As leaders meet at the Rwanda Defence Force’s Gabiro Combat Training Centre in Eastern Province for the 16th National Leadership Retreat, business leaders are asking for more policy reforms to further ease doing business.
Manufacturers and exporters say that low production and high export costs were among the main challenges they face.
They have hence requested that leaders who are gathering in Gabiro from March 8-12, to deliberate effective strategies to address their concerns.
Among the proposals, the business community wants the Government to ensure the availability of raw materials needed for industries, increase air cargo space — which they say will reduce the cost of production and transport.
Felicien Mutalikanwa, the Chairman of Rwanda Association of Manufacturers (RAM), said the high cost of logistics involved in transporting exports by road is hurting the country’s competitiveness.
“Air transport is a better alternative for Rwandan businesspeople who export perishable products. We now have the national carrier (RwandAir), which is more affordable compared to other airlines,” he said.
Marie Chantal Isugi, the Managing Director of Excella Produce Ltd, said the limited cargo space undermines the country’s efforts to diversify its exports.
Every week her company ships out 12 tonnes of avocadoes, French beans and chili to the United Arab Emirates and UK.
Isugi said that RwandAir’s fares are relatively affordable compared to other airlines operating in Rwanda, however, the space is limited compared to the demand.
The national carrier charges $1 to transport a kilogramme of fresh agriculture produce to UK and the United Arab Emirates. Other airlines charge $1.75.
“We are engaged in the horticulture business. We are a landlocked country, so our best alternative is air transport. When the airlines don’t have enough cargo space, we cannot increase export volumes,” she said.
She suggested that the strategies should address two challenges – increasing production and lowering the cost of delivering the final products to both international and local markets.
Mutalikanwa observed that the high cost of importing raw materials increases the prices for the products that are made in Rwanda.
High energy costs
Another challenge highlighted by business executives is the high electricity tariff, especially between 5pm to 11pm when domestic power consumption is high.
“From 5pm to 11pm, factories are discouraged to work because of high electricity tariffs, yet factories should work 24 hours. This is a disadvantage,” he said.
Rwanda’s total export revenues in 2018 grew to $995.7 million from $943.5 million in 2017. Export volume increased by 17 per cent to 742,300 tonnes, according to the National Bank of Rwanda.
But despite the growth in exports, the deficit widened by 12.4 per cent as the import bill rose by 9.5 per cent.
Speaking during a recent session with the Chamber of Deputies, Soraya Hakuziyaremye, Minister for Trade and Industry, said that over the last three years, the Made-in-Rwanda campaign yielded good results.
She acknowledged that the high cost of production was weakening the competitiveness of locally manufactured goods.
As part of solutions, the minister said, the Government will this year review the industrialisation policy to align it with the Made-in-Rwanda drive.
The current industrialisation policy was rolled out in 2011.