A new World Bank report has showed Rwanda needs to embark on improving its regional trade opportunities and negotiations so as to attain its 2035 middle income goals.
The report shows that Rwanda exports to main regional partners almost stagnated and Rwanda remains less open to trading in the bloc, despite having the highest growth rate globally and efforts to improve trade policies and doing business.
Rwanda’s annual growth before covid19 was at 14% compared 3% world and 2% in Sub-Saharan Africa (SSA) and the share of Rwanda’s firm in international trade rose from 11% to 21% (2006-2019) higher than any other SSA country other than Togo (28%).
The world bank report unveiled today showed that Rwanda’s Exports of goods and services are equal to 21.1 percent of GDP, compared to 22.4 percent for low-income small countries (with a population of less than 20 million), and well below the average for middle-income small countries of 34.7 percent.
The report said that in order for Rwanda to meet its 2035 goal of becoming an upper middle-income country, the country will need to raise its exports from 20% today to 46% by 2035.
“To reach this level Rwanda will need a grow at a level of 12% per year and to generate that growth Rwanda needs those levels of trade openness,” said Calvin Zebaze Djiofack, a World Bank Senior Economist
The report also showed that though Rwanda’s exports to the EAC exploded during its entry into the bloc, exports to EAC partner states dropped from 23% in 2010 to 12% in 2019 as a result of Rwanda focusing on Democratic Republic of Congo (DRC)- now Rwanda’s biggest export destination than all EAC states combined.
To improve Rwanda’s trade, the report recommended a reshape of its regional trade policies to foster industrialization and optimize benefits from emerging trade opportunities especially with its big trade neighbor- DRC.
Rolande Pryce, World Bank Rwanda Country representative said that the AfCTA has a potential to be a game changer for Rwanda in particular to raise its exports by almost 7% and incomes by 4% by 2035.
However existing challenges to trade must be addressed especially non-tariff barriers, skills deficit and border security concerns.
Pryce said that given the evidence on the strong relationship between ISO certification and exporting; resources spent on increasing awareness and information dissemination regarding application and filling procedures may help local entrepreneurs realize and maximize the exporting potential.
Pryce also said that given the trade potential between Rwanda and DRC, policies could focus on achieving the same level of integration with DRC and the rest of the central African economic bloc and the EAC- through aligning tariffs and trade procedures.
“Rwanda should also pursue its leadership role in advancing the AfCTA agenda and leverage this free trade agreement preferential market access to secure new opportunities for Rwandan firms,” Pryce said.
She added that Rwanda should also advance its ambition of becoming a logistical hub through continued investment in infrastructure.
Pryce revealed that the World Bank is currently preparing a $250 million development policy operation focusing on private sector investments and green growth to support a new generation of trade reforms.
This will add to the already operational $200M Rwanda digital acceleration project which supports to expand digital access and adoption by spearheading a series of innovative digital access and inclusion initiatives, including supporting 250,000 households with financing to help acquire smart devices as well as training three million people in basic digital literacy (especially girls and women).
Minister of Trade and Industry, Dr. Jean Chrysostome Ngabitsinze said that Rwanda recognizes its position in the geopolitical economy because it is open but opinion and data in the report will help its improvement.