Ibu5Ibe International Business And Accounting Assessment Answers

1.A statement of the scope and opportunity of the investment.  Reason out why the specific host country was chosen as compared to so many other countries for the specific industry/product? This needs to be evidence based (E.g.: Industry MPI).
2.PESTLIED analysis and summary findings.  Provide the country risks from the perspective of the specific industry. Please note this is for the specific industry in the country and based on evidence (use relevant references).
3.Industry/Competitor analysis
4.Suggested mode of entry and an assessment of its appropriateness for entering the chosen market
5.Risk management considerations

Answer:

Introduction:

The focus of the report is to analyse the scope of investment in the special economic zone in Rwanda of Africa and the assessment of risk of investing in this country. Rwanda is a small African country suffered from genocide, loss of life during 1994, which caused a shrink in GDP and discouraged foreign investment in this country. Moreover the country is agriculture based economy with less industrialisation. As per 2014 data, only 14.8% of GDP is shared by manufacturing sector (McCarthy 2015). Major manufacturing products produced in this country are cement, soap, furniture, textiles, cigarettes, shoes and other small scale beverages. Mining industry is an important part of the manufacturing industry. Foreign investment in the economy decreased after 2000s recession (intracen.org 2017). However, after 2007, the country started to develop in different service based industry and has been able to create required environment to attract foreign direct investment (Esiara 2014).

Special Economic Zone has been established in Rwanda to espouse the manufacturing sector with the objective of higher growth rate for the economy. SEZ is defined as geographically determined and physically connected area regulated by a single body, which offers certain incentives including being more progressive and untangling economic regulations for business to physically situate and managing it (minagri.gov.rw 2016). SEZ law in Rwanda was enacted in 2011. SEZ has been designed in Rwanda to remove constraints faced by the domestic private sector and to take facilities such as accessibility of industrial and commercial land, energy at low cost, transport linkages, market access, reduced bureaucracy and other facilities (rdb.rw 2017).  The Kigali SEZ has been founded by the merger of Kigali Free Trade Zone and Kigali Industrial Park projects. This SEZ is developed in two phases where the first one is 98 hectares of land and second one is 178 hectares of land with the facility of electricity, water, sewage, fire fighting system, easing operating system for the investors.

SEZ has been designed in Rwanda to encourage investors to make greater investment in the country and to help in the growth of the domestic and regional economy. Kigali SEZ provides ample scope for the investors including domestic and foreign companies to experience the high profitability and growth of the economy. Kigali SEZ has scope for heavy and light manufacturing industries, large scale plants, commercial wholesalers, chemical industry, pharmacy and warehousing (Aggarwal, Siddiqaliali and Kumar 2012). The scope for Rwanda Foam Ltd for investing in Rwanda is discussed below:

Rwanda is experiencing 8.8% growth rate since 2005with moderate inflation and exchange rate. Rwanda has been recognised as the second best global reformer in the World as per 2013 Doing Business Report published by World Bank (intracen.org 2017). Investment friendly environment with less stringent business rules and special facilities are helpful for fostering manufacturing and service industries in Rwanda. Another opportunity of the SEZ is access of greater market of East Africa, which is integrated with east Africa Common market (Booth and Golooba-Mutebi 2012). Investors can avail more investment opportunities after completion of all phases of SEZ under construction. The possible opportunities are infrastructure in terms of rail, air transport facility, and value added service from the growth of the agricultural sector, facility of ICT Park to be constructed, use of renewable energy such as hydro power, methane gas and off grid generation and other financial service (Giokos and Parke 2016). All these facilities would help Rwanda Foam Ltd to do business in the special economic zone with ease.  

Rwanda is the fastest growing country in the continent of Africa. This is a prospective nation for business investment as government has successfully provided the infrastructure, environment friendly regulations, SEZ despite facing numerous socio economic challenges. Rwanda is a country, which has internet penetration Developing an attitude towards the growth of the manufacturing business is attracting to the investors (minagri.gov.rw 2012). Investment in the country is profitable to Rwanda Foam Ltd as it can get access to the African common market. Central vision of this country is inclusive development and implementation of the financial decentralisation policy. Investors like Rwanda Foam Ltd can utilize the investment benefits by investing in the special economic zone of Rwanda.

PESTLIED analysis and country risks 

PESTLIED analysis includes international and demographic factors along with political, legal, social, economic, environmental and technological factors that can influence the business operation. Country risk is associated with the economic, political and business risks that an investor may face, while making decision of investing in a country. Although Rwanda Foam Ltd is a domestic firm, this company also has to face the above mentioned risks while investing in the SEZ of Rwanda.

• Politicalenvironment

Political instability is a major concern for any investors. As stated by Bright, (2016), political stability helps to formulate and implement any policy taken for long term benefits of the economy. Any investment also has no direct impact on the economy. It takes long period to experience the outcome. Therefore, investment in an economy is greatly influenced by the political stability. Rwanda is a country of east central Africa and suffered from genocide during mid 1990s. However, political environment of this country has been stable since the election of President Paul Kalama in 2000 till 2017 (bbc.com 2017). Paul Kagame is visionary leader, who has been leading the country for 17 years to reach the economy to a high growth path and to bring political and economic stability in the country. Since last twenty years, rule of law, democracy, transparency, effectiveness of government intervention in the economy and fight against corruption has been improved remarkably (Mutabazi 2015). Therefore, political risk for Rwanda Foam Ltd to operate in Rwanda SEZ is likely to be less.

• Economic environment

As pointed out by World Economic Forum, Rwanda is recognised as one of the fastest growing economy of central Africa. GDP growth rate of this country has been around 8% during 2001-14. During 2015, growth rate of Rwanda was 6.9%. Main contributing sector to the growth of the country is manufacturing, construction, services and agriculture.  However, although poverty has been fallen since 2001 to 45% in 2010, more than 60% people are still live under poverty (weforum.org 2017). Life expectancy, enrolment in primary school and healthcare services has been improved notably. Another remarkable movement taken by this country is the approach of gender equality.  

Rwanda is the country, where 64% parliamentarians are women. Moreover, woman has landownership in this country. As reviewed by World Bank, strategic goals for economic development of this country are economic transformation, rural development, productivity and youth employment and accountable governance (worldbank.org 2017). However, as stated by Manson (2015), there are some development challenges in Rwanda that can be detrimental for Rwanda Foam Ltd to invest in this country. Private sector in this country is mainly informal. Investment in the country is difficult due to lack of proper infrastructure. The country needs to achieve many more such as access of electricity, proper infrastructure. Nevertheless, development of Special economic zone and export processing zone may be helpful to remove these challenges for the private business players of the economy. Current invest rate in this country is 25% of GDP, which needs to be increased. Rwanda is presently vulnerable to fluctuations of foreign aid (Binagwaho et al. 2014).

• Social factors

Rwanda met most of the Millennium Development Goal by 2015 set by United Nations for socio economic development of a country. Although poverty level in this country is high in this country, standard of living has been improved substantially. Child mortality in this country has dropped by two third. Gini coefficient of this has decreased from 0.49 in 2011 to 0.45 in 2014, which indicates reduction in income and social inequality. Investment of Rwanda Foam Ltd can create positive impact on economy by generation of direct employment or through backward- forward linkages (rwandapedia.rw. 2012).

• Technological factors

Rwanda has dramatically improved technologically despite having negative impact of genocide. Kigali is the main region of technological development of this country. Low internet penetration is a key challenge for the company (rdb.rw 2017). Only 13% people in Rwanda use online mobile service as per 2015 data. However as stated by Bright (2016), there is ample scope for the development of technology and growth of the sector such as ecommerce, e-services, mobile technology.  Giokos and Parke (2016) pointed out that Rwanda has recently launched innovation hub Fablab to aggravate tech activities. Government has introduced new cashless bus payment system in the capital city Kigali. Therefore, it can be assessed that overall initiatives of the country in order to promote technological development is prospective. However, more initiatives need to be taken for the development of other sectors.

• Legal factors

Rwanda follows the common law as followed by other African countries. However, recently Rwanda is focusing to adopt new laws to develop efficient business tools. In order to attract more investment in the economy, this country shifted from civil law to the common law. Modern common law is based on the Mauritian law, which is based on the English law. The characteristic of the modern common law is the trust, insolvency set off and security interest. This law protects the company against insolvency and provides security for the investors. This law protects creditor on insolvency. Security interest is floating covering all the future and present assets (businessprocedures.rdb.rw 2017).

• Environmental factor

Rwanda is resource scarce country. Therefore, the county faces challenges due to increasing population and pressure on the natural resources with the expansion of the economy. Land degradation, soil erosion, decline in soil fertility are major environmental challenges of this country. As major population in this country lives under severe poverty, environmental degradation has impact on the poorest section of the population and on their food security (Araya, Schwartz and Andres 2013). Manufacturing sector has the responsibility to use environment friendly raw material, techniques. Resource management, waste reduction, product recycling are now growing concern among the business corporations worldwide. Government of Rwanda has taken the policy to reduce pressure on natural resources and conservation of bio diversity as 2020 vision (Balinda, 2014).

• International factors

Manufacturing sector of Rwanda is dominated by import substitution products. Manufacturing sector in this economy consists only 16% of the total GDP. In order to save small domestic industries, government adopted import substitution policy that is stopping import from foreign country and producing the same product in home country. Tourism sector in this country has been a leading sector for earning foreign exchange. However, total value of export from Rwanda during 2015 was US$579 million and import value during the same period was $1858 million indication current account deficit (worldbank.org 2017). Major import partner of the country are China, Uganda, India, Kenya and unite Arab Emirates. Major export partner of Rwanda are Congo, Kenya, Switzerland, UAE and United States. Trade relations are an important determinant of the political relationship between countries (rwandapedia.rw 2013). Any economic instability or fluctuations in business cycle are likely to affect the economy of Rwanda. Low skilled labour is challenge for the economy to improve production of the export sector.

• Demographic factors

Share of manufacturing product in the GDP of Rwanda is small and but grows at an average rate of 7% per annum. Demand for manufacturing products such as consumer goods including mattresses and beddings are increasing both in domestic and international market. 3 main service provided by Rwanda Foam Ltd is mattress fabrication, cushion fabrication and pillow fabrication. Therefore, demand for these products depends on the income and taste, preferences of the households (Amanor 2014). As Rwanda can access a greater market of East African Community, where the population is 143.5 million, it can avail the additional demand from the member countries. The products supplied by Rwanda Foam Ltd are normal product, these products are price elastic. Any small change in the price shifts the demand for the product significantly towards other existing competitors in the market (Kissel 2013).  

The PESTLIED analysis is summarised in the following way. Political environment of Rwanda is quiet stable, which is supportive for investors. Rwanda Foam Ltd can take long term policy to operate in Special Economic Zone of Rwanda for the growth of the company as well as the regional and national growth. Economic condition is also prospective with the growth rate of 6.9% in 2015. Despite having several challenges Rwanda has developed itself as one of the fastest growing economy in the World. Although 45% population in this country live under poverty, social deprivation has been reduced significantly since 1990s and poverty rate has been reduced. Major problem of this country is skilled labour and capital scarcity. Capital investment is required to get out of poverty trap and for economic development. Rate of industrialisation is also slow in this country. Therefore, scope of employment has not been developed much. However the effort of build up the special economic zone in this country is really appreciable to help private companies and generation of employment.

Common Law is followed in Rwanda to take advantage of the African common market. The country has improved in technology to facilitate service and manufacturing sector by setting up the innovation hub Fablab. It has been highlighted in the analysis that the demand for manufacturing consumer goods is high. Among international factor, increase in import creates pressure on the current account of the country. Over dependence on foreign aid is another major concern. Therefore, direct investment in SEZ may change the economic status of Rwanda.

Country risks is consists of economic, political and business risk. Investment in an economy like Rwanda is prospectus as Rwanda government has shown a positive attitude towards investment in this economy. One country risk is less political freedom a large amount of public debt such as 37.3% of GDP. Due to lack of capital formation within nation, the country needs to depend heavily on public debt. Therefore, as per suggestion of Matsuura et al. (2014), developing saving behaviour and attitude is required for internal capital formation. Another risk as highlighted by Bullough et al. (2012), this country is exposed to the geopolitical tension of the Great Lakes Region which may have negative impact on the political situation of this economy. As explained by Augustin et al (2012), infrastructure is required for any investment to be effective. Government has undertaken several policies for penetrating technology in wider scale top benefit all the sectors.

Current account deficit is a major concern for this economy. Current account balance is -7.2% of the GDP indicating deficit. As import is increasing at a greater rate compared to export, price in the domestic economy is likely to rise. Inflation may rise. As the Rwanda is mainly agriculture based economy, main export products are agro based. Price of agro products are less than the manufacturing or other industrial products. Therefore, terms of trade are not in favour of this country during international trade (Holden 2012). Therefore, proportion of manufacturing products needs to be expanded during international trade with developed countries.  

As published in the global competitiveness index report 2016-17, Rwanda ranks at 52^nd position improving from 58^th position during previous year. As per report, Rwanda scores highest among Sub Sahara African countries in terms of labour market efficiency (weforum.org 2016). Labour market efficiency makes investment less risky as there is little gap between labour demand and supply in the economy. Rwanda has developed in infrastructure, institutions and education in past two years (rwandapedia.rw 2012). World Economic Forum has classified economic development into five stages, where stage 1 is efficiency driven economies. Second stage is transition from stage 1 to efficiency driven economies. The third stage is turning into economies that are driven by efficiency (Rostowska 2013). Fourth stage is transition from stage 2 to stage 3 followed by fifth stage of turning into innovation driven economies. The report of WEF has stated Rwanda as factor driven economy.

As discussed by Kelley, Singer and Herrington (2012), factor driven economies compete based on their factor endowment in the economy. In the view of Tuomi (2012), as theses economies become more competitive, productivity increases along with rise in wage and the countries move to the second stage of efficiency driven. Rwanda is still backward in terms of education and skilled work force. However, it can be said that the country can grow up of future skilled workforce as Rwanda government has taken initiatives to invest in education sector.

Another risk for investing in this country is smaller market size. However, any firm investing in this economy can get access of the common market of Africa. Therefore, this risk is no greater in this area. Main problematic area needs to be considered while taking decision to invest in this economy is that inadequate skilled labour force, tax rate, insufficient capacity to innovate, poor work ethics, foreign currency regulations and government bureaucracy (Nash and Ngabitsinze 2014).

Mattress manufacturing industry in Rwanda is becoming competitive over the years. Rwanda Foam is existing company in Rwanda. However, potential competitors in the African market are Kigali Foam, Viva Foam, Afri Foam, flex Foam. Afri Foam and Flex foam has already started operation in the Kigali Free trade zone, whereas Viva Foam, the Tanzanian mattress maker is opening factory in the Kigali Free Trade Zone to start operation.

It can be analysed from the above information that competition in the Rwandan mattress market is increasing and that may be a concern for Rwanda Foam Ltd. The rival firms, which have already invested in the Kigali SEZ, are likely to use all facilities to produce quality products. One facility that the rival firms can use is to access the market of Congo and Barundi and the demand from those markets. As highlighted by Esiara (2013), one possible consequence of increasing competition is increasing pressure on Rwanda Foam Ltd and that may result into price war. Consumers will be benefitted by this competition in the form of decreasing price of mattresses and bedding. As analysed by Abu-Saifa (2012), price of a product falls with the increase in supply of the product in the market.

Market share of Rwanda Foam Ltd would shrink with the entry of greater number of firm in this SEZ. Competition with the firms operating in Kigali SAZ would be fair, as all the firms would get same economic and business advantages. Demand for imported Mattresses is increasing in Rwanda. Therefore, quality in terms of density has been an important factor along with price of the mattresses in Rwanda and corresponding African market (Papadopoulos, Hamzaoui-Essoussi and El Banna 2016)

Entry in the Special Economic Zone of Kigali is easy after several reforms has been undertaken by government. The investor needs to follow some steps in order to get license to operate in this zone. Primarily seventeen steps are needed to follow including purchasing land, environmental impact assessment, construction permit, occupational permit, obtaining SEZ user license (Amorós, Fernánde and Tapia 2012). The required steps are following:

Purchasing land from the developer

• Obtaining an appointment with the developer to visit the zone and to identify the land that will be purchased
• Leasing land from the developer

Environmental impact assessment

• Creation of an account and submission of EIA application
• Site visit
• Obtaining notification that EIA is necessary
• Obtaining EIA study report
• Submitting EIA study report
• Obtaining electronic copy of the EIA certificate
• Obtaining EIA certificate and sign condition of approval

Construction permit

• Payment of fees for construction permit
• Submitting request for construction permit
• Obtaining construction permit

Occupational permit

• Application for occupational permit
• Site verification
• Obtaining permit

Application for SEZ user license

• Application for user license and payment of fees
• Obtaining license

The Rwandan Government has focused on development induced by the private sector to achieve middle-income status by 2020 with the objective to reduce reliance on foreign aid. Binagwaho et al. (2014) mentioned that it is better to have investment rather than aid. Direct investment within economy from either foreign or domestic private firm is beneficial for the economy due to having backward or forward linkages, which can expand other related sectors of the economy. Direct investment in manufacturing sector benefits other industries such as agriculture and service industry (rwandapedia.rw. 2012). Agricultural products are used as a raw material of the manufacturing sector. Moreover, demand for food products increases with the increase in employment and per capita income of people.

Investment in the economy is less due to constraints such as high energy cost, land lock geographical location and hence high cost of transport, lack of skilled labour, limited access of affordable debt financial, and fluctuant tax application and immigration rules. Rwanda Development Board was formed to provide investors facilities of business registration, environmental clearance and investment promotion with other necessary approvals (weforum.org 2016). There is online provision for registration of the new investors. The investors may receive registration certificate within 6 hours of registration at the office of RDB. All foreign investors get the facilities of approval, certificates and work permit.

Although registration is easy, some investors have complained about delays in the implementation process because of lingering of government payments for delivered product, changes in the memorandum of understanding conditions (Armah 2015). Moreover, inconsistent application of tax incentives and import duties turn out to be challenges for doing business in Rwanda. Along with this Judicial System of Rwanda does have proper resources and capacity such as well functioning Court. Therefore, investors often complain about the inconsistent approach of the Government of Rwanda regarding contract sanctity and failure to enforce judgement of Court in a stipulated time. Therefore, malfunctioning of legal system often discourages investors to made investment in the economy (rdb.rw 2017).

During 2008, GoR has implemented a reform in business legislation, which includes new intellectual property law and bankruptcy regulation and arbitration law to vitalize the protection of investors. This reform included greater access of information to the investors and greater corporate disclosure. The amount of tax incentives for investors has increased after the reform. In order to obtain an investment certificate, a foreign investors need to pay USD 250,000 and a domestic firm has to pay USD100, 000. Direct investors can acquire land through threshold agreement that can be extended to 99 years.

During 2015, a new investment code related to investment promotion and facilitation has been implemented to provide incentives international firms headquartered in Rwanda. Rwanda Foam Ltd is likely to get these incentives for operating in the Special Economic Zone/ Facilities such as tax break and incentives, benefits of free funds transfer and compensation against dispossessing are provided to those investors. The key sectors that are focused for investment include information technology, health, manufacturing, and tourism, and other export-oriented industry and energy projects, which are important to clear the bottlenecks for development. The objectives of fiscal incentives to the investors are as follows:

• Achieving net economic benefit so that cost of foregone tax revenues is less than the increase in future investment and tax base
• To support planned tax reforms

The required principles to achieve the objectives are

• The incentives system need not create high administration costs;
• Incentives requires to be designed to encourage investment and productive activities with minimum negative effects;
• The overall tax burden needs to be competitive in both regional and international context and attractive for investment and location in SEZs in Rwanda;
• Stable system is required to reduce risk and uncertainty for investors.

Government of Rwanda has kept provision of two set of policy options. The first one is providing incentives under the national tax system and the second one is providing special incentives for SEZ developers and users. The first act does not include special incentives. The national tax policy and EAC policy are applied within SEZ including existing incentives under the Investment code and Income Tax Law. The second act provides incentives for the SEX developers and users. The objective of the Government in providing tax incentives are to make domestic industry performing in this zone competitive. Tax incentive helps Rwanda Foam Ltd to reduce price of the product and to gain potential competitive advantage in the international market. Matsuura et al.co always() argued that special tax incentives have several drawbacks such as complicated tax system, working against the effort to rationalise the tax system for all investors.

Rwanda Foam Ltd is already relocated to the Phase One of the Rwanda Special Economic Zone. Phase I of the Kigali SEZ is infrastructure with electricity, roads, fire-fighting systems and water, sewage and fibre optic cables that serves in easing the operations of investors. The benefits of investment in the SEZ for Rwanda Foam Ltd are scope of increasing revenue and expansion of business. This investment is effective as the production of manufacturing of high quality mattresses and bedding can help government of Rwanda to take import substitution policy. This policy can effectively reduce the budget deficit as well as current account deficit. Budget deficit would be reduced by increasing tax revenue. Environment assessment impact during prior to licensing can reduce the risk of environmental hazard. Another benefit of this investment is meeting global as well as local needs. Increasing export and decreasing export can turn the terms of trade in favour of the Rwandan economy.

Another advantage of the country from Investment of Rwanda Foam Ltd is generation of employment. As demand for skilled labour increases from the end of the firm, urge for skill development would be enhanced in the economy. Rwanda Foam ltd can attract foreign workers to work in this zone initially being a multinational corporation. Transfer of technology from developed to the Rwandan economy is another major advantage of the foreign direct investment. Growth of export and increase in foreign exchange can drive the economy towards the path of development and helps to become efficiency driven economy and subsequently innovation driven economy. However, innovation driven economy requires effective infrastructure and skilled worker, investment in higher education and R&D. These criteria are lacking in the present situation. Therefore, availability of skilled workers is still a risk to the investors. However, employment generation can reduce the extent of poverty in the economy and may improve the socio economic status of the people.

Rwanda Foam Ltd needs to consider the risks related to macroeconomic environment identified by in the above analysis. Government budget to reduce fiscal deficit is require for stable policy formation in the economy. Sadgrove (2016) mentioned that unstable economic circumstances may hamper the viability of the investment. Therefore, a cost benefit analysis using either present value or future value method can be used to analyse the potential profits or loss from the investment. As opined by Dumas et al. (2013), net present value analysis, internal rate of return method, payback period calculations can be effective way to measure risk and feasibility of the investment. Government needs to take policy to increase gross national saving to enhance availability of funds and capital formation in the economy. Government debt needs to be reduced.

In order to manage the credit risk, the owner and management of Rwanda Foam Ltd needs to ensure that they are aware of possible changes in business due to changes in external macro environment of the economy. Business model needs to be dynamic to be changed according to the political or economic situation of the economy (Sodhi, Son and Tang 2012). Failing to measure risks and controlling the risks may result in losing competitive advantage in the market. The firm needs to keep eye on the general policies of government, plans and attitudes towards economic development over the medium to long term. Although there is good governance in Rwanda, the country is still vulnerable top sudden external economic shock such as global financial crisis or oil price fluctuations.

As infrastructure is the precondition for investment, an investor like Rwanda Foam Ltd opening business in SEZ needs to consider the factors such as quality of roads, port infrastructure, and air transport facility, quality of electricity supply, mobile cellular phone users and telephone lines. Kigali SEZ phase I has road facility, but there is no railroad facility, which is required to build. As competition in the market of mattresses is growing, cost minimisation becomes an inevitable part of the business. Railway is an effective mode of transport for minimisation of cost due to its economies of scale (Lam 2014). Therefore, infrastructure plays a vital role to influence consumer satisfaction indirectly. In the same way, other factors are equally necessary.

In the technological readiness index, the rank of Rwanda is 100 among 138 countries, which signifies weak position with respect to the global economy. Still around 13% of total population in this country use mobile phone and online service. Therefore, Rwandan are still backward in terms of technology, although firm level technology adoption rate is higher. E-commerce and online services have become distinguishing factor for achieving competitive advantage (Fadun 2013). If mass population do not have access of internet, online selling or online marketing cannot be possible.  Technological backwardness is a risk for Rwanda Foam Ltd. Use of information technology in supply chain can bring efficiency by integrating several stakeholders and several departments. Distribution of products and financial transactions in the international market may be hampered due to the problem of lack of availability of technology.

Risks related to business sophistication needs to be considered. Abu-Saifan (2012) mentioned that the factors that determine business sophistication are quantity of local supplier, quality of local suppliers, state of cluster development, and nature of competitive advantage, value chain strength, production process sophistication, and control of international distribution, extent of marketing and willing to delegate authority (Sodhi, Son and Tang 2012). Production process sophistication is less in this economy compared to other parameters. The scope of marketing is less in this economy. Therefore, lack of marketing opportunity, lack of online discourages are risky for the business.   

The rate of enrolment in higher secondary education and training is very low in this economy. The major components are secondary education enrolment rate, Tertiary education enrolment rate, quality of the education system, quality of math and science education, quality of math and science education have not been increased much in this country.  Local availability of specialized training services and extent of staff training determined the competitive advantage (Sadgrove 2016). Government would take initiatives to increase enrolment in higher secondary courses in the economy. However, the company needs to arrange special training programme for the employees internally to improve their skills initially.

As opined by Amorós, Fernández and Tapia (2012), risk management process involves all phases of investment process and feedback between post trade measurement and asset allocation.

Rwanda Foam Ltd may face significant implementation shortfall due to differences in real and paper based shortfall. First step of risk management is risk identification. The second stage is risk measurement and the third step is risk monitoring. Risk diversification is another process. Risk assessment provides a better decision making regarding business. Apart from the risks mentioned above, other business risks that Rwanda Foam Ltd can face are sales volume, price per unit, input cost, competition, and overall economic situation and government regulations (Dumas et al. 2013). The process of risk management that Rwanda Foam can adopt is improving decision-making, planning and prioritisation. Proper resource allocation and usage of resources can help to manage risk and can reduce wastage in business.

As discussed by Bullough et al. (2012), Compliance risks are those risks associated with the maintenance of laws and regulations. Compliance risk can be managed by proper corporate governance approach. Rwanda Foam considers whether the labour law and health and safety laws can add to the overheads or force changes in the specified ways of working of the company. Financial risks are associated with the financial pattern of the business and the transactions that the business conducts and the financial systems practiced by the company. Identification of financial risk includes verifying regular financial operations including cash flow. There are four things that are to be considered is mentioned by Kelley, Singer and Herrington (2012), the way of extending credit to new customers, money lender, and faster credit recovery and insurance that can cover large or doubtful debts. Firms can faces operation risks such as risk of wrong employees, supply chain management, accounting controls, IT solutions and regulations.

As suggested by Jeston and Nelis (2014), one way to managing risk is to quantify the risk first. Country risk is primarily qualitative in nature. However, in order to evaluate the impact, risks need to be quantified. Probability of occurrence of each event can be recorded numerically.  The value of probability against each risk close to 1 signifies high chance of occurrence and value close to 0 indicates little chances of occurrence. Along with the probability value, quantitative value on investor confidence, debt to GDP can be used. Company can use several index published by International Organizations such as World Bank, World Economic Forum. The Index of Economic Freedom and The Corruption Perception Index are useful to measure country risks for investing in Rwanda. It can be evaluated from the above analysis that country risk in Rwanda for investors are less compared to other East African countries due to its trend in progress.

References

Abu-Saifan, S., 2012. Social entrepreneurship: definition and boundaries. Technology Innovation Management Review, 2(2).

Aggarwal, R., Siddiqaliali, B.M. and Kumar, P., 2012. Technology and business incubation a proven model to promote technology innovation and entrepreneurship in Rwanda. International Journal of Business and Public Management, 2(2), pp.47-50.

Amanor, S.T.L., 2014. Private risk capital inflows and the Africa growth story: Africa-wide-investing in conflict zones. Africa Conflict Monthly Monitor, 2014(Jan 2014), pp.16-20.

Amorós, J.E., Fernández, C. and Tapia, J., 2012. Quantifying the relationship between entrepreneurship and competitiveness development stages in Latin America. International Entrepreneurship and Management Journal, 8(3), pp.249-270.

Araya, G., Schwartz, J. and Andres, L., 2013. The effects of country risk and conflict on infrastructure PPPs.

Armah, B.K., 2015. Sustaining Health for Wealth: Perspectives for the Post-2015 Agenda; Comment on'Improving the World's Health Through the Post-2015 Development Agenda: Perspectives from Rwanda'. Browser Download This Paper.

Artt?rma, Ç.A.E.F., 2012. Facilitating economic activity in conflict zones.

Augustin, N., Nataraju, M.S., Govindegowda, V. and Swamy, B.K.N., 2012. Adoption level and constraint analysis of rice farmers in Southern Province of Republic of Rwanda. Mysore Journal of Agricultural Sciences, 46(2), pp.393-397.

Balinda, S.N., 2014. Factors Attracting Foreign Direct Investments (FDIs) in Rwanda: The Case of Selected Companies. Transportation, 7(8.6), pp.94-2.

bbc.com. 2017 Rwanda country profile. Available at: https://www.bbc.com/news/world-africa-14093238

Binagwaho, A., Farmer, P.E., Nsanzimana, S., Karema, C., Gasana, M., de Dieu Ngirabega, J., Ngabo, F., Wagner, C.M., Nutt, C.T., Nyatanyi, T. and Gatera, M., 2014. Rwanda 20 years on: investing in life. The Lancet, 384(9940), pp.371-375.

Booth, D. and Golooba-Mutebi, F., 2012. Developmental patrimonialism? The case of Rwanda. African Affairs, 111(444), pp.379-403.

Bright, J., 2016. Rwanda’s tech initiatives prove African governments can catalyze innovation Available at: https://techcrunch.com/2016/10/31/rwandas-tech-initiatives-prove-african-governments-can-catalyze-innovation/ [accessed on 01.19.2017]

Bullough, A., Kroeck, K. G., Newburry, W., Kundu, S. K., & Lowe, K. B. 2012. Women's political leadership participation around the world: An institutional analysis. The Leadership Quarterly, 23(3), 398-411.

businessprocedures.rdb.rw 2017.  How to obtain a Special Economic Zone user license https://businessprocedures.rdb.rw/procedure/237/188?l=en

Dumas, M., La Rosa, M., Mendling, J. and Reijers, H.A., 2013. Fundamentals of business process management (Vol. 1, p. 2). Heidelberg: Springer.

Esiara, K., 2014. Rush for a piece of Kigali special economic zone. Available at: https://www.theeastafrican.co.ke/Rwanda/Business/Rush-for-a-piece-of-Kigali-special-economic-zone-/1433224-2332260-4wcyoz/index.html

Esiara., K. 2013. Mattress makers feel the pressure of new players. Available at:  https://www.theeastafrican.co.ke/Rwanda/Business/Mattress-makers-feel-the-pressure-of-new-players/1433224-1758942-8yky1kz/index.html [ accessed on 04.20.2017]

eulerhermes.com. 2017. Country Report Rwanda. Available at: https://www.eulerhermes.com/mediacenter/Lists/mediacenter-documents/Country-Report-Rwanda.pdf

Fadun, O.S., 2013. Risk management and risk management failure: Lessons for business enterprises. International Journal of Academic Research in Business and Social Sciences, 3(2), p.225.

Giokos, E., and Parke, P., 2016. Why this South American is making laptops in Rwanda. Available at: https://edition.cnn.com/2016/07/14/africa/rwanda-tech-hub/ [accessed on 01.19.2017]

Holden, J., 2012. Rwanda: Overcoming the Industrial Policy Taboo. In Rwanda Fast Forward (pp. 126-144). Palgrave Macmillan UK.

 https://www.rdb.rw/departments/sez-and-exports/special-economic-zone.html

https://www.rdb.rw/rdb/manufacturing.html

https://www.worldbank.org/en/country/rwanda/overview

intracen.org 2017. Rwanda Special Economic Zones. Available at: https://www.intracen.org/uploadedFiles/intracenorg/Content/Trade_Support_Institutions/Major_events/World_Export_Development_Forum/_WEDF_2013/KSEZ%20brochure.pdf

Jeston, J. and Nelis, J., 2014. Business process management. Routledge.

Kelley, D.J., Singer, S. and Herrington, M., 2012. The global entrepreneurship monitor. 2011 Global Report, GEM 2011, 7.

Kissel, C., 2013. Foreign Direct Investment in Uganda and Rwanda; a Cross-Country Analysis.

Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.

Manson., K. 2015. Businesses relocate to Rwanda’s new Special Economic Zone. https://www.ft.com/content/4fd23ff8-ded6-11e4-b9ec-00144feab7de

Matsuura, Y., Hosokawa, T., Serracin, M., Tulgetske, G. M., Miller, T. A., & Fukatsu, T. 2014. Bacterial symbionts of a devastating coffee plant pest, the stinkbug Antestiopsis thunbergii (Hemiptera: Pentatomidae). Applied and environmental microbiology, 80(12), 3769-3775.

Mccarthy, T., 2015. The Rise of Africa’s Switzerland. Available at: https://the-orator.co.uk/2015/08/the-rise-of-africas-switzerland/ 

minagri.gov.rw. 2016. Investment opportunities in Rwanda. Available at: https://www.minagri.gov.rw/fileadmin/user_upload/documents/Investment_Opportunities_in_Rwanda.pdf

Mutabazi, S. J., 2015. Rwanda's political stability will continue beyond 2017. Available at:  https://www.newtimes.co.rw/section/article/2015-04-30/188343/ [ accessed on 04.18.2017]

Nash, E. and Ngabitsinze, J., 2014. Low-carbon resilient development in Rwanda.

Papadopoulos, N., Hamzaoui-Essoussi, L. and El Banna, A., 2016. Nation branding for foreign direct investment: a review and directions for research and strategy. Journal of Product & Brand Management, 25(7).

rdb.rw 2017. . Your step-by-step guide to SEZ licensing procedures in Rwanda

rdb.rw 2017. International relations https://www.rdb.rw/about-rwanda/international-relations.html

Rostowska, M., 2013. Investment in Sub-Saharan Africa: Opportunities for Polish Companies. PISM Strategic Files, (31), pp.1-6.

rw.one.un.org. 2017. Environment  https://www.rw.one.un.org/mdg/mdg7

rwandapedia.rw. 2012. Economic Development. Available at: https://rwandapedia.rw/explore/economic-development

Sadgrove, K., 2016. The complete guide to business risk management. Routledge.

Sodhi, M.S., Son, B.G. and Tang, C.S., 2012. Researchers' perspectives on supply chain risk management. Production and operations management, 21(1), pp.1-13.

Tuomi, K., 2012. Review of Investment Incentives.

weforum.org 2016. 5 things to know about Rwanda’s econ Available at: https://www.weforum.org/agenda/2016/04/5-things-to-know-about-rwanda-s-economy/ [accessed on 04.18.2017]

weforum.org 2016. The Global Competitiveness Report 2016–2017. Available at:      https://www3.weforum.org/docs/GCR2016-2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf

worldbank.org. 2017. Rwanda monthly trade data. Available at:    https://wits.worldbank.org/CountrySnapshot/en/RWA/textview [accessed on 01.19.2017]