Rwanda’s Meagre Foreign Trade is Vanishing while Foreign Aid is Sharply Increasing

By David Himbara

Rwanda’s tiny external trade has been dealt a blow by the Covid19 pandemic with exports falling by 40.6 percent and imports dropping by 35.2 percent. Meanwhile, foreign aid to Rwanda has risen sharply by 83 percent during the pandemic. Debt has also shot up to 66 percent of GDP.

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The National Institute of Statistics of Rwanda (NISR) has issued Rwanda’s external trade data which compares Rwanda’s performance for January 2021 and January 2020. The difference between the two sets of data shows how steeply Rwanda’s already tiny external trade has been hit by the Covid19 pandemic.

  • Rwanda exported US$49.9 million worth of goods in January 2021, compared to US$84.1 million in January 2020 – a drop of 40.6 percent.
  • Rwanda imported US$229.1 million of goods in January 2021, compared to US$354 million in January 2020 – a drop of 35.2 percent.
  • Overall, therefore, Rwanda’s external trade shrank by 36.6 percent from US$242.4 million in January 2020 to US$153.6 million in 2021.

The implications of the collapsing external trade are not difficult to fathom – the less Rwanda is able to earn from foreign trade, the more it will depend on foreign aid. And, the more Rwanda’s foreign debts increase.

Indeed, Rwanda’s dependency on foreign aid has sharply increased during the Covid19 pandemic. According to the World Bank, aid grants to Rwandadoubled in the second quarter of 2020, a rise of 83 percent. Rwanda is also borrowing heavily, thereby increasing its foreign debt, which now stands at 66 percent of GDP.

How will the government of General Paul Kagame deal with the external trade collapse and the continuously rising dependency on foreign aid and foreign debt? This is a million dollar question. Stay tuned.