Exports to double by 2015

Rwanda’s export revenue is set to grow twofold by 2015 aided by the establishment of the National Export Strategy (NES), according to Rwanda Development Board (RDB). Exports earnings will hit a record US$890m (Rwf528) by 2015 up from US$400m (Rwf237) last year, propelling the country into the right direction in her ambition to become a middle class economy by 2020.
Coffee is projected to continue driving Rwanda’s export sector. The New Times / File photo
Coffee is projected to continue driving Rwanda’s export sector. The New Times / File photo

Rwanda’s export revenue is set to grow twofold by 2015 aided by the establishment of the National Export Strategy (NES), according to Rwanda Development Board (RDB).

Exports earnings will hit a record US$890m (Rwf528) by 2015 up from US$400m (Rwf237) last year, propelling the country into the right direction in her ambition to become a middle class economy by 2020.

Earnings from priority sectors such as tourism, tea, coffee, minerals and mining services are expected to increase significantly from US$336m in 2009, US$400m last year to US$890m in 2015. Other priority areas include pyrethrum, home décor and fashion and business process outsourcing.

Tourism is set to increase from US$174m in 2009 to US$320m, tea from US$52m to US$152m, coffee US$37m to US$130m. Tourism is Rwanda’s top foreign exchange earner, followed by coffee and tea.

Benched on 2009 performance, minerals and mining services earning will reach US$111m from US$56m while horticulture, home décor and fashion are expected to hit US$9m and US$17m respectively from US$3m.

However, the projected revenue increase does not include real exports—which are adjusted to reflect the value of imports 

“The two things we are looking at, is maximising the output of our current exports, and also into new exports,” Clare Akamanzi, RDB’s Chief Operations Officer (COO) said recently at the launch of IMF regional Economic Outlook.

The projections are also based on the recent progress in exports, she said.

According to the central bank’s trade statistics, the country’s exports grew by more than 43 per cent between July 2010 and June, this year, fetching a significant Rwf181b.

Economists suggest that Rwanda needs to fast track export diversification strategies to reduce its over reliance on traditional exports—coffee and tea—which stayed put as the country’s top foreign exchange revenue earners, accounting for 76 per cent of total exports.

Dmitry Gershenson, the IMF country representative recently highlighted the possible causes of modest export growth in spite of extensive macro reforms.

“Rwanda compared to EAC countries is in a fairly difficult position at 12 per cent of GDP compared to 25 percent in Kenya and Tanzania and export concentration is high in Rwanda,” said Gershenson.

Some of the reasons he attributed to this state of affairs include low export growths include high costs of doing business which is about two to three times higher than its partner states in EAC due to high costs of transportation and energy costs.

 “The challenge of high concentration of exports is that the economy is vulnerable to shocks, key prices may go down or revenue,” he said.

 Janet Nkubana, the Chairperson of the exporters’ association said the business community faces different challenges, especially market availability and high transport costs.

 “There must be much emphasis on value addition which also needs high investments otherwise our competitive advantage is very low compared to countries with similar products,” Nkubana observed.

 She suggested that government should also build the capacity of exporters to create awareness on available trade agreements with other countries and strengthen the existing markets.

According to Nkubana, scarcity of accurate data on the number of exporters across the country and in which sectors is a big challenge.

“We need to understand every challenge and strengthen the market. Some people take a few products in their suitcases and claim to be exporters while some do it (export) once a year,” she explained.

Through evaluating exports sector by sector will help to know where the big markets are, and where trders stream from.

 Government is rolling out strategies to diversify into new products; particularly in tourism where new products like cultural tourism, conference and birding tourism targeting specific customer segments were launched.

The NES targets to promote research for market opportunities, trade facilitation and promotion, as well as ensuring stable monetary and fiscal policy in addition to putting up basic infrastructure, branding and continued improvement of business environment to boost exports.

Ends

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