Chinese lockdown hits businesses in landlocked Rwanda

China accounts for 20% of imported goods and owns infrastructure companies in Rawanda, landlocked country in East Africa

Compared to other places, African countries have not reported a large number of coronavirus cases or deaths, but an economic crisis is looming large on the continent. Like the Rwanda-based designer Louis Zibonukuri, hundreds of businessmen dependent on the supplies from China are worried about their bleak prospects. Five years ago, Zibonukuri had opened a showroom of Chinese clothes in Kigali, the capital of Rwanda, a landlocked country in the Great Rift Valley in East Africa. His imported clothes had become a craze and spelled a style in the region.

“I had never felt so low. It is a defining moment which will have a long-time impact on businesses and the lives of the people in my family,” the designer told Anadolu Agency. “Both employers and employees were caught off guard. In such a difficult time we just pray for a meal. Everything else is on halt, but we tend to remain optimistic. I am confident that this epidemic will be confronted, “said Zibonukuri, a father of four children.

He said for, over the past 10 days, there is no business at all. According to Ismael Buchanan, a Kigali based analyst, and a teacher at the University of Rwanda, the African country imports almost 20% of its goods and products from China, which has been under lockdown. He also warned that big projects like construction of the international airport in Bugesera, and roads could be affected as the Chinese own most of the infrastructure companies.

Like many countries, Rwanda also announced strict measures including restrictions on movement to stem the spread of coronavirus. The country also ordered the closure of all businesses except those selling essentials like food and medicine. In a televised address, Rwandan President Paul Kagame described the current period as challenging, which may hamper the livelihoods of many Rwandans. He, however, said the government will try its best to ameliorate suffering.

“Rwandans working together have overcome many challenges at different times. Your [citizens] partnership is needed in the fight against this pandemic, and we must win, “he said.

Uncertain survival

The government has set up a support initiative for vulnerable families affected by the lockdown. Food and other essentials are handed out by members of village committees to needy people at their homes. At Zibonukuri’s showroom, there are two daily wage employees. Their survival has become uncertain at this moment.

The National Bank of Rwanda last month announced a series of measures designed to mitigate the economic impact of the virus. These include a facility of 50 billion Rwandan francs ($52.1 million) from which banks with liquidity challenges can borrow from the central bank rate. The central bank also reduced the reserve requirement ratio effective from April 1, 2020, lowering it from 5%-4% to allow banks more liquidity to further support affected businesses.

Rwanda Revenue Authority also gave businesspeople extra time to pay their taxes by extending the deadline. Dreams of Jean d’Amourr Uwimana, who owns New Art Style company, selling leather goods, in Kigali also came crashing. He was planning to open more branches across the country. He employs 40 people, including 20 permanent staff, who have been sent on unpaid leave.

“The pandemic has altered our perspective on business. For those with businesses this is the time to pick important lessons on how to adapt to challenging times,” he told Anadolu Agency. He said the businesses may never be the same again, appealing to the government to maintain support for the vulnerable Rwandans who have lost livelihood.

No money left to buy food

“I had just paid rent for different business outlets and workers’ wages. I was left with no money to buy food stock. The lesson is to develop a culture of savings to cater for such eventualities even for businesses, “he said. Because of the closure of borders, Heart of Africa Ltd, a Rwandan clearing and forwarding agency has lost all business. Jeanne Izabiriza, managing director said there was no chance to recover till travel confidence returns among people.

“Our prayer is that this ends soon and we resume business. In terms of risks, nobody had foreseen this.” He said. Buchanan said that small and medium enterprises (SMEs) will be the most affected compared to others, as some are already struggling to pay taxes and wages. If this problem persists then there is no choice except that most governments globally have to decide to open up a fiscal stimulus to those SMEs,” he said.

“SMEs can borrow from to pay their workers because some of those workers may have a hard time paying their rent, buying food and so on. There is no choice, those SMEs will need the intervention of government with the stimulus package to be able to be back into business,” he said.

Source: Anadolu Agency