Call for incentives as Rwanda and Netherlands shift from aid to trade

This year marks the end of Netherlands’ financial aid to Rwanda as the two countries move to boost trade to support Rwanda realise its ambition of becoming self-reliant. Both countries are ready to enter a new chapter as emphasised by the Netherlands Ministry of Foreign Affairs’ acting head of the department for Sub-Saharan Africa, Martine Van Hoogstraten, while speaking during the 28th Liberation event at The Hague recently. “This year, we find ourselves in between two chapters of our common history. Our countries’ bilateral development cooperation will end at the end of this year. That is the chapter we are closing, in line with Rwanda’s goal to become independent of foreign aid. Looking forward, both of our countries will focus on intensifying mutual trade and investments,” she said. Rwanda’s business community is already tapping into the Netherlands market, however, there is hope for special incentives that traders and economists say would encourage exporters to increase their exports. Dieudonné ‘Diego’ Twahirwa, a young Rwandan agripreneur who exports chilli to Netherlands. Photo: File. When asked about her preparedness to tap into the new arrangement, Joy Murekatete of Jotete Investments, who exports flowers to Netherlands, said she has been experiencing some good signals in trading with the Netherlands although she believes that the two countries should give traders some guarantees that would encourage them increase their consignments. “We have been getting good rates from RwandAir to fly our flowers to the Netherlands and recently my flowers were auctioned upon arrival, which was very encouraging because before we would just take flowers without assurance of when they would be sold off,” she said. Murekatete, who has since expanded her flowering garden from 4 hectares to 11 hectares, added that, “Such auctions serve as a guarantee and since the two countries are shifting from aid to trade, we would wish to also see guarantees and contracts secured for traders.” For Diago Twahirwa of Gashora Farms, who exports chilli to Netherlands, the new arrangement between Rwanda and Netherlands is likely to come with a lot of benefits, including Rwanda supplying competitive products to Netherlands and benefitting from the Dutch advanced technologies. “We should focus more on fresh produce like chili and flowers because we have a competitive advantage. We also need to target the right time to export, like between December and June, there is a good market for fresh produces,” he said. Twahirwa said that although the Netherlands produces the same product, they are sometimes hindered by seasons which gives Rwandan exporters an advantage to supply the Netherlands markets when their home production is low. Today, according to Twahirwa, transportation of export consignments is easier because of available flights. There is a lot to trade and learn from the Netherlands. Before and during covid-19 period, transportation was tricky. Today, everything is moving smoothly, the flights and ships are available, and the market is there. What economists say Economists also believe moving from aid to trade has a longer and sustainable impact, because aid comes with a number of conditionalities that restricts proper usage. According to Douglas Kigabo Bitonda, an economist, ‘moving from aid to trade’ probably means towards some trade facilitation agreements between the two countries, and that this has the potential to boost Rwanda’s trade capacity and the role of the private sector which has the advantage of building sustainable dynamics between traders and investors. He added that, “I suppose, as Netherlands withdraws from direct aid, the support should be on how to facilitate the negotiations on how to remove trade barriers and facilitate Rwandans to easily get into the Netherlands market, then that would definitely be a great opportunity.” The move to phase out Dutch aid started in 2018 with a plan of a complete phase-out to be done by the end of 2022. The phase-out is not exclusive to Rwanda; it is part of the Dutch’s new strategy for Foreign Trade and Development Cooperation. Speaking to The New Times, Rwanda’s Ambassador to the Netherlands, Amb Olivier Nduhungire, gave a historical perspective of the Dutch aid to Rwanda that dates as far back as after the 1994 Genocide against the Tutsi, which was mainly going to the judiciary in terms of training and equipment. The Netherlands financial aid is expected to only remain in unstable regions near Europe. These include the Sahel, the Horn of Africa, North Africa, and the Middle East. The Netherlands seeks to use this aid to reduce conflicts and terrorism and prevent migration to Europe. He explained that as Rwanda continues to experience steady economic growth, the Netherlands decided to enter a trade partnership with Rwanda. “Rwanda’s trade with the Netherlands stands at US$ 41million as of 2021. Of these, 73 % are imported from the Netherlands while exports represent 27 %,” said Nduhungirehe. The Netherlands already has investments in Rwanda, including BRALIRWA Brewery owned by Heineken, Africa Improved Food, Unilever, a British-Dutch consumer goods company that has ventured into Rwanda’s tea sector as well as pharmaceuticals and dairy production businesses among others. Rwanda equally exports a variety of products to the Netherlands including coffee, tea, flowers, fruits, and vegetables. According to Nduhungirehe, before the covid-19 pandemic outbreak, Rwanda’s flower exports to the Netherlands increased by 45% in the year 2019-2020. He added that with the post-pandemic climate, there is likely higher chances that Rwanda’s trading with the Netherlands will boom since traders are ready to tap into new markets and even expand the existing ones.

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Call for incentives as Rwanda and Netherlands shift from aid to trade