DRC, Still Rwanda’s Number One Informal Trade Partner

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While formal trade between Rwanda and other East African member states is abysmally low, informal trade between the regional block has continued to thrive.

Rwandan informal cross-border exports with its neighboring countries, which account for 20.4 percent of formal exports in the period under review, increased by 21.4 percent, amounting to USD 121.93 million in 2016 from USD 100.45 million in 2015.

Informal trade captures trade between borders that is normally done by communities around borders and may not be recorded among the country’s main trade statistics but is the trade driver along the borders.

According to monetary policy and financial stability statement launched this Wednesday by the National Bank of Rwanda shows that the DRC accounts for 74.7 percent of total transactions, followed by exports to Uganda with 19.1 percent while exports to Burundi and Tanzania account for 6.24 percent and 0.02 percent respectively.

The main sources of these imports are Uganda, Burundi and the Democratic Republic of Congo (DRC) with shares of 64.3 percent, 26.8 percent and 9.0 percent respectively.

The increase in informal imports is due to increased importation of food such as maize corn, soft drinks and modern beer from Uganda.

The Central Bank statement also indicates that the high increase of exports to Uganda is particularly due to exports of live animals as well as telephonic apparatus in 2016.

The observed increase in telephonic apparatus is due to the fact that their prices are lower in Rwanda than in Uganda because IT related equipments are exempted from taxes in Rwanda.

The survey also indicated that Informal imports increased by 41.2 percent, from USD 21.62 million in 2015 to USD 30.52 million in 2016. This increase was offset by the bigger increase in informal exports, leading to an improvement of 16.0 percent in Rwanda’s informal trade balance with neighboring countries, from USD 78.83 million in 2015 to USD 91.41 million in 2016.

 

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