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Trade war bites as Burundi bans exports to Rwanda

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Unexpected outcomes from Burundi’s trade ban on Rwanda

Burundi’s July decision to ban exports to its northern neighbor, Rwanda, is brewing trouble for both economies; the question is whether the embattled leadership in Bujumbura can afford to pay that price. The export restrictions on Rwanda were imposed in July by Burundian President Pierre Nkurunziza’s government amidst increased undiplomatic rhetoric from Bujumbura. Before that, relations between Rwanda and Burundi had soured since Bujumbura accused Kigali of supporting the failed coup against Nkurunziza in May 2015.

The trade ban immediately caused concern in the region as the five East African Community (EAC) member states operate a Common market zone with free movement of goods, services, capital, and people. The Speaker of the East African Legislative Assembly (EALA), Daniel Kidega, condemned the Burundi action.

“What Burundi is doing is a serious breach of EAC trade agreement and EALA is going to investigate the matter and find an immediate solution,” he told journalists.

Instead of rethinking its decision, the Bujumbura leadership went farther to reinforce the ban with tight restriction of transportation links between the two countries.

To back its decision, Burundi quoted strategic security considerations, including a move to “save food for national consumption in case of famine”.

But local press quoted Burundi’s Second Vice-President, Joseph Butore, reportedly saying the underlying objective is to hurt Rwanda.

“We can’t give the fruit of our labour to Rwanda because they want to fight us,” he reportedly said.

In reality, Burundi is a peripheral exporter to Rwanda and the ban could have minimal effect on Kigali’s imports. Burundi mainly exports food stuffs, especially fruits, livestock, and fish products to Kigali. Rwanda, meanwhile, previously exported processed agricultural products like milk, wheat, maize and cassava flour, and potatoes to Burundi.

According to figures from the National Institute of Statics of Rwanda, in the First Quarter of 2016 Rwanda fetched from Burundi just 1.58% of its total imports from the EAC member states.

Over the same period, Rwanda’s imports from the EAC mainly originated from Uganda (44.3%) and Kenya (34.95%), representing around 79% of total imports from EAC. Tanzania imports were in third place with 18.94%.

Data from first quarter of 2016 would, according to some analyses, not be the most perfect for analysis because of the saber-rattling and unrest in Bujumbura which was already hurting trade between the two nations. However, although the volumes may have declined slightly, the pattern remains that Burundi and Rwanda are not the most popular business partners.

Trade statistics about Burundi are not easily available but according to International Alert, a regional NGO involved in fostering cross-border trade between Burundi, Rwanda, and the DR Congo, political unrest has already severely damaged the economy in Burundi.

Burundi has reportedly lost significant investors and its cross-border trade has suffered huge setbacks since electoral violence broke out in April 2015. International Alert quotes National Bank of Rwanda (BNR) statistics that show Burundi’s economy has shrunk by 7.2% – a contrast to the 4.7% growth experienced in 2014.

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