The falling global prices of key commodities coupled with instability in the Burundi market have reduced Rwanda’s export earnings.

The country is, therefore, far from achieving the targeted 11.5 per cent GDP growth in the next four years as its seeks to become a middle-income economy.

This growth was expected to start this year, but figures from the National Bank of Rwanda (BNR) show that in the first six months of 2015, the country recorded a 7.6 per cent growth.

Although the growth is impressive, according to National Bank of Rwanda Governor John Rwangombwa, the country needs to diversify its export base outside traditional exports like coffee, tea and minerals, whose prices have been falling.

“We need to urgently expedite efforts to diversify to other forms of non-traditional export commodities,” said Mr Rwangombwa.

The August 2015 BNR Monetary Policy and Financial Statement shows the value of exports has fallen to $275.28 million in the first half of this year from $293.61 million last year, partly weighed down by the depressed global mineral prices.

Exports to the East African Community member states have also dipped from $85.51 million recorded in the first half of last year, to $62.57 million in the same period this year.

The decrease was mainly due to a fall in exports of beer, raw hides and skins.

Most of Rwanda’s beer used to be exported to the Democratic Republic of Congo and Burundi.

Mr Rwangombwa said Braliwa, the listed beer brewer, no longer exports to those countries as Heineken has moved to protect the export markets from being flooded by beers from Rwanda.

Heineken shares
Heineken, a Dutch brewing conglomerate, owns majority shares in Brasseries et Limonaderies du Burundi, a brewery in Burundi, Brasserie du Congo in Congo and Bralirwa-Brasseries et Limonaderies du Rwanda, a brewery in Rwanda.

Analysts further attribute the dip in exports to the region to the political chaos in Bujumbura which started in April, shortly after Burundi’s President Pierre Nkurunziza’s started his third term project.

Rwanda re-exports petroleum products, vehicles and machines to Burundi. The country is also a big consumers of agriculture and manufactured products from Rwanda.

Re-exports to Burundi and DRC have fallen in the first six months.

Minerals, the country’s second foreign revenue earner, have not been doing well either. The prices of wolfram, cassiterite and coltan — Rwanda’s leading mineral exports dipped by 31 per cent. Output also reduced as jittery mineral exporters reduced production.

“Industry revenues are going down drastically and some miners are laying off employees while putting on hold recruitment plans because of difficulties in paying staff,” said Jean Malic Kalima, the managing director of Wolfram Mining Company Ltd and chairperson of the Rwanda Mining Association.

Job creation

This is another concern for policy makers given the country’s plans to create 200,000 jobs annually to absorb hundreds of unemployed youths. Mining employs over 33,000 workers.

“Since last October, we have not had stable prices; the rate at which prices are dropping has worried miners,” added Mr Kalima.

However, miners are also blaming their profitability woes on what they call high traceability fees introduced by agencies that track conflict minerals.

The Great Lakes region has been in the spotlight over conflict minerals, coming from the DRC, with tracking agencies such as ETR-ITSCI introducing mineral tagging.

Although the government can do little to influence global prices, it is, however, trying to do some advocacy for a reduction in traceability fees.

“Although it is good to comply with traceability standards, it is better to see a reduction or complete elimination of traceability charges; we are engaged with regional and international agencies to ensure this is realised,” said Evode Imena, the State Minister for Mining.

Source: The East African

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