Publication:
Rwanda Economic Update, June 2023: Inclusiveness of Foreign Direct Investment in Rwanda

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dc.contributor.authorWorld Bank
dc.date.accessioned2023-07-11T15:38:35Z
dc.date.available2023-07-11T15:38:35Z
dc.date.issued2023-07-11
dc.description.abstractThe Rwanda Economic Update No. 21 reviews the country’s macroeconomic performance and prospects and includes a special section focusing on the impact of foreign direct investment (FDI) on the domestic economy. After growing by 8.2 percent in 2022, Real GDP expanded by 9.2 percent in the first quarter of 2023. However, this growth momentum may have been halted by disastrous flooding and landslides from the recent rains. Inflation has eased but remained well above the National Bank of Rwanda (NBR) target range in the first half of 2023, despite a tightening of monetary policy since January 2022. Rwanda’s current account deficit improved in 2022, with higher export revenues and remittances outweighing rising import prices. The fiscal deficit narrowed in FY2022-23 thanks to a large decline in public spending, and strong growth which combined to reduce Rwanda’s debt as a share of GDP. Prospects for continued high growth are good, and the fiscal and debt positions are expected to improve over the next few years. The special topic emphasizes the large size of FDI inflows, encouraged by a favorable regulatory environment and improvements in governance. FDI in Rwanda appears to generate significant employment benefits, both in terms of job creation by FDI firms and related increases in hiring by domestic firms. FDI firms also appear to have strong linkages with local firms, particularly domestic suppliers, and tend to provide higher-quality jobs than domestic firms, in terms of access to social security. However, forecasts of the volume of inflows and of employment provided when registering with the Rwanda Development Board turned out to be highly optimistic, raising concerns on both limits on FDI firms and the potential for misrepresentation to gain access to incentives. FDI projects tend to be concentrated in Kigali and surrounding districts, which have much lower poverty rates than the national average, and in general there is a negative association between the level of poverty and FDI inflows. Policies to improve the impact of FDI on inclusiveness could involve encouraging FDI projects in poorer districts, promoting greater participation by women and youths, enhancing corporate social responsibility initiatives, strengthening the monitoring and ex post performance assessment of FDI, improving linkages between FDI projects and domestic suppliers, and encouraging the home country of investors to enforce mandatory standards that enhance the sustainability and inclusivity of FDI.en
dc.identifierhttp://documents.worldbank.org/curated/en/099070923155527476/P17745709838710d3087f70cae21a865046
dc.identifier.doi10.1596/39975
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/39975
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesEdition No.21
dc.rightsCC BY-NC 3.0 IGO
dc.rights.holderWorld Bank Group
dc.rights.urihttps://creativecommons.org/licenses/by-nc/3.0/igo
dc.subjectMACROECONOMY
dc.subjectFOREIGN DIRECT INVESTMENT
dc.subjectFDI
dc.subjectGDP
dc.subjectJOB CREATION
dc.titleRwanda Economic Update, June 2023en
dc.title.subtitleInclusiveness of Foreign Direct Investment in Rwandaen
dc.typeReport
dspace.entity.typePublication
okr.crossref.titleRwanda Economic Update, June 2023: Inclusiveness of Foreign Direct Investment in Rwanda
okr.date.disclosure2023-07-11
okr.date.lastmodified2023-07-09T00:00:00Zen
okr.doctypeEconomic & Sector Work
okr.doctypeEconomic & Sector Work::Economic Updates and Modeling
okr.docurlhttp://documents.worldbank.org/curated/en/099070923155527476/P17745709838710d3087f70cae21a865046
okr.guid099070923155527476
okr.identifier.docmidP177457-983871c1-8122-4fd3-87f7-cae21a865046
okr.identifier.doihttp://dx.doi.org/10.1596/39975
okr.identifier.externaldocumentum34114365
okr.identifier.internaldocumentum34114365
okr.identifier.report183898
okr.import.id1051
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099070923155527476/pdf/P17745709838710d3087f70cae21a865046.pdfen
okr.region.administrativeEastern and Southern Africa
okr.region.countryRwanda
okr.sectorCentral Government (Central Agencies)
okr.themeInclusive Growth,Job Creation,Trade Facilitation,Economic Policy,Public Finance Management,Economic Growth and Planning,Fiscal Policy,Regional Integration,Private Sector Development,Public Sector Management,Jobs,Trade,Public Assets and Investment Management,Public Expenditure Policy,Public Administration,Debt Management,Macroeconomic & Structural Policy Modelling,Public Expenditure Management
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.topicInternational Economics and Trade::Foreign Direct Investment
okr.unitEFI-AFR1-MTI-MacroFiscal-1 (EAEM1)
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