KIGALI - The East African Community (EAC) must urgently reduce non-tariff barriers to allow Rwanda to capitalise on expanded markets as it joins the regional customs union, Rwanda said.
Landlocked Rwanda and Burundi formally joined the five-nation EAC common trade regime this week, a move that requires it to harmonise its import tariffs with partner states.
â€œYes, we will be cutting tariffs, but not enjoying effectively the market that has been widened,â€ Monique Nsanzabaganwa, Rwandaâ€™s minister of trade and commerce, said late last week.
â€œThatâ€™s why we keep non-tariff measures high on our agenda of integration.â€
She said the country's exports may fail to compete against those of its peers, unless measures are taken to reduce corruption and bureaucracy along the road to Kenyaâ€™s port of Mombasa, which it relies on for importation and exportation.
Increased transparency along transport routes, she added, would help Rwanda take advantage of the 120 million consumers in the region and tap into international markets.
A recent report by Rwandaâ€™s Private Sector Federation (RSF) found corruption in Uganda and Kenya is a major obstacle to trade, particularly at police roadblocks, weighbridges and border gates.
â€œRwanda, being the remotest country... we are subject to more hurdles than any other country,â€ the minister said.
EAC member states, however, have agreed to introduce joint committees to monitor non-tariff barriers, Nsanzabaganwa said, adding the challenges are tough.
â€œCorruption is a very complicated thing to deal with.â€
Under the regional customs union, Burundian and Rwandan importers will pay 25% tax on finished merchandise, 10% for intermediate goods and nothing for raw materials.
Nsanzabaganwa said Rwanda had accepted a 20 million euro ($28m) loan from the Common Market for Eastern and Southern Africa, disbursed over three years, to plug initial revenue losses from the integration.
In the short term, Rwandaâ€™s industries may be hurt by increased competition, but the influx of goods and services from countries with better-established manufacturing sectors should induce local firms to become more efficient, the minister said.
â€œWe have the raw materials, we have agriculture, we have minerals but we need capital, technology and skills to add value to our natural resources,â€ she said.
In the longer term, by increasing exports, Rwanda will reduce its trade deficit that currently runs at around 14% of gross domestic product, she said.
Rwanda urges East Africa to cut non-tariff barriers