What is derailing the new exports growth strategy?

Overthe past few years, the government and private sector joined hands to find solutions to challenges that were hampering growth of the export-oriented industries. Subsequently, the government signed deals with close to 40 firms to support them in various ways with the view of expanding the country’s export base, increasing volumes and earnings. This is one of the targets under the country’s growth blueprint, the Second Economic Development and Poverty Reduction Strategy (EDPRS II), where the government looks to increase exports to 28 per cent per year, from about 20 per cent. Under the agreements, exporters pledged to increase productivity and add value on more products, while the government committed itself to put in place the right infrastructure and environment to help realise these goals. The government pledged to improve infrastructure, provide enough electricity and storage facilities, as well as create awareness among exporters on new regulations, policies, and programmes related to trade to facilitate exporters’ access to more international markets. The two parties were expected to periodically review progress every three months. About 11 months down road, not much seems to have changed, and there are still many challenges facing exporters, and eventually affecting achievement of set targets. According to Antoine Manzi, the director for operations at the Private Sector Foundation (PSF), despite the progress made, exporters still face many constraints that have hurt their performance. He said exporters do not have access to funding; lack required equipment and skilled personnel to run them, as well as poor roads and inadequate power supply. Manzi, who was speaking during a meeting between beneficiary exporters and government officials from the trade and industry ministry in Kigali last week, said there is need to understand the challenges the private sector faces and find remedies right away. He, however, said exporters were doing their best to fulfill their part of the deal, noting that 11 months are few to measure scientifically the performance (increase in export volumes) as the projects are long-term ventures. Vainney Kabera, the managing director of Freshpak Limited, said the government has not delivered much in areas like transport, logistics, and packaging. “The cost of transporting exports to the market is still high; this affects the competitiveness of Rwandan goods,” he said. He noted that exporters also still face a big challenge as far as packaging is concerned. Grace Umuhorakeye from the Association of Coffee Exporters said the government is yet avail them enough information on the various export strategies, plans and policies as was promised almost a year ago. Umuhorakeye said concerned government agencies like Rwanda Development Board (RDB) have not briefed exporters on new markets, policies, and incentives. She said such information determines whether an industrialist will increase output to serve more markets or not However, Robert Muhizi, the RDB export division manager, refuted the claims, explaining that companies that consult RDB are always facilitated with market information through research. “We are also helping companies with advocacy and product certification,” he said. Export funds for November Exporters will be able to acquire affordable credit in November under the government’s Marching Grant Fund that is under Export Grow Fund that seeks to support the sector and increase the country’s export base, volumes and earnings, as well as create more jobs. According to officials from the trade and industry ministry, modalities on how exporters will access the funds are in final stages. The money, amounting to over Rwf1 billion, will be channeled through the Development Bank of Rwanda (BRD), which will handle the fund, Laurence Mukarugwiza, the external trade policy specialist and focal point person for the initiative, said. Exporters will access the funds at about 8 per cent interest per annum, according to the Minister for Trade and Industry, Francois Kanimba. The fund will cover 50 per cent of the cost exporters incur as they try to seek new markets abroad, he added. Lack of funding to conduct research and explore new markets is one of the main challenges local manufacturers face, which limits their presence on local and regional markets. Sector performance According to Ministry of Trade and Industry, the initiative is on track. For the coffee sector, Dr Celestin Gatarayiha, the head of the coffee chain division at NAEB, said fully-washed coffee has increased marginally from 42 per cent in 2014 to 42.2 per cent since the deals were signed. “We are targeting the growth in export volumes of fully-washed coffee to reach 50 per cent,” Gatarayiha said. He added that under the Fertiliser and Pesticide Fund were transferred to CEPAR for effective management; more than 2,501 tonnes of fertilisers have been bought and distributed to coffee farmers. “In 2015 alone CEPAR bought 3,000 tonnes and 5,000 litres of pesticide to be applied for 2016 season. NAEB has so far conducted training on good governance and financial literacy for at least 20 co-operatives in addition to preparing coffee seedlings for planting at least 1,500 ha of consolidated land in 2015/2016.” In tea sector, Issa Nkurunziza, the NAEB head of tea division, said they are training farmer co-operatives and other stakeholders in best agro-practices to improve the quality of green leaf. In manufacturing and agro-processing, the Ministry of Trade and Industry officials said companies have been helped to acquire standard quality certification marks for their products thus enabling them to export. “Even those who have been grappling with issues of tax arrears with Rwanda Revenue Authority (RRA) have since been resolved,” a source at the ministry said. Governmnet has also facilitated negotiation with Kenya Airways cargo to ferry Rwanda’s products to Brazzaville in the Republic of Congo twice a month, which is helping companies like Inyange. In the mining sector, Christophe Barthelemy, the managing director of Phoenix Metal Company, a mineral smelter, said the sector has been affected by price fluctuations on the international market. He said there is also a challenge of lack skills, noting that artisanal miners need to be trained to increase their output. Under the export support strategy, government seeks to empower local industries and help them improve production processes as well as volumes and quality to be more competitive on the global stage. The initiative also looks to create more jobs for the youth, with government targeting 200,000 off-farm jobs under EDPRS II. Over 146,000 off-farm jobs were created annually in the past three years, according to the latest Integrated Household Living Conditions Survey (EICV4) report released mid-this month by the statistics body, NISR. Rwanda’s exports declined by 6.2 per cent in value during the first half of the year to $275.28 million, from $2983.62 million over the same period in 2014. business@newtimes.co.rw

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What is derailing the new exports growth strategy?