The New Times (Kigali)

18 May 2012

Rwanda: U.S$100 Million Project to Bridge Trade Deficit

The World Bank and the Government of Rwanda yesterday approved a $100m project that seeks to raise the country's export revenues from regional markets.

Rwanda's growing trade deficit-where imports outpace exports by a big margin- is among the major challenges for policy makers.

A statement from the International Finance Corporation, the investment arm of the World Bank Group, says the money will enable government to open agro-logistic centres with bonded warehouses along the Goma -Bukavu border post.

The project also intends to open air cargo centre with a duty free commercial mall near Kigali International Airport to link the country to world markets by air.

Under the project, which will be implemented through a public-private partnership, Rwanda targets high end growing export regional market for its horticulture produce.

Other strategies highlighted include setting up the e-freight exchange system that is expected to balance truck loads along the two corridors (Northern and Central).

The proposal was drafted by the WB Trade logistics team and it attracted discussions between the WB, IFC, investment climate and high level Rwanda government officials from different institutions.

"The strategy offers the potential to transform Rwanda from the current situation of net import of logistics services into an exporter of logistics and services," said Trade and Industry, Minister, Francois Kanimba.

He noted the essence is to overcome the disadvantages of a landlocked country, export high value exports and take full advantage of large regional markets and increased air traffic.

The strategy recommends the development of a network of value added logistics services in Rwanda using the central and Northern corridor as backbone.

Rwanda is considered the most expensive for exports as the cost of exporting to the country sometimes triples that in other regional economies mainly driven by its geographical position and non tariff barriers along the way.

This year, Rwanda's trade imbalance is projected to reach 17.6 per cent as the country's imports grow much faster than its exports in the midst of turbulence in the global economic situation.

However, government says the situation is not alarming.

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