17 October 2012

Rwanda: Support Informal Traders

Traders, especially those engaged in informal cross-border trade, have noted with concern that high transport costs and limited access to financing are among the main challenges facing their operations.

Their appeal to authorities to reduce such trade obstacles - which are also part of the prevailing non-tariff barriers to trade in the East African Community - comes at a time when informal trade is increasingly becoming an important source of foreign exchange for the country.

Rwanda generated US$42.3 million from informal cross-border exports in the first five months of 2012, up from US$23.8 million the same period last year, according to recent central bank figures.

Statistics from the Ministry of Trade and Industry also indicate that more than 74 per cent of traders engaged in informal trade are women - they usually deal in agricultural produce with low levels of capital.

This shows that besides generating foreign exchange for the country, informal businesses have become a driving force with regard to employment opportunities.

So, easing the challenges affecting the hardworking businesses in this sector will go a long way in promoting the culture of self-employment. And this is what the country needs if it is to attain the middle income status by 2020.

Improving infrastructure and crafting financial products, which are tailored to this segment, among other incentives, would help reduce the cost of doing business across borders, thereby boosting exports.

It would also facilitate imports and increase the supply of goods and services and create employment opportunities, thus promoting growth.

There's is no doubt government is committed to creating a business friendly environment, partly through the elimination of trade barriers.

The move to strengthen finance forums in border districts to help increase traders' access to financing is commendable. It is also vital to provide entrepreneurial training to such traders, particularly through their cooperatives.

But such initiatives need to be expedited.

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