Strategies to grow locally made products
Written by: Our Reporter
Monday, September 26th, 2016, 11:19
The Ministry of Trade and Industry (Minicom) in December 2014, launched ‘Made in Rwanda’ a campaign for marketing locally made brands to boost their consumption and local industries through deliberate awareness drive, enhancing quality standards, branding and packaging along the value chain.
To buy local products an initiative dubbed ‘Twigire’ saw local SMEs targeted by government that wanted them innovate more and enhance creativity so that they could have a competitive edge on both local and international market. This simply was to reduce a trade deficit that Rwanda faces for instance between 2012 and 2014 the country exported Rwf 83 billion as compared to over Rwf 133 billion in imports.
The National Bank of Rwanda (BNR) shows that import and export bills continued to deteriorate by 11 per cent to U$752.62 million in the first five months of 2016 from U$677.85 million in the same period in 2015.
Thus, government spends three dollars on an import compared to a dollar it gets from its export, with a trade deficit growing by 6.8 percent by the end of the first half of 2016. Therefore, one of the strategies to reduce the trade deficit gap was to promote production and consumption of locally made products.
To identify priority sectors that can quickly contribute to Rwanda’s domestic market recapturing, the ministry conducted a study on “Domestic Market Recapturing Strategy (DMRS)” that was validated in February last year.
The study indicated that the total foreign exchange savings induced by the DMRS could reach almost $450 million per year.
The strategy indicated three key potential sectors to recapture the domestic market.
These include construction materials (cement, iron, steel, aluminum products, paints and varnishes) which accounts for $206 million, light manufacturing (textile and garments, pharmaceuticals, soaps and detergents, reagents, packaging materials), which accounts for $124 million, and agro-processing (sugar, fertiliser, edible oil, dried fish, maize, rice), which accounts for $112 million.
However, according to trade experts, poor packaging, branding and lack of competitive marketing strategies, could cripple the sector’s contribution to national economy if not addressed.
According to the experts, there is need to boost institutional capacity building and innovation to enhance the sector’s competitiveness and sustainability.
Rwanda's Minister of Trade and Industry, François Kanimba summarized the implementation plan of the Domestic Markets Recapturing strategy as follows:
First it’s a communication campaign like the one started with Made in Rwanda Expo which was followed by a corporate roll-out programme which will cover the whole year up to December 2016.
The second category of activities includes supporting local producers through government procurement.
Third, designing a national small and medium programme to upgrade the products and the quality of SME products to bring them at a level where they can compete with the competitors from the region.”
In that respect the government said it will support all efforts to promote products made in the region as it targets a 28 per cent annual export growth by 2020.
Rwanda is part of the World Trade Organization (WTO) and the East African Community (EAC), a regional economic bloc and partnership between Burundi, Kenya, Rwanda, Tanzania, and Uganda.
With this in mind it will be mindful of their agreements but continue to promote locally produced products to protect its own industry.
According to Emmanuel Hategeka, Permanent Secretary at Minicom no single country in the global trading arena has ever been denied the policy space to promote its own industries, even when we think our infant industry is in danger - even in the context of EAC common market protocol, we have the policy space to protect those industries.
If Made-in-Rwanda campaign could be understood in a way that people consume more of locally-made products than imports, the country could save up to 18 per cent of what it spends on imports.