The mining industry which is currently Rwanda’s second foreign exchange earner after tourism was also heavily affected by the low foreign demand.
Rwanda’s exports fell by 35.43 percent and 46.53 percent in value and volume respectively, in the first two months of this year as a result of the global economic downturn, according to Rwanda Development Board (RDB).
Latest official figures from RDB’s export promotion department, attributed by the National Bank of Rwanda (BNR) show that combined foreign sales of Rwanda’s leading exports in January and February fell sharply.
The figures provided to The Business Times showed that export revenues declined by $13m (Rwf6.8b) to $23.7m (Rwf13.4b) from $36.7m (Rwf20.8b) in the same period last year.
“The reason for the decline is well known - the global financial crisis (which resulted into a global economic recession) that has affected most of the buyers especially our markets in Europe,” Martin Gasasira, a Marketing Research Officer in charge of exports at RDB said in an interview last week.
A sharp fall was observed in horticulture which declined by 98.7 percent, passion fruits 97.31 percent and Bananas 89.87 percent.
However, handcrafts registered a tremendous increase of 246.33 percent from $42.9 m to $148.5m in the period under review.
In terms of volume, RDB said that handcraft exports increased by some 5,223 kilograms from 2,049 kilograms to 7,272 kilograms, a 254.9 percent increase.
Coffee and Tea which are Rwanda’s traditional exports were also heavily affected, tumbling down by 21.79 percent and 44 percent respectively.
Major markets for Rwanda’s exports are worst hit by the global recession. Rwanda exports to the United Kingdom, Belgium and United States of America.
Other leading destinations for Rwanda’s exports include Hong Kong, Switzerland, Swaziland, Kenya and the Democratic Republic of Congo (DRC).
The mining industry which is currently Rwanda’s second foreign exchange earner after tourism was also heavily affected by the low foreign demand. Total mineral exports declined by 38.84 percent to $9.77million down from $15.98.
Vincent Karega, State Minister for Mining and Environment said that if the recession persists, they expect $60 million from mineral exports this year. This is $40 million less their original projections of $100million.
Karega said that government has focused on increasing production through helping investors in the mining sector to access concession easily. He said plans of putting up a processing plant for value addition are underway.
Apart from the global economic meltdown which has weakened foreign demand, Rwanda suffers from exporting raw materials other than finished products.
“The impact of crisis is significant on all exports including minerals though the quality of exports has a role to play, because we export mainly raw material. Decrease in demand also affects production hence the reduced volumes of exports,” Gasana said.
He said that RDB has intensified efforts to improve the quality of exports through provision of incentives to exporters.
“We have now intensified support for exporters and producers, for them to improve the quality of our exports. This will minimise losses because even with limited volumes, high quality exports fetch high prices,”
According to Gasasira, plans are underway to revise the five year export strategic plan (2008-2012) to mitigate the effects of the global recession on trade.
The new plan will put increase emphasis on the unit price received for the historically key agricultural export crops of coffee and tea.
With such performance, experts predict that imports will continue outstripping exports, exerting more pressure on the country’s current account.
The monetary policy statement by the central bank says that last year the current account deficit widened compared to 2007.
The balance of goods deteriorated by 54 percent from $404.39 million in 2007 to $623.48 million in last year. The central bank attributed this situation to the increase in the value of imports and related costs especially transport and insurance.