Trade deficit narrows by 36% in three years

Trade deficit narrows by 36% in three years

Rwanda witnessed a 36 per cent drop in its trade deficit since 2015 thanks to the Made-in-Rwanda policy that has increased the country’s industrial output

The progress on the performance of manufacturing industries was shared by Felicien Mutalikanwa, the Chairman of Rwanda Manufacturers Association during the celebration of African Industrialisation Day at Kigali’s Special Economic Zone yesterday.

“The manufacturing industries allow economies to diversify export streams, create higher quality jobs and build stronger and more stable economies,” he said.

Since the launch of the Made-in-Rwanda campaign in 2015, he said, total exports increased by 69 per cent from $559 million in 2015 to $944 million in 2017.

Total imports decreased by 4 per cent, from $1.849 billion in 2015 to $1.772 billion in 2017, he revealed.

“Exports growth reflects the positive impacts of the Made-in-Rwanda policy. It is quite visible that it has started to bear fruit and we believe this is just the beginning. According to National Institute of Statistics of Rwanda, the share of industry in the National GDP was 16 per cent in the second quarter of this year,” he said.

In 2017/18, according to Mutalikanwa, manufacturing activities increased by 8 per cent boosted by food processing activities, which increased by 15 per cent.

He said manufacturing of chemicals, rubber and plastic activities grew by 8 per cent while textiles increased by 19 per cent.

“We realised the growth of textiles and leather products thanks to the Government’s policy that discourages importation of second-hand clothes and shoes,” he said.

He added: “We currently have Volkswagen which started assembling vehicles in Rwanda, Bralirwa is starting to produce Heineken beers locally, Skol is increasing its production capacity to meet the market demand. These are few examples among many. As industries, we need to produce quality and affordable products to be more competitive.”

He commended the Government’s procurement policy for having played an important role by introducing preference for locally manufactured goods.

Cecile Nkomeje, the Managing Director of Pharmalab Ltd, that produces hospital equipment, said that they began by importing and supplying hospitals but later launched a local production factory after the Government launched the Made-in-Rwanda policy.

“We are currently producing 25 million of vacuum blood collection tubes and 5 million stool containers and urine containers which we supply to hospitals and clinics, both public and private. We are even exporting since the local market demands not more than 10 million of these,” she said

According to Telesphore Mugwiza, the Director General of Industry and Entrepreneurship at the Ministry of Trade and Industry, by coping with such challenges and promoting locally manufactured products, industrial output will continue to grow and create more jobs.

“For instance, there are over 40 industries in Kigali Special Economic Zone which have created over 5,000 permanent jobs and 7,000 casual jobs so far. We are also developing other industrial zones in satellite cities. These industries will continue to reduce the trade deficit,” he said.

Room for improvement

Mutalikanwa said that there are still areas of improvement amid different challenges that include imported goods packed in plastic packaging while local manufacturers are constrained to use expensive alternatives to plastic.

“This leads to a lack of competitiveness of Rwandan-made products on the local market,” he said.

Other challenges include obstacles in accessing long-term financing at affordable cost.

“In the agro-processing sector in particular, access to raw materials that meet industrial standards is a significant challenge that leads to sub-optimal capacity utilisation across different industries.

“Regulation and enforcement of standards continues to represent a serious obstacle to manufacturing growth as some large and established manufacturers face unfair competition through illicit practices of traders and an informal manufacturing sector which produces and sells sub-standard goods,” he noted.

 

Read more at https://www.newtimes.co.rw/news/trade-deficit-narrows-36-three-years