technologies. According to statistics from Rwanda Development Board (RDB), the main investing countries are Portugal, the UK, India and the UAE.
The government of Rwanda is seeking to attract more FDI and, in 2015, it approved a new Investment Code aimed at providing tax breaks and other incentives to investors. In addition, the country has no statutory limit to foreign ownership or control, nor any official economic or industrial strategy that discriminates against foreign investors. In 2021, the Rwandan government adopted a law that provides incentives to reduce operating costs, attract talent and promote innovation and diversification in companies investing in the country. Rwanda has also provided investment incentives relevant to SDG-related sectors: preferential tax rates for investors undertaking energy generation, transmission and distribution, whether peat, solar, geothermal, hydropower, biomass, methane or wind. On the other hand, the low human resource capacity of Rwanda, the poor infrastructure, its landlockedness and its high operating costs are some of the factors that limit the potential attractiveness of the country (with the political instability of its neighboring country, the Democratic Republic of the Congo, which has had an impact on the entire Great Lakes region and has discouraged international companies from investing in this region. According to UNCTAD, in 2018 the country first requested a settlement of disputes between investors and States (in English ISDS) concerning mining rights on its territory, involving a foreign company. However, Rwanda offers many advantages to the investors: a large methane reserve, an expanding mining potential which remains to be explored and the reputation of being one of the least corrupt countries in Africa. Finally, the Government has continued to develop liberal policies to make Rwanda a hub of trade and services. This strategy has been very successful since the country has been considered one of the most reformist states of the past 15 years.
Foreign Direct Investment | 2019 | 2020 | 2021 |
FDI Inward Flow (million USD) | 354 | 274 | 212 |
FDI Stock (million USD) | 2,547 | 2,707 | 2,912 |
Number of Greenfield Investments* | 20 | 5 | 10 |
Value of Greenfield Investments (million USD) | 1,246 | 236 | 270 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Rwanda | Sub-Saharan Africa | United States | Germany |
Index of Transaction Transparency* | 8.0 | 5.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 9.0 | 3.5 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 5.0 | 5.5 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: June 2023