EFFECT OF FOREIGN DIRECT INVESTMENT ON THE FINANCIAL PERFORMANCE OF THE RENEWABLE ENERGY SECTOR IN RWANDA

Abstract

Over the past two decades, Rwanda's economy has experienced significant growth in infrastructure development and policy improvements. This growth has been accompanied by an increase in foreign investment, with companies expanding their operations in the country. Foreign Direct Investment (FDI) is a critical area of interest for many developing countries, as it brings economic benefits to the host nation. In emerging economies, such as Rwanda, the renewable energy sector has played a critical role in driving economic growth. Despite the global property market experiencing a bubble, the renewable energy market has remained strong, with demand for middle to high-income housing remaining steady. This study focused on the effect of FDI on the financial performance of the energy sector in Rwanda, with MOBISOL Rwanda Ltd as the case study. The study examined how corporate governance elements, trade openness, market size, return on investment, exchange rate, and inflation affect the financial performance of the energy sector in Rwanda. The study utilized a descriptive research design to investigate the financial performance of the energy sector in Rwanda, with MOBISOL Rwanda Ltd as the case study. The target population consisted of 112 employees of MOBISOL, which has significant foreign ownership in Rwanda. The sample size was determined using stratified random sampling, and 88 respondents were selected for the study. Descriptive statistics were used to analyze the data, with the arithmetic mean and standard deviation used to analyze descriptive data. Additionally, inferential statistics were utilized to find correlations among the explanatory variables. Pearson's product moment correlation and stepwise regression were used to examine the relationship among variables. F-tests were used to test the hypotheses in the study. To ensure the validity of the statistical analysis, tests of statistical assumptions were conducted prior to data analysis. The study used SPSS Statistics Version 21.0 software to facilitate data analysis. Descriptive statistics such as frequencies, percentages, means, and standard deviations were used to analyze the data, while inferential statistics were conducted using Spearman rank correlation coefficient and multiple regression. The findings of the study were presented in tables, providing clear insights into the relationship between variables. Key words: Market size, financial Performance, Renewable energy, Rwanda CITATION : Mbarushimana, S., & Mulyungi, P. (2023). Effect of foreign direct investment on the financial performance of the renewable energy sector in Rwanda. The Strategic Journal of Business & Change Management, 10 (4), 310 – 325. http://dx.doi.org/10.61426/sjbcm.v10i4.2752.