The business of re-exporting goods to neighboring countries is emerging as a major component of Rwanda's external trade--a development that analysts say could play a big role to bridge the country's wide gulf between imports and exports.
Latest figures from the National Institute of Statistics of Rwanda (NISR) show an impressive trend during the year just ended, 2012. The country earned about $40 million from re-exports during the first quarter of 2012 alone, a significant rise from $20.3 million during the first quarter of the same year.
Total revenue from re-exported goods during the year toped $92 million mainly from kerosene, petrol, vehicle parts and lubricants. The main market for such goods is the Democratic Republic of Congo. Kenya, Congo, UK, Ethiopia and Tanzania are also consumers of re-exported goods from Rwanda.
With improved security in the Eastern DR Congo, the area has big market potential to boost regional trade.
Although relatively low, proceeds from re-exports are significant to the economy because they try to narrow the wide gap between the country's import and export bill--otherwise known as a trade deficit or trade imbalance that is now estimated at over $1,236 million dollars.
Last year, Rwanda exported goods worth about $416.9 million against $1,653 worth of imports.
The high import bill however, does not come as surprise. There is a very high demand for capital goods for infrastructure development such as those in critical sectors like energy. Such goods include cement and road construction equipment.
Uganda tops the list of five countries that were the main sources of Rwanda's imports in 2012 --supplying cement worth $55.6 million, vegetable fats and oils of $28.3 million, palm oil of $24.7 million, soap and organic surface active products of $11.0 million and worn clothing $12.5 million.
The current construction boom explains the high import bill of cement. It is estimated that the construction sector requires steady supply of at least 350, 000 tons annually, but local manufacturer, CIMERWA with an installed capacity of 100, 000 tons, can supply only 70, 000 tons.
This means that almost 80% of the cement consumed by the country's fast-growing construction sector is imported. This situation could soon change after South African cement giant PPC Ltd recently acquired a 51% stake in the company and plans a turnaround that with a new installed capacity of about 700,000 tons per annum by 2014.
Coffee tops exports
In what looks like growing trade with neighbors, Tanzania was the leading destination for Rwanda's exports in east Africa during the last three quarters of 2012 with minerals such as niobium, vanadium ores, tantalum and concentrates bringing in $53.2 million. Other exports to Tanzania include unroasted coffee that raked in $29.1 million, tin ores and concentrates that earned the country $46.1 million and tungsten ores $19.7 million.
Overall trade figures still show Coffee, minerals and tea as the main exports of Rwanda in the fourth. "The third quarter recorded the highest value ($31.4 million) of coffee exports in 2012, while tea recorded the highest value in the first quarter 2012 ($ 40.5 million)," NISR said.
Outside the region, China and the United Arab Emirates are the main sources of imported goods to Rwanda, according to the report.
While the net value of trade among member-states of the East African Community (EAC) has doubled from $2 billion in 2005 to $4 billion in 2010, the region's largest economy, Kenya, continues to dominate accounting for 41%.
There are signs of positive trade between Rwanda and the Southern African countries grouped under SADC with exports higher than imports. This means that the country could find good market for local products down south. For example, Rwanda exported goods worth $209.7 million to SADC countries and import goods worth $138 million.
Top five first destinations for exports of Rwanda for the year 2012
Values in US$ millions Shares in percentages
Total exports 120.4 79.2 110.3 107.0 100.0 100.0 100.0 100.0