RWANDA:RWANDA:

REFORMING FOR GLOBAL TRADE: The experience of RwandaHon. Vincent Karega

OutlineOutline

1)1) Where we have been: Recent past and Where we have been: Recent past and challengeschallenges

2)2) Where we are: Ongoing reform effortsWhere we are: Ongoing reform efforts

3)3) Where we want to be: Strategic priorities for the Where we want to be: Strategic priorities for the futurefuture

4)4) ConclusionConclusion

1) Where we have been: Recent 1) Where we have been: Recent past and challenges facedpast and challenges faced

Rwanda rising from history of civil strife and genocide Rwanda rising from history of civil strife and genocide halving GDP in 1994 to about $ 1bn and per capita halving GDP in 1994 to about $ 1bn and per capita income of $ 120.income of $ 120.

Low per capita income estimated at $ 320 todayLow per capita income estimated at $ 320 today Agriculture based economy with low levels of Agriculture based economy with low levels of

manufacturing and servicesmanufacturing and services Population growth rate of 2.6% per yearPopulation growth rate of 2.6% per year

ChallengesChallenges Rwanda has a high growth economy and must diversify Rwanda has a high growth economy and must diversify

to avoid slowdownto avoid slowdown High energy costsHigh energy costs

Access to long term and flexible finance coupled with Access to long term and flexible finance coupled with infrastructure constraintsinfrastructure constraints

Double deficit: Fiscal and Balance of Payments Double deficit: Fiscal and Balance of Payments Land locked status and distance from the sea translating Land locked status and distance from the sea translating

into high transportation costs for the only available option into high transportation costs for the only available option (road)(road)

Logistical trade barriers mainly at the regional levelLogistical trade barriers mainly at the regional level Inadequate human and institutional capacityInadequate human and institutional capacity Policy choice to rapidly transform Rwanda into the most Policy choice to rapidly transform Rwanda into the most

competitive place for trade and investment in the regioncompetitive place for trade and investment in the region

2. Where we are: Ongoing reform 2. Where we are: Ongoing reform effortsefforts

Performance in Doing Business Performance in Doing Business index flat over index flat over

2007 and 2008: 1502007 and 2008: 150thth over 178 over 178 economies. Masks significant economies. Masks significant reforms across the boardreforms across the board

Trading across borders Trading across borders performance indicates performance indicates improvements improvements

IFC/FIAS trade logistics project is IFC/FIAS trade logistics project is partnering with us to further partnering with us to further design and implement reforms in design and implement reforms in this indicatorthis indicator

Trading Across Borders

Doing Business

Doing Busin

ess

  2007 2008

Rank 178 166

Documents for export (number) 14 9

Time for export (days) 60 47

Cost to export (USD per container 3840 2975

Documents for Import (number) 20 9

Time for import (days) 95 69

Cost to import (USD per container 4080 4970

     

Time for Export Procedures in Rwanda in 2007: 47 Days

0

10

20

30

40

50

60

70

Assemble andProcess

Documents

Pack goods Inlandtransportation

Customsclearance

Terminalhandlingactivities

Wait to loadcontainer

LoadContainer

17

5

10

9

32 1

Trading across Borders

Time for Import Procedures in Rwanda in 2007: 69 Days

0

10

20

30

40

50

60

70

Obtain bank-

relateddocuments

Assemble

documents

Vessel

time

Berthing andUnloading

TerminalHandlingActivities

CustomsClearanceAt seaport

CustomsInspection In Rwanda

Arrange forInlandtransportation

Waiting timeAt borderCrossing

Inlandtransportation

Import Waiting

5

20

21

4

5

5

152

10

On-going reformsOn-going reforms Trade logistics working group in place co-chaired by RRA Trade logistics working group in place co-chaired by RRA

(Customs) and private sector federation, overseen by (Customs) and private sector federation, overseen by GoR/MINICOMGoR/MINICOM

Efforts to simplify and harmonize documents for international trade Efforts to simplify and harmonize documents for international trade and align them to international best practice, within EAC and and align them to international best practice, within EAC and COMESA frameworkCOMESA framework

Creating a more streamlined and integrated border management Creating a more streamlined and integrated border management system ie Customs taking coordinating lead over other agencies system ie Customs taking coordinating lead over other agencies (RBS, Minagri, public safety)(RBS, Minagri, public safety)

Address identified Non-tariff barriers highlighted in Rwanda Private Address identified Non-tariff barriers highlighted in Rwanda Private Sector Federation study along Northern and Central corridor e.g. Sector Federation study along Northern and Central corridor e.g. multiple weigh bridges and police stops, long queues, poor multiple weigh bridges and police stops, long queues, poor infrastructure and inadequate computerisation, different working infrastructure and inadequate computerisation, different working hours etchours etc

Aim to reduce number of days to export to 30 and 50 for Aim to reduce number of days to export to 30 and 50 for imports over the next 12 monthsimports over the next 12 months

We are initiating self assessment in addition to We are initiating self assessment in addition to implementing pre-clearance and prepayment of taxes implementing pre-clearance and prepayment of taxes and dutiesand duties

Channel allocation at the border e.g. consignments Channel allocation at the border e.g. consignments under the blue or green channelunder the blue or green channel

Risk management is being implemented and we aim to Risk management is being implemented and we aim to streamline it in order to maximize its potential. Further streamline it in order to maximize its potential. Further training of customs officers is required.training of customs officers is required.

Promoting the use of a single administrative document Promoting the use of a single administrative document as an information source for control over international as an information source for control over international trade activity.trade activity.

Change-management within Customs to ensure measures in place Change-management within Customs to ensure measures in place are fully understood and appliedare fully understood and applied

Mobile scanners acquired for cargo inspectionMobile scanners acquired for cargo inspection Inspections can be done at point of exit rather than the dry port as Inspections can be done at point of exit rather than the dry port as

previously donepreviously done Single payment point for customs, Rwanda Bureau of Standards Single payment point for customs, Rwanda Bureau of Standards

(RBS), Magerwa (Customs warehouse)(RBS), Magerwa (Customs warehouse) ObservationsObservations For reforms to achieve objectives, businesses should be able to For reforms to achieve objectives, businesses should be able to

apply and take advantage of themapply and take advantage of them Communication is critical and we look out for all opportunities to Communication is critical and we look out for all opportunities to

engage with business community to develop partnership for mutual engage with business community to develop partnership for mutual benefit.benefit.

Where we want to be: Strategic Where we want to be: Strategic priorities for the futurepriorities for the future

Rwanda Vision 2020 Rwanda Vision 2020 requiresrequires consistent 7% real consistent 7% real economic growth rate from 2000 to 2020 to become a economic growth rate from 2000 to 2020 to become a middle-income country by the year 2020. Our aim today is middle-income country by the year 2020. Our aim today is to achieve double digit growth, and this is possible through to achieve double digit growth, and this is possible through rapid diversification, and fast tracked international trade,rapid diversification, and fast tracked international trade,

GDP growth should be sustained to safeguard our GDP growth should be sustained to safeguard our prosperity, ensure employment generation, improving prosperity, ensure employment generation, improving living standards and to build resilience to external shocks living standards and to build resilience to external shocks (such as recent Kenyan crisis and rising oil prices)(such as recent Kenyan crisis and rising oil prices)

Strategy is to concentrate on strong performers and Strategy is to concentrate on strong performers and engage private sector investment in: transport, logistics engage private sector investment in: transport, logistics and ICT services (towards a redistribution and ICT hub), and ICT services (towards a redistribution and ICT hub), and financial services (toward a financial hub)and financial services (toward a financial hub)

How do we intend to become a redistribution and ICT hubHow do we intend to become a redistribution and ICT hubto maximize our competitiveness? to maximize our competitiveness? Electronic single window which would serve as an Electronic single window which would serve as an

information platform for stake holders in cross border information platform for stake holders in cross border trade. This would entail simplified documents consistent trade. This would entail simplified documents consistent with international best practice, Integrated border with international best practice, Integrated border procedures and computerisationprocedures and computerisation

In hand with above, introduce electronic payment systemIn hand with above, introduce electronic payment system One-stop border post and joint customs inspection within One-stop border post and joint customs inspection within

EACEAC Rwanda is engaged in regional integration with EAC Rwanda is engaged in regional integration with EAC

given implication on tradegiven implication on trade

Actively involved in negotiations with EAC partner states to Actively involved in negotiations with EAC partner states to address international trade issues: Rwanda to join customs address international trade issues: Rwanda to join customs union in 2009, and negotiations for common market union in 2009, and negotiations for common market launched,launched,

Building a much more modern international airport with Building a much more modern international airport with better handling capacities and services. Its preliminary better handling capacities and services. Its preliminary studies completestudies complete

MOU signed to extend oil pipeline from Kampala to Kigali MOU signed to extend oil pipeline from Kampala to Kigali with participation of Libyawith participation of Libya

Establishment of the Free Trade Zone and industrial parksEstablishment of the Free Trade Zone and industrial parks Establish full scale risk management that has successfully Establish full scale risk management that has successfully

been pilotedbeen piloted

ConclusionConclusion The Rwandan government has set in motion a comprehensive The Rwandan government has set in motion a comprehensive

package of reforms and is committed to sustain this package of reforms and is committed to sustain this momentum.momentum.

Rwanda is privileged to be a beneficiary of the IFC FIAS Trade Rwanda is privileged to be a beneficiary of the IFC FIAS Trade logistics project and their partnership with us in this reform logistics project and their partnership with us in this reform process. We commend the recent trade logistics advisory process. We commend the recent trade logistics advisory mission to our country in early April 2008 and the work done so mission to our country in early April 2008 and the work done so far.far.

There is need to see beyond trade logistics for an integrated There is need to see beyond trade logistics for an integrated approach (supply side, infrastructure, storage, standards and approach (supply side, infrastructure, storage, standards and speed)speed)

We are committed to continue to coordinate the national reform We are committed to continue to coordinate the national reform taskforce and we look forward to better donor coordination in taskforce and we look forward to better donor coordination in this respect to ensure synergies and coherence. this respect to ensure synergies and coherence.

Come see Rwanda by Come see Rwanda by yourselfyourself

THANK YOUTHANK YOU