Home Business & Tech Burundi – smallest regional economy imposes ‘export ban’ on Rwanda

Burundi – smallest regional economy imposes ‘export ban’ on Rwanda

by KT Press Staff Writer
10:50 pm
Nemba border

Nemba border

At Nemba border post in Bugesera district where Rwanda borders Burundi’s Nyeshi and Busoni communes of Kirundo province, there is not much taking place.

Trucks carrying manufactured products destined to Burundi are visible in large numbers on the Rwandan side. But there is a marked decrease of  traffic, according to people on the scene.

On the opposite side, there are no trucks returning to Rwanda.

Rwanda exports to Burundi maize, maize flour, wheat flour, cassava flour, potatoes and milk. The Burundians love milk from Rwanda.

Until late 2013, Burundi exported cotton and palm oil to Rwanda. Palm oil export was banned in 2014 over poor quality standards.

While exports on both sides have been weakening, border communities are also not trading with each other as much. Much of what is consumed by Burundians comes from the Rwanda side.

Unlike the Gasenyi/Nemba border which runs through a forest, the communities on either side of the border at Akanyaru are adjacent to each other.

However, the usual movements of border communities are no more in recent months. A few movements involve people walking around without any goods for sale. Even as Burundi says it will not allow its people to send anything to Rwanda, there was not much anyway.

In the past, the movement of border communities was marked by people carrying small baskets of oranges, mangoes and mainly, women carrying bags of silver fish (indagara) from Burundi.

On the Rwandan side, border communities used to sell to their Burundi neighbors plastic materials, shoes and clothes, livestock – as well as maize and cassava flour. Rwandans have been sending to Burundi food commodities and manufactured products.

“There is a year we have not freely been trading with Burundi. Gangs across the border snatch our food crops,” said Joseph Bitembo, a resident of Nyaruguru district.

“Serious problems” if you sell to Rwanda

Last week, a Burundi senior official vowed the government will punish anyone who will export their already scarce food commodities to Rwanda.

Second vice president of Burundi, Joseph Butore warned that any local leader or police officer who will endorse export to Rwanda “will have problems”.

Rwandan communities say their Burundi counterparts need them more.

“They do not have enough food, they buy everything from here. They sell to us a few mangoes and silver fish,” said Bitembo.

He added, “When Burundians get Rwandan currency, they are happy because it’s greater than their own.”

The current exchange rate indicates that 1000 Rwandan francs (Rwf) is worth 2,125 Burundian Francs (BIF).

Canisius Bihira, an economist indicates that “Burundi having a weaker currency has an advantage to sell to Rwanda; when you have a more valued currency, you have purchasing power on your market back home.”

Moreover, he said, Burundi will be missing a point. “When you embark on an embargo, you have to be ready to buy the production you are denying your clients.”

For the clients, the risk is minimum because they can find a substitute from another country, or they can decide to grow the crops you are denying them.

Still, Burundian products coming to Rwanda will not cause a problem because they already have less than they need for themselves. Subsistence agriculture accounts for 90% of agriculture in Burundi, yet the sector contributes 30% of the country GDP.

According to the World Economic Forum (WEF), Burundi’s total GDP declined to $2.9 billion in 2015 from $3.09 billion in 2014. The per capita income stands at $ 305.78.

Rwanda’s GDP could hit $ 10 billion by end of this – with a per capita of $1,066.

Burundi is ranked 140th out of 189 economies in the World Bank’s Doing Business report 2015, a situation that deteriorated following a political crisis that forced about 300,000  Burundians to flee their country and hundreds killed.

Over a 100,000 of Burundian refugees fled to Rwanda and more are still crossing at night to flee killings that are escalating.

The conflict is affecting Burundi’s economy.

Meanwhile, in 2014, Burundi exports to Rwanda were $7.89M. The figure is much less as Burundi products are refused entry over poor quality.

Kigali is preferring more bigger markets. Rwanda’s major imports from the region are Uganda ($263M) and Kenya $177M.

Burundi decision to close its border against its people seeking Rwandan currency came at a time the United Nations took a decision to send over 228 police for peace keeping in Burundi.

Burundi government allies reacted by demonstrating at Rwanda’s embassy in Bujumbura.