Exporters can mitigate external risks in the economy, says Atlas Mara’s chief for global market sales

The world economy continues to grow at a slow pace amid renewed financial and political turbulences. From 3.4% in 2014, global economic growth decelerated to 3.1% in 2015 and to 2.5% in 2016Q1. Mindful of the current global headwinds, the IMF revised downwards the world real GDP growth forecast for 2016 to 3.1% in July 2016, lower than the April 2016 and October 2015 projections by 0.1% and 0.5% respectively. The decision by the British to leave the European Union (Brexit) adds to concerns over the global economic prospects. And in Rwanda, economic growth is projected to be 6.0% in 2016 from 6.9% recorded in 2015 as the sluggish global economy and the lower levels of commodity prices continue to weigh down Rwanda’s external sector. However, Erik Boekel, Atlas Mara’s head of global markets sales, says ensuring more local production while investing in innovation will keep economies like Rwanda relatively stable despite the volatilities. Boekel spoke to Business Times’ Peterson Tumwebaze on how Rwanda can boost its external trade and address the forex exchange risks. Exporters are often exposed to global markets and so are the forex exchange risks, how can they address some of these risks? The prime focus should be to enable exporters increase production to try and close the gap. And people should understand that as Rwanda tries to achieve the middle income status, it’s obvious and normal to experience that kind of trade imbalance between the exports and imports. The current importation trend is a reflection of growth of a positive growth because you want to achieve in almost everything and yet you need raw materials and the like, thus incurring a huge import bill. So how can this be dealt with? Supporting local production is critical but also trying to focus on how to boost exports, is equally imperative to achieve a balance. More finance should be channeled towards supporting exports, however it’s a process that cannot be changed overnight. It should be the responsibility of all the banks and government to ensure exporters are getting the money. The question most business people ask, is how to boost local exports yet interest rates are high; how can this challenge be addressed? It’s a challenge that begins with the Central Bank especially on how to manage the economy, however Africa and Rwanda are not in isolation when it comes to the question of managing interest rates because what happens in global markets affects local economies including Rwanda. For-example inflation and interest rates outside Africa is low when compared to most economies on the continent; this is mainly because after the financial crisis of 2008, many investors moved back to the developed markets, where the risk is lower. Also local currencies continue to lose value against the dollar and it means expensive imports which often translate into high imported inflation. What solutions is Atlas Mara bringing to the market? Atlas Mara is here to stay, meaning we are bringing long term solutions, our primary role is to be able to connect Rwanda financially to the rest of the world. We also want to bring to the market more innovative and affordable products and continue to play our role as one of the leading player in Africa’s financial market which includes Rwanda. We are providing Rwanda with a brand new network which is critical for sustainable development. We are for-example operating in more than 10 countries and expected to increase our presences in over 15 countries in Africa in the next 5 years which only means more connections for Rwanda. We want to bring to the market more sophisticated solutions to the banking sector. This is to respond to the increasing demand of technology to mitigate investment risks Limited innovativeness has often been blamed for the low up take of bank products by customers, what should banks be doing to tap into the unbanked segment? Digital is the way to go, Banks must embrace ICT as an enabler to grow, and they must tap into the ever changing technology. For-example, today almost everyone has a mobile device, so as bankers we need to understand that gone are the days when people used to go to the banks and lineup waiting for services. We have to now reach them electronically in the most affordable and efficient ways we can. It is either you go digital or you get kicked out of the market, and this is what we as Atlas Mara we are focusing on; to become more innovative. Where do you see the future of the banking industry in Rwanda and Africa in general? The banking industry is constantly changing and it’s like the think tank is playing more and more important role. So, we as traditional bank must equally keep changing to match the trends, market players especially in Rwanda must embrace modern and innovative infrastructure and technologies government is putting in place to stay competitive. For example, Rwanda is investing much into brood band, which banks should now use as an enabler to increase outreach and maximize profits. Rwanda’s currency like in many other economies has depreciated by almost 7.5%, the highest depreciation recorded in last decades and in the first half of 2016, how can the country deal with situation? Dealing with forex exchange risks remains a challenge that we all must work together to address. The depreciation of local currencies often puts a lot of pressure on the profitability of many corporations. The fall of international commodity prices and a slowdown in the Chinese and European economies can only mean more crisis to the emerging economies. Despite exporters benefiting from the strengthen of the dollar, it still poses a serious challenge to businesses including importers. We therefore must have a very professional conservation on how to approach and mitigate the risks that come with forex exchange risks.

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Exporters can mitigate external risks in the economy, says Atlas Mara’s chief for global market sales