Local exporters eye Indian market

Rwandan exporters are looking to explore the Indian market as part of the country’s export diversification effort. The exporters want to take advantage of the existing trade agreement between Rwanda and India that came into force nearly six years ago. According to Robert Opirah, the director general for trade and investment at the Ministry of Trade and Industry, exporters will benefit from a Duty Free Tariff Preference (DFTP) facility, a trade arrangement that facilitates access to over 90 per cent of Indian market duty free. Rwanda implemented DFTP in 2009. However, local exporters were not aware of the scheme, and never considered India to be a preferred destination for their products. The government accepted blame for the lack of awareness about the agreement among the business community, and pledged to sensitise the business community through different forums. Opirah says government will also create awareness through workshops and countrywide sensitisation programmes on export development, potential and export requirements. “The trade ministry supports government’s policy to increase exports…we have a comprehensive programme to create awareness on available trade agreements, potential markets,” says Opirah. Even with strong economic relations between the two countries, India remains an insignificant destination for Rwandan exports. India is home to less than one per cent of Rwanda’s exports. The market share for Rwanda’s exports to Asia increased to 21 per cent in 2013 from 11 per cent in 2012, driven by the boom in mineral exports. Minerals accounted for 90 per cent of all exports to Asia. Hides and skins were Rwanda’s second biggest shipments to Asia. Some East African Community (EAC) countries such as Uganda and Tanzania have signed similar trade agreements with India. However, just like Rwanda, Uganda exports to India are still minimal, just below one per cent, while Tanzania exports up to 4 per cent of the country’s total exports under this scheme. “There is a big market for Rwandan products, but exporters need to know the real size and market requirement if they are to penetrate it,” said Jean Marie Munyaneza, the National Agricultural Export and Development Board (NAEB) director for international marketing. Rwanda and India are also expected to benefit from trade relations under the comprehensive economic partnership project that is underway. Supporting India’s Trade and Investment in Africa (SITA) is a United Kingdom Department for International Development (DFID)-funded project to be implemented by the International Trade Centre (ITC). Sopyrwa, a local company that deals in pyrethrum and essential oils, banks on the revamped trade relations between India and Rwanda to turn around its exports. Essential oils and pyrethrum are new export areas in the country but with great potential for growth in terms of value and marketexpansion. Gabriel Bizimungu, the general manger of Sopyrwa, says the firm is ready to enter the Indian market. “We have invested in better equipment to enhance production… sharing experience and expertise with our Indian counterparts will undoubtedly be a great asset to grow and recover our investments,” Bizimungu notes. Rwandan business community is optimistic that the project presents substantial economic and trade benefits. The launch of SITA and the awareness created for the Indian DFTP could greatly boost government’s trade policy, which seeks to accelerate export growth, create jobs, increase revenues and, ultimately, improve the prosperity and social welfare of ordinary Rwandans. According to Opirah, the project seeks to increase value of business transactions between India and selected African countries with the ultimate objective to create jobs and improve household income. Already, different exporting sectors have been selected to benefit from the programme, including the business processes outsourcing, coffee, essential oils and spices, the trade ministry says. Nineteen Rwandan workers were recently in India, where they were trained in essential oil production and processing under the project. This, experts say, is a step in the right direction as the two countries move toward strengthening trade ties. “We are targeting essential oils as some of the local products that will help widen Rwanda’s exports market. We also want to look at India’s experience and knowledge transfer to develop the sector,” says NAEB’s Munyaneza. Looking ahead, sector experts predict different challenges that are likely to impede the good initiative, given the growth level of the sector and Rwanda’s location. They say Rwanda has to address challenges like poor packaging, branding, product marketing, lack of information on market players, transport and supply consistency. They suggested joint ventures between local and Indian firm to improve sector performance along the value chain, especially in production and marketing. According the trade ministry, Indian investors are weighing the option of relocating some of their factories to SITA-benefiting countries to build a robust India-Africa value chain, “which is critical for accessing the other markets like Europe and US”. Boosting exports, which is one of the key goals under Vision 2020 and the second Economic Development and Poverty ReductionStrategy (EDPRS II). Rwanda’s export earnings are mainly from traditional exports of coffee, tea, cassiterite, coltan and wolfram, which are not sufficient enough to offset the trade deficit. Central bank figures show that trade deficit widened by 7.5 per cent to around $1.8 billion in 2014, from about $1.7 billion a year before. business@newtimes.co.rw

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Local exporters eye Indian market