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FOREIGN PRIVATE CAPITAL IN RWANDA | CENSUS REPORT – 2021
CHAPTER 6. INVESTORS’ PERCEPTION
This part summaries investors’ perception anonymously collected
on the business environment in Rwanda on different aspects. The
investors’ perception index (IPI) is calculated based on the themes,
with a scale ranging from one (very bad/poor/low) to seven (very
good/high). This chapter summaries the general findings of each
theme, and the annexes contains the details of questions by each
theme.
Although the survey was conducted during the era of the pandemic
of covid-19, the Rwandan business environment keeps on improving
with an IPI average score 78 percent, i.e. the increase of 3.7 percentage
points vis-à-vis the previous survey (FPC 2020). As per the figure
below, the governance theme is leading with an IPI of 83 percent,
followed by trading across borders (80 percent), legal frame work
(79 percent), Infrastructure (78 percent), T axation & Investment
framework (77 percent), Support Services (76 percent), Economic
and Financial Sector (76 percent), Domestic resources (75 percent)
and institutional efficiency (74 percent).
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FOREIGN PRIVATE CAPITAL IN RWANDA | CENSUS REPORT – 2021
Figure 16. Investor Perception Index
Source: FPC 2021 Census
The governance recorded a higher IPI of 83%, following records made by the political
stability and the ability to deliver, the effort made by the Rwandan Government to
promote private business by putting in place measures against Corruption at the central
and local level as well as in Judiciary institutions.
The trading across boarders recorded an IPI of 80%, due to the ease to import and export
in regional (EAC) and out of EAC as well as the efficient length of time taken to obtain
export certification.
The legal framework recorded an IPI of 79%, thanks to the ability of legal institutions to
enforce existing national laws and legal framework for accounting and auditing as well as
Ease of purchasing / registering land and property.
The infrastructure component recorded an IPI of 78%, thanks to the availability
of telephone network, electricity, internet, and transport. Therefore, the cost of
infrastructure recorded an IPI of 61% lower due to the low cost of internet, electricity
(consumption and cost of tools’ tariff, etc.).
T axation and investment framework recorded an IPI of 77% due to the ease of remitting
revenue on investment, the quality of tax incentives of exports, investments, and imports
of capital and intermediary goods that are inputs in the production processes.
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FOREIGN PRIVATE CAPITAL IN RWANDA | CENSUS REPORT – 2021
Support services to private companies by different public institutions recorded an IPI
of 76%, with the high record in company registration in the concerned institution, the
procedure to obtain operation permits and the availability of places to install offices,
firms, and other physical operation inputs.
Economic and financial sector recorded an IPI of 76%, thanks to stable prices, the
availability of local finances, and less volatile exchange rates.
Domestic resources recorded an IPI of 75%, mainly due to the competitive labor cost
and availability of land and local supplies, then, raw material in different domains, skilled
labor and domestic market size weighted on this index.
Institution efficiency has an IPI of 74%, thanks to the public sector framework, to ease
domestic business and improve the public services to private investors.
40 FOREIGN PRIVATE CAPITAL IN RWANDA | CENSUS REPORT – 2021 CONCLUSION The FPC 2021 census covered 274 companies that hold foreign investment in Rwanda, in form of financial equity and non-equity, of which 227 companies responded, representing 82.8 percent response rate. The census showed that FPC inflows decreased by 23.5 percent to $ 386.4 Million from $ 505.0 M recorded in 2019, mainly due to negative impact of the Covid19 pandemic on domestic businesses. The FPC inflows were mainly driven by Direct Investment with a share of 71.0 percent, followed by Other Investment (28.5 percent) and Portfolio Investment (0.5 percent). In terms of FPC inflows origins, Mauritius led with 35.5 percent shares mainly invested in financial. ICT and manufacturing sectors. The United States of America followed with the second share of 12.7 percent, mainly invested in manufacturing, agriculture and wholesale and trail trade sectors.
41 FOREIGN PRIVATE CAPITAL IN RWANDA | CENSUS REPORT – 2021 The census also shows that the Private Sector External Debt inflows reduced by 35.5 percent to $ 204.6 Million, from $ 317 .5 Million registered in 2019, and the external debt from unrelated entities led with a share of 53.8 percent of the total inflows. With regards to investor perception, the findings show that the Investor Perception Index stood at 78 percent, with higher improvement in infrastructure and support services indices. In order to improve the country’s investment potential, the Government of Rwanda should continue to offer incentives to both domestic and foreign investors through the Rwanda Development Board, in form of fiscal and non-fiscal incentives. These incentives should keep the country’s external competitiveness on a good track, such as macroeconomic stability, capital market growth and reforms to respond on the investors’ perceptions. In addition, the Government should improve policy interventions in specific leading sectors, in order to boost investors’ confidence. 42 FOREIGN PRIVATE CAPITAL IN RWANDA | CENSUS REPORT – 2021 NATIONAL BANK OF RWANDA BANKI NKURU Y’U RWANDA NATIONAL BANK OF RWANDA BANKI NKURU Y’U RWANDA NATIONAL BANK OF RWANDA: KN 6 AV.4 P.O.Box: 531 Kigali Rwanda Tel: (+250) 788 199 000 Email: [email protected] Swiftcode: BNRWRWRW Twitter: @CentralBankRw Website: www.bnr.rw