The Rwandan government has announced plans to bid for the chance to host a Formula One grand prix, with the goal of utilizing the international sports arena to stimulate economic growth within the East African nation.

In a statement released last week, President Paul Kagame remarked that “Rwanda aims to bring back the thrill of racing to Africa by hosting a Formula One grand prix.”

He indicated that there has been “positive progress in our discussions to date” and reassured that the government is “treating this opportunity with the seriousness and commitment it deserves.” If successful, the event would take place on a newly constructed racing circuit near Bugesera airport, just outside of Kigali.

This initiative marks the latest effort by Rwanda to harness the global sports industry to boost its economic development and international standing. In May 2018, the Rwanda Development Board entered into a three-year partnership with the English football club Arsenal, showcasing the “Visit Rwanda” logo on the team’s shirt sleeve to promote international tourism. This agreement was later extended for an additional four years in 2021, at a cost of £40 million. Similar collaborations were established with the French club Paris Saint-Germain in 2019 and the German giants Bayern Munich last year.

Rwanda has also invested heavily in basketball, forming a partnership with the NBA and hosting a significant portion of the Basketball Africa League, while also spending hundreds of millions of dollars on building sports stadiums and facilities within the country.

The Rwandan government defends these expenditures by arguing that major football clubs like Arsenal and PSG have millions of followers worldwide, thereby enhancing Rwanda’s profile as a tourism and investment destination.

According to Visit Rwanda, “the Arsenal shirt is viewed 35 million times each day globally, and AFC is one of the most watched teams in the world, allowing Visit Rwanda to gain exposure in football-loving countries and assisting in its quest to become a more viable tourism and investment hub.” This rationale likely extends to Rwanda’s Formula One aspirations as well, considering that the average viewership per grand prix reached 70.3 million in 2021.

The government claims that these partnerships contribute to the growth of Rwanda’s tourism sector, with over a million visitors recorded in 2022, generating nearly $445 million in tourism revenue. However, critics contend that measuring the benefits from sports events or sponsorships is daunting, and that such investments carry considerable risks in an emerging market economy with a relatively low GDP.

‘A risky strategy’

Simon Chadwick, a professor who specializes in sports economics, commented to African Business that “the Visit Rwanda sports sponsorships have mostly functioned as a communication strategy aimed at boosting tourism figures,” asserting that “these sponsorships do not represent a true sports strategy.”

“It’s possible that some tourists have been drawn to the country due to these agreements. Nevertheless, transitioning from a tourism hotspot to a key player in the global sports arena is a significant leap, necessitating a more strategic approach from the Rwandan government regarding its participation in the sector,” he explains.

Chadwick cautions that entering the global sports arena as a growth catalyst is a high-risk strategy that could lead to considerable debt if not properly managed.

“Bidding for and staging sporting events is both competitive and expensive, with numerous historical examples of nations and cities that have overextended themselves and faced dire financial consequences,” he points out.

“If Rwanda chooses to pursue hosting events, it must be guided by a strict sense of economic discipline in its decision-making. Otherwise, poorly thought-out and expensive choices could result in countries and their citizens enduring decades of debt that are difficult to repay.”