Rwandan exporters are yet to make the most of the European Union duty-free trade opportunity, according to the European Union and International Trade Centre.
Rwanda enjoys duty-free access to the European market for all products but arms and ammunition.
However, despite these opportunities, statistics from the International Trade Centre show that local firms are not making the most of the trade window.
For instance, in 2017, Rwandan firms exported about $53.5m worth of goods to Europe. However, statistics showed that Rwanda had untapped potential to export products worth well over $14.5 million.
Currently, the EU is the world’s largest single market with a population of 503 million people and more than 25 per cent of the world’s GDP, making it a good target for any business.
National Agricultural Export Development Board chief executive, Bill Kayonga, told The New Times that working closely with exporters, they have been able to identify the key challenges and are working out solutions.
Among the major impediments include the high logistical costs to access most markets which, in turn, calls for exporters to be strategic in value chains they invest in.
Kayonga said that, given the high costs associated with logistics, exporters ought to consider strategies that export high quality, and unique and on-demand products which can enable one to cover the high costs.
“One of the challenges we face is that we have high logistics costs, we need to be very strategic in the kind of logistics and value chain we invest in, we need to go for high quality, high-end products so that we can be able to cover the high logistics costs,” he said.
For instance, he said that exporters can make the most of the trends such as the current demand in high-quality organic products which fetch better prices and are in high demand.
Market information and knowledge on market structures is also a critical component that influences the success of an exporter.
An exporter with insights into market information, such as product demands, and market structures is likely to have an edge over those without it.
“Even the products we export compete with products on the shelves, so you have high market penetration costs. It is important to have market intelligence, market information, build relationships over time,” he said.
“Some of our private sector members, especially budding SMEs, are finding opportunities from penetrating the EU, UK, Dubai, China and Japan markets for products such as coffee. “The volumes are still low, and the value is still low. We are building capacity, skills to be able to support the SMEs to be more competitive,” he added.
Export receipts for Rwanda have grown four-fold in the last decade, from $400 million in 2007 and $1.6 billion in 2016.
However, statistics show that there are also challenges related to the growth and survival of small exporting firms.
A previous World Bank Rwanda Economic Update showed that the local export sector is increasingly characterised by high entry and exit rates.
With an estimated 30 per cent survival rate of companies in the export sector, the diversification and emergence of relatively new firms has been slow.
Top 5 per cent of the firms (about 65 companies) were found to be exporting nearly 80 per cent of the produce as of 2017.
This, if addressed, fetch more receipts.
Kayonga said that they have several interventions across the value chain, from availing land and provision of cold rooms, an export development fund as well as linkages to markets among others.
Major opportunities, he said, lie in the horticulture sector given the demand and prices.
“The prices are good, one can make a profit. You can be able to grow three crops a year and produce all through the year, it is a good opportunity,” he said.
Other aspects that have an opportunity despite being on a small scale, include orthodox teas, essential oils among others.
The NAEB boss also called on local exporters to prove they are reliable when working with the various clients as it’s a major factor in international trade.
Among the interventions are trainings, such as one hosted by the EU delegation in Rwanda, International Trade Centre, NAEB and the Private Sector Federation on Wednesday this week on market access, compliance to standards, market intelligence among others.
The first training was themed around the agro-processing and manufacturing sector.
Nicola Bellomo, the head of the European Union Delegation to Rwanda, said that the market has multiple opportunities for Rwandan traders given that it has 28 countries and is diverse.
Among the gaps that ought to be fixed to make the most of the opportunity he said, is capacity and approach by local firms especially in their understanding of the market.
By bridging these gaps, he said that Rwanda can make the most of the Made-in-Rwanda brands and its positive reputation to increase exports.
Among the major opportunities for exporters, he said, are horticulture products, specialty coffee, as well as creative industry products such as garments.
Local exporters who spoke to The New Times said that a common challenge is lack of adequate market information on the European market and its structures.
For instance, Vestine Umutoni, a producer and exporter of handicrafts and African themed clothes, said that despite awareness of the demand for their producers in Europe, her and her cooperative have had challenges building ties with firms that purchase for European stores.
She said that, during her recent visit to three EU countries, she met store owners only to learn that most of them have firms that procure products for them.