Crossing borders for better business

In Rwanda, new market centres mean improved trade at the border

For Rwandans who sell produce or practice a trade or process goods, proximity to the border means business.

Commerce at these boundaries is active, and many depend on it entirely for income.

But for such entrepreneurial individuals – of which approximately 70 per cent are women and the majority impoverished – such buying and selling is informal, sometimes cumbersome and risky. 

Endeavoring for a solution that protects people and supports this lucrative exchange, the Government of Rwanda is establishing cross border market centres on its margins, sites that offer a safe space to engage in trade. 

“These cross border markets are being built to make it easier for traders to do business across the border. We have encouraged small-scale traders to mobilize themselves into cooperatives, and they can sell their goods to the DRC [Democratic Republic of the Congo], Uganda or Burundi. And we also encourage traders from the neighboring country to come and rent stall space,” said Patience Ingabire, Trade Specialist at the Rwanda Ministry of Trade and Industry.

“We are trying to build a single community of traders in these places,” she added. 

The centres are one element of the Ministry’s trade facilitation efforts targeting small businesses and women who are parts of vital national and regional networks. The Government is working with partners the Enhanced Integrated Framework (EIF) and TradeMark East Africa (TMEA) – both supported by the UK’s Department for International Development (DFID) – and the World Bank, among others. 

TRADING SPACES

Current business at the border involves time spent traveling with heavy loads, delays at crossing, lack of information about duties and finances, and security dangers. 

The market centres are an attempt to resolve these issues and, in so doing, directly enhance the income of individuals while also improving the qualitative experience of doing business. 

“As an example, one border crossing with the DRC gets about 20,000 to 40,000 people crossing every day on both sides. The biggest problem is cumbersome crossing procedures, which means that traders were taking too long to cross the border. The other issue is insecurity. Because it was so difficult a lot of the traders were using illegal routes to bypass the official border crossing. So there was an issue of security, especially for the women,” said Anataria Karimba of TMEA, which is supporting the construction of two soon-to-be-launched cross border markets at the northern Rubavu and southern Rusizi borders with the DRC. 

The spaces being created will provide the safety female traders need, as well as a range of other advantages based on discussions with the traders operating along Rwanda’s borders. 

“The centres will have different kinds of facilities like cold storage and warehouses; individual stalls; places to display commodities, fruits and meats; a small boardroom; and security agents. And we will have other institutions like banks and pharmacies,” said Ingabire, who is working on the development of the markets, including two EIF-supported ones.

The cold storage is key, as those selling perishable produce were carrying items in bulk often over distances, then waiting in long lines to cross the border, so basically at the mercy of time and decay – and losing money all the while. 

“The idea of these markets is that they bring about more formality and structure to otherwise informal cross border trade. The permanence of having a purpose-built market structure that traders know is going to be there every day brings stability to their transactions. Also it means that disparate trading activity can be aggregated in a single location, which is much more efficient: traders know which products are coming and going, and where to buy and sell for a stable price,” said Anna Gibson, Private Sector Development Advisor for DFID in Rwanda.

EMPOWERING ENVIRONMENT

The stability involved in having a dedicated space for trade extends to the family life of the women traders. 

“We will have crèches at the markets because a lot of these women have babies. Initially if they had to cross the border, because of documentation requirements they would most likely have to leave their babies by the side of the road. So we included crèches in the markets in order to enable them to conduct their business without having to worry about the wellbeing of their children. Once the markets are operational, traders selling in the market who usually have their babies with them during the day will be able to leave their kids at the crèche under supervision,” said Karimba. 

With their children secure, their goods fresh and their safety fortified, those coordinating the markets are also looking at arming traders with business skills, information about taxes and duties and the ability to organize.

TMEA has trained over 5,000 female cross border traders across nine border districts, and EIF has trained over 800 people on good financial management and the details of customs procedures, something most of these informal traders knew little about. Now, they know their rights and can cite the law on quantities for export and import and duties on goods.

“Many of our cross border traders don’t even know how to read or write and they don’t have the basic skills in entrepreneurship except for buying and selling in a very unorganized manner. So the project initiated a program to put them together in cooperatives and provided trainings in bookkeeping and business planning and linking them to financial institutions to give them small loans to start their business or to enhance their financial capacity to run their business in an organized way,” said Ingabire.

RUN FOR THE BORDER

The Government of Rwanda has a unit specifically dedicated to promoting cross border trade, with the informal business estimated to be worth US$108 million in exports in 2015.

Research has found that of the 50 or so border crossing places in the country, 36 are informal. With the establishment of these markets, some of the unpredictability of current trading processes will be lessened to improve the environment for the tens of thousands of low-income households whose earnings depend on daily trade across borders. 

“By supporting the enhanced productivity and the expansion of cross border trade we are actually helping those at the bottom of the pyramid of the trade ecosystem, and not leaving them behind,” Gibson said, adding that focus should be on both sides of the border.

“What’s more, we see that increased cross border trade generates a real multiplier effect in the local economy. The byproduct of traders increasing their profits through developments like these cross border markets means that they spend more money on local products and services in their border communities, boosting the incomes of surrounding households,” she said.