FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019 16 600 500 400 300 200 100
3500 3000 2500 2000 1500 1000 500
2012 2013 2014 2015 2016 2017 2018 T otal FPC Inflows T otal FPC Stock 2nd Ax 409 428 560.8 476.3 541.2 452.2 463 1109 1104 1752 207 7. 9 2527 .9 2836.1 3197 .9 Source: FPC 2019 Census 2.2. Foreign Private Capital in Rwanda The 2019 FPC results indicated an increase of 2.4 percent in capital inflows in Rwanda, amounting to $463.0 Million in 2018 from $452.2 Million in 2017 , while the capital stock stood at $3,197 .9 Million in 2018 from $2,836.1 Million in 2017 , equivalent to an increase of 12.7 percent. The increase in FPC inflows in 2018 was mainly driven by investment in electricity, gas, and steam sector ($165.2 Million), followed by ICT sector ($82.6 Million), the financial sector ($81.2 Million), and manufacturing sector ($62.7 Million). Figure 2: FPC Inflows and Stocks ($ Millions) In 2018, inflows were mainly composed of FDI with a share of 82.5 percent, followed by OI (16.2 percent), and PI (1.3 percent). By definition, FDI is composed of equity investments from non-resident investors with a shareholding of at least 10 percent of the company’s total capital; reinvested earnings, and debts from affiliated investors. In 2018, the FDI inflows increased by 7 .1 percent, to $381.9 Million from $ Million 356.4 Million (2017), mainly driven by an increase in equity investment (+75.5 percent) and debt from affiliated investors (+20.2 percent). The PI consists of tradable instruments (shareholding less than 10 percent), its inflows increased to $5.9 Million from $0.3 Million in 2017 . The OI, which includes loans from non-affiliated companies; trade credit and advances; currency and deposit; life and non-life insurance technical reserves; pension entitlements and standardized guarantee schemes, as well as other accounts receivable/ payable, decreased by 21.2 percent, mainly due to a decline in borrowings. T able 2: FPC Inflows by Category ($ Millions) Ye a r 2013 2014 2015 2016 2017 2018 % Change % Share FDI 2 5 7. 6 458.9 379.8 342.3 356.4 381.9 7. 1 % 82.5% PI 1.7 5.6 2.5 3.0 0.3 5.9 1628.4% 1.3% OI 168.4 96.3 93.9 195.9 95.4 75.2 -21.2% 16.2% T otal FPC Inflows 4 2 7. 7 560.8 476.3 541.2 452.2 463.0 2.4% Source: FPC 2019 Census FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019 17 Ye a r 2013 2014 2015 2016 2017 2018 % Change % Share FDI 8 3 7.7 1,152.4 1,401.8 1,680.3 1,959.3 2,283.7 16.6% 71.4% PI 89.4 95.0 9 7. 5 100.5 103.9 109.3 5.2% 3.4% OI 477 .1 504.7 578.6 74 7. 1 772.8 804.9 4.1% 25.2% T otal FPC Stocks 1,404.1 1,752.0 2,077 .9 2,527 .9 2,836.1 3,197 .9 12.8% % Share FPC Inflows % Share FPC Stocks 35.7% 24.3% 24.3% 12.2% 17 .9% 17.6 % 13.6% 14.6% 5.9%5.9% 3.3%3.7% 0.5% 7 .2% 5.6% 7.8 % Electricity, Gas &Steam Wholesale& retail trade ICT Finance Agriculture T ourism Other SectorsManufacturing In terms of stocks, FDI remained the main component of total FPC stocks with a share of 71.4 percent at the end of 2018, followed by OI accounting for 25.2 percent and PI representing 3.4 percent. In value terms, over the total FPC stock of $ 3197 .9 Million, FDI counted for $ 2,283.7 Million, OI totaled to $804.9 Million, and PI amounted to $ 109.3 Million. T able 3: FPC Stocks by Category ($ Millions) 2.2.1. FPC by sector of economic activity In 2018, FPC inflows by recipient sectors were led by electricity, gas and steam sector with a share of 35.7 percent of the total, followed by ICT with a share of 17 .9 percent, the financial sector (17 .6 percent) and the manufacturing sector (13.6 percent). In terms of stocks, ICT and financial sectors had the highest share (24.3 percent each), followed by manufacturing (14.6 percent), electricity, gas and steam (12.2 percent), tourism (7 .2 percent), wholesale and retail trade (5.9 percent) and others (7 .8 percent). Figure 3: FPC Inflows and Stocks by Sector of Activities (Percent Shares) Source: FPC 2019 Census Source: FPC 2019 Census FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019 18 FPC Inflows FPC Stocks Origin 2017 2018 % Share Origin 2017 2018 % Share Mauritius 116.0 200.3 43.3% Mauritius 608.6 779.5 24.4% Netherlands 7. 6 70.5 15.2% Kenya 218.2 239.2 7 .5% Kenya 1 7. 1 33.5 7 .2% Netherlands 1 5 7. 0 211.5 6.6% US 9.6 22.9 4.9% South Africa 182.9 183.8 5.7% Belgium 5.0 1 7. 8 3.8% US 162.3 182.7 5.7% UAE 11.1 1 7.4 3.8% PTA 118.2 117 .2 3.7% UK 28.3 14.4 3.1% UK 98.0 111.6 3.5% EXIM Bank - 11.0 2.4% Luxembourg 72.6 74.7 2.3% China 11.5 8.5 1.8% Zambia 68.4 68.4 2.1% EADB 1.4 6.2 1.3% IFC 73.3 68.3 2.1% Others 244.6 60.4 13.1% Others 1,076.6 1,161.1 36.3% TOTAL 452.2 463.0 Grand T otal 2,836.1 3,197 .9 2.2.2 FPC by Country of Origin In 2018, the FPC inflows from Mauritius represented the largest share with 43.3 percent of the total, mostly invested in electricity, gas and steam, ICT and manufacturing. The Netherlands came second with a share of 15.2 percent, mainly directed to ICT and manufacturing sectors. In third place, Kenya has a share of 7 .2 percent of the total FPC inflows mostly invested in the financial and the manufacturing sectors. In terms of FPC stocks, investments from Mauritius occupy the lion’s share of 24.4 percent of the total, followed by Kenya (7 .5 percent) and Netherlands (6.6 percent). T able 4: FPC Inflows and Stocks by Origin ($ Millions) Source: FPC 2019 Census Regarding the sources of FPC inflows by regions, the results show that COMESA and SADC had the largest share, 50.7 and 44.8 percent of the total FPC inflows, respectively, mainly due to rising investments from Mauritius. The inflows from OECD and EU followed with shares of 31.8 percent and 21.0 percent, respectively, due to increased inflows from Netherlands, US, Belgium, UK, South Korea, Germany, and Switzerland. FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019 19 FPC Inflows Stocks Region 2017 2018 % Share 2017 2018 % Share EAC 36.1 35.8 7.7 % 289.2 293.3 9.2% COMESA 160.4 234.8 50.7% 980.3 1,163.3 36.4% SADC 141.6 2 0 7. 5 44.8% 904.2 1,000.2 31.3% OECD 78.0 1 4 7. 2 31.8% 665.0 788.9 24.7% EU 60.6 9 7. 1 21.0% 472.3 575.0 18.0% ASIA 64.5 23.1 5.0% 280.1 284.6 8.9% INT . ORG& BANKS 2 7. 0 18.5 4.0% 280.7 289.3 9.0% TOTAL 452.2 463.0 2,836.1 3,197 .9 T able 5: FPC Inflows and Stocks by region ($ Millions) Source: FPC 2019 Census The FPC inflows from EAC represented 7 .7 percent of the total, driven by investments from Kenya, mainly in the financial sector. Asia followed with a share of 5.0 percent, led by investments from China, South Korea, and India. Lastly, International Organizations and Banks had a share of 4.0 percent, mainly borrowed by financial institutions. 2.3. Foreign Direct Investment in Rwanda In 2018, the total FDI inflows in Rwanda rose by 7 .1 percent to $ 381.9 Million from, $ 356.4 Million registered in 2017 . The increase in FDI inflows was mainly driven by an increase in equity capital and borrowings from related parties, as shown in the table below. The equity rose to $ 137 .3 Million from $ 78.2 Million recorded in 2017 , mainly due to investment in new projects in the electricity and gas sector. In addition, the borrowing between related parties increased by 20.2 percent to $ 149.9 Million. The continued increase in FDI inflows led to an increase in stocks by 16.6 percent to $ 2,283.7 Million in 2018, of which borrowings from affiliated companies, equity and reinvestment earnings represented 44.4 percent, 39.0 percent, and 16.6 percent of the total stock of FDIs respectively. T able 6: FDI Inflows and Stocks by Category ($ Millions) 2013 2014 2015 2016 2017 2018 % Change % Share FDI INFLOWS Equity 74.2 129.6 110.0 83.6 78.2 1 3 7. 3 75.5% 35.9% R .Earnings 39.0 1 7. 5 58.9 126.6 153.5 94.7 -38.3% 24.8% Loans 144.4 311.8 210.9 132.2 124.8 149.9 20.2% 39.3% T otal inflows 2 5 7.6 458.9 379.8 342.3 356.4 381.9 7. 1 % FDI STOCKS Equity 373.6 503.2 619.7 701.8 786.3 890.9 13.3% 39.0% R. Earnings 126.7 144.2 74.9 170.8 282.2 378.8 34.2% 16.6% Loans 337 .3 504.9 7 0 7. 2 8 0 7.7 890.7 1,014.1 13.8% 44.4% T otal stocks 8 3 7. 7 1,152.2 1,401.8 1,680.3 1,959.3 2,283.7 16.6% Source: FPC 2019 Census FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019 20 2.3.1. FDI inflows and Stock by Sector The census findings show that the FDI inflows in electricity, gas and steam sector dominated the total FDI inflows with a share of 37 .9 percent of the total in 2018, mainly originated from Mauritius. The FDI inflows in the ICT sector followed with a share of 21.3 percent of the total, mainly coming from Netherlands and South Korea. The financial sector came in third, with a share of 18.8 percent of the total FDI inflows, mainly emanating from Kenya and Mauritius. Other recipient sectors were the manufacturing (7 .4 percent), wholesale (4.2 percent), agriculture (4.0 percent), tourism (0.7 percent), and other sectors (5.6 percent). At the end of 2018, the FDI stock was still concentrated in the ICT sector, with a share of 29.1 percent of the total, followed by the financial sector (19.3 percent), the manufacturing sector (13.4 percent), the electricity, gas and steam sector (11.0 percent), and other sectors (27 .2 percent). T able 7: FDI Inflows and Stocks by Sector of Activities ($ Millions) 2.3.2. FDI inflows and Stock by Origin Regarding the origin of FDI inflows, Mauritius led with 51.7 percent share of the total, mainly invested in electricity, gas and steam sector, water supply, ICT , manufacturing, wholesale. and financial sectors. Other sources include Netherlands (17 .4 percent), Kenya (6.9 percent), US (5.5 percent), and others (18.5 percent). In terms of FDI stocks by origin, Mauritius,Kenya, South Africa, USA, and Netherlands, remained as the major sources, collectively totaling 60 percent share of total FDI stock. T able 8: FDI Inflows and Stocks by Origin ($ Millions) FDI INFLOWS FDI STOCKS Sectors 2017 2018 % Share Sectors 2017 2018 % Share Electricity 45.8 144.8 37 .9% ICT 589.7 663.7 29.1% ICT 50.2 81.4 21.3% Financial 356.0 441.3 19.3% Financial 36.0 72.0 18.8% Manufacturing 286.8 3 0 7. 0 13.4% Manufacturing 106.9 28.4 7.4 % Electricity 123.4 250.9 11.0% Wholesale 42.0 15.9 4.2% T ourism 200.4 1 9 7. 8 8.7% Agriculture 15.5 15.2 4.0% Wholesale 177 .3 182.7 8.0% T ransportation 3.2 8.7 2.3% Mining 83.8 85.1 3.7% Other Sectors 56.8 15.4 4.0% Other Sectors 142.0 155.2 6.8% TOTAL 356.4 381.9 1,959.3 2,283.7 Source: FPC 2019 Census Source: FPC 2019 Census FDI INFLOWS FDI STOCKS Origin 2017 2018 % Share Origin 2017 2018 % Share Mauritius 109.4 1 9 7.4 51.7% Mauritius 627 .8 796.0 34.9% Netherlands 0.9 66.6 1 7.4 % Kenya 165.7 182.2 8.0% Kenya 16.9 26.5 6.9% South Africa 180.5 179.4 7 .9% US 6.0 20.9 5.5% US 88.3 108.5 4.7% Belgium 5.0 12.3 3.2% Netherlands 46.4 105.8 4.6% UK 25.8 6.4 1.7% Luxembourg 60.6 60.5 2.7% India 31.3 4.5 1.2% India 54.8 5 7. 0 2.5% Others 161.1 4 7.4 12.4% Others 735.2 794.50 34.8% T otal 356.4 381.9 1,959.3 2,283.7 FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019 21 2.4. Portfolio Investment In the case of Rwanda, the PI is composed of tradable equity investments with a shareholding of less than 10 percent of the company’s equity. The PI recorded inflows of $ 5.9 Million in 2018 that led to an increase in total stock by 5.2 percent to $ 109.3 Million in 2018. The investment in this category was still the lowest component of FPC in Rwanda; however, it was increasing in 2018, reflecting an improvement in the capital market development. Figure 4: PI Inflows and Stocks ($ Millions) 2.5. Other Investments OI is comprised of loans, trade credit and advances, currency and deposits, and other accounts receivable/ payable. They accounted for 16.2 percent of the total FPC inflows in 2018, equivalent to $ 75.2 Million. Hence an increase in stocks of OI by 4.1 percent, amounting at $ 804.9 Million in 2018 from $ 772.8 Million in 2017 . Figure 5: OI Inflows and Stocks ($ Millions) 7 6 5 4 3 2 1
120 100 80 60 40 20
2012 2013 2014 2015 2016 2017 2018 5.6 1 1.7 2.5 3 0.3 PI Inflows PI Stocks 2nd Ax 250 200 150 100 50
900 800 700 600 500 400 300 200 100
2013 2014 2015 2016 2017 2018
168.4
96.3 93.9
195.9
95.4
75.2
OI inflows
Source: FPC 2019 Census
Source: FPC 2019 Census
FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019
22
2.5.1. Other Investment Inflows and Stocks by Sector
The debt inflows in manufacturing sector led with a share of 45.4 percent of the total OI inflows,
mostly originating from the United Arab Emirates and East African Development Bank with a share
on 39.7 percent and 18.3 percent respectively. The electricity, gas and steam sector ranked second
with a share of 24.2 percent, originating mostly from Export-Import bank and the United Kingdom.
The borrowings by the wholesale and retail trade sector had a share of 14.9 percent, mostly owed to
Netherlands, Switzerland, and the United States of America.
In terms of OI stock, the financial sector has the highest share (34.5 percent), followed by ICT (18.8
percent), manufacturing (15.6 percent), and agriculture (8.4 percent).
T able 9: OI Inflows and Stocks by Sector of Activities ($ Millions)
2.5.2. OI Inflows and Stock by origin
In terms of the origin of OI, investments from United Arab Emirates dominated with a share of 17 .9
percent of the total OI inflows invested in the manufacturing sector. OI inflows from the EXIM Bank
followed with a share of 14.6 percent, invested in the electricity, gas and steam sector. The OI from
the United Kingdom, Kenya, China, and EADB followed with 10.6 percent, 9.3 percent, 9.2 percent,
and 8.2 percent, respectively, mostly invested in manufacturing, financial, electricity, gas and steam
sectors.
Regarding OI stocks, PTA remained the major lender with a share of 13.5 percent of the total OI stock
in 2018, followed by IFC (12.0 percent), Germany (8.7 percent), and United Kingdom (8.4 percent).
OI INFLOWS OI STOCKS
Sectors of Activities 2017 2018 % Share Sectors of Activities 2017 2018 % Share
Manufacturing 4.6 34.2 45.4% Financial 275.0 278.0 34.5%
Electricity, gas, steam 0.0 18.2 24.2% ICT 150.5 151.2 18.8%
Wholesale and retail
trade 9.6 11.2 14.9% Manufacturing 112.3 125.4 15.6%
Financial 69.6 5.9 7. 8 % Agriculture 71.8 6 7. 8 8.4%
Other Sectors 11.7 5.8 7.7 % Other Sectors 163.3 182.5 22.7%
T otal 95.4 75.2 T otal 772.8 804.9
Source: FPC 2019 Census
FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019
23
T able 10: OI Inflows and Stocks by Origin ($ Millions)
OI INFLOWS OI STOCKS
Origin 2017 2018 % Share Origin 2017 2018 % Share
UAE 0.0 13.5 17 .9% PTA 109.3 108.3 13.5%
EXIM 0.0 11.0 14.6% IFC 101.5 96.5 12.0%
UK 2.5 8.0 10.6% Germany 69.8 70.2 8.7%
Kenya 0.2 7. 0 9.3% UK 60.5 6 7. 3 8.4%
China 0.0 6.9 9.2% EIB 43.9 4 7. 1 5.9%
EADB 1.4 6.2 8.2% Zambia 43.5 43.5 5.4%
Netherlands 6.7 3.9 5.2% Kenya 28.5 30.3 3.8%
Switzerland 3.9 3.9 5.2% Austria 24.3 24.3 3.0%
EU 0.0 2.3 3.1% Sweden 24.0 24.0 3.0%
Luxembourg 1.5 2.3 3.0% EXIM 12.6 23.5 2.9%
Belgium 0.0 2.1 2.8% Sudan 18.4 18.4 2.3%
US 3.5 2.0 2.7% Belgium 15.9 18.1 2.3%
PTA 1.2 1.3 1.7% Switzerland 18.2 1 7. 8 2.2%
Others 74.4 4.7 6.3% Others 202.4 215.6 26.8%
T otal 95.4 75.2 772.8 804.9
Source: FPC 2019 Census
Source: FPC 2019 Census
2.6. Private Sector External Debt
The Private Sector External Debt (PSED) is comprised of non-equity instruments (mainly loans),
contracted abroad by resident companies, and they include loans from affiliated and non-affiliated
lenders. In 2018, the PSED inflows increased by 2.2 percent, amounting to $ 225.1 Million from $
220.2 Million in 2017 , due to an increase in FDI debt inflows (20.2 percent) that overcompensated
a decrease in borrowings from non-affiliated investors (-21.2 percent). As a result, total PSED stock
grew by 9.3 percent in 2018, standing at $ 1,819.0 Million in 2018 from $ 1,663.6 Million in 2017 .
T able 11: Foreign Private Sector Debt Inflows and Stocks ($ Millions)
DEBT INFLOWS DEBT STOCKS
YEAR 2015 2016 2017 2018 %
Change 2015 2016 2017 2018 %
Change
RELATIONSHIP
AFFILIATED 210.9 132.2 124.8 149.9 20.2% 7 0 7. 2 8 0 7.7 890.7 1,014.1 13.8%
NON-
AFFILIATED
93.9 195.9 95.4 75.2 -21.2% 578.6 74 7. 1 772.8 804.9 4.1%
TOTAL 304.8 328.1 220.2 225.1 2.2% 1,285.8 1,554.8 1,663.6 1,819.0 9.3%
FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019
24
2.7 . Income on Investments
In 2018, the overall net profit of private companies increased by 1.1 percent, amounting to $ 142.5
Million from $ 141.0 Million in 2017 . The results show that $ 94.7 Million were retained to expand
business activities representing 66.5 percent of the total net profit, and $ 29.8 Million distributed to
shareholders.
T able 12: Income on Investment by Instrument ($ Millions)
2.7 .1. Income on Investment Distribution by Sector
The sectors that mostly contributed to the net profit were financial sector ($66.0 Million), electricity,
gas and steam ($12.8 Million), and agriculture ($12.6 Million). Considering the dividends declared,
the table below shows that the financial sector led with higher dividends ($ 28.3 Million), followed
by manufacturing ($8.1 Million), agriculture ($ 3.5 Million), and electricity ($1.1 Million). In terms of
retained earnings, the findings show that the financial sector was the key driver with $37 .3 Million,
followed by electricity ($11.0 Million), and wholesale ($10.4 Million).
T able 13: Income on Investment by Sector ($ Millions)
Instrument 2014 2015 2016 2017 2018
Net Profit 46.5 65.0 131.4 141.0 142.5
Dividends Declared 22.4 10.2 38.1 31.0 4 7. 8
Dividends Paid 34.2 32.2 34.9 29.4 29.8
Retained Earnings/Loss 23.0 54.8 93.3 110.0 94.7
Source: FPC 2019 Census
Source: FPC 2019 Census
Sector Net Profit Dividends Declared Dividends Paid RE
Finance 66.0 28.3 18.0 3 7.7
Electricity, gas,
steam
12.8 1.8 - 11.0
Agriculture 12.6 3.5 3.0 9.0
Wholesale & retail
trade
12.1 1.7 - 10.4
T ransportation 9.8 1.4 - 8.4
Manufacturing 8.8 8.1 6.6 0.7
Real Estate 8.0 1.1 - 6.8
ICT 8.0 1.1 2.3 6.8
T ourism 2.4 0.3 - 2.0
Other Sectors 2.0 0.3 - 1.7
T otal 142.52 4 7. 8 2 29.84 94.70
FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019
25
2.8. Return on Equity by sector
The ROE is the amount of net income returned as a percentage of a shareholder’s equity. It measures
the company’s profitability by revealing how much profit a company generates from shareholders’
investment. The analysis of ROE is linked to the incentive to invest in an economy. Rwanda’s ROE
average is 13.2 percent, higher than the world’s profitability of 6.0 percent.
Looking at the sectors, the table below shows that transport and agriculture sectors were more
profitable, with a higher ROE than the country’s average. The financial, manufacturing and wholesale
sectors’ ROE were around the country’s average, while tourism and electricity sectors were below the
country’s average profitability.
T able 14: ROE on FDI by Sector (ratio)
Sector 2014 2015 2016 2017 2018
Agriculture 12.0 44.6 55.4 14.9 20.7
Education -0.5 -0.5 -61.8 -0.3 2.8
Electricity 19.4 59.4 12.4 12.2 5.1
Financial 2 7. 1 20.9 32.1 11.3 15.0
ICT 0.0 3.2 25.4 20.3 7. 3
Manufacturing 28.6 10.9 4.5 52.5 8.9
T ourism -0.1 2.3 -1 7. 9 -6.4 1.2
T ransport 0.0 11.0 5.0 0.5 4 7. 5
Whole sale 4.0 22.8 73.6 10.8 10.4
Average 10.1 11.8 12.8 12.9 13.2
Source: FPC 2019 Census
FOREIGN PRIVATE CAPITAL IN RWANDA YEAR 2019
26