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Foreign Direct Investment Analysis In Rwanda

FDI in Figures

Although FDI stocks have increased in recent years due to Rwanda's political stability and measures focused on improving the business climate, FDI flows still remain rather weak. The political instability of its neighbouring country, the Democratic Republic of the Congo, has had an impact on the entire Great Lakes region and has played a negative role in Rwanda's FDI inflows.

The country's low level of human resources, poor quality of its infrastructure, landlocked position, high operating costs, limited natural resources and the political instability of the region are some of the factors that limit the potential attractiveness of the country. Nevertheless, Rwanda has many assets: a substantial reserve of methane gas, a yet-to-be explored mining potential in expansion and a reputation of being one of the least corrupt countries in Africa. Lastly, the Government has continued to develop liberal policies to make Rwanda a trade and services hub. This strategy has obtained real success as shown by the significant reduction of its bureaucratic procedures (according to the World Bank, there are only two administrative procedures to follow and three days required for a new company to start its activities). The institution is very positive regarding the business climate of Rwanda. In its Doing Business 2016 classification, the World Bank ranks Rwanda 62nd (out of 189 economies). Even though this ranking signifies a significant decline when compared the the previous year, it is nevertheless the second highest ranked country in the Sub-Saharan Africa after Mauritius.

In May 2015, Rwanda launched a new investment code aimed at attracting FDI into tourism, energy and new technologies. FDI inflows are thus expected to reach USD 1.5 billion a year. Among these measures, foreign investors will no longer be required to invest a minimum of USD 100,000. The introduction of this code was written in line with the government development programme 'Vision 2020', which aims to significantly improve the business climate. In August 2015, Rwanda hosted the China-Africa Business Forum, which in turn attracted many investors. In February 2016, the Rwandan Government reported it had signed a mining agreement for a project with the Tri Metals Mining Group for USD 39 million.

Coffee, tea, tin, energy and telecommunications are some of the traditionally targeted sectors for foreign investment. In 2012, the Government and the American company Visa Inc. signed a contract for the development of electronic financial services, opening the door to new future investments in this sector. Rwanda has since continued to develop its technology sector; the country has highly developed demonetised payment systems. China, Indonesia and Germany are the main investing countries. In early 2016, the Rwandan Development Board (RDB) signed an agreement with Thomson Reuters to support further innovation within the country. China, Indonesia, and Germany are the main investors.

Foreign Direct Investment Analysis In Rwanda

Tax Rates

Value-Added Tax (VAT): 18%
Company Tax : 30% of the taxable profits
Withholding Taxes Dividends: 15%, Interests: 15%, Royalties: 15%.
Social Security Contributions Paid By Employers:  5%

Foreign Direct Investment Analysis In Rwanda

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