Rwanda to support exporters to US market

Saturday August 13 2016

A textiles factory worker spins silk yarn in

A textiles factory worker spins silk yarn in Kigali for the export market. Rwanda wants to support exporters of specialty foods, textiles, fashion and home décor to the US. PHOTO | FILE 

By KABONA ESIARA

Rwanda has mobilised $10.5 million in export credit guarantees to subsidise production, market entry, financing and insurance costs for its exporters, especially to the US.

Kigali has been facing dwindling foreign exchange reserves, which have dropped to 3.6 months’ cover, and a weakening currency that has depreciated by 7.6 per cent against the dollar.

In the 2016/17 budget, Finance Minister Claver Gatete announced a $1.2 million allocation to grow the export credit guarantee scheme. Last week, Trade and Industry Minister Francois Kanimba said that entering external markets is costly for small and medium enterprises if they bear all the costs.

“We are looking for ways of sharing these costs,” he said while launching the Rwanda Africa Growth and Opportunity Act (Agoa) Action Plan. The initial plan is to support 30 exporters to sell high-value products in the US market.

In the East Africa Community, Rwanda is one of the countries that has not fully exploited the quota-free, duty-free Agoa market. Export data from USAid shows that the country earned $187,000 in 2014 from exports to the US and $435,000 in 2015, largely from apparel and macadamia exports.

In the EAC, Kenya is the biggest beneficiary of the Agoa free market, bagging $433 million from apparel exports.

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Rwanda wants to support exporters of specialty foods, textiles, fashion and home décor to the US. But the biggest challenge is the production costs, which are still high. This calls for more subsidies to make the goods competitive.

Leslie Middleberg, chief executive of Swahili Imports, a US-based baskets importer, said the Rwandan exporters are losing market share due to high prices. So, the company sources its products from Senegal, Kenya and Uganda.

Now, trade experts are asking Rwanda to review water and electricity prices to make the manufacturing for export competitive.

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