Nine exporting companies yesterday signed a memorandum of understanding (performance contracts) with the government, highlighting the government’s resolve to improve its exports volumes and receipts in the short to medium-term.
The firms that signed deals are from the agriculture and mining sectors, and cottages (handcraft-makers).
Under the agreement, government commits to ensure export infrastructure, like cold chain facilities for horticulture produce, is in place, and to set up an exports guarantee fund to help firms access loans, among other interventions.
On the other hand, exporters are expected to meet the agreed product quotas as per their area of specialty in a given period of time.
Speaking at the signing event, the Minister for Trade and Industry Francois Kanimba said the initiative would use public-private partnerships to promote export trade and, eventually, help cut the country’s trade gap.
“The government and the private sector must work together to ensure the country achieves its export targets and strengthens its foreign exchange reserves for sustainable economic growth,” Kanimba said.
The deal was sealed during the national exporters’ conference in Kigali yesterday. The meeting was organised by the Private Sector Federation and the Ministry of Trade and Industry.
While reading this fiscal year’s budget, Finance Minister Amb Claver Gatete told Parliament that government’s expenditure policies would focus on addressing specific market failures that hold back foreign direct investment and other private sector financing in high-value export industries.
“This approach is guided by the results of a recent public-private sector dialogue involving exporters. We, therefore, expect significant improvements in our foreign exchange earnings in the next few years,” Gatete told MPs.
He projected that exports would grow by 7 per cent in value terms this year, rising from $703 million in 2013 to $751 million in 2014. He, however, noted that export receipts would increase modestly by 5 per cent, to $792 million in 2015.
The government targets a 28 per cent annual exports growth rate under the second Economic Development and Poverty Reduction Strategy (EDPRS II). The sector is currently expanding at 12 per cent, according to Kanimba.
The minister called for strong commitment from all stakeholders to improve the trend.
Rwanda’s total trade grew by a paltry o.4 per cent during the first quarter of 2014, resulting into a 19 per cent trade deficit, Kanimba said.
“We hope that there will be some improvement in the remaining part of the year,” Kanimba noted.
The sluggish external trade was largely attributed to shocks from the global economic arena and decline in prices of agro-exports and minerals on the international market.
Kanimba said a steering committee will be instituted to monitor the implementation and progress of the agreement.
“We want to go beyond statements and speeches and work toward results. Government will give you all the support you need and ensure a conducive business environment that will promote value-addition and export product diversification.”
Hannington Namara, the PSF chief executive officer, said quarterly review will be conducted to monitor the performance of the selected exporters, and that of government.
Robert Opirah, director general for trade and investment at the Ministry of Trade and Industry, said the guarantee fund will enable exporters to acquire loans from banks to expand and improve their operations with government as the guarantor.
“In the long-run, we will put in place a fund to finance the export sector and make sure it grows more sustainably,” Opirah said.
Speaking at the function, Benjamin Gasamagera, the Private Sector Federation chairman, said there was need to sensitise small-and-medium entrepreneurs about the country’s national export strategy if they are to contribute meaningfully.
Celestin Baranyerese, the president of Rwanda Co-operative for Miners in Northern Province, said issues like access to affordable credit should be addressed to build the capacity of SMEs.
Thaddee Musabyimana, the director general Sosoma Industries, lauded the initiative, but said taxes on some raw materials should be scrapped to grow country’s exports and make Rwanda’s products more competitive.
According to Opirah, only 65 firms out of 168 exporters have the capacity to export goods worth $1 million a year.