Rwanda: Govt Increases Import Tax on Construction Materials to Spur Local Production

16 June 2023
The New Times (Kigali)
By Moise M. Bahati

In an effort to strengthen local production, the government has announced a 10% increase in customs duty on imported construction materials, including metal tubes, doors, windows, and their frames.

The Minister of Finance and Economic Planning, Uzziel Ndagijimana revealed this proposal on Thursday, June 15, while presenting the budget for the fiscal year 2023-2024.

In addition to these materials, wheelbarrows, plastic bags, and cloth bags will also face a 35% import duty. The government has opted to impose a 10% higher import duty compared to the prevailing 25% duty within the East African Community (EAC). This decision aims to support local producers of these materials, according to Minister Ndagijimana.

Furthermore, the import duty for second-hand clothes will remain at $2.5 per kilogram, while second-hand shoes will be taxed at $5 per kilogram. Under the EAC customs act, the import duty for second-hand clothes and shoes is set at $0.4 per kilogram.

Anticipated Growth in Export Revenues

Minister Ndagijimana forecasted a 7% increase in Rwanda's exports for 2023, with revenues projected to reach $1,668 million, compared to $1,555 million in 2022. The import bill is expected to rise by 5.8% to $3,804 million.

The trade deficit is also predicted to grow by 5.7%, increasing from $1,990 million in 2022 to $2,104 million in 2023.

6% Budget Increase

Rwanda is proposing a budget of over Rwf5,000 billion for the fiscal year 2023/24, representing a 6% increase. Approximately 57% of the budget will be allocated to recurrent expenditure, while 42.3% will finance development projects. Domestic revenues will cover around 63% of the budget.

Steady Economic Growth

Minister Ndagijimana expects Rwanda's economy to grow by 6.2% in 2023, marking a 2% deceleration from the 8.2% growth recorded in 2022. The construction sector and industrial production are projected to contribute 7.7% to the country's economic growth.

However, the services sector's contribution to economic growth is expected to decrease to 7% from 12% in 2022 due to global shocks.

Read the original article on New Times.

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