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Business Process Analysis BUSINESS PROCESS ANALYSIS EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA ii BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA Acknowledgements Md. Tariqur Rahman, international consultant, is the author of this report. He was assisted by Serge Rwamasirabo, national consultant based in Rwanda. They are wholly responsible for the information and views stated in the report. The consultants’ team acknowledges with gratitude the contributions of a number of people towards the process of this business process analysis (BPA), without whose participation the project would not have succeeded. We would like to express our gratitude and appreciation to Andrew Huelin, Associate Programme Adviser, Trade Facilitation and Policy for Business (TFPB), International Trade Centre (ITC), for his overall oversight, feedback and in-depth comments and guidance from the inception to the finishing of the report. We express our gratitude and thanks to the people whom we interviewed in the process of collecting information for the report. We also express our gratitude and thanks to the persons we have interviewed for the study, along with the participants in the workshop organized by the International Trade Centre (ITC) on 30 October 2015 in Kigali, Rwanda. Vanessa Finaughty edited the report and Isabelle Jouve, Associate Programme Adviser, TFPB, ITC, prepared the copy for printing. iii BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA iv BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA Contents Acknowledgements iii Acronyms and Abbreviations vii Introduction 1 Chapter 1 Trade context for BPA in Rwanda 3 1. Economic situation and trade facilitation 3 2. Overview of Rwanda’s export performance 5 3. Methodology of the study 6 4. Review of literature 6 Chapter 2 Analysis of export process and procedures of selected items from Rwanda 8 1. Export process: Coffee exports from Rwanda 8 2. Export process: Pili pili chilli (African bird’s eye chilli) 11 3. Export process: Pyrethrum 15 Chapter 3 Concluding observations and policy options 19 Annex 1 BPA for coffee exports 21 Annex 2 BPA for pili pili chilli exports 34 Annex 3 BPA for pyrethrum exports 49 References 65 Table 1. Major economic indicators of SITA countries in 2014 3 Table 2. Over time change of export process in Rwanda: World Economic Forum (2005–2014) 4 Table 3. SITA countries: Logistics Performance Index (LPI) 2014 4 Table 4. Comparative statistics of trading across borders indicators for SITA countries 5 Table 5. Trend of Rwandan major exports (Value in ‘000 US$) (2009–2014) 5 Table 6. Time procedure of coffee exports from Rwanda 10 Table 7. Time procedure of African bird’s eye chilli exports from Rwanda 14 Table 8. Time procedure of pyrethrum exports from Rwanda 18 v BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA Figure 1. Use case diagram of core business processes in coffee export 10 Figure 2. Time procedure of coffee exports from Rwanda 11 Figure 3. Use case diagram of core business processes in African bird’s eye chilli exports 14 Figure 4. Time procedure of African bird’s eye chilli exports from Rwanda 15 Figure 5. Use case diagram of core business processes of pyrethrum exports 17 Figure 6. Time procedure of pyrethrum exports from Rwanda 18 vi BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA Acronyms and Abbreviations Unless otherwise specified, all references to dollars ($) are to United States dollars, and all references to tons are to metric tons. The following abbreviations are used: RRA Rwanda Revenue Authority TTM Trade transaction modelling UNECE United Nations Economic Commission for Europe NAEB National Agricultural Export Development Board MINAGRI Ministry of Agriculture and Animal Resources CFA Clearing and forwarding agent MAGERWA Magasins Généraux du Rwanda s.a. RDB Rwanda Development Board UNCTAD United Nations Conference on Trade and Development ESCWA Economic and Social Commission for Western Asia PO Purchase order B/L Bill of lading COQ Certificate of quality COO Certificate of origin SITA Supporting Indian Trade and Investment for Africa vii BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA viii BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA Introduction With the gradual reduction of tariff in international trade over the last two decades, in order to remain competitive in global trade, countries’ focus has shifted towards improving the status of trade facilitation indicators – both within the border and behind the border. For countries that are seeking economic growth and development through increased participation in cross-border trade, this improvement is a must. Other than shipping charges, costs associated with completing documentary and related regulatory procedures such as certification for import and export of any item can account for a significant portion of the value of traded goods. Removal of the non-tariff measures such as cumbersome regulatory procedures and documentation, inefficient transport and logistics infrastructure and services, which will cut the time and costs required to complete a business process and increase predictability, have gained much attention from all segments of the stakeholders. In recent times, the importance of trade facilitation (i.e. the simplification and harmonization of import, export and transit procedures, including paperless trade through wide and efficient use of information and communication technologies) has gained due recognition from international communities such as the World Trade Organization (WTO) (Trade Facilitation Agreement in December 2013). Trading goods across borders involves meeting a vast number of commercial, transport and regulatory requirements, which typically entail complex procedures that require cooperation between many actors, including traders, government agencies and service providers from different countries. Inability or inefficiency to comply with any or some of these requirements or submission of wrong or incomplete documents often creates unnecessary delays and entails additional costs for importers and exporters. High trade facilitation and internal transportation costs are acting like headwind and have significant impact on traders’ ability to earn profits on a thin margin. The benefits resulting from various reforms of trade facilitation-related measures such as streamlining or consolidating the number of ministries and agencies’ documents requirement per transaction, reducing time required to complete the process, making available the formal fess, and reducing informal payments, is very significant. Although most actors and regulators involved in the international supply chain are aware of the need to streamline import and export procedures, few (if any) have a complete understanding of the entire trade transaction process, making it difficult to identify the bottlenecks and prioritize reforms. Again, the procedures to perform trade across borders and their relative efficiency vary across products traded, as well as trade routes, mode of transport, and origin and destination of the products. From this perspective, a product-specific business processes analysis (BPA), examining all commercial, transport, regulatory and financial procedures, is likely to be useful in identifying key areas to improve, through identifying and eliminating administrative and procedural constraints. Rwanda often faces high trade costs due to its lack of direct access to the sea and remoteness and isolation from world markets. Recently, the country is doing quite impressively in terms of reforming its administrative and procedural requirement in service delivery systems, but there is still scope to scrutinize its performance in specific areas, which can guide policymakers to improve. It is hoped that the information in this report on trade processes and procedures of the major export items from Rwanda will assist evidence-based policymaking and reforms to further simplify and streamline export procedures in Rwanda. 1 BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA 2 BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD’S EYE CHILLI AND PYRETHRUM IN RWANDA Chapter 1 Trade context for BPA in Rwanda 1. Economic situation and trade facilitation The Republic of Rwanda is one of Africa’s smallest and most densely populated countries, with a poor rural economy. The country is trying to overcome the limitations of its small, predominantly agricultural and landlocked economy by leveraging international trade both at global and regional level. Recently, Rwanda is maintaining a high economic growth. Although Rwanda resembles its neighbouring countries in terms of major economic characteristics, the country is still falling behind the Sub-Saharan standards on many frontiers, such as per capita gross domestic products (GDP) and trade to GDP ratio (table 1). Table 1. Major economic indicators of SITA countries in 2014 Indicator name Rwanda Ethiopia Kenya Tanzania Low Sub- income Saharan Africa1 GDP per capita (constant 2005 445.62 314.52 658.71 600.66 415.67 1 045.86 US$) GDP growth (annual %) 6.96 9.94 5.33 6.97 6.22 4.24 Agriculture, value added (% of 33.12 42.33 30.27 31.47 32.30 13.96 GDP) Industry, value added (% of 14.36 15.43 19.36 24.99 21.54 27.61 GDP) Manufacturing, value added (% 4.84 4.17 11.11 6.09 8.71 (2013) 10.95 of GDP) Services, etc., value added (% 52.51 42.25 50.37 43.54 46.16 58.40 of GDP) Trade (% of GDP) 45.48 41.18 50.28 49.37 65.18 61.80 Merchandise trade (% of GDP) 40.47 43.09 40.07 34.64 51.79 48.10 Source: World Development Indicators (WDI), The World Bank (accessed on 25 November 2015) Trading goods across borders requires a vast number of transactions to meet the rules and regulations of exporting and importing countries.
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