Trade experts have challenged both the public and private sector to seek new avenues to increase exports to reduce import-export deficit.
The call was made Wednesday during a meeting between the Ministry of Trade, Industry and East African Community Affairs (Mineacom) and various stakeholders.
While many acknowledge that the Government has instituted clear policies to expand the export base, the argument among stakeholders, especially development partners, was the need to determine priority areas of exports, increase production, cut transport cost, non-tariff barriers and come up with new innovations.
Dr Phillip English, a consultant on trade and development based in Canada, said Rwanda had made exceptional progress in improving its investment climate and this positioned it high in the rankings on World Bank Doing Businesses Reports, moving from 139th in 2009 to 56th in 2016.
“This performance has drawn international attention and attracted foreign investors. However, there is still room for improvement in areas such as tariffs and non-tariff barriers, tax policy and administration and the service sector,” he said.
According to English, all export sectors face constraints that are likely to prevent rapid growth in the near future and it would be wise to look at the import side of the balance of payments to seize emerging opportunities such as e-Commerce.
Dr English argued that the volume of imports was three times more than exports and yet domestic producers enjoy natural protection due to the high transport cost of reaching landlocked markets.
“It would be preferable to focus on building local capacity to compare with imports rather than resorting to higher protection which penalises consumers,” he added.
So far, the Government through the National Agricultural Export Development Board (NAEB) seeks to increase exports from the current 21 per cent to 28 per cent in the next five years while reducing its imports by 17 per cent.
Identifying potential markets
Leonard Rugwabiza, chief economist at the Ministry of Finance and Economic Planning, said that while aspects of competitiveness and shortage of productivity will take centre-stage in any debate on exports, there was need to identify potential markets.
“We can compete and we are trying to do so, but how do we check suitable markets and how do we increase productivity yet that particular demand is yet to be met. There is for need hard work and patience,” he said.
“For example, there is high demand for maize flour, meat and wheat next door in DR Congo. But, up to now, we haven’t even been able to satiate that market. The same applies to coffee in Europe.”
Rugwabiza said that while the private sector needed to own that particular challenge, the Government could always chip in and provide any kind of support because such export ambitions normally take some time before they deliver tangible results.
“The Government has been supportive and indeed it will continue to do so, but we should avoid a situation where people get tired of doing the same things when they don’t get results,” he said.
Rugwabiza added that lack of organised systems that lead to robust production will always affect domestic investors which have seen in the past foreign investors deciding to build their factories here when they were targeting a different market.
The Government has taken a decision to waive taxes on raw materials for some industries and provide other incentives, but still, according to experts, production remains low.
Ellen Kallinowsky, the principal technical advisor at the GIZ Kigali office, said it will need vibrancy of the private sector, which needs to be more innovative and proactive to help the public sector in the reaching of required production levels.
GIZ is a German international development agency.
“In all this journey, the private sector needs to be more involved. The international market, which is even more accessible online requires some standards which requires suppliers to focus on value addition to their products, otherwise the market is there,” she said.
According to Kallinowsky, while Rwanda is emerging in the garment industry and seeks to phase out used clothes, its textile industry can perform miracles on the international market but it calls for some simple twisting on the clothes.
“What happened in West Africa, for example on Boubou clothing, is gaining international recognition and Rwanda can do the same, because, if you look at the locally made attires, they are admirable,” she added.
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