Skip to main content

The Possibilities and Obstacles of Foreign Direct Investment in Rwanda


It is worth to state that, foreign direct investment is very important for a country to develop Rwanda included, different opportunities and challenges are observed in Rwanda concerning the FDIs of which one can list the following:

 

Among the possibilities of getting the foreign direct investments in Rwanda includes, access to markets, FDI can be an effective way for foreign companies to enter into Rwandan market. Some countries may extremely limit foreign company access to their domestic markets. Acquiring or starting a business in the market is a means for you to gain access. But in Rwanda foreign markets are facilitated to enter the market.

 

Access to resources, FDI is also an effective way for you to acquire important natural resources, such as precious metals and stones than can be found on different sites in Rwanda.

Reduction in cost of production for foreign companies, FDI is a means for foreign companies to reduce their cost of production as the labor market is cheaper and the regulations are less restrictive in the target foreign market.

 

For foreign direct investors the government of Rwanda have made easy for them the ways for investing including the reduction of number of days in which the businesses are registered, the reduction of taxes mainly in industrial sector production, reduction of the cost of electricity mainly for industries and etc.

 

However there are still obstacles for foreign direct investment including; entry of large giants may leading to the displacement of local businesses as they can’t withstand with the cheap and large scale production of large companies.

 

Repatriation of profits if the firms do not reinvest profits back into the in Rwanda country. This will lead to large capital outflows from Rwanda.

 

The government of Rwanda is very sensitive on the matters of pollution, so many industries are hindered to invest because of the tough rules and regulations concerning environment in Rwanda.

 

The risk for inflation to rise in Rwanda is also another obstacle which makes the government of Rwanda though encouraging the FDIs, is sometimes set to put on some barriers as to prevent the rise in inflation in Rwanda through different tools including the fiscal and monetary policies and these of which may end up discouraging the foreign direct investors.

 

Less skilled labor or scarce human resources is also another challenge with hinders the foreign direct investors where this makes it difficult for them to find skilled labor and end up with high cost of production in the sake of finding skilled and professional human resources.

 

The covid-19 pandemic is also another problem that stagnate the FDI's in Rwanda as many investors are worried about their investments, due to the restrictions regarding the safety measures and the economic activity which has dramatically slowed down, this is a challenge as many businesses are closing and foreign investors are becoming reticent towards investing in Rwanda.

 

However, the recovery fund introduced by the government of Rwanda has brought an new wind of hope as this fund is sustain small, medium and large business so that they can stand still during the pandemic and way after and this is expected to rebuild the economy of Rwanda as it has been deeply affected by the pandemic

 

To sum up, the FDIs in Rwanda have plenty of opportunities to succeed though the obstacles are also there and present but despite those challenges Rwanda remains a good hub for investments.

 

References;

 

1.   https://santandertrade.com/foreign investment in Rwanda

2.   https://data.worldbank.org/ foreign direct investment, net inflows(%of GDP)-Rwanda

3.   https://rdb.rw// foreign private capital in Rwanda report

Labels:

Comments

Post a Comment

Popular posts from this blog

Rising from the Shadows: How the World's Poorest Nations Can Rewrite Their Economic Future

  Most often we economists are very often studying the poorest countries in the world not simply to analyze grimy statistics but to find ways by which these countries could embark on paths toward transformation. Think about it for a second: Burundi, South Sudan, Somalia, Central African Republic, Niger, Chad, Mali, Yemen, Burkina Faso, and Sierra Leone-all have held the title of "poorest," though with so much potential and resources lying under their feet. They stand at the threshold of transformation, notwithstanding that heavy burden of poverty, political instability, and infrastructure deficits. By reinventing their economies and leveraging even modest strengths, these countries can break free from the chains of poverty. What helps knit them together is their shared heritage of turmoil: political turbulence, continuing conflict, and economic precariousness have been nothing short of traveling companions. The resulting turbulence discourages foreign investment, disrupts e...
Post a Comment
Read more

When Employees Go to Court: Lessons for Rwanda's Accounting Sector

  The auditing profession thrives on the trust, reputation, and expertise of its human resources. The current research topic was brought to light through an incisive paper, entitled "When Employees Go to Court: Employee Lawsuits and Talent Acquisition in Audit Offices," that appeared in the Journal of Accounting Research and a collaboration between authors Jade Huayu Chen. Whereas this study investigates U.S.-based firms, it would seem there is much herein for teachings that may relate to what transpires in Rwanda's emerging accounting industry. Chen's study addresses the impact of employee lawsuits on audit offices. The findings indicate that these incidents damage an office's reputation and diminish its ability to attract superior professionals. An employee lawsuit, often filed for reasons such as wage disputes, discrimination, or wrongful termination, serves as an information intermediary reflecting inadequate workplace culture and mismanagement. It means, stud...
Post a Comment
Read more

Can the Global South ever escape the debt trap? The economist's view

  With the heavy debt burdens that the Global South faces, questions of economic sovereignty and equitable growth have gained increased urgency. Both the present-day global financial architecture and trade orientation provide significant barriers but also potential opportunities for these countries to break out of their debt crises. Here, this paper discusses ways through which the Global South could surmount such challenges with concrete examples that might illustrate possible pathways. The Challenge of Debt in the Global South The accumulation of debt in the Global South is no doubt linked to structural issues such as dependence on commodity exports, reliance on foreign financing, and exposure to external shocks like fluctuating exchange rates or a rise in global interest rates. The global financial architecture, dominated by institutions like the IMF and World Bank, often conditions loans on structural adjustment policies, which are then implemented with austerity measures...
Post a Comment
Read more