Diversifying trade for sustainable development

Rwanda needs to improve trade dramatically if it is to meet its development objectives for 2020 vision.

Rwanda needs to improve trade dramatically if it is to meet its development objectives for 2020 vision.

Domestic investment and trade provide a crucial basis for economic development, helping producers move from subsistence farming to access local and international markets and providing a core of employment by generating income within domestic industrial production and services delivery.

Current trade promotion strategy is aimed at improving social and economic status of the Rwandan people in general. Rwanda has a very large informal sector and relatively small private sector, although this has grown reasonably fast in recent years.

The events of 1994 contributed to a rapid deterioration in production, as well as to the destruction of communication and transport infrastructures.

It can be noticed that export levels remain well below the imports. In addition, Investments have been filling the gaps left by the war rather than building on an already productive base, however, this rebuilding phase is faster and Rwanda now has the opportunity to grasp a rapid transition from agricultural subsistence to industrial processing of agricultural goods and an increasing productive service sector.

Clearly there are still many barriers to growth, but the ministry of commerce (Mincom) aims at identifying those barriers in the area of trade and is always entitled to explain how the Government intends to overcome them.

Based on commercial studies that were released two last year, Commercial activity occupies more than 60 percent of the Rwandan households that do not depend on agriculture. Previous studies on commercial activity in the country showed that only 2.6% of Rwandans live on commercial activity, and the ministry of commerce is working hard to increase on the proportion in terms of percentage for citizens involved in commercial activity.

One of the noticeable problems is that the Rwandan business community has been characterized by lack of professionalism and competitiveness. Previously, commercial activity has been regarded by Rwandan people as a second best option, most of them preferring to work as civil servants both in the public service and in the parastatals with limited commercial orientation.

This also shows that innovativeness and entrepreneurship have been at very low levels in this sector. It is only after the recent world commitment to globalization and the Government policy advocating for privatization and promotion of the private sector as a partner in economic development that most of educated Rwandans realized that trade can be an engine not only for self development but also for national economic development and growth.

The ministry of commerce (MINICOM) has made efforts in recent years to organize several workshops aimed at improving skills of people involved in commercial activities and, thus overcome the problem of entrepreneurship skills.

Besides, the insufficiency of entrepreneurship skills has also been shown by

Lack of aggressiveness at the international market.

In addition, lack of modern technology in production that is always done at a higher cost as compared to the neighboring countries has had a set back in the trading of our activities.

Rwanda’s geographical position presents both opportunities and challenges. The countries to the North and East, such as Uganda, Kenya and to a lesser extent Tanzania have developed relatively rapidly in recent years and now provide a large share of the external markets for Rwandan goods.

At the same time, these countries’ products are a source of a strong competition for Rwandan exports seeking international markets, aided by easy access to transport routes. This is mainly due to the fact that Rwanda is a landlocked country

All people involved in fruit and vegetable growing projects can be supported through training in production and quality control, thus offering potential for organizing appropriate supply enterprises at the community level in districts.

Given the fact that fruit products industry in particular offers important programming opportunities given by its significance as an enterprise accessible to the rural poor.

Further more, It is worth to mention here that diversification of agriculture can play important role in market development, and thus inspiring poverty reduction.

Today agriculture has relative contribution to poverty reduction and this can be realized by its direct and indirect growth effects as well as economic progress shown by people involved in agriculture activities.

Direct growth effect of agriculture on poverty reduction is likely to be smaller than that of non-agriculture activities. However, the indirect growth effect of agriculture appears substantial and at least as large as the reverse feedback effect.

This is the reason why the poor participate much more in the agricultural sector for economic progress especially in low income countries, resulting in much larger poverty reduction impact.

From the above context therefore, we can say that enhancement of agricultural productivity is the critical entry point in designing effective poverty reduction strategies. To maximize the poverty reducing effects, the right agricultural technology and investments must be pursued.

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