High transport costs as well as limited access to finance pose a serious challenge to Rwanda’s fledgling informal cross border trade.
Several traders who talked to Business Times at the Gatuna border post said they were posting immense losses as a result.
Others said that they lack enough capital to expand their businesses even as the latest survey by South African-based FinScope shows a substantial rise in the number of Rwandans with access to financial services.
Joy Rwamanza, a trader told Business Times; “Most of us (traders) don’t have enough money to trade in big volumes…so we end up losing business.”
Davis Mukiza, a Business Consultant said; “Looking at the nature of businesses around the border, you find that most of these people are small scale traders; they are always looking for a penny to sustain their families, they don’t know that expanding such a business is worthwhile.”
Informal trade is increasingly becoming an important source of revenues for Rwanda and easing bottlenecks to this sector is part of government’s top economic priorities.
Kaliza Karuretwa, the Director General in charge of Investment Climate at the Ministry of Trade and Industry, said that government is devising a strategy to strengthen finance forums in cross border trade districts to support traders to have access to finance.
“We want to encourage formation of women cross-border trade cooperatives and creation of small trade finance scheme targeted to women traders,” she pointed out, adding that there is need to provide operational and entrepreneurial training to cross-border trader cooperatives.
According to statistics from the Ministry of Trade, over 74 percent of traders engaged in informal trade are women mainly dealing in agricultural goods with low levels of capital.
There is however optimism that improvement in infrastructure and information would increase supply and reduce cost of goods among local cross-border traders thereby increasing demand and volumes exported to larger cross-border markets.
Rwanda generated Rwf33.2 million from informal cross border exports within the first six months of this year compared to Rwf21.9 million from formal exports.