International Journal of Science and Research (IJSR)

International Journal of Science and Research (IJSR)
www.ijsr.net | Most Trusted Research Journal Since Year 2012

ISSN: 2319-7064

Research Paper | Finance | Rwanda | Volume 8 Issue 1, January 2019

Effect of Foreign Direct Investments on the Performance of the Renewable Energy Sector in Rwanda - A Case of Mobisol

Salvator Mbarushimana, Dr. Patrick Mulyungi

Over the past two decades after the Genocide Rwandan economy has enjoyed several developments in terms of infrastructure and policies as well as experts relocating in Rwanda and corporations interested in expanding operations in Rwanda. Foreign Direct Investment has become an area of concern to many developing nations due to the economic benefits it presents to the host nation. The role played by real estate sector in the economy has become critical especially in emerging economies. As the property market around the world is experiencing a bubble, developments in FDI has ensured the real estate market has remained strong with the demand for middle to high income housing remaining steady. This study sought to establish the effect of FDI on the performance of the energy sector in Rwanda. A case of MOBISOL Rwanda Ltd. The specific objectives of the study were; to examine the extent to which corporate governance elements, political governance, trade openness, market size, exchange rate, and inflation determine performance in the energy sector in Rwanda. The study adopted a descriptive research design. The target population were 112 employees of MOBISOL which has with significant foreign ownership in Rwanda. A sample size of 88 respondents were obtained for study using stratified random sampling. The statistical tools of analysis that were used for descriptive data were the arithmetic mean and the standard deviation while the statistical tools of analysis used for inferential statistics were Pearsons product moment correlation and stepwise regression to find correlations among the explanatory variables. F-tests were used to test the hypotheses in the study. Tests of statistical assumptions was carried out before data analysis to avoid invalidation of statistical analysis. The Statistical Package for Social Sciences Version 21 software was used to facilitate data analysis. Descriptive statistics and inferential statistics were used in the analysis. Descriptive statistics was encompassing frequencies, percentages, means and standard deviations. Inferential statistics took the form of Spearman rank correlation coefficient and multiple regression. The results of the analyses were presented in tables. The findings indicated that FDI inflows amount to 0.979 units holding another factors constant. Subsequently, a unit increase in inflation rates decreases performance of renewable energy by 0.521 units. Furthermore, it was not significant at 5 % level using the p-value. Equally, a unit increase in exchange rates increases FDI inflow by 0.30 units. A unit increase in corporate governance increases performance of renewable energy by 0.082 units as per expectation. Furthermore, it was significant as its p value was greater than 0.05. Political governance as similar to corporate governance increases performance of renewable energy by 0.137. This is also as per expectation. Additionally, it was significant as its p value was greater than 5 %. Any unit increase in market size increases performance of renewable energy by 0.07 units and it was significant using the p value. Lastly, trade openness as expected increased performance of renewable energy by 0.071 units. It was also significant using the p value which is greater than 5 %. It was also recommended that a combination of traditional determinants of FDI and Institutional determinants should be considered when formulating policies to appeal to investors to invest into the country. The energy industry and its stakeholders in Rwanda should ensure that they put in place good governance practices in place to appeal to foreign investment. Due to the difficulty of studying cognitive constructs the researcher recommends further research to be carried out on determinants of FDIs and verify if they actually started their own business or not.

Keywords: Corporate governance, Performance, Renewable energy, Rwanda

Edition: Volume 8 Issue 1, January 2019

Pages: 1276 - 1282


How to Cite this Article?

Salvator Mbarushimana, Dr. Patrick Mulyungi, "Effect of Foreign Direct Investments on the Performance of the Renewable Energy Sector in Rwanda - A Case of Mobisol", International Journal of Science and Research (IJSR), https://www.ijsr.net/search_index_results_paperid.php?id=ART20194537, Volume 8 Issue 1, January 2019, 1276 - 1282

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