RDB: How the pandemic affected foreign investment flows into Rwanda

Rwanda faced a significant decrease in foreign investments in 2020, registering investments worth $1.3 billion, which was a 47.1% drop from the $2.4 billion recorded in 2019. The impact of the COVID-19 pandemic on the global economy was the primary reason for this decline in investment flows. Zephanie Niyonkuru, Deputy CEO at the Rwanda Development Board, shed light on the challenges and strategies being implemented to overcome the hurdles caused by the pandemic. While the pandemic continues to be a limiting factor, Rwanda aims to create more jobs and bolster the economy by focusing on recovery measures and boosting local investments. This article dives into the key points discussed in the interview and provides an overview of Rwanda's investment landscape in the face of the global health crisis. Zephanie Niyonkuru emphasized that the private sector investments in Rwanda took a hit in 2020 due to the pandemic's impact on the global economy. The registered investments dropped to $1.3 billion from $2.4 billion in 2019. The pandemic had disrupted various sectors, leading to a reduction in the number of projects and investments coming into the country. Industries like real estate, construction, and manufacturing were significantly affected, contributing to the overall decline in investment activities. Despite the challenges, Rwanda has been working closely with the private sector to mitigate the impact and restore confidence in the investment environment. Foreign Direct Investments (FDIs) played a crucial role in Rwanda's investment landscape, accounting for 51% of the total investments in 2020, up from 37% in 2019. The increase in FDIs was attributed to various factors, including the disruptions caused by the pandemic, travel restrictions, and lockdown measures. Sectors such as tourism, hospitality, and gaming were among the hardest hit, affecting investment activities in these areas. Rwanda has been focusing on creating conducive policies and incentives to attract foreign investors and stimulate economic growth. The government's efforts to support key sectors like manufacturing and construction aim to drive investment inflows and create new job opportunities. In response to the challenges posed by the pandemic, Rwanda has been adapting its investment policies to support the private sector and drive economic recovery. Initiatives like the Economic Recovery Fund, valued at $100 million, aim to provide financial support and access to capital for businesses in sectors like tourism and manufacturing. Additionally, the Manufacturing Recovery Fund offers incentives to encourage private sector investments in key industries. By fostering partnerships between local and foreign investors, Rwanda aims to enhance technology transfer and knowledge sharing to boost local investments and stimulate economic growth. Looking ahead to 2021, Rwanda anticipates continued challenges due to the ongoing pandemic but remains optimistic about the prospects for increased investments and job creation. While full recovery to pre-pandemic levels may be a gradual process, Rwanda's focus on resilience, innovation, and collaboration with the private sector bodes well for the future. As vaccination programs are implemented and economic activities resume, Rwanda aims to build back stronger, leveraging its strategic initiatives to attract investments and drive sustainable growth in the post-pandemic era.