Trade Policy Trade Policy at Work

PACT EAC2: Rwanda continues to face climate and trade-related challenges

Although Rwanda puts in place a National Industrial Policy, agro-processing has so far failed its main purpose of boosting agriculture production for food and livelihood security.

Although Rwanda puts in place a National Industrial Policy, agro-processing has so far failed its main purpose of boosting agriculture production for food and livelihood security.

The sector also continues to face climate and trade-related challenges. More effective implementation of the industrial policy in the area of agro-processing development should bring on board agro-processors as part of its public-private dialogue mechanisms, so as to base its interventions on ground realities.

Recent stakeholder consultations under the project “Promoting Agriculture, Climate and Trade linkages in the EAC – Phase 2” (PACT EAC2) suggested that implementation of this policy does not sufficiently address the needs and wants for agro-processing development, particularly on aspects at the interplay with trade, climate change and food security.

These would include incentives such as tax breaks and subsidies, raw materials, access to finance, market access, technology transfer, certificates.

Work for Agro-processing

CUTS International’s briefing paper, titled Industrial Policy: Proposed Features of a National Agro-Processing Forum under the IDEC by John Bosco Kanyangoga said that Rwanda National Industrial Policy is generally focused on upgrading, modernising and expanding the industrial sector.

Kanyangoga also said that technically, agro-processing falls in manufacturing but there are no specific provisions on food processing within the policy.

“This is a gap to be filled for the industrial policy to sufficiently address agro-processing related issues. Moreover, the industrial policy can serve as a basis to put in place other relevant policies, strategies and measures to enhance agro-processing in Rwanda,” he said.

He added: “In fact, there has been a general consensus by various stakeholders (especially from the private sector) on the need to have a policy and strategy that is dedicated to support and promote a vibrant agro-processing sector in Rwanda.”

As much as the national industrial policy generally focuses on issues that in one way or another have an impact on agro-processing, there are still some missing gaps for specific elements that are needed to address directly the issues related to agro-processing, he observed.

“For instance, an effective industrial policy enhancing agro-processing development should address the critical issues of supply chains whereby most of the agro-industry units are suffering from insufficient raw inputs, high cost of energy and water, lack of access to finance, high energy consumption and outdated technologies,” he said.

They require environment protection measures, agricultural mechanisation and extending agro-industry to new areas with comparative advantages in agro-processing such as horticulture, diary, rice, maize and fruits.

While supporting agro-processing in Rwanda, the special and favorable treatment that the agro-industry deserves should look beyond the rest of the industry sector based on purely business considerations because the agro-processing should be viewed from the food security perspective as well.

On this basis, stakeholders generally recommend that the government should consider incentives such as tax breaks and subsidies to investors venturing in agro-processing business.

The current gaps in terms of favourable industrial policy are also reflected in the high production costs making our agro-processed products less competitive and insecure against competition from imports in the region.

Those factors may include the cost of basic infrastructures for transport and energy, the fluctuation of quality and quantity of raw materials, the lack of technical assistance and skilled labor for agro-processing units, the insufficiency and inefficacy of start-up funds and grace period, the insufficiency of facilities for exports, and the inaccessibility of public markets.

Another important gap is related to the implementation of the national Industrial policy for agro-processing development.

While the IDEC has established a Public-Private Dialogue (PPD) as a consultation mechanism, it does not include channels for agro-processors provide their contribution to policy implementation and obtain responses to their concerns.