Rwanda saw it’s foreign direct investments (FDIs) increase in 2014 despite a decline in the region, which was sparked off by insecurities in South Sudan and terrorist attacks in Kenya.

According to the International Monetary Fund, Rwanda’s actual investments last year were estimated at Rwf195.6 billion ($268 million) compared with Rwf184.9 billion ($258 million) in 2013.

This year, the IMF is projecting to see an increase in FDIs to a total Rwf205 billion ($281 million).

However, the IMF said that Rwanda is not performing at its full potential.

“The country faces a number of challenges, such as the high cost of transportation (although this has been coming down over the past year), cost of electricity, and the relatively small size of the market,” said Mitra Farahbakash, IMF country representative.

With over 10 million people in Rwanda, the country has one of the smallest populations and its purchasing power among the lowest compared with its regional counterparts.

In terms of transport costs, Rwanda is a landlocked country, which has to export and import goods through the ports of Mombasa and Dar es Salaam at a high cost although most of the non-tariff barriers have been removed.

However, Ms Farahbakash, said that despite all the challenges, Rwanda will continue to attract more FDIs because of market opportunities, natural resources and by accelerating regional integration.       

However, the IMF figures, which show increasing FDIs for Rwanda, contradict an Ernst and Young attractiveness survey 2015, which shows that all the countries in the region registered a decline in FDIs last year.

According to the Ernst and Young survey, the region attracted 11.6 per cent fewer projects.

FDI into East Africa’s largest economy, Kenya, reduced in 2014, after growing by more than 30 per cent a year since 2007.

Ongoing security problems and conflicts in Kenya and South Sudan have proved to be a concern, but investors are likely to remain interested in the region.