The Sunday Mail
Trade Focus
Allan Majuru
Zimbabwe and Rwanda relations are at an all-time high as the two countries are planning to set up a Joint Permanent Commission of Cooperation, which will strengthen economic and political engagements.
One of the areas which the Joint Permanent Commission is expected to focus on is trade relations, especially in the context of African Continental Free Trade Area (AfCFTA), which seeks to make it easy for African countries to trade with each other.
This deepened economic cooperation comes from the realisation that the development of Africa requires improved economic integration amongst member states.
In addition, Zimbabwe and Rwanda are both party to the Common Market for Eastern and Southern Africa (COMESA), which means both countries stand to benefit through reduced and zero customs tariffs on goods traded.
The Rwanda-Zimbabwe Trade and Investment Conference to be held on March 24-26 2020 in Kigali, Rwanda, will therefore explore trade and investment opportunities that will further economic co-operation between the two countries.
Rwanda has been enjoying a strong economy, which has grown at an annual average rate of eight percent for the past decade.
This growth has largely depended on the services sector, which is the largest contributor to Gross Domestic Product (GDP), according to Rwanda Development Board.
The services sector contributes about 48 percent to GDP, followed by agriculture at 29 percent and the industrial sectors at 16 percent.
Such a strong economy offers opportunities for local businesses and access to the market can be easily realised if local companies focus on areas they enjoy comparative and competitive advantages.
Services sector
Rwanda is currently developing its skills base and this has opened opportunities for local businesses to supply an array of services, including labour to the country.
There are supply opportunities for services in almost all sectors, but easy wins are in tourism, education, construction and agriculture.
Zimbabwe is home to a diverse skills base that is in demand in Rwanda.
Local companies can also consider coming up with creative offerings that can appeal to a young generation that make up the bulk of consumers in Rwanda.
Tourism sector
Rwanda is currently positioning itself as the leading destination for conferences in Africa, under the Meetings, Incentives, Conferences and Exhibitions (MICE) framework.
This has opened up opportunities for Zimbabwean companies to supply services and products into the growing tourism sector.
Zimbabweans have a strong command of English and have a deeper understanding of the tourism sector, thanks to programmes offered by local learning institutions.
Being conversant of the tourism sector is a skill that is in demand in Rwanda, and local consulting firms can consider tapping into this sector by offering skills training to personnel in Rwanda’s tourism sector.
Local human capital development consulting firms can offer training such as etiquette and grooming.
There is also room for local tourism companies to partner Rwandan companies to offer joint packages that will allow visitors from across the world to visit the two countries on one package.
Rwanda is renowned for its mountain gorillas and Zimbabwe is home to the majestic Victoria Falls.
Riding on daily flights between Harare and Kigali, there is room to boost tourism in the two countries by focusing on improved engagements at company level.
Education
Local investors can also leverage on the country’s stellar academic reputation and high literacy rate to export study programmes and distance learning.
Rwanda is a former French-speaking Belgian colony, but the drive for more foreign investment has seen its government increasingly adopting English, which is a global language.
There is, therefore, demand for English teachers as well as tutors in science, technology, engineering and mathematics.
Local learning institutions can export such programmes, and this can be benchmarked and modelled around existing frameworks used by leading online institutions such as University of South Africa, which services over 130 countries globally.
Already, Zimbabwe has a decent pool of qualified professionals that can satisfy these demands.
Furniture sector
Rwanda’s manufacturing sector is still taking shape and consumers have had to rely on imported furniture products.
Currently, home and office furniture products are being sourced from Asia countries such as Turkey and China.
However, the quality of these products is lower than furniture produced in Zimbabwe, hence there is room for local furniture producers to take command of this market.
Given the bulky nature of furniture products, local manufacturers should move away from exporting assembled products to producing collapsible modular designs that can be easily assembled at the final market or by the end-user at their home.
This will ensure that the cost per unit in production and transportation is cheaper, thus making Zimbabwean-produced furniture competitive in the Rwandan market.
Currently, available infrastructure in Zimbabwe makes it ideal to produce high-end furniture that can compete in the Rwandan market.
In addition, Zimbabwe boasts abundant timber resources with high-quality hardwood such as teak, pine and mukwa.
These are used on most of highly sought-after and luxurious furniture products that fetch higher prices in Rwanda.
Agriculture sector
Agriculture is one of Rwanda’s main economic activities and there is potential for growth through increased productivity and value addition for local consumption.
There is room for local suppliers to export agricultural inputs, mechanisation equipment and implements.
Currently, there is demand for seeds for all crops, which means local seed producers can easily penetrate the market if they set up shop in Rwanda.
There is also demand for skilled personnel such as agronomists, agricultural engineers and agriculture economists.
Fast-moving consumer goods
Rwanda is currently importing fast-moving consumer goods (FMCGs) from across the world, with indications that Zimbabwean products can perform well in the market.
Products from countries such as the United Arab Emirates, Brazil, France and Portugal have found a way into the Rwandan market, and given Zimbabwe’s proximity to the country, there is potential for local products.
What is important for Zimbabwean producers is to ensure that they have visible merchandisers in the Rwandan shops, who can assist in marketing to consumers on the ground.
Construction sector
Rwanda is modernising its buildings and creating residential parks, along the models of Singapore.
Other construction activities are targeting improved housing, transport, water and energy infrastructure, and this presents opportunities for companies directly involved in timber, steel products, building and construction materials, as well as furniture industry for furnishing the buildings.
This has created a huge market for supplies in the construction sector, including furnishings and electricals.
Further to these supplies, there is demand for professionals and services such as structural engineers and surveying.
Linkages to East and West Africa
Rwanda is a hub for a rapidly integrating Africa and is part of East African Community (EAC) Common Market and Customers Union, which has a market of over 132 million people.
Increasing trade with Rwanda will open further markets to the EAC, and, in turn, increase Zimbabwe’s exports to the region.
EAC has a combined GDP of more than US$177 billion.
Rwanda and Zimbabwe are both members of COMESA, a free trade bloc comprising 19 countries.
There is further room to supply the Democratic Republic of Congo (DRC) through Rwanda, particularly in areas difficult to reach through Zambia.
Currently, there are Rwandan distributors familiar with DRC terrain, who can make it easy to further distribute Zimbabwean products.
Going forward
Having discussed these opportunities, it is important for local businesses to consider a route to channel that will make sense for their money.
The most viable option for supplying Rwanda is to set up and operate a shop or distribution centre in Rwanda.
The Rwandan government has made this easier by reducing the time required to set up a company in the country, which is only six hours.
They have also developed export development zones that are available for occupation by foreign companies that are looking into manufacturing processes.
These export zones are also in special economic zones, which reduces the cost of doing business in Rwanda.
Thus, it will be easier for local companies to set up distribution warehouses in Rwanda where they can stock supplies, as well as set up retail shops for Zimbabwean products.
Allan Majuru is ZimTrade’s chief executive officer
