Fixing trade imbalance: Govt seeks to grow service industry

Rwanda expects to bridge her trade deficit by a huge margin in the next six year aided by a surge in overseas service trade. Statistics from the Ministry of Trade and Industry point to a strong growth in the service industry with a projected surplus of US$22m (Rwf18b) by 2017 mainly due to a rapid growth in tourism receipts and business process outsourcing. Tourism revenues are expected to expand by 14 per cent to US$555m (Rwf331b) by 2017 following the launch of new tourism attractions like the canopy walk, birding tourism and the Congo Nile trail. Other products include cultural tourism and the development of museums. The services deficit rose by 26 per cent between 2007 and 2010. The balance is expected to improve by 14.8per cent in 2011. While tourism attractions are expected to increase to 555 from 251, government targets to maximise benefits from fibre optic investments. Business outsourcing, according to statistics, is projected at US$53m (Rwf32b) by 2015. The forecasts are contained in the country’s export strategy that seeks to increase exports of existing products while diversifying into new products and services. Rwanda’s imports grew almost twice the growth of exports between 2007 and 2010. As exports registered an average growth of 12.9 per cent imports expanded by 23.1 per cent on average, owing to high demand of capital goods, due to increasing investments. As a share of Gross Domestic Product (GDP), Rwanda’s Balance of Trade—the difference between the monetary value of exports and imports—deteriorated from -11.9 per cent in 2007 to-17.7 per cent in 2010. It is projected to worsen to -21.6 per cent by end this year. Experts warn that Rwanda needs to rebuild her fiscal shield, mostly depleted following the 2009 crisis and subsequent stimulus programme, to be ready for the next big global shock. “Any shock in international commodities prices for Rwanda’s main export or import products would severely hamper the balance of payments and growth out look,” the World Bank said in its recent report on the country’s economic outlook. Experts say that enhancing export promotion will bridge the trade deficit and bolster the foreign exchange earnings needed to keep the economy stay afloat. gertrude.majyambere@newtimes.co.rw

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Fixing trade imbalance: Govt seeks to grow service industry