Seven ministers in Senate over trade imbalance

The government will put efforts in increasing value addition of export crops and utilise resources on the ground to maximise profitability in order to turn around trade deficit that has slumped heavily. Trade deficit for the third quarter of 2015 was at $338.95 million, 45 per cent higher than the deficit of $233.98 million for the corresponding quarter in 2014, according to reports from the National Institute of Statistics of Rwanda. The government has mainly faulted external factors for the slump, with ministers telling Senate yesterday that global financial crisis; regional political instability; shortage of volumes and value of export products are responsible for the imbalanced trade deficit. The government officials were speaking at a consultative meeting with senators, a meeting that sought to devise means of bridging gaps in the country’s trade balance of payment. The government was represented by Ministers Claver Gatete (Finance and Economic Planning), Evode Imena (Natural Resources), Geraldine Mukeshimana (Agriculture), Papias Musafiri (Education), Francois Kanimba (Trade and Industry) and the Minister in the President’s office, Venantie Tugireyezu. Also present at the Senate Hall meeting was the State Minister for Agriculture, Tonny Nsanganira . Traditionally, Rwanda’s exports comprised coffee, tea and pyrethrum; however, over the last 20 years, sources of foreign exchange earnings have grown to include minerals, horticulture and tourism. According to officials, for a competitive world economy, Rwanda production (volumes) in all sectors is significantly low to supply the needed market with less value addition on the exported commodities. The mining industry, which has been adding billions in the country’s export basket for the past two years, has been badly affected by low level of products diversification and value addition, market access restrictions; lack of enough equipment and deep global decline in mineral price since 2013. By 2013, estimates in exported minerals hovered around $230 million, which suddenly plunged up to $149 million at the closure of the 2015. Presenting his outlook on the export performance and the growth rate before Senate, Trade and Industry minister Kanimba told senators that between 2010 and 2015 the export value has been increasing, but slowed after drops in mineral price beginning 2013. “The average export growth rate between 2010 and 2013 was at around 20 percent, with 2011 hitting at least 47 per cent growth due to value addition on minerals which were trading at good prices on global market,” Kanimba said. “The same applies to service, mostly tourism driven, having increased significantly between 2010 and 2011, this was occasioned by the revision of tourism value within the country, but then from 2013 to 2015 it stagnated,” he added. Kanimba pointed out other challenges that have contributed to the trade imbalance including low supply of the products, market access, export infrastructure and logistics, in addition to capital constraints. Senators were joined by financial and trade experts during the consultative meeting on how to cope up with trade balance deficit at the senate hall yesterday. (Doreen Umutesi) According to the minister, there are cross cutting constraints hinging mainly on the scarcity of enough arable land, inadequate raw supply materials of raw materials, unreliable and expensive electricity for industrial manufacturers and insufficient long term financing and financial capital. Kanimba gave examples of opportunities which are yet to be fully exploited and can help reduce the imbalance. “Coffee, one of the cash crops, production does not increase, despite a robust marketing, we see no uptake in serious investment and it is yet to generate sufficient price incentives on farmers who use land for other crops,” he said. The same challenge affects the tea sector which yields low at the farmers’ level. However, Kanimba hailed investors in the industry on professionalism. Finance minister Claver Gatete, on his part, attributed huge gaps in balance payment to recent changes to flows related to donors and the Eurobond proceeds than just trade in goods and services. To change this trend, according to him, there will be need add value by pre-processing of goods before exporting; import substitution and making Rwanda a regional service hub. “We will need better processing of exports to increase the value of these exports because large amount of coffee and tea is still unprocessed, as well as hides and skins which are one of the largest non-traditional sectors that have grown substantially in recent years,” he said. Economic experts on the other hand called on the government to utilize resources on ground for maximum profitability. “Have we made use of marshlands we have in place? take an example of Rukarara, Akanyaru, Nyabarongo and others those wetlands are lying idle, we can’t claim we lack the land, “We need to be strategic, we have seen places where investors carried out activities without necessary having to expropriate citizens and it has worked to increase productivity,” said Antoine Mugesera a former senator. Reacting on the issues, Donatile Nibagwire, one of the local investors in the agriculture urged the government to treat all entrepreneurs equally adding that very often foreign investors have been favored more than locals. “These foreigners are given too much of exemptions and subsidies, yet local investors who are financially troubled receive few or no subsidies,” she said. She further stated that exporting is challenge for two main reasons; high freight costs and lack of adequate information on international market. editorial@newtimes.co.rw

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Seven ministers in Senate over trade imbalance