By: Dr. David Himbara
So now, 700 Rwandan francs (Rfr) can buy just one dollar. What is happening? Even before a sober analysis is attempted, Rwandan propagandists are falling over themselves hunting for someone to denounce for the collapsing franc. The landlords charging rents in dollars have been fingered; these are some of culprits for driving down the Rwandan franc – so the denouncers shout on the rooftops.
What utter nonsense!
There are several factors that are sending the Rfr over the cliff. I deal with just one today, namely, Rwanda’s international trade – what the country exports and imports.
Using Rwanda’s own data, I prove to you why the people who rule Rwanda should hide their faces in shame for claiming that they have led an economic miracle in the past 20 years.
According to Rwanda Central Bank (BNR), between January and July 2014, the money value of Rwandan exports was US$343 million down from US$344 for January-July 2013.
Meanwhile, the money value of Rwandan imports for January-July 2014 was US$1.4billion, up from US$1.2billion for same period in 2013.
The difference between Rwanda’s imports and exports, or the country’s imbalance of trade in July 2014 was shockingly over US$1billion. Put in another way, the money value of Rwandan imports was more than four times bigger than its exports.
The shamblic state of the Rwandan economy becomes more evident when we look closely at what Rwanda imports and monies involved.
# US$354million went into consumer goods, including such things as live animals, meat, milk, eggs, salt, sugar, beverages, and clothes.
# US$218million went energy, mainly petroleum and oil products.
# US$424million went into importing intermediary goods such as cement, chemicals and fertilizer.
# US$377million bought capital goods, mainly vehicles, machines and tools.
So what is wrong with this picture? Many things.
1) How come Rwanda spends $354million on importing milk, eggs, butter, sugar, clothes and meat? Even the head of state Paul Kagame has a 45 acre farm at Muhazi, as do most Rwandan elites! Why are these so-called farmers hoarding land that is lost to real production that would sharply reduce import bills of consumer goods?
2) Why has the country failed to invest in electricity that would sharply reduce imported petroleum products much of which sustain very expensive power plants that depend on imported heavy fuels? Who benefits from petroleum imports is another issue to raise!
3) What ingredient is missing in Rwanda to manufacture cement thereby reducing imported intermediary goods?
4) Perhaps most shameful is the fact that Rwanda spends almost the same amount of money importing consumer goods ($354million) and capital goods ($377million). Rwanda is therefore not even a banana republic – most bananas are imported from Uganda.
When you look at this miserable state of the economy, the question should be – why has the Rwandan Franc remained relatively strong for so long?
To answer this question, we will examine in the next article how generous foreign donations helped – until 2012, when donors decided they had had enough of Rwanda’s proxy wars in Congo and withdrew or cut back aid. Rwanda has yet to recover from aid cuts as we will see in next articles.