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Rwanda scrambles for alternative sources of imports

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Rwanda Scrambles For Alternative Sources Of Imports
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Rwanda scrambles for alternative sources of imports by Demo(m): Sun Mar 2020 09:10am
Rwandan traders are racing against time to find alternative sources of consumer goods and raw materials they used to import from China, as the coronavirus disruption to supply chains begins to deplete stocks.

Rwanda imports from China electronics and electrical equipment, machinery, building materials, ceramic products, footwear and textiles, furniture, vehicle parts among other products.

“The effect on supply chains also extends to some ongoing local projects which rely on the raw materials and equipment imported from China. Besides, Rwandair has suspended flights to China, which has also affected business travel and trade between the two countries,” said Li Zhen, the second secretary, Economic and Commercial Office at the Chinese embassy in Rwanda. Rwandair suspended flights on January 31.

She said China has taken multiple measures, such as allocating a special fund, cutting taxes, increasing fiscal expenditure and reducing administrative approval procedures to hasten the resumption of industrial production and support markets, while making efforts to contain the coronavirus outbreak.

ALTERNATIVE PARTNERS

“With the exception of Hubei province, whose capital Wuhan is the epicentre of the outbreak, other provinces have resumed production. In some provinces, the work resumption rate has already reached over 70 per cent,” Ms Zhen observed.

However, prices of goods imported from China are expected to go up in the coming months, if the spread of the coronavirus is not contained.

“We are beginning to experience scarcity in the market, but the situation is likely to worsen in the coming months,” said Michel Sebera, the Permanent Secretary in Rwanda’s Ministry of Trade and Commerce.

Rwanda’s Private Sector Federation has identified countries such as Turkey, India, Dubai and Egypt as alternative sources of goods imported from China.

A phone battery which previously cost Rwf10,000 ($10) now goes for Rwf15,000 ($15), an iPhone 6 screen that cost Rwf20,000 ($20) is now Rwf25,000 ($25) or Rwf30,000 ($30) in some shops.

“We are working with PSF to see where else we can get the goods,” said Izabiriza Jeane, the CEO of Heart of Africa Trading, a company that imports goods from China for multiple traders in Kigali.

“The first group will set off to Turkey on March 9, but still it will take some time to make orders then get the goods delivered, so in between there we shall experience a scarcity,” she added.

She said many traders last imported goods from China between November and December 15, 2019, and were supposed to have imported new stock in February, but this was not possible due to the outbreak.

E-COMMERCE GLITCH

The closure of banks in China has complicated the matter, since they cannot even transfer money for suppliers to ship and send them goods.

Clement Ishimwe, who imports electronics from China, said they used not to take a month without going to China for more stock, some used to go every week, and now they are stuck.

“There is no country which can give us what China used to give us in terms of affordable goods,” he said.

Rwandan sellers of coffee, chilli and other products valued at approximately $10,000-$20,000 sold on Alibaba’s T-mall e-commerce platform are currently stuck, struggling to ship their goods to China.

“We have temporarily suspended operations, we can’t get orders now due to the outbreak, even those we had already received we couldn’t serve them, everything is paralysed” said Benjamin Nkurunziza, the sales and marketing manager at Gorillas coffee.

RwandAir opened its Guangzhou route in June last year, and by October the three flights-per-week-route had already picked up, becoming one of the airlines most profitable routes, tapping into business and luxury travellers.

“We are monitoring closely to see as it develops across the world and working on calculating its impact on us particularly but it is a challenge, not only for passengers but also for cargo. We are in touch with the Ministry of Health and all other stakeholders,” said Ms Yvonne Makolo, the RwandAir CEO.

Due to the tensions between Uganda and Rwanda, most members of the Rwandan private sector started importing directly from Asia. The Private Sector Federation initiated a fund to facilitate many traders to import directly from China, increasing the number of Rwandans who import from China. However, many of them are now stuck, with some opting to import from Kenya and Tanzania, where big importers still have large stocks.

CANCELLATIONS

According to a monthly External Trade in Goods Report by the National Institute of statistics published in December 2019, the country imported goods worth $86.67 million from China, constituting 26 per cent of total imports, and exported $1.14 million to the country.

Imports from China, account for 20 per cent of the country’s total annual imports, according to estimates by the country’s central bank.

Andrew Gatera who runs a tour company targeting the Chinese market, having stayed in the country for seven years while a student, says the impact of the outbreak on his business is already great.

“Normally when it’s approaching March we are getting inquiries and bookings because May is the high season, but all we are getting now are cancellations, I am likely to lose $35000 this season” he said.

While addressing the effects of coronavirus on the economy, Prof Thomas Kigabo, the chief economist at the National Bank of Rwanda said it is still early to know the extent of the damage of the virus to the economy.

Although the economy is projected to grow by double digits in 2020, it is expected to suffer a slow down just like its peers in the region that depend on China a lot.

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