Rwanda says it is revising policies to fix its daunting trade imbalance, mainly caused by huge importation of mainly electronics, light manufactured merchandise, petroleum products, fertilisers construction materials.
Despite Rwanda’s 8% steady growth over the past decade, the country faces a staggering trade imbalance due to increased imports; valued at 75% or Rwf8.6trillion by December 2013.
The trade deficit during 2013/2014 was $1234.8M (Rwf8.6trillion) representing 16.4% of GDP.
“This is a bad difference,” said Emmanuel Hategeka, Permanent Secretary for the Trade Ministry.
Hategeka told KT Press on Friday, November 28, the ministry is undertaking fundamental policy changes to reduce imports below 60% by 2020.
“We are hopeful to reduce expenditures on imports by at least 18% in the next 6 years,” said Hategeka.
In practical terms, the policy seeks to accelerate the domestic market through increased productivity and help the economy earn an extra $500m annually.
The country is engaging economists and development experts to develop a proper policy to address the matter as soon as possible.
On November 28, shortly after participating in a workshop in Rwanda’s Capital Kigali, to establish the strategy, Dr Derk Bienen, managing partner at a Germany-based economic development research and consulting firm (BKP), said Rwanda needs to strengthen its local industry, especially agro-processing, to deal with future trade deficits.
Indeed, agriculture remains an untapped, even when it employs 70% of the population. The central bank says the sector suffers from minimal financing due to its risky nature.
The government is revamping a cooperatives (SACCOs) policy to help increase financing in the sector, especially in mechanized farming and cut down food importation.
Meanwhile Rwanda’s exports remain dominated by traditional products including coffee, tea and minerals such as tin, coltan, wolfram and cassiterite. Mining contributed fetched over $226m in export revenues last year. The country plans to double the revenues by 2017.
By: Dan Ngabonziza