Regional
World Bank: DRC is Rwanda’s most promising trade partner
![image](webadmin/images/drc-rwanda business.jpg-20220207101912000000.jpg)
The
neighbouring Democratic Republic of Congo has great trade potential with
Rwanda, with data from recent years showing growing trade and currently is
Rwanda’s biggest regional trading partner.
The
latest World Bank report on Rwanda themed ‘Boosting regional trade integration
in the post-Covid era’ observed that DRC is a growing trade opportunity for
Rwanda.
Exports
have grown considerably in the last decade, analysts said adding that Rwanda
exports to DRC are more than to East African Community countries combined.
By
2019, Rwanda had exported more goods to the DRC than to the EAC. The main
exports to the DRC include livestock and crops, but cross-border trade in
services, such as finance, transportation, and wholesale trading, are also
important, the report noted in part.
Non-EAC
neighboring markets have proved to be more dynamic in recent years, the report
noted, adding that it’s expected to grow especially in the advent of the
African Continental Free Trade Area.
This
is also at a time when statistics from the World Bank show that since 2012
Rwanda’s exports to the East African Community have somewhat stagnated.
Data
shows that when Rwanda joined the EAC customs union in 2009, exports of goods
to EAC partners more than doubled in the following three years to 23 per cent
of the country’s total goods exports.
However,
since 2012 Rwanda’s exports to the EAC have almost stagnated with Rwanda’s
total exports increasing substantially on average 17 per cent per year from
2010-19.
Analysts
say that this has seen the country not be able to benefit from regional
integration beyond price reduction conferred by tariff reduction.
Among
the reasons for such outcomes is the similarities of export products among EAC
partners as most countries export almost the same set of products.
However,
experts noted that exports to EAC partners is a unique opportunity for Rwanda
to learn to export relatively sophisticated products through value addition to
bigger markets.
Calvin
Djiofack, World Bank's Senior Economist for Rwanda said that data shows a
growing opportunity in neighbouring DRC where Rwanda exports more than to EAC
countries combined.
Non-EAC
neighboring markets have proved to be more dynamic in recent years, the report
noted, adding that it’s expected to grow especially in the advent of the
African Continental Free Trade Area.
“Rwanda’s
trade with other sub-Saharan African countries (beyond EAC and DRC) has been
low, declining from 7 per cent of Rwanda’s exports in 2010 to just 2 per cent
in 2019. This underscores the importance of the opportunity that AfCFTA
represents for Rwanda,” the report read in part.
Djiofack
called for rethinking Rwanda's Regional trade noting that it had been impacted
more than exports to global partners during the crisis.
“The
pandemic severely depressed Rwanda’s trade in 2020. Total exports of goods and
services fell by 14.4 percent by value in 2020, despite the 130 per cent
increase in gold exports following the establishment in Rwanda of Aldango Ltd,”
“Rwanda
regional trade of goods was less resilient in 2020 compared to its trade with
global partners. While Rwanda’s merchandise exports to the world increased by
40 per cent in 2020 compared to 2019 (thanks to the unprecedented increase in
gold exports), exports with EAC partners actually declined by 41 per cent,” the
World Bank report noted in part.
Antoine
Kajangwe Director General Trade and Investment Ministry of Trade and Industry
that the similarity in exports from the region had had a negative impact on the
competitiveness on Rwandan exports to EAC.
He
noted that Rwanda’s response to the challenge involves value addition and high value
products that can compete in the region and beyond. These sectors he said
include electronics, textiles, pharmaceuticals and medical products among
others.
“We
have started to see investments in these high value products. We have also seen
an opportunity in value addition of minerals, we are already seeing demand in
Gold, Tin and Cobalt,” he said.
Another
sector that bears opportunity is specialized services such as ICT, Finance
sector, he added.
Kajangwe
added that the DRC-Rwanda border offers a great opportunity for cross border
trade and a huge opportunity diversification and upgrading exports.
“We
also have an opportunity in continuing to pursue standards as it will set us
apart in accessing and retaining markets,” he said.
Rwandan
businessman Dennis Karera, who is the East African Business Council (EABC) Vice
Chairman said that the pandemic showed that EAC still has challenges in
integration as trade was severely affected across the bloc. He said that
the severe trade interruptions across the bloc was proof that much could be
adjusted regionally to improve trade.
Other
aspects that he called for include the operationalization of a regional dispute
resolution mechanisms which could affect the pace of business, trade and
integration as well as inclusion of the role of the regional legislative
assembly.
Karera
added that liberalization of regional skies would be impactful to trade in the
region including for Rwanda but added that the concern has been pending for
years unresolved.
Amina
Rwakunda the Chief Economist at the Ministry of Finance said that other plans
underway that could impact Rwanda’s regional trade outcomes include
establishing a foreign based multi-services centre targeting the country’s
point of entry like Dar es Salaam and Mombasa, continued investment towards
becoming a regional trade hub as well as reprioritizing and restrategizing
following the pandemic.
Among
the key recommendations by the World Bank Group is that Rwanda should continue
its efforts to develop, improve efficiency in and strengthen coordination
across the trade logistical infrastructure required for a regional logistic
hub.
Other
recommendations include improvements that could significantly reduce both
external and internal trade costs include improving the efficiency of trucking
firms and capitalizing on the potential for increased handling of transit trade
to and from Democratic Republic of Congo.
Source:
www.newtimes.co.rw