FDI industry in Rwandan-Free-Samples for Students-Myassignment

Question: You are required to make an FDI in an industry in Rwandan in Africa. Answer: Introduction With the increasing ramified economic changes and expanding use of business on international level, foreign direct investment use has been gaining momentum throughout the time. The foreign direct policy is the process of investment by the company in the overseas market. The FDI can be invested in energy, tourism and new technology. There are several countries that have used these FDI policies to strengthen their foreign exchange and valuing their money supply effectively. FDI in Rwanda has increased throughout the time due to its liberal FDI policies and easy remittances in other countries. Many big companies such as GE capital, BHP Billiton and Coal have been selling their goods and services in this country with a view to expand their business around the globe. The foreign investor who wants to invest in the country can invest as much amount they want to invest in particular company. In this report, FDI in electricity industry has been taken into consideration There are several joint ventures and strategic alliance through which Rwanda has increased its FDI investment and resulted to increase the efficiency to improve in the business activity. The telecommunication, energy and tourism are those sectors which highly developed time to time and growth rate of this constantly in high position. Rwanda continuously developed their all sector of business industries and also improves their payment systems. There are various numbers of opportunities for the company in foreign direct investment to develop their industry sector for future competition. Present description of company (The Great Lake Energy) Great Lake Energy is an enterprise which was established by Sam Dorgan in 2005. Its main headquarter is in Kigali, Rwanda and deals primarily with the markets of East Africa. This company provide electricity to many NGO, hospitals, schools and much other institution. Presently, company designed solar system with the optimized version. Earlier, the company has trained local entrepreneur to deal in Africa and has also encouraged local engineer to install these system. With Sun King Lamps it provides solution of lightening in rural areas. In 2014, Great Lake Energy combines with Global Bright Foundation to provide help refugee in Africa The Great lack energy company has been used to establish strategic alliance for the FDI investment in Rwanda. The development growth of the Rwanda continuously grows high. There are many developments boards are established in Rwanda that provide facility for fast investment. These types of board give the better opportunity to the investor to easiest route for foreign direct investment. Only few formalities are require performing and any foreign company can easily make investment in other business industries. There may be some hurdles or difficulties in understanding the procedure foreign direct investment. Foreign Direct Investment is change time to time with some amendments. Partners of The Great lack Energy Company With the increased growth of Rwanda and ramified economic growth, various organizations are making investment in Rwanda special economic zone. It is evaluated that government of Rwanda has been providing several benefits to organizations who invested their capital in this special economic zone such as low amount of tariff and traits, reduced tax burden, low level of financial assistance and support in research and development department. The Great lack energy company has entered into strategic alliance with NGO and other rural institutions. With the help of this strategic alliance, The Great lack Energy Company indulged in providing extensive energy consulting solutions and providing best benefits energy to peoples on domestic and international level. The main reason behind entering into this strategic alliance is related to the high capital investment of The Great lack energy company and intellectual property of these NGO and other rural institutions in the grasp market share. It wi ll help all these partners to create synergy in market. Partnership with these rural institutions and NGO by The Great lack Energy Company will bring following benefits Service contract with these institutions will ensure effective system functioning and implementing proper functioning. Arranging technical team to install new mechanism in special economic zone of Rwanda. Increased output and increment in domestic market share. The Great lack Energy Company has established joint ventures with these NGO and other rural institutions with a view to increase its productivity and increased market share Special economic zone of Rwanda It refers to geographically specified and physically determined secured area which is administrated by single body of regulatory body of special economic zone of Rwanda. It gives several benefits to organizations who set up their business units in this area with a view to promote and motivate their business functioning (Mustapha, Aun and Akanbi, 2017). Reason behind investing in Rwanda Rwandan government also provides some learning procedure to understand the process of foreign direct investment. These initiatives may help the investor to educate himself and be aware of the regulations provided by the Rwandan government. The interest of business in other country to expand the business or making good profit may lead business industries to foreign direct investment. The wider benefit which Rwandan business industries are getting from the close African countries. There are many workers are opportunity of employment very well available to the people but there is lack of professional workers. There are many steps are taken by the government to improve the investment policy in the country. There should be some liability imposes to the industries which can lead their business to wrong way or on illegal way. Punishment and penalty for violation of law must be imposing to the business industries. The investigation by the government on the working of the foreign company shou ld be updated time to time. This type of action can give better implementation of Foreign Direct Investment. The economic growth of the Rwandan enjoys the benefit of foreign direct investment. Small domestic market is also having good benefit of this polices. New investor who wants to invest in the desire business can register itself with board. This may take few minutes to register the investor. In supermarket industry has been taken into consideration to evaluate whether the supermarket industry could increase the value of investment by 20% The Rwanda development board plays an important role regarding the foreign investment policy in the country. The good thing of policies of Rwanda is that there is equal treatment for all the companies and no system of partiality is going in the development board. The normal required approval must be avail and the particular certificate regarding such approval provided to the investor. Regulations made regarding the improvement of foreign direct policy must be updated timely that may not contain any irregularity in this behalf. This type of all policies and regulations are made for the growth of the international business expansion. There is no hard difference in treatment between foreign and domestic company except initial capital to register the business. All which the board is the transparency in the business transaction between the foreign and domestic countries. The foreign exchange policy is also developing in this way which gives support to the foreign direct investment. There are many foreign exchange fund transfer agencies are available like Western Union which provide the better and low cost facility of fund transfer. The payments are also transfer and can be remitted through schedule commercial banks. Settlement of dispute can also be managed. Ideally, FDI in Rwanda has increased due to increased business functioning, establishment of various businesses and strategic alliance, Rwanda has created special economic zone for its investment and increased level of business in supermarket business in Rwanda. Rwanda Special Economic Zone: It is a special economic zone which is governed by single body. In this zone, rules and regulation are more liberal and easy for business to operate within easily. In this zone, several incentives are also available with the business. It facilitate land for small and large scale industry, reliable and quality infrastructure .the main aim of this zone is to developed regulatory infrastructure and investment that will help in developing world class economic zone. Viability of making investments in Rwanda (SEZ) by Great Lake Energy The main reasons are discussed as below: Energy: Rwanda main source of energy is biomass which is available in abundance account for 83% and other sources of energy available are hydropower, thermal and methane gas which help in targeting 90% of electricity. As this renewable energy present in abundance so the company can utilize this energy to produce power projects. The government of Rwanda is bound to partner with the investor in providing generous incentive and liberal policies and support this power generation producer so that they can diversify energy sources by domestic source of energy and phasing out fossil fuel generation. To set growth rate from 110MW to 563MW. Foreign Direct Investment: Due to political stability and main focus on the business climate which lead to massive increase in the stock of FDI. Due to low man power force, high operating cost and poor infrastructure are the reason which reduces the foreign investment in this zone. Lastly, the government is providing liberal and economic policy for the business. Infrastructure: New railway lines have been introduced in this zone due to which it became easier to carry goods from one place to another. The government is lot more project which to be completed till 2018 for conducting business in more efficient manner. In country most of transportation is based on roads around 90% for that government have built national paved roads which are good condition. A world class airport have been planned in this zone which will not only provide extra capacity for passenger and for cargo shipment but still some further development are planned which include water transportation , bypass roads , ring roads and rapid bus transportation. Thus rail, air and logistic are on the developing process which can lead to profitable investment in future. Technology: This can be the fastest growing sector in this zone among all the African countries. The government had tied up with many telecom companies to enable the services as fast as possible. Rwanda is one fastest internet provider among the African countries. Mobile- cellular phone subscriber has increased in recent years with a high growth rate. Networking system and software development is growing rapidly and also exporting their services. Government is focusing more on developing skill development and for that it had set up new Universities. There are opportunities in many sectors in this zone are internet data centres, business process outsourcing, e- waste management. Tax revenue: Government have increased revenue on taxes through expanded tax base which in turn reduces the balance deficit. The government had reduced the taxes on natural resources which help the company to provide services at low cost and advances state capacity which in turn strengthens the democracy of the country. Although tax extraction is necessary for any country to fulfil its basic function. Certain compulsory transfers such as fine, social contribution and penalties have been denied (Kivyiro and Arminen, 2015). Labour market: Rwanda is offering highly efficient and excellent workforce of labour which help the company to get their work done easily without much difficulties. Rwanda is working on its skill to provide technically qualified workforce. To enhance this skill government is setting up new centre at graduation level and increased capacity for knowledge based industry. Robust governance: Government has a clear view about growth through private investment. Stable government with well -functioning institution, proper rules and regulation followed in country and no place for corruption. The policies for private investment should be economic and liberal. Financial services: A large group of total population follows formal financial system in Rwanda. The sector in this zone remains liquid to sustain profitable growth. The interest rate relatively stable than any other African countries. It tries to reduce balance of payment deficit. Banks in Rwanda holds a dominant place in the financial sector of this zone. Around 66.3% of the total asset is with the bank, thus regulate the financial market. Insurance sector is continuously growing in this market and showing profitable growth rate year after year. KCB is the largest regional bank at present in Rwanda. Export and Import: Rwanda is a rural country with most of people is engaged in farming. It mainly exports coffee and tea but showing massive improvement in energy sector but Rwanda is dominated by import for its local needs. The large enterprises are engaged producing soaps, wheelbarrow, plastic pipes, water bottles, cement, shoes, soft drinks, textile and roofing material (Cassimon, Verbeke and Verpoorten, 2016). Tourism: Tourism is the fastest growing economic sector in this zone which helps the country in leading in Foreign Direct Investment. Revenue from tourism sector contributing a major amount in the total revenue of the country but there are two countries which can be visited safely (Kivyiro and Arminen, 2015). Market access: Although the market in Rwanda has shown remarkable improvement in its area but still the traders are bearing the cost of both import and export. For that the Government is trying to increase market access through reducing trade barrier and linking producer to market. Growth in GDP: The country has set his vision to achieve a remarkable growth in GDP of the country. It has set his target to achieve GDP to $1240 till 2020 for the private sector and export. For this the government has planned Seven Year Government programmed which aim to achieve ambitious range of target in the economy. Although, it is challenging target with middle income status population but several programmed, policies and several other plans have been formulated by the government to achieve this growth rate. At present, the progress has been good but still the target remains challenging (Steenbergen and Sen, 2017). Credit Expansion: Presently, there is a low level of investment in private sector which can be extended by providing credit to the private sector still there lack of instrument for providing credit to the company but the Government has planned several credit expansion programmed so that the bank can grant long size loan , longer repayment period and with reasonable interest rate Further the Government has decided to finance not only to large enterprise but also to the medium scale enterprise. Credit expansion will help the country to bring about stability in the market (Hakizimana, 2015). Better regulation: There has been a remarkable work done to improve the regulatory environment but still there are some areas which need to be upgrade. Better taxation and insolvency laws, better concession in key areas such as electricity, mining and other important sectors. The Government of Rwanda is trying to ensure that the regulation for private sector is fair and transparent but still there are some laws which create hurdle in the operation of the enterprises. Such laws needs to be reviewed with a regular time period (Kelly, 2016) Education: Education sector has been a matter of concern in Rwanda but now the literacy rate is reaching to its high level which is 71% in 2009, up from 58% in 1991.Rwanda ensure that the population has a highest literacy rate. The firms are identifying large percentage of unskilled workforce but due to work place training and environment have overcome these problem. The Government has implemented certain programmed which will help to increase internship and apprenticeship in private sector (Nkomo, 2015). Healthcare: Healthcare is historically of poor quality in Rwanda but now Rwanda is supported by UNICEF but has change the entire scenario. Now around 96 % of the total population is covered by health insurance (Cavusgil, Rammal, and Freeman, 2011). Strategic factors and investing viability by The Great Energy lack company After evaluating all the factors and strategic compliance of the FDI policies and regulations of company in Rwanda, it could be inferred that FDI investment in this country has increased by 20% since last 5 years. However, increased level of FDI in Rwanda has several drawbacks which could destruct its business in determined approach. For instance, if Rwanda consistently makes its policies liberal and inclined towards FDI investment by other corporations then its domestic market players will have to face high competition. It is true to say that people in Rwanda is more inclined towards buying imported goods which has high quality and easily available in market. However, at one point of time, it will increase the overall national income of Rwanda but on the other side, it will destruct the business market and its production on the national level. It is evaluated that FDI can be very useful term for the short time but it will also destruct the business in long run. For instance. If FDI is increased in Rwanda then it will destruct the domestic business. For instance, in clothing industry, it will destruct the domestic business players who are selling their products in market (Ndagijimana, 2015). People in Rwanda are more inclined towards buying goods and services from the international players. The main impact of FDI in Rwanda could be seen by evaluating the increasing GDP growth and increased national income. The main positive impact of FDI is related to Rwanda that has set his vision to achieve a remarkable growth in GDP of the country After evaluating the GDP growth of company due to increased level of FDI it is considered that FDI of country would be $1240 till 2020. It will not only impact the private sector and export of the country but also decrees the unemployment rate and negative impact on economic of business. At present, the progress has been good but still the target remains challenging in Rwanda. In addition to this, FDI in Rwanda has allowed various organizations to influence the political policies and measures very drastically. It reflects the negative impact on the business functioning of domestic players. However, government of Rwanda has planned its policies and import regulations in such a way which could reduce the negative impact of foreign investors on domestic organization. It could be evaluated that domestic players has to lower down their products prices and have to sell their products below lower than marginal cost. These level of business functioning has shown that if Rwanda wants to grow its GDP on international level then it will have to liberalise its FDI investment. However, to the certain level, it will strengthen its value of money but in long run economic of Rwanda will be totally dependent upon this big organization. After evaluating the secondary data, it is considered that various big countries such as Indonesia, Russia and China had faced recession due to high flow of FDI in their country. The main negat ive impact of high FDI inflow is considered due to its influence on government policies and regulations. For instance, if big organizations make high amount of investment in particular country then they would better want to influence the government policies and business regulations as per their choice and wants. According to the business ethics, these organization should not be allowed to hamper other business organization otherwise it will destruct the equilibrium in all the domestic and international organizations (Cook and Mitchell, 2014). Rivals of The Great lack Energy Company in Rwanda The Great lack Energy Company is not the first company that invested capital in SEZ of Rwanda. The main rival of The Great lack Energy Company in Rwanda is GE capital LG and IBM. It has been evaluated that due to the increased improvement of GE capital and IBM in Rwanda, there is high improvement in electricity production. In mobile communication sector, the positive impact has seen with the increased use of 4G technologies which will surely increase the living standard of people in Rwanda. It is considered that in Rwanda, there is remarkable work done to improve the regulatory environment but with the deficiency to make improvement in some areas. What these rivals are doing in Special economic zone of Rwanda These rivals GE capital and IBM in Rwanda are indulged in generating electricity and developing new contents in research and development department. It is observed that these business organizations are indulged in providing the generating services and entered into strategic alliance with several small local business units to sell its electricity to local business units in market. How The Great lack Energy Company is leading in Rwanda The great lack energy company is leading in Rwanda through its cost leadership. It has developed effective cost leadership strategy in its business with a view to create core competency in Rwanda and international market. The main reason behind success of the great lack energy company is related to following a shorter span of work for generating electricity in special economic zone of Rwanda for its people. Company has also observed various other benefits which is offered by Rwanda government throughout the time. The Great Lakes Energy company is the leading company in the energy busienss sector in Rwanda Distributors of The Great Energy lack Company The main distributors of The Great Energy lack Company are EDF Energy Gas suppliers that indulged in providing and supplying its energy stocks on domestic and international level with the assistance of other organizations in Rwanda. . After evaluating the secondary data, it is considered that Rwanda government has planned Seven Year Government programmed which aim to achieve ambitious range of target in the economy (Stevens and Newenham?Kahindi, 2017). Although, it is challenging target with middle income status population but several programmed, policies and several other plans have been formulated by the government to achieve this growth rate. Growth perspective of Rwanda It is evaluated that if FDI in Rwanda is allowed with no restrictions then it will enhance the banking sector outcomes and infrastructure in Rwanda. It is evaluated that Rwanda has increased its GDP growth by 10% since last five years. This has increased due to its increased national income and reduction in employment (Okafor, Piesse and Webster, 2015). . It is considered that better taxation and insolvency laws, better concession in key areas such as electricity, mining and other important sectors will increase the GDP rate of country. The Government of Rwanda has put emphasis upon strengthening its FDI policies by implementing tough compliance and regulation for private sector to increase the transparent. In addition to this, government of Rwanda has also indulged in improving its FDI compliance on regular intervals after considering its FDI laws and regulations in context with domestic player. Education sector in Rwanda has shown increased literacy rate is 69% in 2009, up from 58% in 1991. In addition this, it has increased the employment rate due to the increased business units establishments. The Government has implemented certain programmed which will help to increase internship and apprenticeship in private sector. Risk and other factors Developing countries and countries which are under constant growth can take most of the benefit from the FDI policies. The FDI policy of the company decides the upward growth of the domestic economy. The overall effect of the FDI policy depends on the micro and macro-economic growth (Andrei and Andrei, 2016). The FDI policy should be well documented provided benefit to host country. The policies made by the Rwandan government come to important challenges when such regulations are not easily accumulated. Huge inflows of investment receive by the African continent. Factors which will be calculate for the investment is the natural resources of the African countries (S. Tamer Cavusgil). The government of Rwanda established many fast track projects to help the foreign investor by getting or proving various guidelines on this behalf. There are many agencies which are liable to regulate and implement the FDI policies provided by the Rwanda government. There are many inconsistency rises in t he tax and duties which are the challenge faces by the business industries in Rwanda. There is no statutory limit stated by the Rwanda government in the holding of the investment. Many laws governed by the Rwanda government are to give proper facility in international business (Knutsson, 2017). The Rwanda government offers many incentives to the investor in taxes and duties. The taxes rates fix by the Rwanda government are in the favor of the investor to increase the favorable market in the domestic market. The government also taking many steps to develop the human capital of the Rwanda government by involves the foreign technology without any restriction. The Rwanda government also has not force IT professionals to store their data in Rwanda. The local as well as foreign investor can establish their business in any form they think deemed fit. The constitution of the Rwanda also made in this behalf that every person has right of private property. The right of personal property canno t violate by the government of Rwanda. The law of the country also gives benefit of purchase and sale of the private property by the foreign enterprises. The law regarding intellectual property is made for easy interaction to the international market. The government of Rwanda gives the transparency policy and good governance to the business. The credit facility in the Rwanda may also have many laws. The stability of government may also have one of the good reasons for investing in the country. The new investment in the country may improve the business climate of market (Callixte and Werdler, 2017). The main risk of the great energy lack company face is related to external political changing factors Negative impact of FDI in Rwanda Foreign direct investment in Rwanda has allowed various big corporations to set up their business units in Rwanda special economic zones. After evaluating the secondary data, it is considered that these big organizations such as Reliance, GE capital and other business have influenced government policies and regulations in effective manner (Bijaoui, 2017). These regulations have been mould as per the instructions of these big organizations so that they could increase their productivity and outcomes in effective manner. However, in long run, it will surely put negative impact on the economics of country. For instance, if increased FDI is allowed then it will surely destruct the budgetary functions and legal compliance process of country. Another concerned about FDI is related to environmental impact, especially in other than SEZ. These increased organizations will destruct the use of natural resources and it will result to low sustainability of environment in Rwanda. However, due to in creased FDI and increased number of business units in Rwanda, social health of people in Rwanda has gone down but now Rwanda is supported by UNICEF but has change the entire scenario. Now around 96 % of the total population is covered by health insurance (Pacheco-Lopez, 2014). Strategy which the green lack energy company follows Cost cutting strategy has been developed so that the company can enter the market without many difficulties. These strategies will not only help the upcoming exporter but will also help the support growth rate, product line diversification and value addition of existing trader Conclusion After evaluating all the data and information on FDI in supermarket industry of Rwanda, it is considered that Rwandan government has indulged in providing several learning procedure to understand the process of foreign direct investment for organizations and its political parties to overcome its negative impacts on its economy. These initiatives may help the investor and policy makers to educate themselves and be aware of the regulations provided by the Rwandan government. The interest of business in other country to expand the business or making good profit may lead business industries to foreign direct investment. Now in the end, it could be inferred that only in short term FDI in Rwanda could provide high benefits to country but in long run it will destruct the countrys sustainability and environment at large References Andrei, D. and Andrei, L.C., 2016. World FDI, An Unequal Partners and Concentric Circles Design, Part VIII When and Where Capital Scarcity. Studying Africa. Its Regions and Countries. Bijaoui, I., 2017. International Trade and FDI. InMultinational Interest Development in Africa(pp. 3-28). Springer International Publishing. Callixte, K. and Werdler, K., 2017. Work In Progress: The Role Of Higher Education In Post-Conflict Tourism Development, A Case Study From Rwanda.ARA: Revista de Investigacin en Turismo,4(1). Cassimon, D., Verbeke, K. and Verpoorten, M., 2016. FDI from a financing for developmentperspective. Opportunities for Africas Great Lakes Region.Reflets et perspectives de la vie conomique,55(1), pp.29-46. 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