The announcement by the Ministry of Trade and Industry that Rwanda needs to adopt better policies to boost exports, illustrates that the country’s imports outpace exports by a huge margin.
Despite efforts to increase export revenue through diversification —mainly by shifting from over-dependence on traditional exports like tea and coffee—the trade deficit has grown rapidly since 2007. As the value of exports increased, the imports bill expanded at a faster rate.
According to official statistics, imports grew almost twice the growth of exports between 2007 and 2010.
In the period, exports registered an average growth of 12.9 per cent while imports expanded by 23.1 per cent on average, owing to high demand of capital goods, due to increasing investments.
The share of the Balance of Trade to Gross Domestic Product deteriorated from -11.9 per cent in 2007 to-17.7 per cent and is estimated to climax -21.6 per cent in 2011
However, the new national export strategy seeks to reverse this trend through fresh policies aimed at, among other factors, promoting export diversification and reducing freight costs.
Indeed, the success of all these initiatives will hinge on the level of integration of Small and Medium Enterprises (SMEs) into the export value chain.
Integrating SMEs into this export chain will help 95 per cent of the country’s businesses improve their competitiveness through better strategies.
That way, local SMEs, which account for 84 per cent of private sector employment in the country, will play a vital role in the industrialization process.