Incentives to support agriculture in the East African Community: Lessons for Rwanda

  • As one of the potential drivers of Rwanda’s economic growth, agro-processing industries are supported with measures including tax incentives, import tariff protection, and supporting infrastructure.
  • Analysis of Rwanda’s agricultural market shows substantial policy weight is assigned to staple cereal crops such as rice, maize, and wheat – translating into price incentives for producers, yet growth in productivity is slow.
  • Welfare analysis suggests that a proposed VAT exemption for locally processed cereal commodities would have little impact on poverty relative to forgone tax revenues.
  • Policy recommendations evolving from the analysis include: complement the current food availability policies with measures to improve access and stability; rebalance public expenditure in support of agriculture towards public goods and infrastructure; and strengthen the regional governance and cooperation framework to allow for reliable market access for exporting countries and stable prices for net-importing countries.