This archive report was first published on 24 August 2019.
Regional feuds have taken a toll on Rwanda's informal cross-border trade, with the latest central bank figures showing a sharp decline in exports and imports.
According to the central bank, informal exports account for 10% of the country's total exports, while informal imports account for 0.5%.
For years, informal cross-border trade has been a vital source of livelihoods for poor border communities. However, the escalation of political tensions between Rwanda and its neighbors has led to a significant decline in trade along the border.
One of the major factors contributing to the decline is the closure of Rwanda's borders with Uganda, which prohibited Rwandan citizens from crossing. This move greatly affected trade along the border, leaving many who depended on it without an income.
Another impasse between Rwanda and Burundi also affected informal and formal cross-border trade between the two countries, particularly after Bujumbura blocked its traders from selling groceries to Rwanda.
Despite the decline, Rwanda's total informal exports in 2018 stood at $125.3 million. Exports to other East African Community member countries, which account for 22.3% of its total exports, rose by 141.0% in value, fetching $128.9 million in the first half of 2019.
However, imports from the region dropped by 7.8%, attributed to the increased participation of local businesses that had to step up to fill the gap for consumer goods from Uganda and Burundi.
“People are slowly getting used to goods manufactured here. We can’t get Mukwano soap any more, so they complain about the quality but when there are no options they end up buying what is available,” said a wholesaler in Kigali.
The crisis has narrowed Rwanda’s trade deficit with the EAC to $99.8 million in the first half of 2019, from $194.5 million recorded last year.
The figures also indicate that the country’s efforts to diversify exports are beginning to bear fruit, with a 7.5% growth in exports in the first half of 2019, largely driven by a surge in non-traditional exports.
Non-traditional exports like milled products and other manufactured goods registered a 25.2% growth, earning the country up to $196.4 million of the $577.8 recorded in the first half of the year.
