ICT key to competitiveness of Rwanda

17 September 2014
ITC News
Regional integration critical for growth of small economies

Rwanda’s global competitiveness has been underpinned and empowered by the smart use of information and communication technology (ICT) to enhance efficiency, particularly in public service delivery.

The country’s Minister of Trade and Industry Francois Kanimba told delegates at the World Export Development Forum in Kigali on 16 September 2014 that ICT has been at the heart of all the areas where Rwandan public sector procedures have achieved progress. As a consequence, Rwanda is ranked 8th as an e-enabled public sector.

Mr. Kanimba said ICT has helped to speed up processes and make them more transparent. Access to capital for small and medium-sized enterprises (SMEs), for instance, has increased through a common credit tracking system, and this has led to Rwanda’s ranking as number 13 in the World Bank Doing Business Indicators.

Another key reform area has been in the Rwanda Development Board’s computerized system where one can now register a business in six hours. Mr. Kanimba said land registration has also been computerized and linked with the business registration, which has been useful for businesses when they apply for loans. Tax returns can now be filed and paid online and SMEs are also paying taxes using mobile phones.

Mr. Kanimba said crossborder trading is an area in which Rwanda can benefit from trade facilitation. Using a single electronic window for customs clearance is key, and now this can be done online. Dialogue among the three presidents of Rwanda, Uganda and Kenya has helped to improve trading across borders and related transit issues. As a consequence, the shipping of goods from Rwanda to the port of Mombasa in Kenya has been reduced from 22 to 6 days. This has contributed to an increase in exports by 30% through regional integration, he stated.

Mr. Kanimba said this is an example of the East African Community working to address trade facilitation.

The Commissioner for Trade and Industry at the African Union, Fatima Haram Acyl said high production and transaction costs, including non-tariff barriers, contribute to the fact that only around 10% of what is exported from African countries reaches other African markets. Access to information on markets and standards is also a challenge, she said. When countries have different technical standards, this creates barriers to doing business.

Ms Acyl said the size of the market is also a challenge. Most of the 54 countries in Africa are small, with less than 20 million people and less than USD10 billion GDP. In 2012, the African Union decided to create a common market by 2017. The action plan is focused on growing trade and increasing opportunities for SMEs through regional integration. The free trade area may start with a group of countries such as East Africa before further expansion, she said.

‘We don’t lack frameworks and strategies, we lack implementation,’ said Ms. Acyl. ‘It’s important to give skills to youth so that they can do business in Africa and stay in Africa.’

Africa has good growth potential but structural challenges serve as impediments, said the World Bank’s Senior Director of Trade and Competitiveness Global Practice, Anabel González.

Access to finance, managerial skills and technology, trade intelligence, knowledge of foreign cultures and non-tariff measures, including those related to standards, are some of the challenges faced by enterprises, she said.
Trade support institutions can make a tangible difference, Ms González said. She added that World Bank studies have shown that for every dollar invested in these agencies, there can be up to a 100 dollar return on the investment in terms of increased exports.

Ms. González said there is good potential for SMEs to export indirectly by supplying value chains. It is important for international institutions such as the International Trade Centre and the World Bank to help connect SMEs with large suppliers with programmes to strengthen linkages and also to facilitate access to certification and finance.

Across the Indian Ocean from Africa, the Government of India has been providing assistance to SMEs to supply manufacturing industries, said Ambassador Vidya Bhushan Soni, Chairperson of the Overseas Infrastructure Alliance.

Mr. Soni said the presence of a large group of middlemen, to the detriment of SMEs and customers who pay high prices, has impacted on SMEs. Large investors like Walmart will change this pattern, he said.

The common shortcomings of SMEs are in design and marketing in the early stages, and packaging and supply logistics in the latter stages. Mr. Soni, who is also a senior member of the Confederation of Indian Industry, said chambers of commerce play a key role in India to train and capacitate SMEs.