How Rwanda plans to grow export base

Rwanda’s exports have increased four-fold in the last decade from just $400 million in 2007 to US$1.6 billion (about Rwf1,300 billion) in 2016, according to the 10th Edition of Rwanda Economic Update.

The update was produced by the World Bank back in August under the theme: Sustaining Growth by Building on Emerging Export Opportunities.

Non-traditional exports, like chili, emerged as an important driver of such growth. Agricultural products were the second largest component of nontraditional exports after minerals.

Such exports generated money that is half the funds needed to be invested in agriculture and livestock sector to reduce poverty levels from the current 39.1 percent as per the fourth Integrated Household Living Condition Survey of 1013/2014, to 15 percent by 2024 according to the Ministry of Agriculture and Animal Resources.

Speaking to The New Times on Tuesday, the Minister for Trade and Industry, Vincent Munyeshyaka said that Rwanda’s exports diversification is gaining momentum, pointing out that they have put in place strategies to increase exports earnings through continued diversity from traditional exports like coffee and tea.

“First, our export commodities have been largely consisting coffee and tea; but as of now, mineral exports have significantly increased such that they have surpassed both the two commodities combined in generating revenues,” he said.

According to Rwanda Mines, Petroleum, and Gas Board, as of November this year, the mining sector had generated $300million a significant shift from the $200million average income from the sector over the past five years.

The increment in such revenues was thanks to diversification and value addition to mineral products as well as global mineral prices which have picked up, among other factors, according to government officials.

As per the World Bank’s publication, Rwanda’s exports are more diversified with the growth of services, re-exports and small-scale cross-border trade.

Exports to the region, and especially to the Democratic Republic of Congo and to the East African Community (EAC) countries, mainly as re-exports and through small-scale cross-border trade, contributed the bulk of export growth for Rwanda.

Though the country’s industrial sector is dominated by agro-processing factories; industries engaged in textile, leather are also helping drive up Rwanda’s exports, citing C&H Garment based at Kigali Special Economic Zone, and Kigali Leather Factory in Bugesera District.

Minister Munyeshyaka said that agriculture exports have also played a big role in growing Rwanda’s exports citing green beans, vegetables to Europe and other parts of the world.

Based on the statistics from Rotational Institute of Statistics of Rwanda, the country’s economy grew by 8 per cent in the third quarter of 2017, and Munyeshyaka said that industrial sector contributed to such economic performance as it grew by 6 per cent in the same period.

He said that the country has specific strategies to grow its export base, such that it has set targets to increase exports by at least 17 per cent per year under the vision 2050 blueprint that targets ensuring high standard of living for Rwandans.

“It is realised that as industrial sector grows, we will be also increasing our export capacity,” he said.

“We have taken such strategies, and we have agreed upon them with all concerned partners, and the budget to implement it will be available starting from the financial year 2017/2018,” he said.

Value addition, diversification

The World Bank states that traditional exports currently generate less than half of the total exports earnings, while a decade ago, Rwanda’s exports exclusively consisted of these traditional goods.

Export volumes for coffee have been stagnant while the volume of tea production has nearly doubled, although with muted economic impact given the low value addition.

The value of non-traditional exports (newly introduced export commodities such as green beans, chili, dried pineapple, cassava flour, among others), increased by 52% from June to September 2017, compared to the same period in 2016 with exports of $95.5 million from $66.1 million in 2016, as per the 2017 third quarter report from National Institute of Statistics of Rwanda.

The good performance, the report shows, was thanks to an increase in manufacturing, agro-processing and other agriculture products that were up 41%, 67% and 89% respectively.

The manufacturing sector was boosted by an increase in textile & articles of textile up 165%, salt, sulphur and cement exports up by 124% as results of high production of CIMERWA and their exports outside the country especially to DRC, iron and steel increased by 93% as a result of demand for iron bars in the construction sector as well as exports of the latter to Tanzania, DRC & Uganda.

Soaps, detergents increased by 65% while hides and skins were up by 9.7%.

The agro-processing sector increased mainly due to an increase in exports of cereals, flour, starch and pastry up 192.1% (most of the flours, cereals and pastry are exported to Europe mostly in Belgium), animal or vegetable fat  and oils grew by 56.1% and products of the milling industry by 83.6%.

Emile Nsanzabaganwa, the Chief Executive Officer of Kinazi Cassava Plant said that the factory’s flour is being sold on five continents including 40 states out of 50 in the United States.

The $10 million cassava processing factory with capacity to process 120 tonnes of cassava per day, was commissioned in April 2012 to add value to cassava produce, which was not done before as cassava produce from farmers would rot due to lack of a ready market.

“We have contracts with customers to export about 50 tonnes to the USA, 50 tonnes in Canada, about that quantity in Europe and Australia as well as 15 countries in Africa per month,” he said.

Figures from National Agriculture Exports Development Board (NAEB) show that tea sales revenues for the year 2016 – 2017 increased to $74.5million from $70.7 million received in 2015-2016.

In the financial year 2016-2017, horticulture value chains exports were 25,586 metric tonnes that generated over $15.5 million.

The coffee exported in terms of revenues from July 2016 to June 2017 reduced by 3.4% from over $60.7 million in 2015-2016 to $58.5 million.

Pie Ntwari, the communication officer at NAEB said that the strategies to increase and sustain export revenues include increasing productivity of agricultural exports through both high quality and volumes of the produce, as well as encouraging people engage in agriculture sector to work in cooperatives and enhance such practice.

In this year, NAEB built a park house – a cold room facility – to help horticulture (fruit, and vegetable as well as flower) exporters safely handle their produce.

“We also have a cold truck that helps horticulture exporters to take their produce to Kigali International Airports in good conditions prior to being exported abroad,” Ntwari said.

According to statistics from NAEB, agricultural export commodities generated about $356 million, which represent an increase of 25%, compared to the previous year 2015-2016.

Through the fiscal year 2015-2016, about $289.4 million were generated from agricultural export commodities, an increase of 6% compared to the previous year 2014-2015.

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