17 Quantitative Findings and the end for 2008 and 2009. The transactions include the retained earnings/loss, change in equity, loans disbursements and payments. The difference between two ends period stocks which is not explained by the flows of the year is due to other changes mainly valuation of equity and non-equity stocks.
Figures 5 and 6 show that, liabilities gross inflows in 2009
slightly decreased by 0.6 percent to RWF 79,838.4 million. The
stock of foreign liabilities recorded a growth of 34.0 percent
from RWF 165,023.1 million in 2008 to RWF 223,240.1 million
in 2009. Resilience registered in foreign liabilities despite the
global financial crisis was attributable to increase in long and
short term loans from related companies.
Figure 5: Total stocks end 2008 & 2009
Source: Foreign Private Investment & Investor Perceptions Survey,
2010
2.8. Challenges
Challenges encountered in conducting the 2010 FPC survey
include the following;
2.8.1 Responsiveness
Some companies were reluctant to supply information,
mainly because this was the first survey and that most
respondents were not conversant with the FPC terms used
in the questionnaire. Fear of data confidentiality to some
respondents was also a hindrance attributable to non-
response. As for the future surveys, the FPC Working Group
will enhance the understandings of the respondents through
sensitization and simplified questionnaire.
CHAPTER III: QUANTITATIVE FINDINGS
3.1. Analysis of findings on private foreign assets and
liabilities
This section presents the Analysis of findings on flows and
stocks of Foreign Assets and Liabilities (FAL). The FALs are
composed by Foreign Direct Investment (FDI), Foreign Portfolio
Investment (FPI) and Other Investments (OI).
The flows represent the transactions of FAL during the period
under review, while the stocks are the positions at the beginning
107.3
5.0
52.8
165.0
137.2
5.2
80.9
223.2
50.0 100.0 150.0 200.0 250.0 Direct Investment Portfolio Investment Other Investment Total Foreign Liability Stock 2008 Stock 2009
18 Foreign Private Investment and Investor’s Perceptions Report-2010 Source: Foreign Private Investment & Investor Perceptions Survey, 2010 Figure 5: Total stocks end 2008 & 2009 15
Figure 6: Total flows during 2008 & 2009
36.6
0.6
42.6
79.8
58.7
0.4
20.8
79.8
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Direct
Investment
Portfolio
Investment
Other Investment Total
Inflow 2008
Inflow 2009
Source: Foreign Private Investment & Investor Perceptions Survey, 2010
3.1.1. Foreign Direct Investment
An Investment is considered to be a Foreign Direct Investment (FDI) if non- resident entities or
individuals hold 10% or more of the equity share in a resident entity , including Fellows
Enterprises and Direct Investments of less than 10 percent . In 2008, the FDI flows were RWF
36,645.6 million, dominated by Equity capital and retained earnings accounting for 50.0 and 38.9
percent respectively.
In 2009, FDI flows rose by 60.1 percent, from RWF 36,645.6 million in 2008 to RWF 58,688.7
million in 2009, the increment was mainly due to increase in l ong and short term l oans from
related companies.
Equity capital and retained earnings during the period under review, declined by over 50 percent
mainly due to global financial crisis. Equity capital amounted to RWF 18,320.8 million in 2008
compared to RWF 8,219.2 million in 2009 while t he retained earnings decreased from RWF
14,268.4 million in 2008 to RWF 6,842.3 million in 2009.
FDI stock which is composed of paid-up share-capital, share-premium, accumulated retained
earnings, capital reserves and loans from related companies increased from RWF 72,022.4 million
3.1.1. Foreign Direct Investment
An Investment is considered to be a Foreign Direct Investment
(FDI) if non-resident entities or individuals hold 10% or more
of the equity share in a resident entity, including Fellows
Enterprises and Direct Investments of less than 10 percent. In
2008, the FDI flows were RWF 36,645.6 million, dominated
by Equity capital and retained earnings accounting for 50.0 and
38.9 percent respectively.
In 2009, FDI flows rose by 60.1 percent, from RWF 36,645.6
million in 2008 to RWF 58,688.7 million in 2009, the increment
was mainly due to increase in long and short term loans from
related companies.
Equity capital and retained earnings during the period under
review, declined by over 50 percent mainly due to global
financial crisis. Equity capital amounted to RWF 18,320.8
million in 2008 compared to RWF 8,219.2 million in 2009 while
the retained earnings decreased from RWF 14,268.4 million in
2008 to RWF 6,842.3 million in 2009.
FDI stock which is composed of paid-up share-capital, share-
premium, accumulated retained earnings, capital reserves and
loans from related companies increased from RWF 72,022.4
million in 2008 to RWF 137,150.1 million recorded in 2009
mainly due to loans. On average, FDI accounted for over 50.0
percent of total liabilities.
3.1.2. Foreign Portfolio Investment
Foreign Portfolio Investment (FPI) comprises ownership
of investment of less than 10 percent excluding the fellow
companies and direct investment enterprises. FPI stock slightly
increased from RWF 3,357.3 million to RFW 5,209.4 million in
2008 and 2009 respectively, equivalent to 5.5 percent growth.
On average, FPI accounted for 7.4 percent of the total liabilities.
3.1.3. Other investments Other investments cover mainly long term and short term loans from unrelated companies. In 2008, a total of RWF 35,422.0 million of loans were reported, 19 Quantitative Findings of which RWF 31,690.1 million (97.3 percent ) were long term and RWF 459.2 million (1.3 percent) short term loans in form of are trade credits. In 2009, RWF 80,880.6 million loans were reported of which RWF 62,332.6 million (48.6 percent) were long term and RWF 9,198.3 million (46.3 percent) were trade credits. On average, other investments accounted for 34.8 percent of the overall liabilities. 3.1.4. Foreign liabilities by sectors This section provides information on the stocks and flows of Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), and other investments by sector. 3.1.4.1. Flows and stocks by sectors in 2008 International Standards Industrial Classification (ISIC) is composed by 18 sectors. During the period under review, 13 sectors had FAL. The sectors with no FAL were the human health and social work activities; Water supply; sewerage, waste management and remediation activities; education; arts, entertainment and recreation which are mainly government owned. The figure 7 below shows that in 2008, the highest inflows were recorded in information and Communication (58.0 percent), followed by finance and insurance (19.0 percent) and accommodation and food service (10.0 percent).In terms of stock the information and Communication accounted for 39.3 percent. This is in line with expanding market in information and Communication. Figure 7: Flows and stocks by sectors in 2008 (RWF millions) 3.1.4.2. Flows and stocks by sectors in 2009 In 2009, information and Communication remained the largest sector attracted 31.0 percent of total liabilities compared to 57.8 percent in 2008. Inflows to agriculture, forestry and fishing sector accounted for 22.3 percent up from 19.0 percent in 2008. 17
Figure 7: Flows and stocks by sectors in 2008 (RWF millions) Source: Foreign Private Investment & Investor Perceptions Survey, 2010 3.1.4.2. Flows and stocks by sectors in 2009
In 2009, information and Communication remained the largest sector attracted 31.0 percent of
total liabilities compared to 57.8 percent in 2008. Inflows to agriculture, forestry and fishing
sector accounted for 22.3 percent up from 19.0 percent in 2008.
Sectoral performance o n stocks was dominated by the Financial and insurance with RWF
77,614.5 million mainly due to depreciation of RWF. Stock of foreign liabilities in i nformation
and Communication amounted to RWF 76,338.8 million while wholesale & retail trade having
RWF 22,774.6 million.
Source: Foreign Private Investment & Investor Perceptions Survey,
2010
20 Foreign Private Investment and Investor’s Perceptions Report-2010
Sectoral performance on stocks was dominated by the Financial
and insurance with RWF 77,614.5 million mainly due to
depreciation of RWF. Stock of foreign liabilities in information
and Communication amounted to RWF 76,338.8 million while
wholesale & retail trade having RWF 22,774.6 million.
Source: Foreign Private Investment & Investor Perceptions Survey,
2010
Figure 8: Flows and stocks by sectors in 2009 (RWF million)
Total inflows of foreign liabilities were mainly concentrated in
ten countries accounting for 94.6 percent. South Africa, China
and Libya were the leading source of inflows with 62.0 percent
in 2008. In 2009, South Africa, China and Libya were in the lead
accounting for 44.0 percent of total inflows.
17
Figure 7: Flows and stocks by sectors in 2008 (RWF millions) Source: Foreign Private Investment & Investor Perceptions Survey, 2010 3.1.4.2. Flows and stocks by sectors in 2009
In 2009, information and Communication remained the largest sector attracted 31.0 percent of
total liabilities compared to 57.8 percent in 2008. Inflows to agriculture, forestry and fishing
sector accounted for 22.3 percent up from 19.0 percent in 2008.
Sectoral performance o n stocks was dominated by the Financial and insurance with RWF
77,614.5 million mainly due to depreciation of RWF. Stock of foreign liabilities in i nformation
and Communication amounted to RWF 76,338.8 million while wholesale & retail trade having
RWF 22,774.6 million.
Quantitative Findings
The
stock
of
foreign
liabilities mainly came from
South Africa, China and
Libya accounting for 43.3
percent and 35.2 percent in
2008 and 2009 respectively.
Source: Foreign Private Investment & Investor Perceptions Survey, 2010
Source: Foreign Private Investment & Investor Perceptions Survey, 2010
Table 4: Countries of origin by Stock in 2008 & 2009 in RWF million
2008
2009
No
Country
Stocks
%Share
Stocks
%Share
1
South Africa
28,779.3
17.44
South Africa
33,808.5 15.14
2
China
21,019.0
12.74
China
22,624.3 10.13
3
Libya
18,421.7
11.16
Libya
22,251.6 9.97
4
Netherlands
12,707.8
7.70
Mauritius
20,036.9 8.98
5
Kenya
10,692.9
6.48
Netherlands
19,740.6 8.84
6
Mauritius
10,586.1
6.41
Luxembourg
17,244.6 7.72
7
Others
62,816.3
38.07
Others
87,533.7 39.21
8
Total
165,023.1
100.00
Total
223,240.1 100
Table 3: Inflows by origin in 2008 & 2009 in RFW million
2008
2009
No
Country
Flows
% Share
Flows
% Share
1
South Africa
20,863.9
26.1
South Africa
12,326.9
15.44
2
China
19,215.7
24.1
China
11,464.4
14.36
3
Libya
9,502.9
11.9
Libya
11,117.7
13.93
4
Netherlands
8,527.7
10.7
Mauritius
10,638.1
13.33
5
Kenya
4,414.4
5.5
Netherlands
7,349.9
9.21
6
Mauritius
3,519.8
4.4
Luxembourg
6,014.8
7.53
7
Others
13,794.1
17.3
Others
20,917.0
26.20
8
Total
79,838.4
100.0
Total
79,828.7
100
22 Foreign Private Investment and Investor’s Perceptions Report-2010 3.1.5. Foreign private investment stock by regional grouping With regard to foreign private investment stocks by regional economic grouping, the survey findings show that, except for OECD- Non EU countries, the stock of foreign private investment held by all regions recorded increases in 2009 compared with 2008. The European Union (EU) countries held the highest stock amounting to RWF 69.586 million in 2009, accounting for 31.2 percent of overall stock, up from 48,694 million in 2008(see Figure 9). COMESA (Non EAC) emerged second, followed by SADC (Non EAC & COMESA, ASIA, EAC and OECD (Non-EU). Investment from EAC almost doubled from RWF 212,241 million in 2008 to RWF 20,302 million in 2009. This suggests the positive effect of joining EAC. Overall diverse sources of foreign investments imply that the economy is less dependent on one region and hence less vulnerable. Figure 9: Foreign Private Investment Stock by Regional Grouping, 2008 and 2009 20
Figure 9: Foreign Private Investment Stock by Regional Grouping, 2008 and 2009
Source: Foreign Private Investment & Investor Perceptions Survey, 2010
3.1.6. Return on equity by sector 2008 and 2009
In the period under review the overall return on equity attributable to foreign direct and portfolio
investors declined to 9.0 percent in 2009 from 28.0 percent in 2008 (See Table 5) . This situation
was largely attributed to the decline in overall profit to RWF 7,916 million in 2009 from RWF
29,209 million in 2008 mainly due to lower economic activities as the result of the global
financial and economic crisis. In addition increase green field investments in mining and
financial sectors which had not yet realized their returns on investment, contributed to the decline
in overall profitability.
Table 5: Top profitable sectors
2008 2009
Sector Net Profit Equity ROE
Net
Profit Equity ROE
Manufacturing 3,343 6,769 49% 3,177 8,205 39%
Agriculture, forestry and fishing 1,013 4,103 25% 1,281 4,679 27%
Wholesale and retail trade 155 8,022 2% 1,818 8,800 21%
Information and communication 19,336 26,809 72% 3,184 17,104 19%
Real estate activities 82 486 17% 85 478 18%
Transportation and storage 226 454 50% 76 562 13%
Accommodation and food service 698 8,444 8% 235 2,921 8%
Financial and insurance 2,423 49,858 5% (2,444) 54,473 -4%
Overall 29,209 105,477 28% 7,916 90,569 9%
Source: Foreign Private Investment & Investor Perceptions Survey, 2010
Source: Foreign Private Investment & Investor Perceptions Survey, 2010