23 Quantitative Findings 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
24
Foreign Private Investment and Investor’s Perceptions Report-2010
Disbursements of the PSED in 2008 and 2009 amounted
to RWF 46,668.6 and RWF 64,406.2 million, respectively
equivalent to an increase of 38.1 percent. Debts from related
companies totaled RFW 4,056.3 million in 2008 against RWF
43,627.2 million in 2009 while from unrelated sources were
RFW 42,612.3 million in 2008 and RWF 20,779 million in 2009.
The 51.1 percent decrease of loans from unrelated companies
was associated to credit crunch and this was compensated by
the increase of loans from related (see Table 11).
Table 6: Private Sector External Debt flows (Rwf million)
Type
Flows
2008
2009
Loans from related companies
4,056.3
43,627.2
LT loans from related
3,726.9
31,742.7
ST loans from related
315.1
10,111.0
Supplier credits from related
14.3
1,773.6
Loans from unrelated companies
42,612.3
20,779.0
LT from unrelated
41,440.7
10,093.2
Trade Credits from unrelated
560.5
9,621.4
Other
611.16
1,064.41
Total Loans
46,668.6
64,406.2
Source: Foreign Private Investment & Investor Perceptions Survey,
2010
On a sectoral basis, manufacturing sector had the highest
return on equity of 39% in 2009, followed by agriculture
sector (27%), wholesale and retail trade (21), information and
communication (19) and real estate (18). Compared to 2008,
except for wholesale and retail trade, agriculture and real
estate which increased other sectors recorded a decline. With
regard to finance sector, the decline in return on equity could
partly be explained by green field investments in the sector.
3.1.7. Dividends paid
During the period under consideration, dividends paid to
foreign shareholders declined by 16.0 percent from RWF 15,691
million to RWF 13,247 million. The higher performances were
registered by information and Communication, followed by
manufacturing and finance and insurance. Poor performances
on other sectors were results of the global financial crisis.
3.1.8 Private Sector External Debt (PSED)
Private Sector External Debt is the gross outstanding amount
of those current and not contingent liabilities that require
payment(s) of interest and/or principal by the debtor at some
point(s) in the future and that are owed to non-residents by
private residents of an economy (IMF Debt Guide, 2009).
Private sector external debt flows and stocks include borrowing
from affiliates and non-affiliates and debt securities.
3.1.9. Foreign Assets
This section provides analysis of the survey findings on the
stock of Private Sector Investments abroad (Foreign Assets).
Foreign assets refer to holding of equity shares or lending
to non-residents (in form of loans, debt securities and trade
credits) or acquired any other assets by a resident entity in /to
non-resident entities by an entity resident in Rwanda.
The results showed that foreign assets were in form of foreign direct equity and foreign portfolio equity. FDI amounted to 25 Quantitative Findings Table 7 indicates that the stock of PSED increased from RWF 58,895.4 million in 2008 to RWF 131,968.9 million in 2009, mainly concessional loans from related companies. Table 6: Private Sector External Debt flows (Rwf million) Type Flows 2008 2009 Loans from related companies 6,139.5 51,088.2 LT loans from related 5,175.1 38,119.2 ST loans from related 316.8 10,652.1 Supplier credits from related 647.5 2,316.9 Loans from unrelated companies 52,756.0 80,880.6 LT from unrelated 47,197.7 62,332.6 Trade Credits from unrelated 2,714.3 9,198.3 Other 2,843.89 9,349.69 Total Loans 58,895.4 131,968.9 Source: Foreign Private Investment & Investor Perceptions Survey, 2010 Source: Foreign Private Investment & Investor Perceptions Survey, 2010 The big share of loans was absorbed by information & Communication and finance and Insurance sectors by the proportion of 64.3 percent and 13.8 percent respectively in 2008. The same sectors were leading in 2009 with 49.9 percent and 14.0 percent. Figure 10: Stocks of loans by sector in 2008 and 2009 23
Figure 10: Stocks of loans by sector in 2008 and 2009 8,220 2,703 38,279 5,515 2,267 2,755 18,610 7,276 66,185 11,673 0
- 40,000.00 80,000.00 Mining Finance and Insurance Agriculture, Fishing and mining Information and… Manufacturing Whoelsale and retail trade Stock 2009 Stock 2008 Source: Foreign Private Investment & Investor Perceptions Survey, 2010 3.1.9. Foreign Assets This section provides analysis of the survey findings on the stock of Private Sector Investments abroad (Foreign Assets). Foreign assets refer to holding of equity shares or lending to non- residents (in form of loans, debt securities and trade credits) or acquired any other assets by a resident entity in /to non-resident entities by an entity resident in Rwanda. The results showed that foreign assets were in form of foreign direct equity and foreign portfolio equity. FDI amounted to RWF 7,283 million in 2008 and increased to 8,109 in 2009. FPI recorded amount of RWF 4,843.7 million in 2008 and RWF 5,487.0 million in 2009. Sectors with foreign assets were finance and insurance (51.8 percent) and whole sale and retail trade (48.2 percent). 26 Foreign Private Investment and Investor’s Perceptions Report-2010 RWF 7,283 million in 2008 and increased to 8,109 in 2009. FPI recorded amount of RWF 4,843.7 million in 2008 and RWF 5,487.0 million in 2009. Sectors with foreign assets were finance and insurance (51.8 percent) and whole sale and retail trade (48.2 percent). Table 8: Foreign Assets stock (RWF million) Components Stock 2008 Stock 2009 Direct Investment 7,283.0 8,109.0 Portfolio Investment 4,853.7 5,487.9 Other Investment _ 83.6 Total Foreign Asset 12,136.7 13,680.6 3.2. Findings on private non-foreign assets and liabilities This chapter presents the aggregate findings on companies’ turnover, levels of employment, compensation of employees and the analysis on foreign assets and liabilities. It also provides findings on contribution to corporate social responsibility. 3.2.1 Entity turnover The total turnover for the entities increased from RWF 264,816.4 million in 2008 to RWF 281,878.1 million in 2009. Bulk of registered turnover was wholesale and retail trade which accounted for 29.5 percent in 2008 and 25.9 percent in 2009. Manufacturing sector accounted for 21.1 percent in both 2008 and 2009. Finance and Insurance sector accounted for 17.1 percent in 2008 and 20.4 percent in 2009. The findings collaborate to the fact that the wholesale trade is the largest sector in the economy which includes fuel companies, shopping malls and auto companies. 3.2.2. Employment As shown in the Table 9, the total employment in foreign owned investments grew from 12,909 in 2008 to 14,511 in 2009, equivalent to an increase of 8.2 percent. Rwandans accounted for 95.0 percent of the total employment and the remaining 5.0 percent were foreigners. In terms of gender, male employees accounted for the largest share of 69.3 percent of the total employment.
27 Quantitative Findings Table 9: Distribution of employment in 2008 and 2009 Type 2008 2009 Actual employment Gender Local Foreign Local Foreign Administrative/ Accounts Female 411 12 590 7 Supervisory Male 510 44 754 45 Female 167 29 284 25 Skilled Male 398 128 533 195 Female 1,002 59 1,697 9 Male 3,208 659 3,063 275 Unskilled Female 2,055 2 2,550 9 Male 5,157 23 5,040 23 Total 12,909 957 14,511 589 Source: Foreign Private Investment & Investor Perceptions Survey, 2010 In terms of sector distribution, manufacturing sector accounted for the largest proportion of 25.9 percent, implying that it is labor intensive. The share of agriculture, forestry and fishing was 20.2 percent and finance and insurance sector 18.7 percent. Employment in finance and Insurance sector doubled in 2008 and 2009, as a result of expansion of the banking sector, existing and new banks. Figure 11: Distribution of employment by sector 2008-2009 25
gender, male employees accounted for the largest share of 69.3 percent of the total employment.
Table 9: Distribution of employment in 2008 and 2009
Type 2008 2009
Actual employment Gender Local Foreign Local Foreign
Administrative/Accounts Female 411 12 590 7
Male 510 44 754 45
Supervisory Female 167 29 284 25
Male 398 128 533 195
Skilled Female 1,002 59 1,697 9
Male 3,208 659 3,063 275
Unskilled Female 2,055 2 2,550 9
Male 5,157 23 5,040 23
Total 12,909 957 14,511 589
Source: Foreign Private Investment & Investor Perceptions Survey, 2010
In terms of sector distribution, manufacturing sector accounted for the largest proportion of 25.9
percent, implying that it is labor intensive. The share of agriculture, forestry and fishing was 20.2
percent and finance and insurance sector 18.7 percent. Employment in finance and Insurance
sector doubled in 2008 and 2009, as a result of expansion of the banking sector, existing and new
banks.
Figure 11: Distribution of employment by sector 2008-2009
Source: Foreign Private Investment & Investor Perceptions Survey, 2010Source: Foreign Private Investment & Investor Perceptions Survey,
2010
3.2.3. Compensations of employees.
Annual value of total compensation of employees rose from
RWF 41,926 million in 2008 to RWF 54,755 million in 2009,
equivalent to 29.7 percentage increase. In terms of type
of compensation, salaries and wages contributed to the
highest share of 88.0 percent. Locals had relatively bigger
share due to their high proportion in the total employment.
28
Foreign Private Investment and Investor’s Perceptions Report-2010
Table 10: Total compensation of employees for 2008-2009 in RWF
million
Compensation of
Employees
Status
2008
2009
Salaries and
Wages
Local
32,423
43,168
Foreign
3,263
3,181
Fringe Benefits
Local
2,392
3,291
Foreign
62
104
NSSF/Pension
Local
1,547
1,841
Foreign
261
271
Directors Fees
Local
132
150
Foreign
67
63
Other - Local
Local
33
67
Total
41,926
54,755
In 2009, financial and insurance activities accounted for
47.6 percent, followed by Manufacturing 16.6 percent and
information and communication 9.3 percent. The higher
compensations of employees from the finance and insurance
sector is in line with its high number of employment.
3.2.4. Actual investment
Actual investment constitutes land, buildings, machinery,
vehicles, equipment and capital. During survey period, actual
investment rose from RWF 208,656 million in 2008 to 339,371
million in 2009 which is an increase of 61.5 percent. Plant and
machinery accounted for 26.0 percent, followed by building and
civil works 22.0 percent of the actual investment. This pattern
is due to growing construction activities in different sectors and
new Greenfield investment in mining and manufacturing.
Table 11: Type of investment in FAL private enterprises 2008-2009 in
RWF million
Type of investment
2008
2009
Land
20,892
34,367
Building and Civil Works
31,959
73,878
Plant and Machinery
44,965
87,261
Vehicles
5,530
6,036
Computer and accessories
2,657
4,368
Furniture and Fittings
11,054
9,770
Pre-Startup Expenses
53
510
Working Capital
14,987
18,566
Work in Progress
60,733
74,977
Other
15,827
29,638
Total
208,656
339,371
Source: Foreign Private Investment & Investor Perceptions Survey,
2010
Source: Foreign Private Investment & Investor Perceptions Survey,
2010