Rwanda's nascent manufacturing sector has been hit hard by the nine-month crisis in Burundi that has narrowed the export market.
The government has said that the crisis could further bring down export revenues, while at the same time hampering the expansion of old and the setting-up of new industries at the newly-established Kigali Free Trade Zone.
“Our exports to Burundi have reduced to between 10 to 20 per cent; they were worth about $20 million a year,” said Trade and Industry Minister Francois Kanimba, adding that the crisis has affected all the trade links that had been set up to help Rwandan manufacturers expand into the neighbouring country’s markets.
“Burundians don’t have money to buy goods, and due to security fears our people no longer go there with ease,” Mr Kanimba said.
According to Mr Kanimba, Rwandan manufacturers have competitive advantage over regional rivals in Burundi and the Democratic Republic of Congo.
A number of regional companies use Rwanda as a strategic entry and export point into the two markets, as they plan to create subsidiaries in Bujumbura and eastern DRC. The firms include Bakhresa Grain Milling and Matelas Dodoma.
However, uncertainty over the Burundi crisis means that firms that had expansion plans are shelving them.
Local businesses and manufacturers who were already established in Burundi have also had to stop trading due to the on-going insecurity that has resulted in properties being looted or destroyed in the violence.
The situation worsened further when the two countries traded accusations that strained diplomatic relations hence affecting business and across their borders.
READ: Political tension curtails Rwanda trade with Burundi
Innocent Safari, the permanent secretary of Rwanda’s Ministry of East African Affairs told The EastAfrican that Rwanda-Burundi trade revenues last year declined to $9 million, from over $20 million the previous year.
The decline could have affected Rwanda’s 2015 trade deficit which, according to the National Bank (BNR) statistics reduced by 0.87 per cent to $1,633.05 million from $1,647. 37 million in the first eleven months of 2015, compared with the same period of 2014.
The DRC and Burundi are Rwanda’s second largest cross-border markets, accounting for more than half of the total formal and informal cross-border exports.
According to the Rwanda Association of Manufacturers, the worst hit are companies involved in food processing, paint, mattresses and cement.
“None of our manufacturers are ready to go back to Burundi. Even those who were on standby have lost hope. So our exports are going down,” Claudine Mukeshimana Cannoodt, Executive Director of Rwanda’s Association of Manufacturers told The EastAfrican.
Experts say the long-standing insecurity has caused regional and foreign investors to shy away from Burundi hence bringing down its economy.
Christophe Sebudandi, a Burundi expert and university lecturer said the crisis has stopped many foreign investors’ plans to set up business in the country.