The paper "PESTEL Analysis for Rwanda" is a perfect example of a business case study. In order to make the business possible for companies to operate in Rwanda, the SEZ provides numerous incentives to the domestic and international companies that operate within the SEZs. Among other incentives that are provided by the government of Rwanda include liberal and simplified economic regulations. The companies operating within the SEZs are given the tax reforms that allow them to compete favorably. Political Factors The government of Rwanda have provided a conducive environment for business with the security and infrastructure promised High level of political stability with well-functioning institutions No toleration to corruption Economic Factors A favorable economic growth of 8.8% annually Lower and stable inflation and interests rates The purchasing pow of the Rwandese is lower or high-end products Social Factors Limited skilled population A lower population of about 11 million Rwandese The social structure is well-established The purchasing power is relatively lower Technological Factors The technology level in Rwanda is very low The internet access is low averaging 13% in 2014 The Internet networks are based on 3G network No world-class technology in Rwanda and most will be imported No technical know-how in Rwanda and the skills technical skills are imported Legal Factors Favorable legal environment provided in Special Economic Zones Conducive infrastructure guaranteed in the SEZs but it is not yet developed fully Safety regulations are not extreme but established on global standards Employment laws require international companies to import top-level skills as they embark on training domestic workers Environmental Factors Already provided land for the manufacturing firms with little environmental concerns like nearness to residence The SEZs have the government addressing environmental issues Requirements on the processing of waste for the general waste treatment system Incentives to Enter Rwanda Special Economic Zone All products are treated as exports to allow the companies to have better terms.
Other incentives are physical including guarantees on reliable utilities that include power, water and sanitation (RDB, 2015). There are also storage and warehousing facilities. The ICT infrastructure is also developed by the government as incentives. The government also undertook to provide office space to the organizations that will set their business at the SEZs. The other incentives include the setting up of onsite and offsite roads as well as links to airports and main roads (Kisambira, 2014).
For the infrastructure developed by private individuals and companies, they are absorbed by the government of Rwanda after a given time to facilitate the maintenance (Beaumont, 2010). The environmental concern incentives are also provided with the government providing facilities for waste management. The firms are only required to provide the waste processing. Their overall ease of doing business has been improved in Rwanda especially in the SEZs to encourage more business and the slots created for the firms are almost under pressure now. Current Foreign Investment in Rwanda The Foreign Direct Investment in Rwanda has increased in recent years because of political stability and measures the country has taken to improve the business climate.
Nevertheless, the FDI figures remain low partially because of the political instability of the neighbors like the Democratic Republic of the Congo and Burundi. The low level of human resources, poor quality of infrastructure, high operating cost, landlocked state, high operating costs, limited natural resources and social characteristics of the Rwanda demography also have played a role in limiting the level of foreign direct investment. However, the government has played a big role in improving liberal policies and making Rwanda a trade and services hub.
In 2015, the country launched a new investment code that was meant to attract Direct Foreign Investment in tourism, technology, and energy. In these changes, the investors will not be allowed to invest a minimum of $100,000 to gain access to the industry. In 2015, the country also hosted the China-Africa Business Forum and this was used to boost the foreign direct investment. Other major economic reforms and the government deals with foreign private companies continued to grow in the year 2016 and this helped grow the foreign investment in Rwanda.
As a result of these decisions by the government, the foreign direct investment in Rwanda has shown encouraging growth. The foreign direct investment (FDI) Inward Flow grew from $258 in 2013 to $459 M in 2014, to $471M in 2015. The FDI Stock was $837.7M, $1,152.3M, and $1,183.3M in the years 2013, 2014, and 2015 respectively.