15 September 2018

East Africa: Rwanda Trade Deficit With EAC Partners Widens

Rwanda's trade deficit with its EAC peers widened by $16 million (Rwf14 billion) in the first half of 2018, as the country opted for food and cement imports from the bloc to plug domestic production gaps.

According to new trade data from the National Bank of Rwanda, the trade deficit increased to $152.83 million (Rwf132.2 billion) from Rwf118.3 billion ($136.81 million) in the six-month period ending June 2018, attributed to increased imports of cement, maize, sorghum and rice from the region.

"The worsening trade balance is on account of increased imports -- by 12 per cent from $221.67 million to $248.26 million -- outweighing exports," the central bank said.

Rwanda imported more cement after the largest manufacturer, Cimerwa, shut down its plant for maintenance and upgrade in March and April.

A second plant, Kigali Cement, owned by troubled Nairobi Securities Exchange-listed ARM Cement, also suspended production during the period under review, even as demand from the rebounding construction industry rose.

There was a 31 per cent increase in cement imports, from 117,959 tonnes in the first half of 2017 to 154,486 tonnes during the same period this year.

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The imports were to plug a 14.2 per cent hole in local cement production as demand shot up by 12.1 per cent. According to the central bank, cement demand in the first half of this year reached 277,695 tonnes from 247,831 tonnes during the same period last year.

Rwanda is also grappling with low production of maize to feed a growing population and supply raw materials to industries such as breweries, maize millers and food processors.

African Improved Foods (AIF), a maker of soya and maize flour for children and mothers, has been importing from Uganda.

On the other hand, Rwanda's exports to the EAC increased to $95.43 million (Rwf84 billion) in the six months ending June 2018 from $84.86 million (Rwf74.4 billion) in the same period last year.

Outside the region, Rwanda's import bill has remained high, with new data from the central bank indicating that in the first half of 2018 formal imports rose by seven per cent in value to $1,127.4 million, from $1,053.8 million during the corresponding period of 2017.

Rwanda imported more consumer goods, capital goods, intermediary goods and energy and lubricants.

Rwanda's export earnings have increased due to high global commodity prices. In first six months of this year, export earnings increased by 23.2 per cent to $463.16 million (Rwf405 billion), from $375.91 million (Rwf330 billion) during the same period in 2017 while the volume increased by 18.4 per cent

"The increase in exports value is mainly attributable to the good performance in traditional exports (28.7 per cent), non-traditional exports (19.1 per cent) and re-exports (22.2 per cent)," said the central bank.

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