Securing a certification for an international quality standard is a critical factor in opening doors to international trade. This was underscored by the newly released 19th edition of the Rwanda Economic Update (REU19) which shows that businesses with an International Organisation for Standardisation (ISO) certificate are 36% more likely to be exporters.
Along with access to e-commerce, the report highlights quality certification as two of the main indicators of access to international markets. However, both factors remain significant challenges to Rwandan businesses, with only 3% of Rwandan firms having obtained ISO certification in 2019.
International quality standards, like those governed by the Swiss-based ISO, create a common base of trust between importers and exporters of products and commodities. These include a number of important benchmarks for agricultural production and food safety.
The REU19, released in Kigali, Rwanda, yesterday, finds that, after a strong economic recovery last year, Rwandan GDP growth is expected to be moderate in 2022 due, in part, to the effects of the war in Ukraine and the persistent risk of the COVID-19 pandemic in major economies.
According to the report, titled Boosting Exports Through Technology, Innovation, and Trade in Services, GDP growth is projected at 6% for 2022, after reaching 11% in 2021. Inflation continues to mount as increases in international commodity prices and the disruption of global supply chains have led to substantial increase in energy, transport, and food prices.
“The mounting inflation in Rwanda, which comes at the time when employment has not yet recovered to its pre-pandemic level, has the potential to undo hard-won achievements in terms of poverty reduction and human capital development. Government interventions to protect the most vulnerable, building on the country’s social safety nets continue to be critical,“ said Rolande Pryce, World Bank Country Manager for Rwanda.
E-commerce access is key
In its special focus on trade, the report gives an insight into Rwanda’s export performance. The REU19 notes that Rwandan firms have increased their participation in international trade (particularly in services) over the last decade, to levels exceeding that of regional and continental peers.
According to the report the sectors with the largest share of firms exporting were food processing, hotels and restaurants in 2019.
The REU19 also shows a significant correlation between the adoption of e-commerce in Rwanda and the participation in international trade and noted its limited use by Rwandan firms.
“The strong link between e-commerce and exporting, and the lack of information regarding foreign markets regularly cited by firms in Rwanda, suggests investment in internet infrastructure can provide isolated enterprises, such as those in rural and underdeveloped urban areas, low-cost connectivity to markets and customers, and increase local firms’ participation in international trade,” said Calvin Djiofack, World Bank Country Economist .
According to the REU19, Rwanda has placed great emphasis on services development to raise employment, income, and export earnings. Yet, the country is facing a skills deficit that, if not addressed, will constrain potential growth for high-skill services exports.
One of the measures the report recommends to boost openness to trade in services, is for Rwanda to address its skills shortage in the short-run by recognizing qualifications of regional professionals, and abolishing work-permit regimes for them.
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