13
Figure2.1: Distribution of employment by type in 2013
Source: Foreign Private investment 2013 Regarding sector distribution of employment, agriculture had the highest number with 28.0 percent, followed by Finance and insurance with 15.8 percent of total number of employees, mining 11.3 percent and manufacturing 9.0 percent.
Table2.8: Distribution of employment by sector 2011-2013
Sector
2011
2012
2013
Agriculture
8,015
4,274
9,596
Real estate activities
6,183
6,183
1,231
Mining and quarrying
4,875
4,756
3,825
Finance and insurance
3,944
4,083
5,129
Manufacturing
2,817
5,832
3,191
Administrative
1,509
1,445
1,329
ICT
846
651
461
Wholesale and retail trade
808
770
618
Tourism
579
1,629
778
Others
1,141
3,211
7,956
30,717 32,834 34,114 Source: Foreign Private investment 2013
The double increase in Agriculture employment came mainly from Shagasha, Mulindi and Gisakura tea factories newly privatized.
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The drop in employment in sectors like real estate, mining, and tourism was caused by change of some companies’ ownership from non-residents to residents and the nature of those sectors to employ casual laborers in a given season.
2.3.4 Compensations of employees.
Total compensation of employees (wages, salaries, contribution to pension fund, fringe benefits, etc.) paid out by enterprises that responded to the FPC 2013 more than doubled from US$.139.0 million during 2012 to US$.301.6 million during 2013. Local employees received the highest share of total employee’s compensation accounting for an average of 80.5 percent of the total compensation in 2012 and 2013.
The best remunerating sectors were finance and insurance with 58.7 percent of total remuneration, followed by manufacturing 12.9 percent and ICT for 12.0 percent. The big increase in transportation sector was due to some big companies which sold shares to non – residents. Details are shown in Table2.9.
Table2.9: Compensation of Employees 2011- 2013 (US$ million) Sector 2011 2012 2013 Financial services 43.0 81.9 163.7 ICT 20.0 14.2 13.7 Manufacturing 12.9 18.0 21.9 Wholesale & Retail trade 4.5 4.8 6.2 Tourism 4.0 2.0 4.0 Agriculture 3.4 4.6 9.8 Transportation 1.9 1.5 54.0 Mining 1.7 2.1 3.7 Others 3.6 10.0 24.6 Total 95.0 139.0 301.6 Source: Foreign Private investment 2013
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2.3.5 Corporate social responsibility
Corporate social responsibility is a c orporate 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 ot her social, cultural or community services that
benefit the population. The contributions of companies to corporate social responsibility stood at
US$ 4.0 million in 2012 from US$ 3.0.million in 2011 and US$ 2.0 million in 2010.
For 2013, the respondents were also requested to provide monetary value of the amount spent on
corporate social responsibility (CSR) activities. The findings showed that the total amounts spent
on CSR activities was US$ 5.0 million ( figure 2.2 ). The activities which attracted subst antial
CSR expenditures were education; arts & sports and health & welfare which on average
accounted for 48.4 percent.
Figure2 2: Corporate social responsibility by type of recipient in 2013 (US$ thousands)
Source: Foreign Private investment 2013
On average, most of the Corporate S ocial Responsibility expenditures were dedicated to arts and sports (41.0 percent) - the big chunk went in Primus Guma - Guma super star and the primus league. The results sh owed that the manufacturing sector was the biggest contributor to CSR in 2013 as it accounted for about 26.7 percent, followed by finance sector.
16
Table2.10: Corporate Social Responsibility by Distributing Sector 2011- 2013 (US$ million)
Sector
2011
2012
2013
Manufacturing
1.5
2.2
1.3
Finance
0.4
0.5
0.9
ICT
0.3
0.4
0.3
Agriculture
0.2
0.2
0.2
Tourism
0.2
0.3
0.3
Wholesale and retail trade
0.1
0.1
0.1
Mining
0.1
0.1
0.2
Others
0.1
0.2
1.8
Total
2.8
4.0
5.0
Source: Foreign Private investment 2013
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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 and f oreign borrowing during 2013 and the respective outstanding stocks as at end of 2013. It presents also the situation of income, profitability and analysis of selected FPC indicators.
Foreign Private Capital is composed of Foreign Direct Investment (FDI), other investments and Portfolio investment. FDI are made of investments of non -residents in resident companies with a shareholding of at least 10% of the company’s total capital and debt from fellow (related) enterprises but excludes debt among related fi nancial intermediaries. Portfolio investment are tradable instruments and other investments which are borrowing 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 Capitals are of two main categories which are liabilities made of inward investment flows and stocks as well as assets made of outwards investments flows and stocks.
3.0.1 Foreign Private Capital attraction in Rwanda
Looking at the performances in terms of investment attraction and registration, fo r the last six years (2009 -2013), a total of 28 0 investments projects fully owned by foreign investors or in joint ventures with local investment has been registered with pledged investment value of US$ 2,526 million and planning to create 35,580 jobs.
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In 280 pledged projects, 151 are operational, 69 are in implementation phase, 22 have closed, while 38 remain committed to start their activities. The following table presents the pledged investments in value, number of projects and annual planned new jobs for the period of 2009- 2013.
Table3.11: New Foreign Private Investments registered (2009 – 2013)
2009
2010
2011
2012
2013
Number
46
41
60
74
59
Value($ million)
531.32
201.37
398.89
590.15
803.9
Jobs
3,748
3,971
5,553
17,498
3,810
Source: Rwanda Development Board, 2014.
Foreign Private Capital in Rwanda has been increasing overtime. In 2013, FPC inflows to Rwanda increased by 4.5 percent as it reached to US$ 427.7 million compared to $409.3 million recorded in 2012. They were dominated by FDI, amounting to US$ 257.6 million, and occupy 60.2 percent of total inflows, followed by other investments of US$ 168.4 million, accounting for 39.4 percent and portfolio investments of US$ 1.5 million. In 2011 with the starting of Rwanda Stock exchange, portfolio investments flows were particularly high ($ 87.3 USD) compared to other years as presented in figure 3.3.
In terms of stock, total foreign private capital increased by 26.6 percent reaching US$ 1,404 million in 2013 from US$ 1,109 million recorded in 2012 of which FDI amounting to US$ 837.7 million followed by other investments of US$ 477.1 million and portfolio investments of US$ 89.4 million.
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Figure3.3: Foreign Private Investment Inflows and Stock by 2013
Source: Foreign Private investment 2013
The flows of foreign private investments have been increasing over the years as presented in the table 3.12.
Table3.12: Foreign Private Investments Inflows by Category 2008-2012(US$ million)
INFLOWS
YEARS
2008
2009
2010
2011
2012
2013
FDI
66.9
103.3
250.5
119.1
255.0
257.6
PORTFOLIO
1.1
0.7
1.5
87.3
1.0
1.7
OTHER INVESTMENT
77.9
35.7
91.0
150.2
153.3
168.4
TOTAL
145.9
139.7
343.1
356.6
409.3
427.7
Source: Foreign Private investment 2013
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3.1 Foreign Private Investment by sector of economic activity
Considering foreign inflows by recipient sectors, 28.2 percent of total FPC in 2013 was channeled to Finance and insurance, followed by manufacturing with 24.8 percent, mining with 23.7 percent, and transportation with 9.2 percent and other sectors with 3.6 percent. The stock of foreig n investment in ICT accounted 40.7 percent with an amounted of US$ 455.7 million followed by finance and insurance accounting 20.0 percent with US $ 339.4 million and manufacturing with 18.4 percent which is equivalent to US$256.5 million.
Figure3.4: Foreign Private Investment Inflows and Stocks by Sector (US$ million), in 2013.
Source: Foreign Private investment 2013
3.2 Foreign Private Investment by country of origin
Most of the flows were mainly fr om Switzerland (US$ 96.0 million) followed by South Africa (US$ 45.5 million), Preferential Trade Area (US$ 44.6 million) and Canada (US$ 38.5 million) accounting for 52.5 percent of total FPC in 2013. The main recipient sectors of investments from Switzerland are mining and agriculture whereas for South Africa the main sector is manufacturing of other non-metallic mineral products.
21
In terms of stocks, Mauritius, South Africa, Kenya, Luxembourg, USA and Netherlands were leading accounting for 54.0 percent of the total stock. Mauritius is the largest investor as a host of many holding companies although the ultimate controlling companies are from different parts of the world. The census took into consideration only the immediate relationship (immediate investor). Beside countries of origin, loan from financial institutions such as Preferential Trade Area (PTA) and African Development Bank (ADB) were important with US$ 82.9 million in 2013. Sectors such as tourism, finance and insurance borrowed from these institutions.
Table3.13: Inflows and Stocks by Origin in 2013 (US$ million)
Source
Inflows
% Share
Country
Stock
% Share
Switzerland
96.01
22.4
Mauritius
212.71
15.1
South Africa
45.51
10.6
South Africa
162.59
11.6
PTA
44.62
10.4
Kenya
146.15
10.4
Canada
38.52
9.0
Luxembourg
81.67
5.8
Kenya
33.47
7.8
US
80.26
5.7
Mauritius
32.13
7.5
Netherlands
74.60
5.3
France
19.75
4.6
PTA
70.51
5.0
Uganda
14.58
3.4
UK
67.39
4.8
ADB
14.51
3.4
Libya
59.48
4.2
Tanzania
11.95
2.8
Germany
47.70
3.4
Netherlands
10.76
2.5
Canada
38.52
2.7
Others
65.91
15.4
Others
362.57
25.8
Total
427.72
100.0
Total
1,404.14
100.0
Source: Foreign Private investment 2013
With regard to foreign private capital stock by regional economic grouping, the European Union (EU) countries held the highest stock amounting to US$ 323.2 million (23.0 percent) up from US$ 318.8 million recorded in 2012 and dominated by investments from Luxembourg and Netherlands mostly in finance & insurance and in telecommunication sectors respectively. COMESA (Non- EAC) held US$ 272.2 million (21.8 percent) increasing from US$ 240.0 million in 2012 dominated by investments from Mauritius while OECD-Non EU had US$ 189.2 million (13.5 percent) up from US$ 135.9 million in 2012 coming mostly from USA and Switzerland. EAC had US$ 168.3 million (12.0 percent) up from US$ 139.7 million in 2012 and dominated by investments from Kenya.
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SADC (Non EAC & COMESA ) had US$ 167.4 million ( 11.9 percent) up from US $ 117.5 million in 2012. Stock of investment from international and regional organizations such as ADB, PTA and WB was US$ 146.7 million (10.5 percent). Asia accounted for US$ 47.7 million (4.1 percent) increasing from $ 43.3 million in 2012 . Other countries had US$89.4 (6.4 Percent) million from $ 46.5 million in 2012.
Figure3.5: Foreign Private Investment Stocks & Inflows by Region in 2013 (US$ million)
50.0 100.0 150.0 200.0 250.0 300.0 350.0 Stock Flows Source: Foreign Private investment 2013
3.3. Foreign Direct Investment
3.3.1. Foreign Direct Investment inflows and stock
Foreign direct investments are made of three categories: equity capital which is new investment in a company, loan from affiliates or from shareholders and retained earnings. In 2013, the FDI inflows increased from US$ 255.0 million in 2012 to US$257.6 million dominated by loans from shareholders of US$ 144.4 million representing 54.9 percent, equity capital of US$ 74.3 million accounting for 28.2 percent while retained earnings were US$44.2 million accounting for 1 6.9 percent. Flows of borrowing from affiliates in 2013 were US$144.4 million close to US$145.2 million received in 2012. Equity capital decreased from US$ 87.4 million in 2012 to US$ 74.2
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million registered in 2013. Retained earnings increased from US$ 22.0 million in 2012 to US$ 44.2 million in 2013.
Table3.14: Inflows and Stocks of FDI by Type 2011-2013(US$ million)
FDI Components
2011
2012
2013
Inflows
Stock
Inflows
Stock
Inflows
Stock
Equity capital
26.3
316.7
87.4
245.23
74.2
373.6
Loans
91.6
196.8
145.6
408.54
144.4
337.3
Retained earnings
1.2
31.9
22
61.73
44.2
126.67
Other changes
NA
-50.3
0
5.5
-5.4
0
Total
119.1
495.1
255.0
715.5
257.6
837.7
Source: Foreign Private investment 2013
3.3.2 Foreign Direct Investment Inflows and Stock by sector
In 2013, most of the Foreign Direct inflows were directed to Mining with US$ 99.3 million, Manufacturing sector with US$ 64.0 million and Finance & Insurance sector with US$ 38.0 million. In terms of stock, ICT dominated with US$ 340.6 million, followed by finance and insurance (US$ 167.3 million) and manufacturing (US$ 154.5 million).
Figure3.6: Foreign Direct Investment Inflows and Stocks by Sector in 2013 (US$ million)
Source: Foreign Private investment 2013