Call for incentives as Rwanda and the Netherlands move from aid to trade | The new times
This year marks the end of Dutch financial assistance to Rwanda as the two countries work to boost trade to help Rwanda achieve its ambition of self-reliance.
Both countries are ready to enter a new chapter, as the acting head of the department for sub-Saharan Africa of the Dutch Ministry of Foreign Affairs, Martine Van Hoogstraten, underlined during a speech at the 28th event of release in The Hague recently.
“This year, we find ourselves between two chapters in our shared history. The bilateral development cooperation of our countries will end at the end of this year. This is the chapter we are closing, in line with Rwanda’s goal of becoming independent from foreign aid. Going forward, our two countries will focus on increasing mutual trade and investment,” she said.
Rwanda’s business community is already tapping into the Dutch market, but there is hope for special incentives that traders and economists say would encourage exporters to increase their exports.
Dieudonné ‘Diego’ Twahirwa, a young Rwandan agripreneur who exports chilli to the Netherlands. Photo: File.
Asked about her readiness to take advantage of the new deal, Joy Murekatete of Jotete Investments, which exports flowers to the Netherlands, said she had received good signals in trading with the Netherlands, although she thinks both countries should give merchants guarantees that would encourage them to increase their shipments.
“We got good rates from RwandAir to fly our flowers to the Netherlands and recently my flowers were auctioned on arrival which was very encouraging as before we only took flowers with no insurance at the moment where they would be sold,” she said.
Murekatete, who has since expanded his flower garden from 4 hectares to 11 hectares, added that “these auctions serve as a guarantee and since the two countries are moving from Aid for Trade, we would also like to see guarantees and guaranteed contracts for the tradespeople. .”
For Diago Twahirwa of Gashora Farms, which exports chilli to the Netherlands, the new Rwanda-Netherlands agreement is likely to bring many benefits, including Rwanda supplying competitive products to the Netherlands and benefiting from the Dutch state-of-the-art technologies.
“We should focus more on fresh products like chilli and flowers because we have a competitive advantage. We also need to target the right time to export, as between December and June there is a good market for fresh produce,” he said.
Twahirwa said that although the Netherlands produces the same product, it is sometimes hampered by the seasons, which gives Rwandan exporters an advantage in supplying Dutch markets when their domestic production is low.
Today, according to Twahirwa, transporting export shipments is easier thanks to the available flights. “There is a lot to trade and learn from the Netherlands. Before and during the covid-19 period, transportation was tricky. Today everything is going well, flights and ships are available, and the market is here.”
What economists say
Economists also believe that the shift from aid to trade has a longer and lasting impact, as aid comes with a number of conditionalities that limit its proper use.
According to Douglas Kigabo Bitonda, economist, “moving from aid to trade” probably means towards trade facilitation agreements between the two countries, and that this has the potential to strengthen Rwanda’s trade capacity and the role of the private sector which has the advantage of building a lasting dynamic between traders and investors.
He added: “I guess that as the Netherlands is withdrawing from direct aid, the support should be on how to facilitate negotiations on how to remove trade barriers and facilitate the entry of Rwandans into the Dutch market, then that would definitely be a great opportunity.”
The decision to phase out Dutch aid began in 2018 with a full phase-out plan to be carried out by the end of 2022.
Elimination is not exclusive to Rwanda; it is part of the new Dutch foreign trade and development cooperation strategy.
Talk to The new timesRwanda’s Ambassador to the Netherlands, Amb Olivier Nduhungire, gave a historical perspective of Dutch aid to Rwanda dating back as far as after the 1994 Genocide against the Tutsi, which mostly went to justice in terms of training and equipment.
Financial aid from the Netherlands should only remain in unstable regions close to Europe. These include the Sahel, the Horn of Africa, North Africa and the Middle East. The Netherlands seeks to use this aid to reduce conflict and terrorism and prevent migration to Europe.
He explained that as Rwanda continues to experience stable economic growth, the Netherlands has decided to enter into a business partnership with Rwanda.
“Rwanda’s trade with the Netherlands amounts to $41 million in 2021. Of these, 73% is imported from the Netherlands while exports account for 27%,” Nduhungirehe said.
The Netherlands already has investments in Rwanda, including the Heineken-owned BRALIRWA brewery, Africa Improved Food, Unilever, an Anglo-Dutch consumer goods company that has ventured into the tea business in Rwanda, as well as in pharmaceutical and dairy companies, among others.
Rwanda also exports a variety of products to the Netherlands, including coffee, tea, flowers, fruits and vegetables.
According to Nduhungirehe, before the outbreak of the covid-19 pandemic, Rwanda’s flower exports to the Netherlands increased by 45% in the year 2019-2020.
He added that with the post-pandemic climate, there is likely a greater chance that Rwanda’s trade with the Netherlands will boom, as traders are ready to tap into new markets and even expand existing ones.