Rwanda signed a trade facilitation agreement with the DR Congo over a year ago that sought to improve trade between the two countries. The deal, signed by trade ministries of both countries was also geared at supporting people involved in cross-border trade around border areas in Rubavu District.
Despite this deal, there are still many challenges faced by cross-border traders and customs officials. Florance Nyiransaba, a Gisenyi trader who sells fruits and produce in the DRC, said small cross-border traders, especially women doing business between Rwanda and the DRC, were not benefitting from the trade deal.
Nyiransaba said many women cross-border traders with infants have, for instance, had to leave their children in the hands of temporary caretakers on the Rwandan side of the border because they lack travel documents, which they say are costly. One pays Rwf10,000 for a travel document, but the small women cross-border traders say that is a lot of money, adding that the process to acquire children’s travel documents is also lengthy.
“Therefore, women traders with small children have no other option but to hire temporary baby-sitters near Petite Barriere border in Gisenyi when they go to the market in the DR Congo, which affects businesses. We cannot concentrate because we are thinking about the children we left behind,” the trader, who has a two-year child, said in an interview with Business Times last week.
Hundreds of people from Rubavu and neighouring districts, who are involved in informal cross-border trade between Rwanda and the DRC, use Petite Barriere border post every day, according to officials. About 90 per cent of these are women, and 74 per cent of the Rwandan women sell produce and fruits in Goma, from where they buy goods for sale back home.
Gorrette Uwimana, another cross-border trader, said customs officials still confiscate small items like foodstuffs and clothes they buy in Goma despite a trade facilitation agreement in place. Under the deal, goods worth less than $2,000 (about Rwf1.7 million) are exempted from taxes. She claimed the deal is yet to be implemented on the side of Rwanda, while DRC traders are benefiting from it.
Traders abusing the agreement, officials say
However, William Musoni, the deputy commissioner for custom services at Rwanda Revenue Authority, said some of the traders were abusing the trade facilitation agreement and engaging in smuggling.
“The agreement was put in place to ease trade between the two countries. However, some traders try to smuggle items from the DR Congo that are not covered by the agreement into Rwanda to avoid taxes,” says Musoni.
Musoni said customs officials confiscate such goods whenever they discover them. He explained that only goods made in DRC are tax exempt under the deal.
“Therefore, if the products are not made in the DRC, traders must pay taxes or else we confiscate the goods.”
Gerald Mahoro, a customs officer at Petite Barriere border post, said incidences of smuggling have gone up over the period the trade facilitation agreement has been in place.
“It’s unfortunate that instead of the agreement encouraging and easing trade between Rwanda and the DR Congo, it has ironically created more problems at the border,” said Mahoro.
Mahoro also said they confiscate over 400kg of wine, 500 cartons of tomato sauce and kitenge fabrics, among others, on a daily basis.
He added that smugglers use different tactics to avoid detection, but noted that the agency has tightened surveillance to identify and apprehend traders involved in smuggling between the two countries.
The officials also said it is advisable for traders with infants to leave them behind when going to the market in the DRC.
Musa Babonampoze, the head of Turwany’inzara Co-operative in Gisenyi, advised small women traders and other business people to join co-operatives to avoid some of the challenges they face.
“Many of the small women cross-border traders in Gisenyi have a wrong perception about co-operatives because the few groups in the areas have not done a good job. So, some traders shun them, thinking there is nothing to gain from working in groups,” he said.
Babonampoze, however, added that traders working with the existing co-operatives, like Unama Ukore, Ejoheza, and Cyizanya, are helped to overcome problems that affect their operations. “The leaders work with those in DR Congo to solve traders’ problems, including theft, and the victims get immediate support which traders that don’t belong to any co-operative might not get,” he said.
He urged traders to always get information to help them differentiate between goods that are taxable and those not taxable, as well as the amount of taxes to be paid.
He said most of the time traders make losses because they do not understand the tax regime of different categories of goods and neither are they conversant with the trade facilitation agreement. So, people buying goods from DR Congo barely make any profits after paying taxes.
Informal trade between Rwanda and the DRC took a lion’s share of informal cross-border exports last year at 74.7 per cent of the total informal cross-border exports compared to that with other neighbouring countries Tanzania (6.24 per cent), Uganda (19.1 per cent), and Burundi (0.02 per cent). Total informal cross-border exports were recorded at $121.93 million over the year, up from $100.45 million in 2015. However, informal cross-border imports rose 41.2 per cent to $30.52 million from $21.62 million the previous year. The DR Congo represented 9 per cent of the total informal imports.