Trade Deficit Drops Over 63%, DR Congo Remains Key Export Destination
Despite ongoing conflict, eastern DR Congo remains Rwanda’s major destination for exports
This positive trend underscores the government’s efforts to boost domestic production, reduce reliance on imports, and enhance export competitiveness.
The improvement in the trade balance is seen as a key indicator of Rwanda’s growing economic resilience and progress toward achieving self-sufficiency.
Key Drivers Behind the Decline
The reduction in the trade deficit can be attributed to several factors:
Increased Exports
In December 2024, the value of domestic exports rose by 1.06% compared to November and surged by 58.58% compared to December 2023. Notable growth was observed in sectors such as:
Animals and vegetable oils, fats & waxes : Increased by 1,169.40% year-on-year.
Manufactured goods classified chiefly by material : Grew by 57.54% year-on-year.
Crude materials (inedible, except fuels) : Rose by 18.57% year-on-year.
These increases reflect improvements in local manufacturing capabilities and the diversification of export products.
Reduced Imports
Imports decreased significantly in December 2024, falling by 19.89% month-over-month and 23.08% year-on-year. Major declines were recorded in:
Chemicals & related products : Down by 38.79% month-over-month and 16.35% year-on-year.
Machinery and transport equipment : Reduced by 30.53% month-over-month and 15.39% year-on-year.
Mineral fuels, lubricants, and related materials : Dropped by 53.39% month-over-month and 64.23% year-on-year.
The reduction in imports indicates improved efficiency in resource allocation and reduced demand for foreign goods, potentially driven by policy measures aimed at promoting local alternatives.
Re-export values also showed resilience, decreasing slightly by 4.31% month-over-month but increasing by 13.40% year-on-year.
Key re-export destinations included Congo, the Democratic Republic of , which accounted for nearly 96% of total re-exports.
Sectoral Highlights
Food Processing : Domestic exports of food and live animals increased by 14.05% month-over-month, though they still lagged behind December 2023 levels due to a 20.91% decline year-on-year.
Beverages and Tobacco : While domestic exports of beverages and tobacco fell sharply by 62.53% year-on-year, re-exports of these products grew by 44.31% during the same period.
Manufacturing : Manufacturing activities experienced robust growth, with notable increases in sectors like chemicals, rubber, and plastic products (34.6% ) and non-metallic mineral products (33.4% ).
Trading Partners
Rwanda’s trade relationships continued to evolve, with some partners showing substantial growth:
United Arab Emirates emerged as the largest export destination, with exports increasing by 93% month-over-month and 41% year-on-year.
Uganda saw an impressive surge in exports, up 248% year-on-year.
Belgium recorded a staggering 2,111% increase in exports year-on-year.
On the import side, Kenya stood out as a major contributor to the change, with imports rising by 422.90% year-on-year. Meanwhile, imports from traditional partners like Tanzania and Uganda declined significantly.
Implications for Rwanda’s Economy
The shrinking trade deficit is a testament to Rwanda’s commitment to transforming its economy through industrialization and trade diversification. By reducing dependency on imports and boosting local production, the country is positioning itself as a regional leader in sustainable economic growth.
Looking Ahead
While the drop in the trade deficit is encouraging, challenges remain. Sectors such as textiles, clothing, and leather goods continue to struggle, with exports declining by 39.5% in November 2024. Addressing these weaknesses will be crucial to ensuring balanced growth across all industries.
As Rwanda moves forward, the focus will likely shift toward expanding markets for high-value exports, enhancing productivity in key sectors, and maintaining momentum in reducing the trade deficit. With continued effort and strategic planning, the country is well-positioned to achieve its vision of becoming a middle-income nation by 2035.
