Though Rwanda's export volumes increased by 42.8 per cent as of September this year compared to the same period last year, revenues from exports grew only by 6.1 per cent, the Minister of Finance and Economic Planning has said.
Uzziel Ndagijimana made the disclosure on Tuesday, November 26, 2019 while making a presentation on 2019/2020 national budget status report, and the state of the national economy (until September this year), to the plenary of the Chamber of Deputies as mandated by the law governing national budget and patrimony.
According to Ndagijimana, this dismal performance of export revenue is attributable to a sharp decline in prices on the international market for most of the exports from the country.
Some of the products which underwent price drop on the international market include mineral products and agricultural produce such as tea and coffee.
"Prices at international market did not perform well, yet, we had done well in terms of production and increased export volumes by 42 per cent. But, because prices were low, the revenues went up by just 6.1 percent,” Minister Ndagijimana said indicating that if prices were good, the revenues would increase at the same level as the volumes.
"But, because prices fell by 10, even 20 per cent [for some commodities], it made exchange earnings shrink, though we had an increase in volumes,” he observed.
MP Christine Muhongayire said that given the decline in prices of traditional exports like tea and coffee, which threatens the national economy, there is need to be proactive in devising mechanisms to arrest the situation.
Coffee revenues decreased from $69 million in 2017/2018 to $68 million in 2018/2019 whereas the export quantities of the same commodity increased by 6 per cent from 20,000 tonnes to 21,000 tonnes in 2018/2019, according to statistics from the National Agricultural Export Development Board (NAEB).
Quality, value addition
The average price of Rwanda Coffee was $3.41 per kilogramme in 2017/2018, which reduced by 7 per cent to $3.18 a kilogramme in 2018/2019., while that of tea reduced from $3.17 a kilogramme to $2.73 a kilogramme in 2018/2019.
"It is true that we cannot control the international market. But, I wonder what strategies we have so that we tackle such a problem before it could escalate?” Muhongayire wondered.
The Minister said the country is putting more efforts in increasing production of tea and coffee, and other commodities with an emphasis on quality as it helps get the highest price available at the market.
"We are also expanding the market for our produce,” he said.
Ndagijimana added that deliberate efforts were also being put in reinforcing value addition in the mineral sector, as another strategy to fetch more attractive prices on the international market.
He said that when minerals are exported raw, they bring in little earnings, and are much susceptible to price fluctuations.
"But, if we are able to process them in the country, it will not only create jobs for the nationals, but also enhance the value once exported,” he said adding that such activity has started in the country with two refineries of gold and tin already operational in Rwanda.
"We are still encouraging investors so that they venture into processing our natural resources get added value before being taken to international markets,” he said.
He explained that the price at least doubles when minerals are exported after they are processed.
Economic outlook
Overall, the country’s economy (GDP) grew by 12.2 per cent in the second quarter of 2019 from 8.4 per cent in its first quarter – which is an average of 10.3 per cent growth in the two quarters as per figures from the Ministry of Finance and Economic Planning.
Regarding national budget execution, as of end September, Rwf681.8 billion had been used, which represents 99.2 percent of 687.6 billion of the funds that were expected to have been spent in the quarter.
The budget for the fiscal year 2019-2020 – which started from July 1 and will conclude on June 30 – is Rwf2.8 trillion.