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Rwanda's road to cross-border prosperity

Rwanda's progressive vision for trade continues to yield real economic impact for poor people's lives. As one of the fastest growing economies in Africa, Rwanda has made big strides to overcome past conflict and focus on reconciliation and rebuilding the country, charting progress in a unified front, which has significantly attracted foreign investments to boost Rwanda's economic development.

 

The EIF programme supports the Government's vision for national development building institutional capacity to develop and implement key policies, strategies, regulatory frameworks and trade reforms. Through the analytical diagnostic trade studies funded through the EIF and other donors, trade priorities promoting job opportunities, increases in incomes and rural development feature strongly in the Economic Development and Poverty Reduction Strategy (EDPRS II 2013‑2018). 

 

Key sector strategies for the implementation of the EDPRS II have also incorporated trade priorities, including the Strategic Plan for the Transformation of Agriculture in Rwanda Phase III; Infrastructure (Energy, Transport Urbanization and Rural Settlement); Financial Sector Development; Private Sector (Small- and Medium-sized Enterprises, Tourism and Manufacturing); Education; and, importantly, the National Cross-Border Trade Strategy (2013-2018). These have been instrumental in drawing in development partners' financial support and the Government's commitment to ensure that the strategic documents are effectively implemented to enable policy reforms and development impact. The incorporation of the EIF programme in the Ministry of Trade and Industry (MINICOM) has been at the heart of quickening the pace of progress.

 

The Single Project Implementation Unit (SPIU) set up at MINICOM with EIF support focuses on ensuring synergies and sustainability for externally funded projects and coordinates other donor‑funded projects relating to Aid for Trade (AfT) and investment. In addition to the EIF, the SPIU is funded by the World Bank, the International Fund for Agricultural Development, the African Development Bank (AfDB) and UNIDO. In terms of joint donor initiatives, the EIF has joined hands with the European Union (EU) to improve market access, and with TradeMark East Africa (TMEA), the World Bank and AfDB on transport, market infrastructure and trade logistics. Additionally, the Rwanda Trade Logistics and Distribution Services Strategy has been supported through the SPIU, together with the United Kingdom's Department for International Development as the EIF Donor Facilitator and TMEA.

 

Cross‑border trade (CBT) directly benefits the poor and can be a driver for regional peace and key to regional trade integration. Informal CBT accounts for a considerable proportion of Rwanda's regional trade, with exports estimated at US$108.3 million in 2015 and imports of US$22 million. This is a very different trade balance compared to the formal sector, where Rwanda runs a trade deficit.

 

Rwanda has 53 border crossing points, and 36 out of these are informal ones. Through the National Cross Border Trade Strategy, the Government plans to build markets around border areas to help facilitate CBT. In this framework, the EIF funded feasibility studies for CBT market infrastructure, which were completed with detailed designs for six districts bordering three other EIF Countries (Burundi, the Democratic Republic of Congo (DRC) and Uganda).

 

Building on this groundwork, an EIF‑funded project was launched to improve the cross-border business environment as envisioned in the Strategy, by addressing the institutional mechanisms, trade-related capacities and the strategic trade support infrastructure. The project has the overall objective of improving the livelihoods and the earning potential of those engaged in CBT in Rwanda, of which 74% are women, and 90% of these women traders rely on CBT as their sole source of income.

 

Through the EIF project and with TMEA support, MINICOM has established the CBT Coordination Unit to coordinate and implement the National CBT Strategy and ensure mainstreaming of CBT into national programmes. The Unit has been institutionalized and integrated into the Trade and Investment Development Division of MINICOM to ensure the CBT projects' continuity beyond the projects' end phase. Plans are also underway to consolidate all various CBT projects under development under the combined CBT programme in Rwanda, to be coordinated by the Unit. As such, the Unit is developing a management model for the market centres, while the Government is encouraging cross‑border traders' cooperatives to organize themselves into strong institutions to be able to carry forward this agenda to future generations.

 

This programmatic approach is also intensively leveraging development partners' support for CBT initiatives. The EIF project, which is being implemented together with TMEA support, has set the stage and triggered additional investments that have paved the way for significant resources to develop CBT in Rwanda. Support already mobilized includes US$26 million from the World Bank and US$6.7 million from TMEA, UN Women and the New Partnership for Africa's Development. Other partners including the Common Market for Eastern and Southern Africa (COMESA); the AfDB and the EU are exploring options for supporting this key area.

 

Even with the EIF project itself, the Government of Rwanda through the Local Administrative Entities Development Agency and district authorities are contributing more than a third of the project costs with initial commitments of US$1,600,154 (US$978,877 from the Central Government and US$621,227 from District Administrations) alongside the EIF's contribution of US$3,485,870.

 

These market centres are being built with the ownership of local leaders, thereby strengthening the public‑private partnership amongst the trading countries along the common borders, facilitating revenue collection and contributing to the elevation of informal activities into formal business. With EIF support, the construction of market centres on the borders of Uganda (at the Cyanika border post) and of DRC (in Karongi on the shore of Lake Kivu) are now underway. The World Bank through the Great Lakes Trade Facilitation Project is establishing further CBT markets on the borders of DRC and Rwanda to reduce the costs faced by traders, the majority of whom are small-scale and women traders. TMEA is currently funding the construction of two further cross-border posts, one in cooperation with COMESA, while the Government has already financed the construction of a CBT market in Nyarunguru.

 

Through their concerted focus on CBT, Rwanda is striving to achieve the target of 28% of export growth as underlined in the EDPRS II through promoting regional trade. In line with the Vision 2020 development goals, the Government of Rwanda also continues to aggressively pursue a reform agenda focusing on enhancing the attractiveness of the country as an ideal investment location, promoting trade and entrepreneurship as well as laying a firm foundation for industrial growth and development. The EIF programme will continue to support resource mobilization efforts to facilitate export promotion and access to regional and global markets.

 

Rwanda's CBT story is reflective of how the LDCs have assumed the responsibility of "trade, not aid", connecting peoples' aspirations into reality. There is an energetic pull to the prosperity agenda in Rwanda that has counted on EIF backing to build high levels of engagement, resource mobilization and commitment from the Government, the private sector, civil society, development partners and communities countrywide. Making trade easier for cross-border traders through organized border markets, storage infrastructure, improved border logistics, access to finance, improved border security is leading to long-term change for border communities.