AT&T Expansion into Rwanda
Introduction
AT&T should consider expanding its business activities to Rwanda. Rwanda is one of the fastest developing countries that have the potential to satisfy the requirements of investment of a multinational company. Research into the economic statistics, political environment, and market of Rwanda can explain the suitability of doing business in the country. An assessment of the present and potential future conditions of the country explains why it will be a wise decision to expand business activities into Rwanda.
Market Overview of Rwanda
Rwanda is one of the fastest-growing economies in Africa. The country has been on an upward trajectory in the last two decades. In 2019, the country’s economy grew by 9.5%, a figure that most other countries in the same region did not come near (UN). More interestingly, all sectors experienced growth. It means that the country is well balanced in growth and unlikely to falter in any sector. Rwanda is, for this reason, expected to thrive more in the coming years. It is expected to rise to the level of an upper-middle-income country in the next two decades or less.
The fast and evenly distributed growth of Rwanda indicates a clear signal for investment. AT&T can invest in Rwanda owing to the numerous opportunities that the country offers for investment. The company has the opportunity to make substantial profits by offering its services to the population that is increasingly improving in the economic endowment. The growth of all sectors means that the people of Rwanda are increasingly gaining from numerous job and business opportunities that are increasingly arising. For this reason, there is a high possibility that the company can get customers from amongst the endowed populace.
The success of the country is becoming a regional powerhouse is also an added advantage. AT & T stands to benefit from the numerous advantages that accrue to the association of a country with economic growth. Subsidiary services, for example, are available and are highly to continue increasing as more firms invest in the same. The country has already gained a good reputation as the most business-friendly in the region. This reputation is attracting investment by numerous other firms that can provide direct or indirect support to the activities of AT & T.
Statistics of Rwanda
The figures that assist in measuring the economic performance of Rwanda indicate hope for businesses that operate in the country. First is the favorable Gross Domestic Product. In 2019, the country posted a GDP of $9.4 billion. The encouraging issue about the GDP is that it indicated a continuous rise. The GDP had increased by 6.1% from what the country had achieved in 2018 (UN). It meant that the country has been experiencing favorable times that enable maintaining steady growth. The rate of inflation was also comparatively low. It increased slightly to 1.6% last year. It means that it was within the manageable range.
Another positive indicator was the improvement in purchasing power. The country’s low level in economic status makes the indicators look unfavorable. However, owing to economic growth, the purchasing power of the people of Rwanda is continuously improving. In 2018, for example, the figure was $2114. Compared to other developing countries, Rwanda is faring well in improving in this aspect (UN). The simultaneous growth of all sectors of the economy is also minimizing the disparity in the purchasing power of the people of the country. AT & T can take advantage of these improvements amongst the people of Rwanda. There is a possibility that people will afford its telecommunication services. Better still, more people are likely to gain purchasing power in the coming years. The company should take this opportunity to establish itself as the company with the largest market share ahead of others.
Political Environment of Rwanda
The political environment of Rwanda exhibits a positive political environment. The country is known for its current political stability, owing to the strict leadership by its main political party (USAID). The country is especially praised for its ability to rise from a highly politically unstable country after the devastating genocide of 1994. During the tragedy, about 800,000 people lost their lives through the massacre. Less than three decades later, the country is now one of the most peaceful and orderly nations in Africa. This fast change from a devastating state to one of peace and tranquility is attributed to the robust political system under which the country operates.
The government of Rwanda is part of the process of progress of the country. It is known for the massive support that it offers to various players in different sectors. One of how it does so is by having a business-friendly legislature. The laws formulated in the country regarding the right ways of conducting business are favorable to the various firms that are affected by the same. There is a high chance of surviving and thriving if AT & T invest in Rwanda.
The decision to expand to Rwanda would also be wise in that it offers a chance to benefit from one of the numerous international connections that the government of Rwanda is continuously creating. The government of Rwanda has been forging international links with other governments around the world. The USA is among the many countries with which the government has been cooperating (USAID). AT&T stands to benefit from international cooperation in numerous ways. The costs of importing various goods to Rwanda, for example, will be low, owing to the intervention of tariffs. Government support after an investment is also almost guaranteed, owing to the various initiatives that the government of Rwanda has been putting in place to encourage foreign investment. The action of the government in protecting the welfare of foreign investors, for example, will be a benefit that the company is set to reap. Under the current leadership, there is minimal bureaucracy in the process
Conducting business in Rwanda is easy. The country is ranked at number 38 in the world and number 2 in Africa for ease of doing business (USAID). The massive support accorded to businesses by the government is one of the factors that contribute to the increased ease of doing business in the country. The country is also characterized by a high level of economic freedom. Currently ranked at number 33, the freedom of doing business in Rwanda suggests that investors have an easy time making money with minimal issues arising. Obtaining electricity, for example, is easy for firms that operate in the country. It is for this reason that various businesses in different industries are thriving with ease. AT & T also stands a chance to make a move of expansion that will help it reap from the favorable business conditions of Rwanda, as opposed to investing in other countries that do not offer the same.
Potential for Diversification
Rwanda is a mixed economy, which maximizes the potential of a business to diversify its activities. The country is predominantly agricultural (Redifer 7). However, it incorporates various and numerous sectors that complement the subsistence agricultural sector to form a complete and active economy. Similarly, the telecommunication industry is part of the economy of the country. It joins the others to form a complete economy. It means that the economy of the country is diverse and likely to be more diverse as more investors seek to invest in the country. The potential investors are likely to bring with them business opportunities to which AT & T can diversify for better profitability.
The potential for diversification within the telecommunication industry is also high. Being a telecommunication company, AT & T can invest in the various types of entertainment that it currently offers. The market for the company’s services is diverse, hence the ease of profiting from diverse channels. Better still, there is a good chance that the company can introduce more services in the country and make substantial profits. Among them are investments in cell service, communication infrastructure, software research and development, and cloud computing amongst others. Investing in diverse ways in Rwanda is likely to bear fruits in both the short and long-term.
Issues that may affect the expansion activity
Despite its potential, Rwanda may also present various issues that may minimize the effectiveness of AT&T in effecting its business plans. One of the significant issues is the low standards of living amongst the Rwandese populace (USAID). The current economic status of most people is demanding. Investing in the country may, for this reason, end in slow returns. Another potential hindrance is the low level of the country in terms of development. AT & T has been mostly operating in developed countries, while Rwanda is a developing nation. The company may, for this reason, face challenges of adapting to the new conditions. The issue of low internet penetration is also significant for the telecommunication company. Only 1% of Rwandese people have access to the internet. Selling data plans may, for this reason, not be a viable investment.
Potential ways of curbing the issues
Despite the number and magnitude of the problems, AT&T may embark on some interventions to minimize their negative effects (Redifer 12). Among the viable solutions is carrying out intensive market research. The company needs to invest in market research to ensure that it invests only in the areas that have the potential for good returns in both the short and long-term. Another viable solution is embarking on the mission of providing ICT services to the people of Rwanda. The company can decide to invest in spreading the internet. By so doing, it will stand a good chance of making good profits in the long-term.
Conclusion
Rwanda presents suitable conditions for the expansion of the business. AT&T may consider it as one of the areas in which it can invest and diversify its services. Among the indicators of potential excellence in business include the fast-growing economy, business support from the government, potential for other compatible investments, and suitable conditions for diversification amongst others. However, the issues of low internet connection and low living standards amongst the people of Rwanda may minimize how lucrative the investment is. Good research and investing in internet connection may, however, offer solutions to the issues.
