The 10th report of the World Bank Rwanda Economic Update, released this week in Kigali, shows that the local exporting sector is increasingly characterised by a high entry and exit rates.
Although Rwanda has higher number of exporters compared to other regional countries, data shows that about 60 per cent of the firms that export from Rwanda in a given year are new and 50 per cent of these firms will not be exporting the following year
The challenge with the growth and survival of small exporting firms has always been as real as that for other start-ups. There are not many start-ups that live to blow their first candle, so one can only imagine how huge the challenge could be for businesses dealing with overseas markets such as exporters.
Lack of sustainability plans is slowing the country’s efforts to achieve its export targets as much as it discourages many potential exporters from venturing in the sector. The positive now is that the issue is being given some attention with stakeholders charting the way forward.
Whereas experts have urged exporters to diversify their products to keep afloat in the business, there is need for a thorough post-mortem to underpin exactly why nascent exports firms exit too soon after starting.
This is because diversification can just be one-third of a plethora of challenges the exporters face. Equally important is to understand the fact that for most businesses, the first year or so are mainly investments with little returns. This means that new exports firms need more propping and support to keep going until such a time they are able to recoup initial investments and work and earn returns to it.
Stakeholders need to iron out a more ambitious and visionary plan to fix every possible loophole by working with the exporters facing challenges.