International Trade
Senior 6 · Economics
International Trade
Lesson 1 of 5
25 min
The National Bank of Rwanda (BNR) records the value of every good that leaves the country. The tables show its figures for the fiscal year 2024–25, which ran from 1 July 2024 to 30 June 2025. Values are in millions of US dollars, the currency most of Rwanda's trade is priced in.
| Exports of goods, 2024–25 | US$ million | Share of total |
|---|---|---|
| Gold | 1,260.9 | 42.0% |
| Other products, including re-exports | 1,070.6 | 35.7% |
| Minerals: cassiterite (tin ore) 116.0, coltan 110.4, wolfram 38.5 | 265.0 | 8.8% |
| Coffee | 116.2 | 3.9% |
| Tea | 111.0 | 3.7% |
| Pyrethrum | 7.5 | 0.2% |
| Hides and skins | 0.3 | under 0.1% |
| Statistical adjustments | 169.7 | 5.7% |
| Total | 3,001.1 | 100% |
| Imports of goods (valued c.i.f.), 2024–25 | US$ million | Share of total |
|---|---|---|
| Consumer goods (of which food: 790.4) | 1,401.8 | 24.1% |
| Intermediate goods (inputs such as fertiliser, cement, chemicals) | 1,152.7 | 19.8% |
| Gold | 1,173.5 | 20.1% |
| Capital goods (machines, vehicles, equipment) | 979.0 | 16.8% |
| Energy products (mainly fuel) | 705.1 | 12.1% |
| Adjustments (including goods imported to be re-exported) | 411.8 | 7.1% |
| Total | 5,824.0 | 100% |
Read the tables before going on. (1) Which single product earned the most? (2) Rwanda spent almost twice as much on imports as it earned from exports: what kinds of goods make up that bill? (3) Gold appears in BOTH tables. What does that suggest about how much Rwanda really earns from gold?
Definition
Domestic trade (internal or home trade): the buying and selling of goods and services within one country's borders, paid for in that country's own currency.
Example: Irish potatoes grown in Musanze and sold at Nyabugogo market in Kigali.
Definition
International trade (foreign or external trade): the exchange of goods and services across national borders. It involves at least two countries, usually two currencies, and customs rules at the border.
Example: tin ore mined in Rwanda and sold to a smelter abroad; fuel bought abroad and brought into Rwanda by road.
Definition
Exports: goods and services produced in a country and sold to buyers in other countries. They bring foreign currency in.
Imports: goods and services bought from other countries. They send foreign currency out.
Re-exports: goods that are imported and then exported again without being substantially changed, for example fuel or food brought in by a Rwandan trader and sold on to a buyer in a neighbouring country. When a country earns its living partly by handling other countries' goods in this way, it is said to carry on entrepôt trade.
Definition
Visible trade: trade in goods, which can be seen and recorded as they cross the border (coffee, fuel, machines).
Invisible trade: trade in services, such as tourism, transport, insurance, banking and education. A tourist from abroad who pays to visit Volcanoes National Park is buying a Rwandan service export, although nothing physical leaves Rwanda.
| Feature | Domestic trade | International trade |
|---|---|---|
| Currency | One currency (Frw) | Two or more; buyers must exchange currency, so the exchange rate matters |
| Movement of factors | Labour and capital move fairly freely inside the country | Workers and capital face visas, permits and controls |
| Laws and rules | One set of laws, standards and taxes | Different laws, product standards and customs duties in each country |
| Barriers | None at internal boundaries | Tariffs, quotas, border checks and documents |
| Distance and cost | Shorter journeys, lower transport cost | Longer journeys, freight and insurance, higher risk |
| Language and culture | Usually shared | Often different, so marketing must adapt |
| Size of market | Limited to the home population | Many countries, so a much larger market |
| Basis | Forms | Rwandan illustration |
|---|---|---|
| Direction of the goods | Export trade, import trade, re-export (entrepôt) trade | Tea exports; fuel imports; goods re-exported to the Democratic Republic of Congo, which took 83.98% of Rwanda's re-exports in the last quarter of 2025 (NISR) |
| What is traded | Visible (goods) and invisible (services) | Coffee is visible; tourism and air transport are invisible |
| Number of partners in an agreement | Bilateral (two countries) and multilateral (many countries) | A deal between Rwanda and one partner is bilateral; the World Trade Organization's rules are multilateral |
| Area covered | Regional trade (within a bloc) and global trade | Trade inside the East African Community (EAC) is regional |
| How it is recorded | Formal trade (declared at customs) and informal cross-border trade (small traders who are not fully recorded) | BNR adds an estimate for informal cross-border imports to the customs figures |
Worked example 1: how much do the traditional exports earn?
Using the BNR figures for 2024–25, find the share of export earnings that came from coffee, tea and minerals together.
Add the three values, then divide by the total:
Now look at gold. Rwanda exported gold worth US$1,260.9 million but imported gold worth US$1,173.5 million, so its net earnings from gold trade were at most
Interpretation: gold is the largest export by gross value, but most of that value was first paid out for gold imports. A product's gross export value can therefore overstate what it adds to the country's foreign-exchange earnings.
Worked example 2: the visible trade balance in 2025
The National Institute of Statistics of Rwanda (NISR) reports formal trade in goods for each quarter. Adding its four quarters of 2025 gives domestic exports of US$1,592.3 million, re-exports of US$675.2 million and imports of US$5,538.6 million.
Step 1: total exports million US dollars.
Step 2: visible trade balance million US dollars, a deficit.
Step 3: export cover of imports
In 2025 Rwanda's goods exports paid for only about two-fifths of its goods imports. Unit 2 shows how the rest was financed.
Warning
Two common mistakes. (1) Re-exports are not Rwandan production: when you judge what a country makes, use domestic exports, not total exports. (2) Figures from different sources are not interchangeable. NISR's customs-based figures are for a calendar year; BNR's are for a fiscal year and are adjusted for balance-of-payments use. Always say which source and which year you are quoting.
| Advantages of international trade | Disadvantages |
|---|---|
| Access to goods a country cannot produce, such as fuel and many machines | Dependence on foreign suppliers, so a border closure or war abroad can cause shortages |
| Larger markets, economies of scale and more jobs in export industries | Cheap imports can close local firms, especially young (infant) industries |
| Foreign exchange to pay for imports and debt | Persistent trade deficits put pressure on the exchange rate and reserves |
| Competition that pushes local firms to become efficient | Imported inflation when world prices of fuel or food rise |
| Transfer of technology and skills | Rapid use of non-renewable minerals |
| Wider choice and often lower prices for consumers | Dumping: goods sold abroad below their cost to capture a market |
| Closer political and economic cooperation | Earnings swing with world commodity prices |
Limitations are the things that stop a country from trading as much as it could. For Rwanda they include:
Tip
Visible or invisible? Ask: "Could a customs officer open a box and see it?" If yes, it is visible trade. A lorry of tea is visible; the freight charge paid to the lorry's foreign owner is invisible (a service).
Important
Discuss. Gold was Rwanda's largest export by value in 2024–25, yet Rwanda imported almost as much gold as it exported. Should gold be included when judging how well Rwanda's exports are performing? Give one argument for including it, one against, and your own conclusion.
Federal Reserve Bank of St. Louis, "International Trade 101" (about 9 minutes, 2024). A country opens up to trade in coffee: watch who gains (consumers, exporters) and who loses (sellers who cannot match world prices), and why that leads some governments to use tariffs.
Practice
Sources and credits
Written by Ganzaa: the chart, the tables, the worked examples, the discussion question and the practice items.
