An incentive program aimed to spur the manufacturing industry in the country has attracted $1.7 billion (Rwf1.7 trillion), said the Prime Minister.

PM Edouard Ngirente was addressing the plenary assembly of both chambers on December 2, to update them on achievements made on trade with a focus on export promotion.

The incentive programme dubbed ‘Manufacture and Build to Recover’ programme was approved in 2020 and rolled out in 2021 to help the economy recover from the effects of Covid-19.

The programme extended tax breaks and tax credits to businesses with an aim to reduce cost of investment for new manufacturers as well as those seeking to expand existing operations.

Ngirente indicated that the uptake is promising and with the continued trend, it would help address some of the economic challenges that the country faces.

"This will boost our economy in terms of increased exports and also drive import substitution by producing goods locally that are otherwise imported,” he said.

The investments were done in over 97 projects.

He highlighted that the investments made are directed at 31 construction projects, 39 in manufacturing, and 27 in agro-processing.

Ngirente noted that the benefits of giving these incentives can be weighed in terms of jobs created, quick turnaround in production, and export revenue generated more than focusing on the foregone tax revenues.

Merchandise exports increase by 21 per cent

The premier also highlighted that despite low agriculture performance and economic setbacks noticed this year, the manufacturing industry has played part in increasing exports by 21.2 per cent in the first nine months of 2022.

Exports in volume increased to 891.9 tonnes in 2022 from 738.1 tonnes in 2021, generating $1 billion in revenue, a 37.3 per cent increase from $738.1 million.

This is while imports have also increased by 14.9 per cent from 2,117.6 tonnes in the first nine months of 2021 to 2,433.3 in the same period of 2022. The import bill increased by 25.9 per cent to $2.6 billion from $2 billion.

Ngirente said that the trade deficit of 19.5 per cent shouldn’t be worrying because most of the imports are materials used as intermediate goods in the manufacturing industry.

Rwanda's economy is expected to grow at 6.8 per cent this year.

Fuel, fertiliser subsidy

To tame the continued increase of consumer prices on the market, the government has injected subsidies in fuel and fertilisers as the world continued to witness economic shocks from disrupted supply chains and the impact of Russia-Ukraine war.

Fuel subsidies on gasoline and diesel have amounted to Rwf87 billion while fertilisers amounted to Rwf15.9 billion in the fiscal year 2021/2022 and is expected to grow to Rwf30.8 billion in fiscal year 2022/2023.

The decision was taken to mitigate the adverse impact of high fuel prices on general price increases (inflation) which would negatively affect the speed of the country's economic recovery from the Covid-19 pandemic toll.

The soaring of fuel prices is a global challenge. This has greatly affected most economies around the world.