A new report by a global network of professional firms providing audit, advisory and tax services, KPMG, has tagged Rwanda “the rising star in Central Africa”; with its stable political environment, improving governance and facilitation of business and strong growth.
The report titled, “What influences foreign direct investment into Africa”, says Rwanda received some of the lowest FDI inflows into Central Africa, however, it should be noted that FDI inflows to Rwanda have been increasing slowly but steadily over the five years during 2014 from US$251 million in 2010 to US$268 million in 2014, a 7% increase.
The value of announced Green field FDI projects in Rwanda increased by 14% during 2014 to US$496 million.
A Green field investment is a form of FDI where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up and, most often building new facilities, and creating new long-term jobs in the foreign country by hiring new employees.
Using 10 sources, ranging from the 2014 and 2015 World Bank’s “Ease of Doing Business” surveys; to Transparency International’s Corruption Perception Index (CPI), contributors to the KPMG analysis say four primary factors help attract investments to African states; Comparatively high growth expectations compared with developed economies, politically mature governments with independent judiciaries, available land and significant mineral and other resources and increasing domestic consumption.
At 79%, Rwanda ranks as the most attractive investment destination in Central Africa in terms of the ‘Where to invest in Africa Report’.
It is also the only Central African country that scored above 50% in the Ease of Doing Business Survey, 2015 where it scored 67%.
KPMG calculations and analysis indicates that the total FDI inflows into Central Africa during 2014 amounted to US$12.1 billion, approximately 22% of the total FDI inflows into Africa during 2014 of US$53.9 billion.
On the continent, countries that are potential rising stars are, among others, are Ethiopia, Egypt, Kenya, Rwanda and Morocco.
Analysts say that if the Africa needs to continue to focus on improving infrastructure, the business environment and most importantly, reduce internal and regional conflicts and political and, or, policy uncertainty.
They add that African countries that are weathering the reducing FDI inflow storm the best, are those that have a focus on manufacturing or services.
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