Rwanda is the largest exporter of textiles from the region to the DR Congo but Rwandan SMEs in this line of business ought to explore this business line for expansion and diversification.
The study titled "The Opportunities for trade in the Democratic Republic of Congo" was launched on Wednesday, August 19, by the East African Business Council in collaboration with GIZ
It reveals trade opportunities that SMEs in the region can tap into.
One of the DR Congo's most sought after textiles products is plain woven fabrics of cotton containing more than 85 per cent cotton by weight and weighing between 100 to 200 grams.
"The size of this market has risen to $ 23.9 million, and is dominated by the Netherlands, India and Belgium. The market for sacks and bags for packing of goods of man-made materials, excluding of polyethylene is worth exploring for SMEs in this line of business," reads a section of the report.
The report has data showing the potential for trade in textile exports from Rwanda to the DR Congo. It also lists the most-sought after products which includes clothing accessories, blankets and travelling rugs, household linen and articles. Others are sacks and bags, for the packing of goods, of polyethylene or polypropylene strip or the like.
Theoneste Ntagengerwa, the Rwanda Private Sector Federation (PSF) Spokesperson, on Wednesday told The New Times that efffort is being done to expand and help Rwandan SMEs tap more into the opportunities in DR Congo textile trade.
He said: "PSF has in the recent years conducted trade missions in both North and South Kivu (Provinces of DR Congo) in order to promote trade between our countries."
"Representatives of the business community from DRC were invited in national business forums organised last year to continue building relationship and networking among our business communities."
Expand operations in sugar confectionaries
For the SMEs in the food processing cluster, the report recommends that Rwandan SMEs in the prepared foodstuff business, "ought to explore expanding their operations" in sugar confectionaries.
A section on preparations of cereals, flour, starch or milk; pastrycooks' products points out the potential of trade between Rwanda and the DR Congo for products in the category of processed foodstuffs.
Rwanda exported products worth $ 8 million in 2018, half of which ($ 4. 3 million) was destined for the DR Congo. In the same year, the DR Congo imported products in this category worth $99.7 million.
The most sought-after products in this category by the DR Congo are sugars and sugar confectionary.
Data reveals that "there exists a potential for trade for Rwanda in the category of sugar and sugar confectionary products. It reveals that Rwanda exported products in this category worth $ 6.1 million (an additional $4.8 million from 2016).
As noted, the DR Congo presents an opportunity for increased sales and subsequent business growth for many SMEs in the region.
The report indicates that the value of goods imported in the DR Congo in 2019, stood at $6.6 billion while EAC exports to the country in 2018, stood at $855.4 million, representing 11.5 per cent of total DR Congo imports.
Looking at the value of EAC partner states exports to the DR Congo in 2018, Rwanda comes first with $337.4 million, followed by Uganda with $204.3 million, Kenya $149.8 million, Tanzania $144.9 million and Burundi at $18.9 million.
Globally, far away China is the top exporter to the vast neighbouring country commanding a share of 31.2 per cent, followed by South Africa at 15.8 per cent and Zambia 13 per cent.
During the launch of the new study, EABC CEO, Peter Mathuki, urged EAC partner states to fast-track the admission of DR Congo into the regional bloc noting that it sources for goods that the EAC can ably supply, from very distant markets.
Mathuki said the DR Congo will benefit from the larger EAC Common Market and Common External Tariff framework.
Mathuki added: "It will also have access to sea ports of Mombasa and Dar es Salaam at competitive rates. Their huge population of 81 million people also provides a vast opportunity for SMEs from the EAC region."
In light of the Covid-19 pandemic this year, the EABC has focused on analysing new market opportunities for SMEs geared to drive business recovery.
Mathuki is of the view that "our region's geographic proximity" to DR Congo is an avenue to optimize trade.
Regional SMEs must proactively realign and focus their operations to match the market opportunities in the DR Congo as one of post-Covid-19 recovery strategies, he stressed.
Challenges of doing business in DR Congo
Venturing into trade in the vast neighbour, however, has hurdles to contend with
The DR Congo has the highest rate of import and export transactional costs in Africa, it is noted, and "this translates into high costs of doing international business."
These costs are mainly manifested in terms of non-tariff barriers.
According to the study, the firm that provided input in the textile category exports to the DR Congo through Goma border post and uses an Indirect-Channel through domestic agents such as export broker, export agents, and buyers agents.
It is noted that unjustified labelling requirements, unjustified standards, import bans or 'buy-national policies' rarely affect products in the textile category through the Goma border post.
What to watch out for, as noted, is the "request for additional trade documents that occasionally causes delays."
While the firm (respondent) has never experienced delays due to lengthy customs procedures or arbitrary customs valuation, concerns to do with product classification for customs purposes surfaced a couple of times.
The lack of information about opportunities in the DR Congo was cited among the challenges.