Kigali, Rwanda – September 21, 2018: A slow shutter shot of traffic on a sunny morning in Kigali city centre
Rwanda is attracting more investment from international businesses, with a significant rise in Foreign Private Capital (FPC) inflows with Mauritius, the United States, and Europe being the biggest drivers of the growth, according to a new report.
In 2023, these inflows grew by 33.8%, reaching USD 886.9 million, up from USD 663 million in 2022, as per the Foreign Private Capital 2024 – Survey Report compiled annually by the National Institute of Statistics (NISR). The survey was release this Wednesday.
This highlighted increase shows that more foreign companies and investors are choosing Rwanda as a place to do business, helping to grow the economy and create jobs.
FPC refers to money that businesses or investors from outside the country bring into Rwanda to start or grow companies. This can include opening factories, expanding existing businesses, or funding large projects like real estate developments and technology systems.
Biggest Winners: Jobs and Economic Growth
The report highlights how FPC has had a direct impact on the economy. The total turnover (or sales revenue) of foreign-funded companies in Rwanda grew by 18.2%, reaching USD 3.6 billion in 2023. This accounts for nearly 26% of the country’s GDP, showing how much these businesses contribute to Rwanda’s economic activity.
The increase in investment has also meant more jobs for Rwandans. The number of people employed by companies funded through FPC rose by 20.3%, with 59,916 people employed in 2023 compared to 49,790 in 2022. Local managerial roles also increased significantly, with Rwandans taking up 39.7% more leadership positions than the previous year.
Which Sectors are Attracting Investment?
The financial sector brought in the most investment, with USD 236 million, making up 26.6% of total inflows. This was followed by manufacturing (USD 165.2 million, 18.6%) and information and communication technology (ICT) (USD 107.4 million, 12.1%).
One standout sector was agriculture, which saw investments grow by an impressive 123.5%. Real estate also made headlines with a massive 1,552% increase in foreign investment. This suggests that international investors see opportunities in Rwanda’s growing cities and housing market.
Who is Investing in Rwanda?
Mauritius emerged as the top source of FPC inflows, contributing 29.4% of the total. However, there were notable drops in investments from some countries. For example, inflows from Kenya decreased by 34.6%, and those from China fell by 38.1%.
On the other hand, North America saw significant growth, with investments from the USA increasing by 123% from USD 30.7 million in 2022 to USD 68.3 million in 2023. Although these investments accounted for only 7.7% of total inflows, they indicate growing interest from the region.
Europe was another major contributor, accounting for 27.3% of total FPC inflows. France led the way with a 295% increase, reaching USD 62.7 million, while Germany saw a remarkable 1,350% growth, contributing USD 57 million.
Despite these successes, not every sector saw growth. Investments in wholesale trade and other related activities decreased slightly. Gender gaps in employment remain a challenge, as women hold only 33% of skilled technician roles compared to men at 67%.
What Makes 2023 Unique?
One unusual finding is the sharp rise in real estate investments, which jumped by over 1,500%. Additionally, while local employment in FPC companies grew by 22.5%, the number of foreign workers dropped by 28.1%, showing a shift toward hiring Rwandans. This essentially means that incoming foreign investors are increasingly getting the local talent they need to run their businesses. It could also be partly due to government policy, which is requiring companies to hire locals.
The report paints a hopeful picture for Rwanda’s economy. As more foreign investors bring their money and expertise into the country, sectors like agriculture, real estate, and manufacturing are set to thrive. This will not only boost economic growth but also create more opportunities for Rwandans to take on leadership and technical roles.
