Rwanda’s trade with its neighbours is expected to grow following the signing of a $1m (about Rwf697m) funding deal to boost cross-border trade with the Democratic Republic of Congo, the country’s main re-export market.

The grant from Belgium and the UK (through Department for International Development - DFID) was extended through a contribution agreement under the TradeMark East Africa Rwanda programme.

The project dubbed "Linking East to West – Supporting Rwanda’s Trade Competitiveness with the EAC and DRC” – will reduce the cost and increase the value of trade between Rwanda and the DR Congo, Frank Matsaert, the TMEA chief executive officer, said during the signing of the deal on Wednesday.

Matsaert added that the 20-month programme also seeks to set up a cross-border market for informal trade on the Rwanda/DR Congo border, as well as improve the capacity of small and medium enterprises in Rwanda.

"Under this project, we will negotiate with DR Congo to simplify its trade laws, carry out feasibility studies on how to create sustainable cross-border markets and support market linkages to enable Rwandan companies and farmers export more to DR Congo,” said Mark Priestley, the head of TMEA Rwanda.

François Kanimba, the minister for trade and industry, said government will take advantage of the support to draft an efficient cross-border strategy. 

"Such small investments could result in a dramatic increase in cross-border trade,” he said.

"Increasing cross-border trade is one of the main priorities to bridge Rwanda’s burgeoning trade deficit. The DR Congo border is a border of opportunity comprising $192m of formal and informal exports in 2013 from Rwanda. 

Through this programme, the proposed interventions will seek to increase both formal and informal exports to DRC, which will lead to a tangible impact on poverty and gender,” said Erwin De Wandel, the minister counsellor at the Belgian embassy in Rwanda.

Crucial trade

Government figures show that last year, both formal and informal Rwandan exports to the DR Congo totaled to $192 million.

Matsaert said high cost and delays undermine trade, reducing the demand for and supply of Rwandan products and services in markets across borders.

The programme is expected to reduce the cost of exporting goods and services to DR Congo.

The Ministry of Trade and Industry, Rwanda Development Board, ProFemmes/Twese Hamwe and International Alert are the implementing agencies of this programme.

Cross-border trade is crucial for Rwanda. More than 37 per cent of Rwanda’s merchandise exports in 2012 were exports to Rwanda’s four neighbouring countries – Burundi, the DR Congo, Tanzania and Uganda. 

Cross-border trade, mainly informal, plays an important role in poverty reduction as it provides trading opportunities to poor people, particularly the women, who are the most active traders along Rwanda’s borders.