As the country grapples with the trade deficit burden, the government is weighing at options of embarking on cutting imports to save more foreign exchange to balance trade receipts.
This comes after efforts by the government to bolster exports did not yield the expected results with their receipts continuing to decline standing at U$ USD 558.8 million, a decline of 6.8 percent by end of December, 2015.
Through replacing imported product with locally made products is likely to help the government save foreign exchange that it would use to import the same products thus reducing the deficit that stood at 6.8 percent in the first half of 2015.
“And this has a direct bearing on our balance of payments, because you don’t have to spend those millions dollars importing products,” said Emmanuel Hategeka in an interview on Thursday.
He adds, “If we save on those importations and buy locally produced then our balance of payments will not deteriorate the way they would.”
To achieve this, the government last year implemented the Domestic Market Recapturing Strategy (DMRS) which aims at substantially reducing some of the products we have been importing and replace them with locally made products.
“From an optimistic scenario, if we implement the strategy over the next five years we should see a saving of U$ 450 million in a year,” the permanent Secretary explained.
According to Central Bank, the country spends over U$ 140 million a year and U$ 14 million in importation of construction materials and rice importations respectively which if produced locally would cut on the deficit.
“So what we are talking about is big impact, we are talking about high value products,” he added.
Gerald Mukubu, the deputy chief executive officer at Private sector federation-PSF says that the initiative is backed by the made in Rwanda campaign that aims at sensitizing Rwanda consumers to consume local products.
“When the demand for local products go up it means our industries can then expand their production,” he said.
Nevertheless, the government says that the initiative will further supplement the country’s national industrial policy and export strategy.