FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 15 Table 2.6: Employment by Category in 2016 Category Foreign ST Foreign LT Local Total Managers/ Supervisors 21 824 1,976 2,821 Administrative/Accounts 18 270 11,690 11,978 Skilled technicians 134 949 8,407 9,490 Casual 5 50 34,484 34,539 Total 178 2,093 56,556 58,827 Source: Foreign Private Capital 2017 According to the 2017 FPC, in terms of gender, males represent 56.3 percent whereas females represent 43.7 percent. Most of women are in the category of skilled technicians due to their concentration in the financial sector. Figure 3 : Distribution of employment by gender in 2016 Source: Foreign Private Capital 2017 Regarding sectorial distribution of employment, agriculture had the highest number with 38 percent of total employees, followed by financial services (33 percent), mining (11.7 percent) and manufacturing (7.8 percent).
FOREIGN PRIVATE CAPITAL IN RWANDA
Year 2017
16
Table 2.7: Distribution of employment by sector 2014-2016
Sectors
2014
2015
2016
Agriculture
14,394
14,932
22,398
Financial and insurance
5,434
6,559
16,150
Construction
220
1,260
1,467
ICT
650
862
1,579
Manufacturing
2,878
6,816
3,816
Mining and quarrying
6,830
4,843
5,734
Real estate activities
1,094
86
360
Tourism
2,152
1,527
1,599
Wholesale and retail trade
2,401
1,467
1,497
Other sectors
911
2,840
4,227
Total
36,964
41,192
58,827
Source: Foreign Private Capital 2017
The increase in Agriculture employment mainly came from newly privatized tea
factories like Shagasha, Mulindi and Gisakura and the nature of their sector that
employs many casual workers. It is labor intensive in tea and coffee plantations.
2.3.4
Compensations of employees
Total compensation of employees (wages, salaries, contribution to pension fund,
fringe benefits, etc.) paid to companies’ employees increased by 23.5 percent from
$331.4 million in 2015 to $409.5 million in 2016. Local employees received the
highest share accounting for an average of 84.7 percent of the total compensation
in 2016.
The best remunerating sectors were finance and insurance with 48.5 percent
of total remuneration, followed by manufacturing with 24 percent. Details are
shown in Table 2.6.
FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 17 Table 2.8: Compensation of Employees 2014- 2016 ($ million) Sectors 2014 2015 2016 Financial services 164.9 90.3 108.4 ICT 15.8 41.7 36.2 Manufacturing 24.0 117.8 114.8 Mining 2.2 4.6 98.2 Tourism 6.0 31.9 1.5 Transportation 40.0 5.9 0.3 Wholesale & Retail trade 9.6 11.0 10.0 Other sectors 55.77 28.28 41.04 Total 318.3 331.4 410.4 Source: Foreign Private Capital 2017 2.3.5 Corporate social responsibility Corporate Social Responsibility (CSR) is a corporate initiative to take responsibility for the company’s effects on the environment and social welfare. Those initiatives are directed to environment, infrastructure, educational programs, health and other social, cultural or community services that benefit the population. The contributions of companies to corporate social responsibility stood at $ 9.94 million in 2016 up from $ 9.4 million in 2015. The activities which attracted substantial CSR contributions are arts and culture (27. 2 percent) Health and welfare (23.1 percent) followed by donations to vulnerable groups (13.2 percent), education (11.9 percent), environment (14 percent), water (10 percent) and sport development (7 percent).
FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 18 Figure 4: Corporate social responsibility by type of recipient in 2016 ($ million) Source: Foreign Private Capital 2017 The results show that the financial sector is the biggest contributor to CSR in 2016 as it accounted for 50.5 percent, followed by manufacturing sector with 30.3 percent. Table 2.9: Corporate Social Responsibility by Sector 2014- 2016 ($ million) Sector 2014 2015 2016 Agriculture 0.1 0.3 0.5 Financial 0.6 1.2 5.0 ICT 0.0 0.7 0.8 Manufacturing 1.2 2.8 3.0 Mining
0.1 0.1 Professional 0.0 0.0 0.0 Tourism 0.1 0.0 0.0 Wholesale and retail trade 0.1 0.2 0.1 Other sectors 0.16 4.25 0.47 Total 2.2 9.4 9.9 Source: Foreign Private Capital 2017
FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 19 CHAPTER THREE FOREIGN PRIVATE INVESTMENTS IN RWANDA 3.0 Introduction This chapter highlights the census findings on foreign private investment that includes, foreign direct investment, foreign portfolio investment and other investments in 2016 and the respective stock as at end of 2016. It presents also the income and profitability by sector. Foreign Private Capital is composed of Foreign Direct Investment (FDI), other investments and Portfolio investment. FDI is made up of investments of non- residents in resident companies with a shareholding of at least 10% of the company’s total capital; and debt from related enterprises, but excludes debt among related financial intermediaries. Portfolio investment are investments in tradable instruments and other investments which are borrowings from outside as well as non-tradable shareholding of less than 10% of total capital of the company. All these categories are analyzed by type of liability or instrument, relationship, sector of investment, and source country. Foreign Private Capital has two directions which are liabilities including inward investment flows and stocks as well as assets made up of outward investments flows and stocks. 3.1 Foreign Private Capital attraction in Rwanda Looking at the performance in terms of investment attraction and registration, for the last 8 years (2009-2016), a total of 445 investment projects fully owned by foreign investors or in joint ventures with local investment has been registered with investment pledges worth $ 4,116 million and commitments to create 69,319 jobs. The following table presents the pledged investments in value, number of projects and annual planned new jobs for the period of 2009-2015.
FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 20 Table 3.10: New Foreign Private Investments registered (2014 – 2016) 2014 2015 2016 2009-2016 Number of projects 54 60 47 445 Value($ million) 359.61 822.47 686.5 4,116 Jobs 5,169 6,161 8,017 69,319 Source: Rwanda Development Board, 2017 3.2 Foreign Private Investment in Rwanda The census results show an increase of 13.6 percent in 2016 compared to the level of inflows which were recorded for 2015. Foreign Private Capital in Rwanda increased in 2016 to $ 541.2 from $ 476.3 million recorded in 2015. The census indicates that the stock of foreign private capital increased from $ 2,077.9 million in 2015 to $ 2,528.2million in 2016 mainly driven by ICT with $ 631.3 million followed by finance & insurance services with $ 472.3 million and manufacturing with $ 384.1 million. In terms of stock, total foreign private capital rose by 21.7 percent amounting to $ 2,527.9 million in 2016 from $ 2,077.9 million recorded in 2015 of which FDI amounts to $ 1,680.3 million followed by other investments of $ 747.1 million and portfolio investments of $ 100.5 million Foreign direct investments include three categories: equity capital, loan from affiliates (shareholders, parent or fellow companies) and retained earnings. In 2016, the FDI inflows reduced by 9.9 percent, from $ 379.8 million in 2015 to $ 342.3 million in 2016. The decline in FDI was mainly on the account of lower inflows of new equity and loans compared to 2015 following the slowdown in global economy. The inflows of other investments, mainly loans, from foreign non-affiliates increased from $ 93.9 million in 2015 to $ 195.9 million in 2016.The investors opted for non-affiliate borrowings (other investments) which led to an increase in other investments. The intercompany borrowings represent 37.3 percent against 63.7 percent of other investment in total foreign private external debt disbursements in 2016. The stock of Private Sector External Debt (PSED) as at end 2016 stood at $ 1,563.4 million increasing from $ 1,302.8 million in 2015, mainly driven by loans from foreign banks and developments agencies with share of 63.7 percent.
FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 21 In addition, the retained earnings to profits made stood at 84.3 percent in 2016 and the FDI rate of return stood at 12.8 percent above the global rate of return of 6.1 which gives an indication of the country’s investment profitability. Figure.5: Foreign Private Investment Inflows and Stock by 2016 ($ Million) Source: Foreign Private Capital 2017 The flows of foreign private investments have been increasing over the years as presented in the table 3.11 below. Table 3. 11: Foreign Private Investments Inflows by Category 2010-2016 ($ million) Years 2010 2011 2012 2013 2014 2015 2016 Fdi 250.5 119.1 255 257.6 458.9 379.8 342.3 Portfolio 1.5 87.3 1 1.7 5.6 2.5 3.0 Other Investment 91 150.2 153.3 168.4 96.3 93.8 195.9 Total 343.1 356.6 409.3 427.7 560.8 476.3 541.2 Source: Foreign Private Capital 2017 In the year 2016, total inflows amounted to $ 541.2 million, outflows stood at $ 178.3 million giving the net flows of $ 298.0 million.
FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 22 Table 3. 12 : Foreign Private Investments flows 2016 ($ million) Components 2015 2016 2016 Stock Net Flows Other Changes Stock Fdi 1,401.80 266.27 12.22 1,680.29 Portfolio 97.4 2.96 0.10 100.46 Other Investment 578.6 160.43 8.11 747.14 Total 2,077.90 298 20.43 2,527.90 Source: Foreign Private Capital 2017 3.2.1 Foreign Private Investment by sector of economic activity Considering foreign inflows by recipient sectors, 34.1 percent of total FPC in 2016 was channeled to finance and insurance, followed by ICT with 30.0 percent, manufacturing with 13.9 percent, and Wholesale and retail trade with 10.6 percent, electricity gas and steam 6.1, other sectors with 14.3 percent. The stock of foreign investment in ICT (27.2 percent or $ 698.5 million) followed by finance and insurance (25 percent or $ 631.3 million) and manufacturing (15.2 percent or $ 384.1 million). Figure 6: Foreign Private Investment Inflows and Stocks by Sector ($ million), in 2016. Source: Foreign Private Capital 2017
FOREIGN PRIVATE CAPITAL IN RWANDA Year 2017 23 3.2.2 Foreign Private Investment by country of origin Most of the inflows were mainly from Mauritius ($ 167.2 million, representing 32.7 percent) followed by International Financial Cooperation (IFC) ($ 66.7 million, representing 12.3 percent), Preferential Trade Area (PTA) ($ 41.3 million, representing 7.6 percent), and Netherlands ($ 33.4 million), all with a combined share of 58.8 percent of total FPC inflows in 2016. In terms of stocks, Mauritius, Kenya, South Africa, USA, Netherlands, and United Kingdom were leading with a share of 53.2 percent of the total stock. Considering the immediate parent company, Mauritius is the largest investor as a host of many holding companies although the ultimate controlling companies are from different parts of the world. Table3.13: Inflows and Stocks by Origin in 2016 ($ million) Origin Inflows % Share Origin Stock %Share Mauritius 167.2 30.9 Mauritius 523.9 20.7 IFC 66.7 12.3 Kenya 219 8.7 PTA 41.3 7.6 Netherlands 150.6 6 Netherlands 33.4 6.2 171 6.8 South Africa UAE 33.4 6.2 US 160.1 6.3 Kenya 26.6 4.9 PTA 119.1 4.7 US 24.7 4.6 United Kingdom 79 3.1 Luxembourg 22.4 4.1 IFC 76 3 Sudan 18.2 3.4 Luxembourg 73.2 2.9 Belgium 11.2 2.1 Malaysia 62 2.5 OTHERS 96.1 17.76 OTHERS 894.1 35.4 TOTAL 541.2 100 TOTAL 2,528.20 100 Source: Foreign Private Capital 2017 With regard to foreign private capital stock by regional economic grouping, the COMESA (Non-EAC) held the highest stock amounting to $585.8 (24.7 Percent) dominated by investment from Mauritius. The European Union (EU) countries held $ 412.6 million (17.4 percent) dominated by investments from Netherlands and United Kingdom directed mostly in finance & insurance and in ICT sectors. While OECD-Non EU had $ 224.1 million (9.4percent) coming mostly from USA, Israel and Russia. SADC (Non EAC & COMESA) had $ 274.2 million (11.6 percent)