The Rwandan government has announced it is bidding to host a Formula One grand prix, as the East African country aims to use the global sports industry to stimulate higher economic growth.
Announcing the bid last week, Rwanda’s president, Paul Kagame, said that “Rwanda is bidding to bring the thrill of racing back to Africa, by hosting a Formula One grand prix.”
He added that there had been “good progress in our discussions so far” and that the government is “approaching this opportunity with the seriousness and commitment it deserves.” Should the plan be successful, the race would be held on a new racing track close to Bugesera airport outside Kigali.
This is not the first time that the Rwandan government has sought to leverage the global sports industry in order to boost economic growth and its international reputation. In May 2018, the Rwanda Development Board signed a three-year deal with the English football team Arsenal which saw the “Visit Rwanda” logo featured on the shirt’s sleeve in the hope this would boost international tourism. The deal was extended for a further four years in 2021 at a cost of £40m. Similar deals were penned with the French football club Paris Saint-Germain in 2019, and with German giants Bayern Munich last year.
Rwanda has also invested heavily in basketball, striking a partnership with the NBA and hosting much of it’s Basketball Africa League, while spending hundreds of millions of dollars domestically on developing sports stadiums and facilities.
The Rwandan government has justified these investments on the basis that major football clubs such as Arsenal and PSG are watched by millions of fans worldwide, enhancing the visibility of Rwanda as a market for tourism and investment.
Visit Rwanda has said that “the Arsenal shirt is seen 35 million times a day globally and AFC is one of the most watched teams around the world, enabling Visit Rwanda to be seen in football-loving nations around the world and helping its drive to be an even more successful tourism and investment destination.” Similar considerations are likely to be driving Rwanda’s interest in Formula One – the average audience per grand prix was 70.3mn in 2021.
The government has claimed that such partnerships are partly responsible for the growth in Rwanda’s tourism industry. The country welcomed over a million visitors in 2022, generating almost $445m in tourism revenue. However, sceptics argue that it is difficult to quantify the value gained from sports events or sponsorships and that such investments are high-risk in an emerging market economy with a relatively low GDP.
‘A risky strategy’
Simon Chadwick, a professor of sport economy, tells African Business that “the Visit Rwanda sports sponsorships have simply been a communications tool designed to drive tourism numbers” and that “such sponsorships are not a sport strategy as such.”
“One imagines that some tourists will have been enticed into visiting the country by these deals. However, the leap from being a tourism destination to being a prominent and important member of the global sport industry is a big one, requiring Rwanda’s government to think more strategically about its commitment to the sector,” he says.
Chadwick adds that investing in global sports in a bid to enhance growth is a risky strategy that can leave countries heavily indebted if it is managed in the wrong way.
“Bidding for and hosting sporting events is both competitive and expensive, indeed there are examples across history of countries and cities that have over-stretched themselves and faced major financial problems,” he notes.
“If Rwanda is going to follow the event hosting route, then a sharp sense of economic discipline should govern its decision making. Otherwise, ill-judged and expensive decisions can leave countries and their taxpayers exposed to decades-long levels of debt that are difficult to clear.”