Export Solutions: Creating Synergies Through Structural Modifications

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Export is increasingly critical in the road towards achieving middle-income status.  For a country like Rwanda, a way to sustainably develop itself is by enhancing its competitive advantages and increasing efficiency. Rwandan export is mostly commodity based with tea, coffee and minerals forming the bulk of goods export.  In relative terms, Rwandan export is very small, but it does not mean that it can’t export more. In fact there are efficiency enhancement options available and this paper explore such opportunities and present a few practical ideas on how to implement them based on existing and proven ideas. The most important thing is to create linkages to maximize profits and use of existing resources.[pic 4]

Rwanda’s production is based on the largely rain-fed agricultural production of small, semi-subsistence, and increasingly fragmented farms. It has few natural resources to exploit and a small, noncompetitive industrial sector. Production of coffee and tea are well-suited to steep slopes, and cool climates of Rwanda.  The export of coffee and tea has ensured access to foreign exchange earnings however over the years, farm size continues decreasing. The same thing can be said about raw material, there is just not enough in the country. The Rwandan mining sector is a major contributor to GDP but companies don’t run at full capacity. One way to resolve this is to import raw materials. This also poses a problem because Rwanda is a landlocked country resulting in high transportation costs.   Our research also finds that there are key constraints that prevent the growth of the business sector in Rwanda.  Milk for instance suffers from lack of linkages in its value chain and the shortage of electricity does not help in addressing this issue.