AFRICANGLOBE – Last year Rwanda set out to double its efforts towards advancing the agenda that will see a significant number of Rwandans produce and consume more, domestically.
For now, there is at least one standout thing that many people in Rwanda have come to be familiar with in 2018 – the ‘Made-in-Rwanda’ slogan.
For instance, the ‘Made-in-Rwanda’ Expo has grown into a bigger event, attracting hundreds of local exhibitors and consumers.
The number of exhibitors at the annual Made-in-Rwanda Expo increased by 86 per cent in the past four years with about 460 exhibitors showcasing locally made products last year.
Bernadete Umunyana, the founder and Creative Director of Dokmai Rwanda, a local company that makes leather products like shoes, bags and wallets, said the Made-in-Rwanda drive has made it possible for businesses like hers to expand their markets.
“Made-in-Rwanda campaign has particularly created awareness about our products and enabled us to widen our markets. Last year I started exporting my products and this is because of the government support towards locally-made products,” she said.
The big idea by the government is to balance the country’s trade with the outside world.
Rwanda had a trade deficit (imports outweighing exports) of $1,017.32 million as of September 2018, according to central bank statistics.
This is largely because the country does not produce everything that it needs.
To put this into perspective, Rwanda imports mainly food products, machinery and equipment, construction materials, petroleum products and fertilisers.
Moreover, its exports are dominated by traditional products such as coffee, tea and minerals like tin, coltan, wolfram and cassiterite.
Rwanda like other countries hates the trade deficit because it can cause outsourcing of jobs to other countries. As a country imports more goods than it buys domestically, then the home country may create fewer jobs in certain industries.
The big picture
It is safe to argue that the Government is on track to deal with the trade imbalance.
Looking at the bigger picture, the Made-in-Rwanda programme has made a significant contribution towards realising this goal.
Statistics from the Ministry of Trade and Industry show that since the start of Made-in-Rwanda campaign in 2015, Rwanda’s total exports have increased by 69 per cent, from $559 million to $944 million in 2017 while total imports decreased by 4 per cent, from $1.849 billion in 2015 to $1.772 billion in 2017.
“As a result, the total national trade deficit has decreased by 36 per cent since 2015,” Telesphore Mugwiza, the Acting Director General in charge of Industry and Entrepreneurship Development told reporters.
He added that there are challenges to fully achieve the ‘Made-in-Rwanda’ programme objectives, pointing out the need for local industries to continuously improve their quality and the way they market their products.
“We have learnt that even-though it is difficult, it is possible to develop a vibrant industrial sector that can help to reduce our trade deficit,” he noted.
In July last year, the U.S suspended duty-free treatment for all Rwanda’s eligible products in the apparel sector under the African Growth and Opportunity Act (AGOA) framework.
This was a result of Rwanda’s decision to ban secondhand clothes, also known as cagua, which previous analyses indicated was making life hard for domestic textile industries.
The decision to phase out cagua was supposed to be a joint decision by all EAC member states, but only Rwanda implemented it.
To reaffirm its decision, the Government said it would pay taxes for textile firms affected by the U.S. stance to suspend Rwanda’s products eligibility under AGOA.
C&H Garments, a Chinese garment manufacturing firm, was particularly one of the big players that was affected by this move.
An official from C&H Garments said that they have not been affected by US’ cancellation of Rwanda’s duty-free treatment under AGOA as they have been able to resort to other markets.
“We no longer export to the US, but we are exploring other markets. We already have contracts with European companies and are not affected by AGOA at all,” he said.
The official, who is not authorised to speak to the media, added that they have also received support from the Government in investment and facilitation aspects, particularly through incentives on imported raw materials.
“The Government had previously promised to give us subsidy in terms of paying taxes. But what we decided to do was to shift from one market to another. However, they support us through our raw materials that are coming in,” he noted.
Rwanda’s strategy to develop the textiles, apparel and leather industrial sectors seeks to increase the quality and quantity of textile, apparel and leather for both local and foreign markets.
Mugwiza insisted that the EAC policy on used clothes is not a ban, but an import tariff adjustment to induce fair competition with free (or effectively subsidised) secondhand clothing imports.
For Rwanda’s case, since the change of tariffs on used clothes, Rwandan textile revenues have made large gains.
“The first year growth was approximately 20 per cent in textiles and garments sector positively responding in part to the tariff measures on SHC [second hand clothes]. Job growth followed a similar trend,” he said.