Foreign_Private_Capital_Rwanda_2013.pdf

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Table3.21: Economic regional comparisons in FDI Return on Equity 2011-2013 (percent) Years 2011 2012 2013 Rwanda 19.5 20.6 16.1 World 6.9 7.6 6.8 Source: World Investment Report, 2013

3.9. Private Sector External Debt 2013

Private Sector External Debt (PSED) is the amount of 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 owed to non -residents by private residents of an economy (IM F Debt Guide, 2009). Private sector external debt flows and stocks are made of borrowing from aff iliates included in FDI and from non-affiliates included in other investments as well as debt securities.

3.9.1. Private Sector External Debt inflows 2013

Disbursements of the Private Sector External Debt (PSED) in 2013 amounted to US$ 312.9 million fro m US$ 363.1 million in 2012, a decrease of 13.8 percent as 2012 recorded huge inflows of debts in mining and tourism sectors . Debt inflows from related companies included in foreign direct in vestments totaled US$ 144.4 million. These flows came from fellow or parent companies abroad.

Debt inflows from unrelated sources were US$ 168.4 million in 2013 against US$ 218.0 million recorded in 2012. The debt from non -affiliates represents 53.8 percent of total debt from abroad
in 2013. The repayment of principal w as US$ 119.6 million in 2013 of which 79.4 % repaid to foreign affiliates.

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Table3.22: Private Sector External Debt flows 2012 – 2013 (US$ million) Type
Maturity Disbursement
Repayment

2012 2013 2012 2013 AFFILIATES
145.1 144.4 34.1 95.0 Loans
LT
131.4 130.2 31.1 90.5 ST
13.7 14.2 3.1 4.5 NON AFFILIATES
218.0 168.4 156.4 24.6 Loans
LT
88.7 153.6 40.5 13.5 ST
0.0 3.6 0.0

Trade Credits
ST
62.9 11.2 57.9 11.1 Other
LT
1.7 0.0

TOTAL
363.1 312.9 190.5 119.6 Of which:
LT
221.8 283.8 71.6 104.0 ST
141.3 29.0 118.9 15.6 Source: Foreign Private investment 2013

3.9.2. Private Sector External Debt stocks 2013

Private Sector External Debt (PSED) stock includes both long and short term borrowing from affiliates (FDI related borrowing) and non-affiliates (non-related entities abroad). Private sector external debts are largely in form of loans, trade credits, debt securities and other accounts payable.

In this section, the stock of PSED is presented and analyzed according to type, maturity and relationship. According to the census, the Private Sector External Debt (PSED) stock has been increasing since 2010, standing at US$ 814.5 million end 2013 increasing by 31.1 percent compared to end 2012.

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Table3.23: Private Sector External Debt stocks 2010-2013 (US$ million)
Type
STOCKS

2010 2011 2012 2013 AFFILIATES 136.0 177.0 287.9 337.3 Loans LT 121.0 160.0 260.3 300.03

ST 15.0 16.9 27.6 37.32 NON AFFILIATES 162.1 243.7 333.3 477.11 Loans LT 146.6 228.6 295.5 435.52

ST 0.1 0.2 3.3 6.94 Trade Credits ST 15.3 14.4 28.1 28.18 Other LT 0.1 0.5 6.4 6.47 TOTAL 298.1 420.7 621.2 814.5 Of which: LT 283.0 403.5 553.7 742.02

ST 15.1 17.2 39.5 72.44 Source: Foreign Private investment 2013

3.9.3 Private Sector External Debt Stock by Maturity and Type

In 2013, 92.2 percent of the stock of PSED were in form of long term borrowing while 7.8 percent was short term borrowing, same trend as in 2012 where 93.3 percent of stock of PSED was long term and 6.7 percent was short-term. Loans, (excluding trade credits and others made of employee stocks options, custody accounts or administered funds, outstanding franchise fees, and other claims) amounted to US$ 760.2 million, representing 97.5 percent of the overall debt stock and dominated by loan from affiliates with share of 57.6 percent while trade credits represented 3.2 percent and others (employee stocks options, custody accounts or administered funds, outstanding franchise fees, and other claims ) accounted for 1.6 percent.

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3.9.4 Private sector external debt inflows by credit type

Globally, the inflows of PSED end of 2013 were largely from non -affiliates amounting to US$ 168.4 million, a proportion of .54.0 perc ent of the total PSED inflows. Debt from affiliates was almost the same as of last year with US$ 145.1 million recorded in 2012 to US$ 144.4 million in 2013.

Figure3.8: Private sector external debt inflows by relationships (US$ million)

Source: Foreign Private investment 2013

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CHAPTER FOUR CONCLUSION

The foreign private capital results revealed that, foreign private investments in Rwanda continued to grow and provide a drive for sustained economic gro wth. In 2013, private sector foreign liabilities inflows to Rwanda increased by 4.5 percent to US$ 427.7 million from US$409.3 million recorded in 2012 , indicating increased attraction of foreign investments from abroad. The Rwandan FDI profitability expre ssed in rate of return on equity continues to be above the world average of 6.8 percent and among the highest in the world with 16.1 percent in 2013.

In 2013, foreign private capital inflows into Rwanda were dominated by foreign direct investment inflows (60 percent) and characterized by high retained earnings. The level of other investments inflows remained more or less the same as in 2012. In terms of country of origin, most of the flows were mainly from 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 and investing mostly in finance and insurance as well as in manufacturing sectors accounting 53.0 percent of total inflows.

In addition, the retained earnings contribution to FDI which stood at 15.0 percent in 2013 and the FDI rate of return of 16.1 percent give an indication of increased investors’ confidence and investment opportunities in the country. It is therefore recommended to continue with efforts to improve investment climate further so that investors can gain higher returns and reinvest. The measures being taken in the area of reducing cost of doing business are in line with the objective of encouraging new investments and re-investment of earnings need to be strengthened Also, he efforts need to aim at expanding investment opportunities and promote diversification.

The country needs to continue sustain the achievements registered in the attraction an d retention of private investments. As way forward, the results of this study should be used as an indication of foreign private investment sectorial performance and as an evaluation tool of current interventions as well as the design of new policies and p rograms focusing on priority investment

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issues. They also should be used in the Balance of Payments and International Investment Position to improve the country’s external sector statistics.

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REFERENCES

Aswath D. (2007), Return on Capital (ROC), Return on Invested Capital (ROIC) and Return on Equity (ROE): Measurement and Implications, Stern School of Business. Business Monitor International (2011), Emerging markets monitor, World Bank, Washington,USA.
Competitiveness Report (2014). Based on average ranking; United Nations Publications, Switzerland. Caves, R.E. (1982), “Multinational Enterprises and Economic Analysis”, Cambridge
University Press, Cambridge and New York International Monetary Fund (2009). Balance of payments, manual sixth edition, Washington, USA. International Monetary Fund (2012). World economic outlook, Washington, USA. National Bank of Rwanda (2012). Annual report 2011, Kigali, Rwanda. National Bank of Rwanda (2013). Annual report 2012, Kigali, Rwanda. National Bank of Rwanda (2012). Foreign Private Investment and Investor’s perception 2011 report, Kigali, Rwanda. The World Bank (2011). Doing business 2012 The World Bank (2012). Doing business 2013 World Bank (2013). Doing Business’ Rankings 2012 & 2013, World Economic Forum Global 11.

World Bank (2014). Doing Business’ Rankings 2013- 2014, World Economic Forum Global 11.

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ANNEXES

Annex 1: Rwanda Working Group on Foreign Private Investment Monitoring and Analysis

Coordination 1.BAJIJI Innocent, Manager aftercare and facilitation, RDB 2.MANZI Sebastien, Director of Economic Statistics Unit, NISR. 3.MWITIREHE Viviane, Director Statistics Department, BNR.

Team leader NTIRUSHWAMABOKO Dominique, BNR Technical team

1. KAVUTSE Emmanuel, RDB
2. MPAYIMANA Fabien, NISR
3. MUHORAKEYE Josephine, RDB
4. NIKUZE Alice, RDB
5. KABATESI Lucie, RDB
6. UWINGENEYE Joyeuse, RDB
7. MUTABARUKA Pierre Andre, RD
8. MUHOZA Modeste, RDB
9. MUYUMBU Innocent, RDB
10. NDWANIYE Desire, BNR
11. SHYAKA Chris Picton, RDB

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Annex 2: Foreign Private Capital Stock and Inflows by source in 2013 (US$ Million) Source Stock Inflows Austria 10.4 10.4 African Development Bank 17.6 14.5 Australia
3.9 0.3 Belgium 4.7 6.3 Botswana 0.8 0.8 Burundi
2.1 2.1 Canada 38.5 38.5 China (mainland only) People`s Republic of
5.9 5.9 Congo, Democratic Republic of 0.2 0.3 Cyprus 25.8 2.0 Denmark 0.0 0.1 Ethiopia
0.0 0.0 European Investment Bank (EIB) 5.1 6.0 Export Import Bank (EXIM) 21.6

France 9.8 19.7 Germany
47.7 3.8 Ghana
0.3 Hong Kong
8.0 India
13.7 3.1 UIFN
9.5 Israel
0.7 Italy and Vatican City
2.2 0.3 Kenya 146.1 33.5 Lebanon
0.9 0.1 Libya
59.5 0.5 Luxembourg
81.7 0.1 Madagascar
0.0 Malaysia 10.1 Mauritius
212.7 32.1 Netherlands 74.6 10.8 Nigeria
27.0 4.0 Norway 2.0 0.1 Others 43.3 1.0 Panama
4.6 0.7 Preferential Trade Area (PTA) 70.5 44.6 Romania 0.0 Senegal
0.1 South Africa 162.6 45.5

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Swaziland 0.7 0.7 Sweden
24.6 Switzerland
38.1 96.0 Seychelles 2.9 3.0 Tanzania 22.0 12.0 Togo
15.7 1.1 Uganda 19.9 14.6 United Arab Emirates
8.3 0.3 United Kingdom
67.4 6.6 US 80.3 6.3 Zambia 0.0 0.0 Zimbabwe 0.0 0.0 Total 1,404.14 427.72

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Annex3: Questionnaire

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Foreign Private Investments Census 2014 (Covering period 2013)

Please help us monitor economic development and formulate better policies

June 2014

2

Foreign Private Investment Census 2014

Dear Investor

The Government of Rwanda is conducting an enterprise census to obtain data on foreign assets, liabilities, and investor perceptions on the investment climate in Rwanda. The census is undertaken jointly by the National Bank of Rwanda, National Institute of Statistics of Rwanda, Rwanda Development Board and Private Sector Federation are officially empowered to collect this data. Your cooperation in completing this census questionnaire is highly appreciated.

Why do we need to collect this information and how do you benefit? The collected information will be used in national, regional and international economic analysis for investment promoti on and facilitation. The information you provide is essential for foreign exchange, debt and reserve management, and for enhancement of economic growth, maintenance of price and financial system stability, and improving the ease of doing business in Rwanda.

Completing the Questionnaire Given the importance of this exercise, we would appreciate the Director of Finance or Chief accountant fill the Foreign Assets and Liabilities part and the perception part be completed by the Chef Executive Officer. Do no t hesitate to contact us if you have any difficulty completing the questionnaire our contacts are provided below. Please attach your financial statements for the year ended December 2013 . Our staff will be visiting you and we would be most grateful if you would provide them with your cooperation. We would appreciate the filled in questionnaire to be ready within ten (10) days from the date of delivery.

Mandate and Confidentiality The National Institute of Statistics of Rwanda under the Law n 009/2005 of 14/07/ 2005, The National Bank of Rwanda under the Law n 055/2007 of 30/11/2007 and Rwanda Development Agency under the organic Law n053/2008 of 02/09/ 2008 mandate the implementation of this exercise . The information you supply will be kept strictly confident ial and will be used for statistical and policy purposes only. Publication will only be in aggregate form. As a way of promoting dialogue we will share with you the results of this census in aggregate form and seek your further involvement.

THANK YOU FOR YOUR COOPERATION

FPI 2013 CONFIDENTIAL 3

Guidelines and Definitions

Who needs to complete this questionnaire? The Chief Executive Officer, Chief Finance Officer or a representative shall fill the questionnaire.

2. Do you need assistance?

Our interviewers are available for guidance on how to complete this questionnaire. In addition, the following offices are open for any inquiries;

Names Institution Telephone E-mail address Director of Statistics BNR 0788309163 [email protected] Director of economic statistics NISR 0788762655 [email protected] Head of Investment promotion and Implementation division RDB 0785498616

[email protected]

Part 1 Should be completed by ALL respondents.

3. Reporting period

This questionnaire requests for stock data on a calendar year basis (i.e., from 1st January to 31st December) for Parts 1 – 4 and transactions within the calendar year 2013. If your entity’s financial statements are prepared on any other financial year basis other than on the calendar year, please take one of the following steps. If you produce: Quarterly or semi-annual accounts please consolidate these so that the data you submit is consistent with the specific period requested for. 4. Currency of reporting Please provide data in Rwandan Francs (RWF).

Units of Reporting Please report all data in actual amounts (to the last unit). For example, enter six million eight hundred eighty two thousand seven hundred forty one as 6,882,741 (and not as 6.283m). Please report all data in units.