Understanding Rwanda’s Agribusiness and Manufacturing Sectors   Gathani and Stoelinga

This book comes after the 50th anniversary of Rwanda’s Independence

and provides the first ever comprehensive overview of firms in the
country’s agribusiness and manufacturing sectors. Understanding
Rwanda’s Agribusiness and Manufacturing Sectors puts these sectors
into context historically, explaining how decisions and initiatives
going back to the 1930s have contributed to determining the shape Understanding
and composition of agribusiness and manufacturing in Rwanda
today. These sectors, more than any others, have followed the ups Rwanda’s
and downs of Rwanda’s history. The book also provides an in-depth Agribusiness and
analysis of agribusiness and manufacturing in Rwanda today, with
a focus on understanding the origins, evolution and capabilities of Manufacturing
firms, and how these capabilities came to be. This overview, or Sectors
“Enterprise Mapping”, gives the reader a detailed understanding of
the ownership structures, products, systems, resources and exports
of leading firms in Rwanda’s agribusiness and manufacturing sectors
today. Finally, this book individually profiles forty-three of Rwanda’s
largest manufacturing and agribusiness firms.

This book is targeted at policymakers, academics, businesspeople,

and prospective investors interested in gaining a better understanding
of Rwanda’s industrial sector.

Sachin Gathani and

Dimitri Stoelinga

With a Foreword by François Kanimba, Minister of Trade and

Industry, and an Introduction by Professor Måns Söderbom
UNDERSTANDING RWANDA’S AGRIBUSINESS
AND MANUFACTURING SECTORS
 UNDERSTANDING
RWANDA’S AGRIBUSINESS
AND MANUFACTURING SECTORS

Sachin Gathani and Dimitri Stoelinga

Copyright © 2013 The International Growth Centre
Published by the International Growth Centre
Published in association with the London Publishing Partnership
www.londonpublishingpartnership.co.uk

All Rights Reserved

ISBN 978-1-907994-17-3

A catalogue record for this book is available from the British Library

This book has been composed in Minion Pro

Copy-edited and typeset by T&T Productions Ltd, London

Cover design: Peninah Njuguna

Contents

Foreword viii
Preface x
Acknowledgements xi
About the Authors xii
Introduction xiv
Acronyms and Abbreviations xvii

1  Origins and Evolution 1

1.1  Industrial Development in Rwanda: An Overview 1
1.2  The Origins of Industry in Rwanda 5
1.3  The Foundations of Modern Rwandan Industry 19

2  Main Findings 37
2.1  Our Framework 37
2.2  Size of Firms in Rwanda’s Manufacturing and
Agribusiness Sectors 39
2.3  Main Findings: Ownership Structure 41
2.4  Main Findings: Products 53
2.5  Main Findings: Systems 61
2.6  Main Findings: Resources 70
2.7  Main Findings: Exports 73
2.8  Summary of Main Findings  77

3 Coffee 81
3.1  Sector Profile 81
3.2  Coffee Business Center (CBC) 85
3.3  Kivu Arabica Coffee Company (KCC) 87
3.4 Rwacof 90
3.5  Rwanda Trading Company (RTC) 92
3.6 Rwashoscco 94
vi CONTENTS

4 Tea 97
4.1  Background and Overview 97
4.2  Rwanda Mountain Tea (RMT) 100
4.3  Sorwathé (Société Rwandaise de Thé) 104

5  Staple Crops 107

5.1  Background and Overview 107
5.2  Bakhresa Grain Milling 111
5.3  Pembe Flour Mills 114
5.4  ICM Rwanda Agribusiness 116
5.5 Minimex 119
5.6  Kabuye Sugar Works 122

6  Horticulture and Specialty Plants 125

6.1  Background and Overview 125
6.2  Premier Tobacco Company (PTC) 128
6.3  Shekina Enterprises 131
6.4  Horizon Sopyrwa (Société de Pyrethre au Rwanda) 133
6.5 Sorwatom 138

7  Dairy and Beverages 143

7.1  Background and Overview 143
7.2 Bralirwa 146
7.3  Brasserie de Mille Collines 150
7.4  Inyange Industries 152
7.5  Laiterie de Nyanza (Agro-Processing Industries) 155
7.6  Enterprise Urwibutso (Sina Gérard) 157

8  Construction Materials 161

8.1 Background and Overview 161
8.2 Ameki Color 164
8.3 Cimerwa 167
8.4 Kigali Cement Company 169
8.5 Ruliba Clays 172
8.6 Safintra 175
8.7 Simaco/Afrifoam 177
8.8 SteelRwa 179
8.9 Tolirwa (Tôlerie Industrielle du Rwanda) 182
8.10 Ufametal  184
8.11 Uprotur 186

9  Other Light Manufacturing138

9.1  Background and Overview 191
9.2  Anik Industries 194
9.3 Aqua-San 196
9.4  Kigali Steel & Aluminium Works 199
9.5 Manumetal 201
CONTENTS vii

9.6  Mutara Enterprises 204

9.7  Roto Ltd. 208
9.8  Rwanda Foam 210
9.9  Société Rwandaise de Chaussures (SRC) 212
9.10  Suku Paper Works/Safari Center 214
9.11  Sulfo Industries 217
9.12  Trust Industries 220
9.13 Utexrwa 223

Appendix 227
Bibliography 233
Foreword

Rwanda, after more than a decade of sustained high growth, is embarking

on a new phase of its development. The transition from a least developed
country to middle-income status targeted by Vision 2020 will require high-
er growth rates based upon a more diversified and productive economic
base fuelled by private investment. In the future, growth will increasingly
emanate not only from increases in productivity in agriculture but also
from new investment in industry, services and export diversification.
This book focuses on one of the foundation stones of the coming growth
– industry – and it provides us with detailed information on the dynamics
and the structure of Rwanda’s manufacturing and agro-processing sectors
today. It will also provide policymakers as well as investors interested in
our industrial development with a clear view of the history of Rwanda’s
industrial sector, including its recent performance and a description of
the leading enterprises. It highlights policies that have helped promote the
sector’s development over the past decade. Most importantly, it conveys a
sense of the sector’s considerable potential for further growth in the con-
text of the wider regional economic integration.
This book is part of a larger project undertaken by the Brookings Institu-
tion with support from the African Development Bank and UNU-WIDER.
This project, called Learning to Compete, is a comparative study of sev-
eral African countries that focuses on export development, skills, foreign
investment and economic clusters, all with the aim of understanding
recent trends in productivity growth and ways to improve competitive-
ness. When the International Growth Centre proposed including Rwanda
among countries covered by this project, we were pleased to endorse that
effort because we wanted to learn from their experience and share with
other countries the findings and recommendations of the study.
Laterite Ltd., a Kigali-based research firm that was contracted by the In-
ternational Growth Centre to conduct this work, has – through its rigorous
yet practical approach – brought an innovative and analytical voice to the
ongoing review of trade and industrial policies in Rwanda. Through inter-
views with the top management of our most prominent companies, this
book maps out the present state of Rwanda’s leading industrial p ­ erformers,
FOREWORD ix

singling out both challenges and the underlying opportunities. This anal-
ysis will go a long way towards informing Rwanda’s strategic thinking to
enhance trade and industrial policies and reforms. It highlights impor-
tant issues such as the emerging role of the construction materials and
agro-processing sectors, opportunities to expand significantly into neigh-
bouring markets and the importance of facilitating investment from large
national and regional investment groups and industrial conglomerates. At
the same time, however, it provides a reality check on real constraints in
the sector, including historically low export orientation, complications
in sourcing raw materials, cost of transport and unstable demand, issues
that we need to take into account when we design our industrial and trade
­policies.
Those interested in Rwanda’s development – policymakers, academics,
businesspeople and prospective investors – will, I am confident, find this
book essential to understanding Rwanda’s industrial sector. It is a mile-
stone in marking the next phase of Rwanda’s journey toward becoming a
middle-income country.
François Kanimba
Minister of Trade and Industry
Preface

Rwanda achieved independence on 1 July 1962. This book marks the

50th anniversary of the country’s independence and tells the story of its
manufacturing and agribusiness sectors by systematically looking at the
evolution of firms in these sectors since the 1930s. These more than other
sectors have followed the ups and downs of Rwanda’s history. Tracing their
evolution allows us to understand in rich detail the current state and fu-
ture potential of these sectors, which will be critical in Rwanda’s journey
to achieving middle-income status.
The backbone of this book is an enterprise map of Rwanda’s manufac-
turing and agribusiness firms, tracing their origins and evolution, as well
as current firm capabilities and how they were formed.
This mapping exercise was conducted in 2012 and involved profil-
ing leading firms in Rwanda’s manufacturing and agribusiness sectors
through one-on-one structured interviews with their senior management.
The book contains 43 firm profiles that detail each company’s origins,
products, systems and resources. Given the small size of Rwanda’s econ-
omy, with only a handful of firms that qualify as large enterprises, this
exercise provides a comprehensive assessment of the country’s industrial
capabilities base.
This book will provide the first ever comprehensive overview of firms
in the manufacturing and agribusiness sectors. In doing this, we hope to
provide academics and policy-makers with insights on the structure and
existing capabilities of industrial firms, enabling them to design targeted
interventions that are based on an understanding of the key constraints to
industrial development in Rwanda. We also hope that this book will pro-
vide inspiration to entrepreneurs and investors looking to start new firms,
or expand existing ones, in the manufacturing and agribusiness sectors
in Rwanda.
June 2013
Acknowledgements

The Laterite team would like to thank the 43 firms and their representa-
tives for agreeing to be part of this study and for sitting through the in-
terviews with our research team, often for hours on end. Their insights
have been key to making this a valuable exercise. In particular, several of
Rwanda’s inspiring managers and CEOs who reviewed and debated the
findings have made a significant contribution to this book.
Government institutions and organizations have also played an impor-
tant part in making this book possible. They provided us with guidance,
relevant data, contacts, the necessary permissions and invaluable insights.
We thank in particular the Ministry of Trade and Industry (MINICOM),
the Rwanda Development Board (RDB), the National Institute of Statistics
(NISR), the Rwanda Revenue Authority (RRA), the Ministry of Agricul-
ture and Natural Resources (MINAGRI), the National Agriculture and
Export Board (NAEB) and the National Bank of Rwanda (BNR).
Special thanks goes to the many people who have helped us write, edit
and proofread this book. We would like to thank in particular Nick Buck-
ley, Jean Baptiste Gasigwa, Maria Paula Gomez, Garron Hansen, Simon
Jones, Sophia Kamaruddin, Peninah Njuguna, Nupur Parikh, Leonard
Rugwabiza and Nina Stochniol for their time, thoughts and incredible
support.
A final word of thanks goes to the International Growth Centre (IGC).
The research for this book would not have been possible without the finan-
cial, logistical and, most importantly, technical support from the Rwanda
Country team: Jonathan Argent, Richard Newfarmer and in particular
Michele Savini and Professor Måns Söderbom. We thank them for their
support and advice throughout this project.
About the Authors

Dimitri Stoelinga is a Co-Founder and Partner at Laterite Ltd. Prior to

establishing Laterite, Dimitri worked for the World Bank in Nairobi and
Washington, DC, UNDP in Angola, Delegation of the European Commis-
sion in Tanzania and the Harvard Center for International Development.
Dimitri holds an MPA in international development from Harvard Uni-
versity, an MBA from the Indian Institute of Management and an MSc in
management from ESCP Europe Business School.

Sachin Gathani is a Co-Founder and Partner at Laterite Ltd. Prior to es-

tablishing Laterite, Sachin worked for the World Bank Group in Kenya. He
has several years’ experience as a management consultant for US state gov-
ernments and the government of South Sudan, and has led competitive-
ness strategies in Colombia and Djibouti. Sachin has undergraduate de-
grees in political economy and business from the University of California,
Berkeley, and a masters in international affairs from Columbia University.

Laterite Ltd. (www.laterite-africa.com) is a research-consulting firm

based in Rwanda, Burundi and Malawi. We offer a variety of research ser-
vices clustered around economic and social research, policy development
and market research. Laterite is committed to bringing world-class re-
search services to African markets with a high growth potential but little
advisory service infrastructure.

The International Growth Centre (www.theigc.org) promotes sustainable

growth in developing countries by providing demand-led policy advice
based on frontier research. The IGC is directed and organized from hubs
at the London School of Economics and the University of Oxford and com-
prises country offices across the developing world. The IGC was initiated
and is funded by the Department for International Development (DFID).
ABOUT THE AUTHORS xiii

Professor Måns Söderbom was formerly the lead academic for the IGC
Rwanda country office and is currently professor of economics at the
University of Gothenburg, Sweden. Most of his research is empirical, and
focuses on the microeconomics of productivity, exports, investment and
labour markets in Africa. Much of his recent work in this area has focused
on Ethiopia. He has done theoretical research on the effects of financial
constraints on company investment. He has also worked on civil conflicts.
Prior to joining the faculty in Gothenburg in 2008, he was a Research Fel-
low at the Centre for the Study of African Economies in Oxford.
Introduction

By Måns Söderbom

In this book Sachin Gathani and Dimitri Stoelinga present the results from
their studies of manufacturing and agribusiness in Rwanda. These studies
are based on in-depth interviews with leading businessmen and -women
in the country. The work is also based on careful statistical analysis of a
wide range of data on Rwandan companies. By combining case studies of
individual companies with careful quantitative analysis, the study offers a
uniquely comprehensive and informative picture of the industrial sector.
I very much hope and believe that the study should be of great interest to
policy makers, members of the business community and academics.
The research is part of a series of studies of industrial development in
Africa and Asia, which are to be published jointly by the two top devel-
opment think-tanks in the world, namely the Africa Growth Initiative at
the Brookings Institution in Washington, DC, and the United Nations
University–World Institute for Development Economics Research (UNU-­
WIDER). The involvement of these institutions ensures that the findings
of the studies will resonate far beyond the borders of Rwanda. The over-
arching theme of the research is Learning to Compete. The starting point
for the research project is the simple observation that there is very little in-
dustry in Africa. Lessons from Asia are that industrial growth and exports
can be very potent drivers of economic development, poverty reduction
and job creation. But this has not yet happened in Africa or Rwanda. It
is true that there has been tremendous growth in much of Africa – and
certainly in Rwanda – over the past decade. But insufficient job creation
and poverty remain problematic. Why is there so little industry in Africa?
That is the question to which the researchers have set out to find answers.
The present study documents the origins, capabilities and potentials
of firms in Rwandan manufacturing and agribusiness. The book pro-
vides general analysis, as well as detailed profiles of individual firms and
sectors. The authors focus on the leading firms in the country, i.e. firms
that are large in terms of output, employment and exports. Large firms
account for most of Rwanda’s industrial output and exports, hence a better
INTRODUCTION xv

understanding of the decisions and performance of these firms automat-

ically implies a better understanding of the overall growth potential of
the industrial sector in Rwanda. This should not be interpreted as im-
plying that smaller firms are somehow less important in general. Micro
and small firms offer jobs and they sometimes provide an entry point, in
particular, for women into the labour market. Occasionally – though not
as frequently as one would wish – small firms also grow to become large.
The constraints and opportunities of small firms certainly warrant careful
analysis too.
Gathani and Stoelinga bring us many findings. Some of them are rela-
tively general and broad. For example, their work confirms that many of
the best-performing firms in Rwanda have some foreign ownership, or are
run by managers or entrepreneurs with a background in trading. Similar
findings have been reported for many other African countries. This book
carefully explains why and how this fact is informative about the relevant
capabilities for running a successful business in Rwanda. Other results
are more specific to the Rwandan context. Sourcing inputs and raw ma-
terials is a key constraint for many manufacturing firms, and arguably an
important reason as to why few Rwandan manufacturing firms are able to
compete internationally.
The study also establishes that large regional conglomerates have per-
formed well in Rwanda recently. They have brought to the Rwandan mar-
ket large capital investments, skills and know-how. Some of them find
Rwanda a strategic location to target the Rwanda–Burundi–DRC markets.
There are also domestic investment and holding groups that control sig-
nificant portions of the Rwandan industrial sector. Small, domestic en-
terprises, in contrast, often struggle to raise capital and have a hard time
finding skilled staff. This is one reason the manufacturing sector has not
been able to generate a lot of jobs over the past decade.
Several questions related to policy arise as a direct result of the research
presented in this study. For example, what policies would be most effec-
tive at facilitating firms to source inputs, e.g. raw materials? How should
policies towards international investors be tailored so as to maximize the
benefits for ordinary Rwandans? How should competition regulation be
designed? Finding answers to questions such as these is generally very dif-
ficult, and readers will not find here cookbook-style recipes for policy. But
they will find a wealth of facts and results that provide a good basis for
advancing the policy discussion further.
Working with Sachin Gathani and Dimitri Stoelinga on this project has
been a true pleasure for me. They have enormous knowledge about the in-
dustrial sector in Rwanda, and I hope you will find this book as inspiring
as I do. The authors would agree that it would not have been possible to
xvi INTRODUCTION

write the book without the help of a large number of people in Rwanda. I
would like to take the opportunity to thank in particular the entrepreneurs
and managers who agreed to be interviewed and who shared with us their
stories. In many ways, this book belongs to them.
Acronyms and Abbreviations

AFDB African Development Bank

ASSOPTHE Association of Rwanda Tea Growers

BNR Banque Nationale du Rwanda

(National Bank of Rwanda)
BRD Banque Rwandaise de Développement
(Rwandan Development Bank)

CEO Chief Executive Officer

CIP Crop Intensification Programme
COMESA Common Market for Eastern and Southern Africa
COO Chief Operating Officer
CSR Corporate Social Responsibility
CTC Curl-Tear-Crush

DRC Democratic Republic of Congo

EAC East African Community

ERP Enterprise Resource Planning

FMCG Fast Moving Consumer Goods

FTE Full-Time Employee

GDP Gross Domestic Product

GNU Government of National Unity
GOR Government of Rwanda

IBRD International Bank for Reconstruction and Development

IFAD International Fund for Agricultural Development
ILO International Labor Organization
IMF International Monetary Fund
INEAC Institut National d’Etudes Agronomiques du Congo
(National Institute of Agronomical Research in the Congo)
xviii ACRONYMS AND ABBREVIATIONS

IPO Initial Public Offering

ISO International Organization for Standardization

JV Joint Venture

KSEZ Kigali Special Economic Zone

LGP Liquid Petroleum Gas

MCC Milk Collection Centre

MINAGRI Ministry of Agriculture and Animal Resources
MINECOFIN Ministry of Finance and Economic Planning
MINICOM Ministry of Trade and Industry
MIS Management Information System

NBR National Bank of Rwanda

NGO Non-Governmental Organization
NISR National Institute of Statistics Rwanda
NPK Nitrogen, Phosphorus and Potassium fertilizer
NSC National Sericulture Centre
NUR National University of Rwanda

OCIR-Café Office des Cultures Industrielles du Rwanda Café

(Office for Industrial Crops of Rwanda Coffee)
OCIR-Thé Office des Cultures Industrielles du Rwanda Thé
(Office for Industrial Crops of Rwanda Tea)
OCIRU Office des Cultures Industrielles du Rwanda-Urundi
(Office for Industrial Crops of Rwanda-Urundi)
Opyrwa Office du Pyrèthre du Rwanda
(Office of Pyrethrum Rwanda)

PEARL Partnership for Enhancing Agriculture in

Rwanda through Linkages
PPC Portland Pozzolana Cement
PSF Private Sector Federation
PVC Polyvinyl Chloride

QC Quality Control

RBS Rwanda Bureau of Standards

RDB Rwanda Development Board
RDF Rwanda Defence Force
RIG Rwanda Investment Group
ACRONYMS AND ABBREVIATIONS xix

RRA Rwanda Revenue Authority

RSSB Rwanda Social Security Board
Rwf Rwandan Francs

SADC Southern African Development Community

SKU Stock-Keeping Unit
SPREAD Sustaining Partnerships to Enhance Rural Enterprise
and Agribusiness Development

UHT Ultra-High Temperature

UNIDO United Nations Industrial Development Organization
USAID United States Agency for International Development
USD United States Dollar

VAT Value-Added Tax

WFP World Food Programme

Chapter 1

Origins and Evolution

1.1  Industrial Development in Rwanda: An Overview

Over the past decade, Rwanda’s manufacturing sector has experienced a

rapid comeback.1 In 2011, manufacturing output reached its highest level
since 1994 and, at US$223m in real terms, was on par with the average
output of US$216 achieved between 1986 and 1990 (measured in constant
USD, see Figure 1.1). If current growth rates persist, output is expected to
reach US$303m in 2015, surpassing the pre-genocide maximum. By the
end of the 1994 genocide, the output of the manufacturing sector was only
37% of what it had been at its peak, and so the genocide will have cost the
country 20 years of industrialization – more or less a generation. The cur-
rent comeback has been achieved following a decade of sustained growth
in the manufacturing sector, with a compounded annual aggregate growth
rate of 6.5% in real terms between 2001 and 2011, a remarkable feat.
However, there is another way of looking at the figures, which presents
a more sobering picture. In per capita terms, the cost of the 1994 geno-
cide was much higher (see Figure 1.2). At US$20.4, real manufacturing
output per capita in 2011 was only about half of what it had been at the
end of the 1980s, in part reflecting the exceptionally rapid growth of the
population itself.2 Projecting growth in the manufacturing sector using
recent growth trends (in particular, the compounded growth rate of the
manufacturing sector between 2001 and 2011, which was about 5.2% per
capita), Rwanda would only achieve its pre-genocide maximum of US$41
per capita around 2025.3 This reflects the real extent of the impact of the
1994 crisis on Rwanda’s industrialization process.

1 
In this section, “manufacturing” refers to all manufacturing activities, includ-
ing agribusiness but excluding mining.
2 
In constant US dollars 2000.
3 
This is a potential scenario based on current trends. Reality could turn out to
be very different.
2 CHAPTER 1

350 Real output Projected output

(US$m, constant 2000) 300

250
Real output

200
150
100
50
0
1965 1975 1985 1995 2000 2015

Figure 1.1  Manufacturing, value added (constant US dollars 2000).

Sources: World Development Indicators (2011); NISR (2011).

Real output per capita Projected output

50
US$ (constant US$2000)

40

30

20

10

0
1965 1975 1985 1995 2005 2015 2025

Figure 1.2  Manufacturing in Rwanda (value added per capita).

Sources: World Development Indicators (2011); NISR (2011).

While Rwanda’s economic growth since the late 1990s has been a major
success story – Rwanda is one of the world’s 10 fastest growing economies
– its manufacturing sector has not kept up with the growth pace of the
agriculture and services sectors. The output of these sectors in Rwanda
has more than doubled compared with the late 1980s, whereas output in
the manufacturing sector still remains below pre-crisis levels. In part this
was to be expected: agriculture could recover much more quickly because
in the early stages it benefited from productivity gains associated with the
return to peace and stability and so grew much faster. Services also grew
rapidly, having benefited from the inflow of donor assistance and invest-
ment in much needed basic infrastructure, spurring construction around
the country, as well as private investment in telecommunications, finance
and tourism.
The drop in the output of Rwanda’s manufacturing sector started to-
wards the end of the 1980s, a few years before the drop in the output of
the services and agriculture sectors that took place in 1994 (see Figure 1.3).
Moreover, while the services and agriculture sectors returned to growth
ORIGINS AND EVOLUTION 3

250 Manufacturing

Index of real output (100=1990)

Agriculture
200
Services
150

100

50

0
1990 1995 2000 2005 2010

Figure 1.3  Manufacturing versus services and agriculture (1990–2009).

Sources: World Development Indicators (2011); NISR (2011).

17 Trendline
Manufacturing (%GDP)

Manufacturing as % of GDP
15
13
11
9
7
5
1994 1996 1998 2000 2002 2004 2006 2008 2010

Figure 1.4  Manufacturing as a percentage of GDP (1994–2011).

Sources: World Development Indicators (2011); NISR (2011).

immediately after the genocide, it took the manufacturing sector five years
to return to a sustainable growth path. As a result, the contribution of
Rwanda’s manufacturing sector to GDP has dropped from 17% in 1994 to
around 6.5% since 2000 (see Figure 1.4), with the services and agriculture
sectors returning to growth five years before the manufacturing sector.
The crisis affected the manufacturing and agribusiness sectors dispro-
portionately for several reasons: (i) it is more embedded as a sector, de-
pending on well-functioning supply chains (both local and international),
infrastructure networks, utilities and financial markets to support capital
investments; (ii) it is capital intensive and capital is very fearful when cri-
ses break out, and timid when they end; (iii) it relies on heavy equipment
and machinery, much of which was damaged during the crisis and takes
a long time to restore and rehabilitate; and (iv) it requires very specific
technical production skills, often relying on foreign expertise which left
the country in the period leading to the genocide.
4 CHAPTER 1

Lower-middle-income
countries 17.0%
Lower-income countries 13.6%
Kenya 11.3%
Malawi 10.0%
Zambia 9.6%
Tanzania 9.5%
Uganda 8.0%
Rwanda 6.4%
DRC 5.5%
Ethiopia 4.0%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Figure 1.5  Manufacturing in Rwanda and other countries in the region

(%GDP, 2009). Source: World Development Indicators (2011).

As a result, the contribution of Rwanda’s manufacturing sector to GDP

is low relative to both regional and international comparisons. Manufac-
turing accounted for about 6.4% of GDP in Rwanda in 2009, compared to
8% for Uganda, 9.5% for Tanzania and 11.5% for Kenya (see Figure 1.5).
The gap with neighbouring countries is not very large, however, as East
Africa’s economies are mostly service driven with stagnating manufactur-
ing sectors in terms of share of GDP per capita. The gap is much larger
when comparing with the global averages for low-income countries and
lower-middle-income countries, which are 13.6% and 17% respectively.
Another key characteristic of manufacturing sector growth in Rwanda
is that it has followed a stop-and-go pattern since independence (see
Figure 1.6). Almost invariably, good years of economic growth in the sec-
tor have been followed by bad years. Such patterns of growth are quite
common in low-income countries. In Rwanda, possible explanations are
the small size of the manufacturing sector, the overvaluation of the Rwan-
dan franc (which was pegged to the dollar until 1990), the reliance of the
Rwandan economy on the terms of trade and in particular its reliance on
the exports of coffee, which follows a cyclical production pattern (coffee
trees alternate between high- and low-yield years). An interesting statistic
to illustrate this fact is that the manufacturing sector’s longest spell of pos-
itive economic growth since the mid 1970s lasted for four years, between
1996 and 1999. This came in the immediate aftermath of the genocide, re-
flecting a period of economic catch-up rather than growth per se. Typically,
two or three years of positive growth in the manufacturing sector have
been bounded by one year of negative growth. Despite recent growth, this
persistent trend of stop-and-go behaviour shows that the manufacturing
and agribusiness sectors have yet to settle on a path of sustained economic
growth.
ORIGINS AND EVOLUTION 5

40

Growth in manufacturing
30
20
sector (%) 10
0
1976 1981 1986 1991 1996 2001 2006
–10
–20
–30
–40

Figure 1.6  Growth in Rwanda’s manufacturing sector (WDI, 1976–2009,

excluding 1990). Source: World Development Indicators (2011).

A central takeaway message from this overview is that one of the rea-
sons Rwanda’s manufacturing sector is small and only accounts for a small
share of GDP is because Rwanda’s manufacturing sector took longer to
recover from the 1994 genocide. As we will show in the following sections,
Rwanda’s manufacturing sector remains very young, with the majority of
firms still in the start-up or growth phase and still in the process of devel-
oping optimal systems and organizational structures. However, the rapid
growth in the agriculture and services sectors, coupled with a decade or
more of investment in infrastructure, have created the necessary linkages
in the economy to position this young manufacturing and agribusiness
sector for new growth.

1.2  The Origins of Industry in Rwanda

Plotting the creation date of 125 medium to large manufacturing firms

for which we have found documentation since independence reveals some
interesting insights into the pattern of industrial development in Rwanda
(see Figure 1.7). Rwanda’s manufacturing sector has gone through three
distinct phases: (i) in the 1960s, in the immediate aftermath of independ-
ence, with relatively open policies hampered by simmering social conflicts
and weak integration; (ii) between 1973 and 1994, a period of import-sub-
stitution; and (iii) since 1995, with rapid regional integration based on an
improving investment climate which is still ongoing today.4
The breaks between periods are marked crises and dips in the levels of
new firm creation in the manufacturing sector, namely in the early 1970s,

4 
Note that in Figure 1.7 we are interested in the trends, not the exact number of
firms created per se as it is not possible to check how exhaustive this list is.
6 CHAPTER 1

30 Regional crisis 1994

Number of firms
25 1972–73 Genocide
20
15
10
5
0
4

9
4

–9
–4
–6

–6

–8

–9

–9
–7

–7

–8

05
00
60

65

80

90

95
70

75

85

20
20
19

19

19

19

19
19

19

19
Figure 1.7  Date of creation of manufacturing firms.

following ethnic violence in Burundi and the military takeover by J­ uvénal

Habyarimana in 1973, and during the 1994 crisis. As can be seen in
Figure 1.7, growth in the manufacturing sector was limited during the first
period from independence to 1973, while the policy of import-substitution
led to a peak of new firm creation in the early 1980s, before slowing down
in the lead up to the 1994 genocide. The analysis also shows that the rate
of company formation from 1995 onwards is the fastest since the 1970s.
We use the remainder of the chapter to provide a detailed description
of the evolution of Rwanda’s agribusiness and manufacturing sectors
from independence to 1994, before focusing on the different development
phases these sectors have gone through since 1995.

1.2.1  Before Independence: The Long Shadow of Colonial Rule

The Belgian colonial administration played a key role in defining the land-
scape of Rwanda’s industrial sector as we observe it today. On the one hand,
the Belgian administration’s investment policies focused investment in
the Burundi part of Rwanda–Urundi, thereby depriving Rwanda of an in-
dustrial base, while, on the other hand, introducing strategic mandates
that developed the agribusiness sector, particularly coffee.

Context
Rwanda’s industrial sector was almost non-existent at the time of inde-
pendence in 1962. The aggregate output of the manufacturing and agri-
business sectors in 1962 amounted to a mere US$3m and accounted for
only 2% of GDP (World Bank 1985). This was because the socio­economic
fabric of the country had been destroyed in the revolution of 1959­– 61,
manifesting wide­spread violence and a huge exodus of parts of the popu-
lation to neighbouring countries.
Perhaps more important was the history of colonial rule. The Belgian
administration had channelled the majority of investment for economic
ORIGINS AND EVOLUTION 7

and industrial development on the Burundian side of the border in what

was then Rwanda–Urundi (World Bank 1985). Bujumbura, Burundi’s cap-
ital today, was also the capital of Rwanda–Urundi and as a result received
the vast majority of public investments at the time.5 The colonial admin-
istration, comprising the entire administrative infrastructure and links to
Brussels, was also based in Bujumbura. Moreover, while bordering towns
in Rwanda such as Gisenyi and Cyangugu had some economic potential,
the Belgian administration preferred to target the development of cities on
the opposite side of the Rwanda­–DRC border, namely B ­ ukavu, opposite
Cyangugu, and Goma, opposite the Gisenyi border (Bézy 1990). Given its
small scale in the 1950s and an estimated urbanization rate of about 1%
in 1956 (Baeck 1956), Rwanda was much less of a priority for the Belgian
administration than neighbouring Burundi and the DRC. A fact that puts
this asymmetry within the Rwanda–Urundi region into context is that just
before independence in 1962 there were an estimated 152 registered com-
panies in the Rwanda–­Urundi region, out of which only 24 were based in
Rwanda.6 The only manufacturing firm started under the Belgian admin-
istration that survived independence and that remains active today was a
wheat flour processor, Etiru (Sotiru today), created in 1948.

Policies
While the Belgian administration did not leave Rwanda with much of an
industrial base, a number of strategic decisions that were taken in the first
half of the 20th century have had a lasting impact on the geography and
nature of Rwanda’s agribusiness sector. Following regular famines in the
region, in particular, the Gakwege famine in 1928–29, which led to wide-
spread international condemnation of Belgium’s management of its col-
onies, the colonial administration decided to introduce mandatory food
crop production. Every family had to maintain 15 acres of land, 5 of which
were dedicated to the production of cassava; it was compulsory to drain
swamp­land and start cultivating it; and several new plants and varieties,
such as the Irish potato and a new variety of maize, were introduced with
the support of INEAC (the National Institute of Agronomical Research in
the Congo) (Chrétien 2000, pp. 240–45). Part of the objective of this new
approach was to improve food security in the region. The Belgian admin-
istration also saw an opportunity to introduce cash crops as a way to in-
crease the profitability of the land, the incomes of farmers and tax receipts.
The move towards increasing revenues from farmers was particularly im-
portant in the context of the global economic crisis in the 1930s.

Bujumbura was called Usumbura at the time.

5 

Rapport aux chambres 1960, p. 436 (Bézy 1990).

6 
8 CHAPTER 1

Coffee was the main cash crop introduced by the Belgian administra-
tion during the 1930s, which also became the core of the administration’s
economic programme in Rwanda–Urundi. Coffee was based on a variety
of arabica coffee that the Germans had brought to the region before World
War I. Conversion to coffee production was mandatory, something the
recently established International Labor Organization and the League of
Nations were very much against, and was carried out in five large waves
between 1931 and 1938, during which millions of coffee trees were planted.
While coffee production in the region was estimated at 11 tons in 1930, it
reached 10,000 tons by 1942 (Chrétien 2000, pp. 240–45). In 1946, a reg-
ulator for the coffee sector was created with the objective of checking the
quality of the coffee which at the time was exported to the United States.
The Office for the Industrial Crops of Rwanda–Urundi or Office des Cul-
tures Industrielles du Rwanda–Urundi (OCIRU) was the precursor of
today’s OCIR-Café and the geographical distribution of coffee planting,
starting with Cyangugu on the Rwanda side of the border, effectively de-
termined the geography of today’s coffee sector.
Another cash crop that was introduced in 1936 in the areas of B ­ yumba,
Ruhengeri and Gisenyi was pyrethrum. Pyrethrum, a natural insecticide,
was meant to be “the export crop [...] that grows where coffee doesn’t”
(­U NIDO 1976). In 1945, a decade after the crop was introduced, Rwanda
was already producing an estimated 360 tons of pyrethrum. By 1949, a
small facility was started in Ruhengeri that had capacity to dry up to 135
tons of pyrethrum a year. Not surprisingly, Ruhengeri is also where to-
day’s Horizon S­ opyrwa, Rwanda’s sole pyrethrum processor and exporter,
is based. By 1955, pyrethrum production in Rwanda had tripled to about
1,200 tons per year, which made the country the fourth largest pyrethrum
producer in the world; and by 1959, when Belgium’s grip on the region
started to unravel, Rwanda was growing pyrethrum on an estimated
1,200 ha (­U NIDO 1976). Besides coffee and tea, which was first introduced
by private investors in 1954 and further developed after independence,
­pyrethrum is Rwanda’s largest export crop today (Bézy 1990).
In addition to coffee and pyrethrum, another major decision of the
Belgian administration in the 1930s that has shaped Rwanda’s industrial
sector today was investment in mining, focusing in particular on tin, gold
and silver, wolfram, niobium and tantalum. While Burundi was the recip-
ient of the bulk of investment targeted at the development of the manufac-
turing sector, Rwanda received comparatively more investment targeted at
mining: 85% of the region’s 269 mining sites in 1955 were in Rwanda (Bézy
1990). The main mining regions were located in central Rwanda for cas-
serite and the northwest of the country for wolfram (IBRD 1957), which
remains the case today.
ORIGINS AND EVOLUTION 9

1.2.2  Independence to 1973: Early Wave of Industrialization

Supported by Foreign Capital

The period from independence to 1973 was characterized by an early wave

of industrialization driven mainly by foreign investors and donors, includ-
ing Belgium and China.

Context

The foundations of Rwanda’s contemporary manufacturing sector were

laid in the immediate aftermath of independence. This early wave of in-
dustrialization was mostly supported by foreign private and public in-
vestments, with Belgian interests still very present in the local economy.
Bralirwa, for example, was an extension of Belgian-owned Bralima based
in the DRC. In 1957, Bralima had decided to invest in a new brewery on
the eastern shores of Lake Kivu, which became operational for the first
time in 1959. After the turbulent period leading to independence, this fac-
tory eventually became Bralirwa in 1963. Belgian investors also started
Rwandex (now RTC, it was Rwanda’s largest coffee processor and exporter
until very recently) in 1964, as well as Manumetal (which remains one of
Rwanda’s largest local manufacturers of furniture products today) in 1967.
Belgian aid also largely financed investments in the tea sector.
Rwanda’s young tea sector, which private foreign investors had launched
a decade earlier, was also boosted during this period with public invest-
ments and donor support targeted at the development of tea plantations
in the Mulindi, Pfunda and Cyangugu areas, which remain major cen-
tres of production today. Mulindi was the main priority region at the time.
A tea factory with a capacity of 800 tons was set ­up in Mulindi in 1962,
the management of which was assigned to a German company, AGRAR
und Hydrotechnik (IBRD 1957). This factory was the precursor of today’s
Mulindi tea factory. The national agency overseeing the coffee and tea sec-
tors, Office des Cultures Industrielles du Rwanda (OCIR), which over the
years has been a very active player in these markets, was also established
during this first wave of industrialization in 1964.
A less-talked-about actor, which has had an important role in the
development and geography of Rwanda’s agribusiness sector is China.
It is with the support of Chinese development aid and technical exper-
tise that rice and sugar cane production were introduced in Rwanda in
the late 1960s. Both rice and sugar cane production were first started in
1967–68 in the marshland of the Nyabugogo valley north of Kigali and the
Bugarama valley for rice. On the grounds of what is today Kabuye Sugar
Works, a multimillion-­dollar business, China set up a small experimental
sugar-­processing plant with an initial capital investment of approximately
10 CHAPTER 1

US$200,000 around 1969 (IBRD 1957). The company was called Sucrerie
Rwandaise de Kabuye. China also supported the development of the Rize-
rie de Bugarama, which today is owned by ICM Rwanda, also a multimil-
lion-dollar business.
Other private foreign investments came from investors of Indian ori-
gin in the region, starting companies such as Sulfo and Bata (the latter is
a large multinational shoe manufacturer). Sulfo Industries, the country’s
largest producer of FMCG such as soaps, cleaning detergents, personal
care products, food items, etc., was started in 1962.
Almost 60 years later, these companies still exist and have become the
backbone of Rwanda’s manufacturing and agribusiness sectors. In 2010,
Bralirwa and Sulfo alone accounted for an aggregate turnover of about
US$150m (more than one-third of the output of Rwanda’s manufacturing
sector) and provided full-time employment to about 1,300 people.

Policies
Foreign investment at the time was supported by a very favourable Invest-
ment Code, promulgated in 1964, offering foreign investors benefits such
as guaranteed repatriation of interest earnings, dividends and the original
capital invested; exemption from import duties on imported inputs and
capital investment; a tax holiday for five years followed by two years of re-
duced taxation; and alternative benefits, such as restriction on competing
imports. Rwandan investors did not benefit from these provisions, which
is one of the reasons there was little local private sector investment at the
time. Only two large privately owned Rwandan businesses – still existing
today – were created during that period: Amagerwa in 1965 (which was
originally an import–export firm, but eventually started producing con-
struction materials), and Rwanda Paints in 1968, a paint manufacturer.
By 1970, at the end of Rwanda’s first Five-­Year Plan (1966–70) period,
which identified coffee, tea, pyrethrum and textile processing as priority
sectors, Rwanda’s agribusiness and manufacturing sectors accounted for
about 4% of GDP and employed 2,300 people, distributed across 20 large
processing firms (see Table 1.1) (World Bank 2012).

1.2.3  1973 to 1994: Rapid Diversification Supported

by Public Sector Intervention

The period from 1973 to 1994 is characterized by a rapid diversification of

Rwanda’s agribusiness and manufacturing base, with many new entrants
and increased public sector intervention, which contributed to growth but
also large inefficiencies in the sector.
ORIGINS AND EVOLUTION 11

Table 1.1  List of major processing firms in 1970.

Number
 Sector of firms   Firm name
Coffee  4 Four mills in Butare, Gisenyi,
  Kigali, Ruhengeri
Tea  3 Mulindi, Shagasha, Ntendezi
 (Cyangugu)
Beverages (brewery)  1 Bralirwa
Wheat milling  1 Etiru
Sugar milling  1 Sucrerie Rwandaise de Kabuye
Rice milling  1 Rizerie de Bugarama
Preserves  1 Konfigi
Textile  2 Sirwa
Footwear  1 BATA
Soaps  1 Sulfo
Paints  1 Rwanda Paints
Pyrethrum (drying)  1 Drying facility based in Ruhengeri
Furniture  1 Manumetal
Electronics  1 Mera
  (radio manufacturer)
Total number of firms 20
Source: adapted from Commission des Communautés Européennes, Les con-
ditions d’installation d’entreprises industrielles: Rwanda, December 1972.

Context
After a period of stagnation between 1970­and 1975 – a period of socio-­
political turmoil in Burundi in 1972 with significant repercussions for
Rwanda, a military takeover in Rwanda in 1973, and adverse weather con-
ditions, which affected agricultural output – Rwanda’s manufacturing and
agribusiness sectors grew rapidly between 1975 and the late 1980s. From
the start of Rwanda’s Second Development Plan (1977–81) to the end of
its Third Plan (1982–86), the manufacturing sector grew at an estimated
compounded annual rate of 6.7% in nominal terms (World Bank 2012). As
a result of this growth rate and the collapse in agricultural production due
to the weather conditions and the collapse of global coffee prices in the
1980s, the contribution of the manufacturing sector to GDP grew from a
base of about 3.6% of GDP in 1970 to 15.9% in 1986 (World Bank 2012).
12 CHAPTER 1

During this period, sectors that had started in the 1960s were strength-
ened and Rwanda’s manufacturing sector entered new and more sophisti-
cated production areas.

Tea sector. The period from 1972 to ­1986 was critical for the tea sector (see
Table 1.2). In the space of 14 years, the Rwandan government – through
OCIR (which was split into OCIR-Café and OCIR-Thé in 1978) and joint
ventures (JVs) with foreign investors – constructed 8 tea factories, bring-
ing the total number of tea factories in the country to 11 in 1986. These 11
tea factories are still operational and account for the vast majority of tea
production today.

Construction materials. Rwanda’s construction materials sector started

in the early 1970s. By 1990, Rwanda had more than 10 firms operating
in the construction materials sector, and was producing roofing sheets,
lime, cement, tubes (both metallic and PVC), bricks, tiles, nails, wire, as
well as paints. The firms that started during this period account for about
half of the output of Rwanda’s construction materials sector today. Half
of these companies were either publicly owned or had mixed ownership,
such as Sonatubes, PPCT, Cimerwa and Briqueterie Rwandaise Ruliba
(today Ruliba Clays). The latter produced products such as cement, lime,
clay bricks or papyrus-based sheets. Firms in metal processing for the con-
struction sector were all privately owned and included companies such as
Prometal, Sofar, Uprotur and Tolirwa.

Agro-­processing and beverages. The agro-processing sector (excluding

tea and coffee, including beverages) grew significantly during this period
with many new entrants. Government funding was specifically targeted
at sectors viewed as strategic for food security, and included a maize mill
called Maisserie de Mukamira, a new rice mill called Rizerie de Rwama-
gana (now owned by ICM Rwanda), Sopar, which processed animal feed,
­Opyrwa the pyrethrum processor, two dairies (Laiterie de Rubirizi and
Laiterie de Gishwati) and a banana beer processor (Ovibar), which is
Rwanda’s national alcoholic drink. The government also acquired a 30%
stake in Bralirwa in 1976, two years after the company obtained the license
to produce Coca-Cola products in the country, and five years after the
Heineken group bought a 70% stake in the company. The reason Bralirwa
was so strategic is that it was and remains today Rwanda’s largest company,
and due to excise taxes on beer products was and is the country’s largest
taxpayer. By one estimate, Bralirwa accounted for 23% of Rwanda’s tax
revenue in 1982 (World Bank 1985). Meanwhile, the private sector focused
on more commercial food products such as tomato paste, pasta, biscuits,
passion fruit juice and cigarettes.
ORIGINS AND EVOLUTION 13

Fast-moving consumer goods (FMCG), textiles, footwear and furniture.

During the period from 1975 to 1­ 990 many new firms targeting the do-
mestic consumer market for products such as soaps, toothpaste, toilet
paper, matches, candles, batteries, mattresses, furniture (both wood and
metallic), shoes (leather and plastic) as well as textile products emerged.
All of these were privately owned except for Sodeparal, a leather shoe pro-
cessor, and Usine d’Allumettes and Sorwal, a producer of matches, which
received public investments. It is possible that because of the non­-strategic
nature of FMCG and the small size of the sector at the time, fewer of these
companies survived the 1994 genocide, and those that did are having sig-
nificant challenges in terms of capacity utilization.
From a private sector perspective, two interesting facts are worth noting.
The first is that from 1975 to ­1990 growth in the manufacturing sector
was increasingly driven by Rwandan investors, whereas in the 1960s the
vast majority of investment in the manufacturing sector had come from
foreign investors or donors. Examples of manufacturing firms set ­up by
Rwandan investors include Sonafruits, Mironko Plastics, Uprotur, Sorwa-
tom, Ameki Meubles and Ameki Color, Société Rwandaise de Batteries;
Rwandan investors also entered into JVs with foreign investors, including
investments in Tabarwanda (48%), Tolirwa (27%) and Sonatubes (10%).
One of the reasons this might have been the case was Rwanda’s new in-
vestment code in 1977, which extended to local investors benefits that had
previously only been available to foreign investors. These included exemp-
tions from import duties, tax holidays and alternative benefits, such as pro-
tection from imported products.
A second feature of these investments is that many of the entrepreneurs
that entered the manufacturing sector began as traders (World Bank 1985):
A distinguishing characteristic of Rwanda’s industrial sector is close links
with commerce. Some traders entered manufacturing to diversify their ac-
tivities, others because their import business had become less profitable as
a result of competition from substitute products manufactured locally. This
passage is often successful as exposure to commerce has developed many of
the skills necessary to thrive in manufacturing, marketing and distribution,
book keeping, pricing, managing employees, etc.

Examples of traders that subsequently entered the manufacturing sec-

tor include the founders of Tolirwa, Uprotur, Société Rwandaise de Bat-
teries, Rwanda Foam/Amagerwa, Ameki and Utexrwa, all interviewed as
part of this study.
This pattern of traders entering manufacturing echoed the history of
other countries. For example, Sutton and Kellow describe a similar process
in Ethiopia. As markets integrate and deepen, traders are well positioned
to see market opportunities less evident to other prospective investors. In
14 CHAPTER 1

Ethiopia, half of the leading firms find their origins in the trading sector,
as this is where “the deepest and most acute knowledge of local and inter-
national markets is already at hand” (Sutton and Kellow 2010, p. 5). Sutton
reiterates the importance of the trading sector on the manufacturing sec-
tor (Sutton and Kellow 2010, pp. 5–6):
A common and unfortunate tendency among observers of developing
economies to see the trading sector as ‘separate’ from and irrelevant to the
growth of manufacturing industry is a mistake: the role of import–export
businesses as the seed corn of manufacturing firms is fundamental.

Policies
Public sector involvement in the manufacturing sector had both positive
and negative consequences under Rwanda’s Second and Third Develop-
ment Plans. Positive outcomes included new firm creation and increased
diversification in the manufacturing and agribusiness sectors. These were
counterbalanced by structural inefficiencies and underperformance at the
firm level that led to a progressive decline of these sectors from 1986 to
1994. Public sector involvement came in three forms.
(i) Public ownership or JVs in selected strategic sectors of the economy.
The public sector had full ownership of the coffee (OCIR-Café), tea
(OCIR-Thé), pyrethrum (Opyrwa) and staple crop sectors (wheat,
maize, rice and sugar milling), as well as manufacturing firms
viewed as strategic such as Ovibar (banana wine) and Usine d’Al-
lumettes (matches). The government also had a majority stake in
Rwandex (51%), a coffee processor, and Rwandexco, a textile firm.
To attract foreign investment, the government took a minority
stake in companies such as Bralirwa (30%), Sonatubes (20%), a
tannery (30%) and Manumetal (15%).
(ii) New policies targeted at promoting investment and protecting
selected industries from imports. This included import licensing
after 1983, price controls, import duties, increased capital for the
Rwandan Development Bank (BRD) created in 1968 and a new
investment code in 1977. The government’s policy at the time can
be characterized as one of increased protectionism and import sub-
stitution. All imports required a license, which became difficult to
obtain after 1983 for products manufactured locally. These import
restrictions were enhanced by high import tariffs for protected
products: examples include fruit juice with an import tariff of
150% in 1985, cigarettes (150%), metal furniture (100%), soap (80%)
and paint (80%) (World Bank 1985). Additionally, importers were
required to place a 100% local currency deposit with the Central
Bank when they received the import license; this deposit was kept
ORIGINS AND EVOLUTION 15

until the item of interest was imported, which could take several
months, affecting the cash flow of these companies. Price controls
on all goods sold in the country were also introduced, although
they were not applied strictly. All prices had to be approved by the
Ministry of Finance, with the objective of controlling inflationary
pressures and limiting price­competition from imported products.
(iii) Procurement favouring the local manufacturing sector. The govern-
ment supported the development of the local manufacturing sector
by purchasing in bulk from companies such as Sodeparal (leather
boots to the army), Utexrwa (socks for the army), Sonatubes (PVC
tubes for water supply), as well as from Manumetal, Rwanda Furni-
ture Works and Namdhari Furniture (office furniture for the cen-
tral administration and home furniture for high-ranking officials)
(Ngirabatware et al. 1988). Through local procurement the govern-
ment also helped to solve one of the main constraints of Rwanda’s
manufacturing sector at the time: low demand.

Path dependency
The pre-genocide period is key to understanding the state and geography
of Rwanda’s manufacturing sector today. What the period leading to the
1990s can teach us is that many decisions, even decisions that were taken
in the 1930s under colonial rule, have created path dependency – in other
words, “history matters” – the decisions of the past will influence the set of
decisions that are faced today. Under the pressure of the global economic
crisis in the 1930s and following regular famines in the Rwanda–Urundi
region, the Belgian administration decided to introduce mandatory farm-
ing (for crops such as cassava and Irish potatoes) as well as export crops
such as coffee and pyrethrum in Rwanda. The latter remain Rwanda’s
main export crops, along with tea, which was introduced in 1954. Chinese
experiments with rice and sugar in the Kabuye and Bugarama areas led to
the development of Rwanda’s sugar and rice industries. The first entrants
that developed quasi­-monopolies in the lucrative beer and soap markets in
the 1960s – Bralirwa (between 1959 and ­1963) and Sulfo (1962) – are still
among the country’s largest firms and in 2012 accounted for about one-
third of the output of Rwanda’s manufacturing and agribusiness sectors.
Strategic public investment in the agribusiness sector such as the Rizerie
de Rwamagana have seeded the development of major actors in Rwanda’s
agribusiness sector today such as ICM Agribusiness Rwanda. Similarly,
the big push in the tea sector, between 1972 and 1986, has defined the cur-
rent geography and production capacity of Rwanda’s tea sector.
Another feature of Rwanda’s agribusiness and manufacturing sectors
that could have been carried over from the pre­-genocide period is low
16 CHAPTER 1

Table 1.2  New entrants between 1970 and 1990.

Sector Year Firm/factory name Main product Ownership
1972 Pfunda Tea Public
1975 Gisakura Tea Public
1977 Kitabi Tea Public
1979 Rubaya Tea Public
Tea

1980 Nyabihu Tea Public

1981 Mata Tea Public
1983 Gisovu Tea Public
1986 Sorwathé Tea Public
1973 Sebulikoro Tiles Private
1978 Sonatubes PVC tubes Mixed
1979 Tolirwa Roofing sheets Private
Construction materials

1981 PPCT Lime Public

1984 Cimerwa Cement Public
1985 Prometal Nails, wire-nets Private
N/A Sofar Wire fencing Private
1987 Uprotur Metallic tubes Private
Briqueterie
1988 Clay bricks Public
  Rwandaise Ruliba
1988 Guttanit Rwanda Papyrus sheets Public
Usinex, then
1972–78 Pyrethrum Public
 Opyrwa
Rizerie de
1978 Rice Public
 Rwamagana
Passion fruit
1979 Sonafruits Public
juice
1981 Cookirwa Biscuits Private
Agro-processing

1980–84 CODERVAM Rice Public

1980–84 Shiramaka Pasta Private
1985 Laiterie de Rubirizi Milk Mixed
1985–88 Byumba Flour Mill Wheat flour Public
1986 Sorwatom Tomato paste Private
Maisserie de
1987 Maize flour Public
 Mukamira
1988 Laiterie de Gishwati Milk Public
1988 Sopab Livestock feed Public
ORIGINS AND EVOLUTION 17

Sector Year Firm/factory name Main product Ownership

Usine d’Allumettes Mixed/
1980–88 Matches
 Sorwal Public
1981 Sakirwa Soaps Private
1983 Rwanda Foam Mattresses Private
FMCG

1983 Somirex Toothpaste Private

1985 Socobico Toilet paper Private
1986 Anik Candles Private
1988 SRB Batteries Private
Other
1984 Chillington Hoes Private
metals
1978 Mironko Plastics Plastic products Private
1983 Rwakina Quinine Private
Chemicals

1982 Ramco Paints Private

Acetylene
1984 Oxyrwa Private
cylinders
1984 Ameki Color Paints Private
Rubber 1976 Bandag Tyre retreading Private
1977 Ovibar Banana wine Public
Beverages
1981 Sobolirwa Soft drinks Private
Tobacco 1979 Tabarwanda Cigarettes Private
1973 Rwandexco Blankets Mixed
Textiles
1984 Utexrwa Clothes Private
N/A Sodeparal Leather shoes Public
Footwear
N/A Ecomirwa Plastic sandals Private
Packaging 1985 Petrolgaz Packaging units Private
Papeteries du
Paper 1978 Paper products Public
 Rwanda
Pharma-
1980 Cuphmetra Medicine Public
ceuticals
Wooden
1982 Ameki Meubles Private
 furniture
Furniture

Rwanda Furniture Wooden

N/A Private
 Works  furniture
N/A Harjit Singh ETS Furniture Private
Source: IMF document, MINECOFIN Study, World Bank manufacturing sector
study (1988) (World Bank 1985).
18 CHAPTER 1

export orientation. The estimated share of sales that came from exports
for firms in the manufacturing sector in the late 1980s was approximately
3.6% (Ngirabatware et al. 1988). This is remarkably similar to the export
orientation of non-commodity exporting firms in 2010 at 4.5% (i.e. firms
outside the coffee, tea and mineral sectors) (Gathani and Stoelinga 2012).
While low exports could have stemmed from a variety of factors at the time
(including low capacity utilization, the low productivity of manufacturing
firms or the low quality of products, etc.), one of the most cited factors in
the literature pre ­1990 is a systemic overvaluation of the exchange rate
due to a peg to the dollar (see Figure 1.8). The consensus among macro­
economists is that overvaluation hurts economic growth in developing
countries (Rodrik 2008). It is associated with several macroeconomic im-
balances: low exports, stop-and-go macro­economic cycles, high current
account deficits, foreign currency shortages, balance of payments crisis,
corruption and rent seeking.
A potential take­away message, which reinforces the idea of path depend-
ency, is that the low export orientation of the manufacturing sector in the
late 1980s might be one of the causes of the current low export orientation.
This is because two types of manufacturing firms exist in Rwanda today.
(i) Firms that were created before the 1990s that have been refurbished
and reconstructed since the 1994 genocide, and that had a very low
export orientation to start with. This low export orientation means
that these companies had very little export infrastructure in place
before the genocide, such as trade offices in neighbouring coun-
tries, links with traders in foreign countries or a good understand-
ing of demand and market dynamics in foreign countries, etc. This
inherent low export orientation is likely to have affected the ability
of these firms to export today.
(ii) Firms created after 1995, which are either still in the growth phase,
just entering new export markets or are too small to export. Given
the low export orientation of incumbents, these new manufactur-
ing firms could not rely on existing export distribution networks
and on existing knowledge about foreign markets to grow their
exports base. They have to invest time to build their own knowl-
edge and establish their own networks, which takes time to put in
place.
To summarize, history has played an important role in shaping the
structure and output of Rwanda’s agribusiness and manufacturing today.
The impact of the policies of the Belgian colonial administration and the
subsequent actions of the post­-colonial government and investors has had
a significant role in determining the current state of Rwanda’s agribusi-
ness and manufacturing sectors.
ORIGINS AND EVOLUTION 19

1.3  The Foundations of Modern Rwandan Industry

Rwanda’s manufacturing sector was severely damaged during the period

from 1990 to 1­ 994. At US$109m in constant terms, aggregate production
in 1995 was the lowest level of production recorded since 1975 and about
half of average production during the 1980s. New firm creation in the
manufacturing sector came to a complete halt, with the creation of only
one manufacturing firm during the period from 1990 to ­1994: Urwibutso
(a food-­processing company) in 1993. In this section we describe how
Rwanda’s manufacturing sector has gone from reconstruction to renewed
growth and from a state-­driven system to greater liberalization and pri-
vatization.
These economic policies have contributed to two main phases in the
development of Rwanda’s manufacturing and agribusiness sectors since
1994: (i) a reconstruction phase from 1994 to 2­ 005, and (ii) a growth and
consolidation phase, which started in 1999, but picked up in 2006–7 at the
time of Rwanda’s entry into the East African Community (see Table 1.3).

Policies: liberalization and privatization

The gradual liberalization of the economy followed by a series of privatiza-
tions led to a resurgence of manufacturing firms and exports.
The ending of the genocide in 1994 marked not only a major break in
Rwanda’s history and socio­economic development but also a significant
shift in economic policies for the manufacturing and agribusiness sectors:
from import­substitution and state­-driven growth towards increased lib-
eralization and privatization.
Before the 1994 crisis, the deterioration of global commodity prices in
the early 1990s forced the government to take steps towards gradual and in-
creased liberalization. To unlock international support, the H
­ abyarimana
administration had adopted “structural adjustment” policies, winning fi-
nancial assistance from multilateral institutions (in particular, the World
Bank, the African Development Bank and the International Monetary Fund).7
These policies included successive devaluations of the Rwandan franc,
which went from 83 Rwf per USD in 1990 to 144 Rwf per USD in 1993
(i.e. an aggregate devaluation of about 73%); the elimination of quantita-
tive restrictions on currency transfers in 1992; and the adoption of the

Structural adjustment initiatives between 1990 and 1994 included the World
7 

Bank–funded Structural Adjustment Credit (SAC), the IMF-funded Structural

Adjustment Facility (ESAF), the World Bank–funded “Public Enterprise Reform
Project” (started in 1990, closed in 1996) and the AfDB- and World Bank Group–
funded “Structural Adjustment Programme” or SAP I (started in 1991, closed in
1993).
20 CHAPTER 1

700
600
De facto peg to US$
500
RWF per US$

400
300
200
100
0
1960 1970 1980 1990 2000 2010

Figure 1.8  Official exchange rate (Rwf per US$).

“core” measures agreed to at the summit for the Cross-­Border Initiative in

Eastern and Southern Africa in 1993, which targeted significantly reduced
import tariffs in the region. A new policy for the divestment from – and re-
structuring of – public enterprises was approved by parliament in 1993, but
was blocked by Rwanda’s constitutional court due to inconsistencies with
some of the clauses in the 1993 Arusha Peace agreement (World Bank 1993).
In the lead-­up to the development of this public enterprise policy, the gov-
ernment had also started divesting from public enterprises, as the example
of Sonatubes in 1992 reveals.
The Government of National Unity that took over following the geno-
cide quickly accelerated this incipient liberalization and reversed protec-
tionist policies to support economic recovery. Between 1995 and 1996, the
government introduced several measures that permanently redefined the
role of the public sector in Rwanda’s economic development and, in par-
ticular, in the development of the country’s manufacturing and agribusi-
ness sectors. These included:
•  Market-­determined exchange rates.
•  The removal of price controls.
•  The liberalization of domestic marketing as well as marketing for the
tea and coffee sectors.
•  Removal of interest rate controls for the banking sector.
•  Reduced tariffs as part of the implementation of the Cross Border In-
itiative. Tariffs were reduced from an average of 35% in 1993 to 19.7%
in 1995­–97 (and reduced further down to 8.6% in 1999).
•  The liberalization of the coffee sector, allowing for competition at all
stages of the production process.
•  The 1996 Privatization and Public Investment Law, which gave the
new administration the authority to liquidate, restructure, disinvest
from or lease out public enterprises.
(For more details, see IMF (2000).)
ORIGINS AND EVOLUTION 21

While removing protectionist measures in the context of the recon-

struction of the manufacturing sector was a necessary step, in the short
term the increased competition resulting from cheaper imports made it
more difficult for local manufacturers to compete, and probably contribut-
ed to the slow pace of the recovery of the manufacturing sector. According
to the IMF (2000) report: “the increased external competition … led to re-
ductions in, or even cessation of, production in several industries, includ-
ing corrugated iron-sheets, soaps and cosmetics.”
The 1996 Privatization and Public Investment Law and the gradual
liberalization of the coffee and tea sectors have had a significant impact
on the composition and performance of Rwanda’s manufacturing sector
today. In the immediate aftermath of the genocide, the government of
Rwanda had full ownership or a majority stake in more than 20 manu-
facturing or agribusiness firms, 11 tea factories through OCIR-Thé, three
coffee factories (Nkora, Gikondo and Masaka) and Rwandex, which had a
de ­facto monopoly on the coffee export sector. Public enterprises included
Laiterie Gashwati (dairy), Laiterie Nyabisindu (dairy), Laiterie Nyagatare
(dairy), Rizerie de Bugarama (rice), Rizerie de Butare (rice), Rizerie de
Rwamagana (rice), Soproriz (rice), Maisserie de Mukamira (maize flour),
Etiru (wheat flour), Minoterie de Gatare (wheat flour), Sucrerie de Kabuye
(sugar), Ovibar (banana beer), Rwandexco (textile), Sodeparal (leath-
er footwear), Sonafruits (fruits processing), Sopab (animal feed), Sorwal
(manufacturer of matches), Briqueterie de Ruliba (clay construction ma-
terials), and ­Cimerwa (the country’s largest cement manufacturer). The
government also had a minority stake in Tabarwanda (cigarettes) and
­Bralirwa (beer).
As the example of the liberalization and privatization of Rwanda’s
coffee sector reveals (see Box  1.1), managing the transition from a state-­
controlled market to a fully private and competitive market is a delicate
process that takes time to implement and time to reach maturity and equi-
librium. The pace of privatization and the form it has taken has varied
from sector to sector, based on the state of public enterprises at the end of
the war, interest from the private sector, the quality of private sector bids
and government priorities. While the process of divestment from public
enterprises in the manufacturing and agribusiness sectors started imme-
diately after 1994 with a series of liquidations (including Cuphmetra, Lait-
erie de Gishwati, Laiterie de Nyagatare, Soproriz, Sopar and Sode­paral),
the privatization process of public enterprises only gathered traction a
decade later, starting in 2005.

Phase 1: The reconstruction effort (1994–­2004)

The decade from 1995 to 2004 was a period focused on recovery and re-
construction, with the key characteristics being the initial restoration of
production capacity and the entry of a limited number of new firms.
22 CHAPTER 1

Table 1.3  Phases of industrial development from 1995 to 2012.

2000

2004

2006

2008
2009
2002

2005

2007
2003
1999

2001
1996
1997
1998
1995

2012
2010
2011
Policies
Phase 1

Phase 2
Phase 3
In the first column, phases of industrial development:
Policies: liberalization and privatization.
Phase 1: reconstruction.
Phase 2: rapid privatization.
Phase 3: growth, consolidation and entry into the EAC.

After 1994, the task of rebuilding Rwanda’s manufacturing and agri-

business sectors was exceptionally difficult owing to several factors: the
depletion of human resources; the destruction of facilities, equipment and
production lines; the disruption of key public services, in particular, the
supply of electricity, which did not return to pre­-1994 levels until 1998
(IMF 1998–2002); the state of the local banking sector, which was over­
burdened with non-­performing loans and was not in a position to support
the reconstruction of a capital intensive sector in the immediate aftermath
of the crisis; and low demand from a strife-impoverished citizenry.
Although the manufacturing and agribusiness sectors collapsed in
1994–95 to about half the production levels of the 1980s, production in the
immediate aftermath of the crisis did not come to a complete halt. One of
the main reasons was the policy decision by the incoming Government
of National Unity to recognize existing property rights for all Rwandans,
including the estimated 2 million Rwandan refugees that had fled the
country in 1994, and foreigners alike (UNCTAD 2006). Many business-
men, who had taken refuge in neighbouring countries during the war, re-
turned to Rwanda as soon as the conflict had come to an end to reclaim
their factories and start the process of rebuilding their businesses. Based
on a sample of 55 manufacturing or agribusiness firms for which we have
information – both from the interviews conducted as part of this exercise
and alternative sources – about 29% of manufacturing firms had started
production again by the end of 1994, and 62% by the end of 1995 (IMF
1998–2002). There was even some new firm creation during this period,
including Mutara Enterprises (furniture).
Nonetheless, the production capacity of the economy had suffered bad-
ly. Even firms that had managed to restart operations without too much
damage to their equipment and facilities in the first few years after the
genocide faced significant challenges scaling up production: Bralirwa’s
beer production levels in 1998 were only 65% of what they were before the
ORIGINS AND EVOLUTION 23

war; Sulfo’s output of soap products in 1998 was 70% of 1993 levels; that
same year, Tolirwa (corrugated sheets) was at 47% of 1993 levels; Prometal
(nails and wire) at 12%; Rwandex (coffee exporter) at 27%, etc. (IMF 1998–
2002). Factories that had sustained damage often needed years to become
operational again. Examples include Anik Industries, which restarted op-
erations in 1996–97 but completely lost its mirrors and shoe polish pro-
duction lines; Kabuye Sugar Works (previously Sucrerie Rwandaise de Ka-
buye), which only managed to restart operations in 1999 after significant
repairs to pre-­war equipment; Sopyrwa (previously Opyrwa, pyrethrum
processor) only started operations after privatization and the revamping
of equipment in 2000; Sorwatom (tomato paste), which opened its doors
again after significant capital investments in 2003–4; the Maisserie de
Mukamira (maize mill), which was destroyed during the war, privatized
in 2004, rehabilitated in 2006, before becoming operational again in 2007;
and the Minoterie de Byumba (wheat mill), which was defunct until Pem-
be Flour Mills took over in 2007 (USAID 2009). Finally, numerous com-
panies went out of business altogether or were liquidated in the aftermath
of the genocide. Examples include Somirex (toothpaste and soap), Cuph-
metra (pharmaceuticals), Laiterie de Gishwati (milk), Laiterie de Nyaga-
tare (milk), S­ oproriz (rice), Sopab (animal feed), Sodeparal (leather shoes),
Guttanit (papyrus sheets), PPCT (lime), among others.
The pace of recovery varied significantly by sector (see Figure 1.9). Not
surprisingly, the first sector to return to pre-­war levels in 1997 was the
cement sector, buoyed by high demand and a significant influx of foreign
aid. By 1995, Cimerwa was back at 80% of 1993 production levels, and at
100% by 1997. Demand for cement outpaced supply significantly, forcing
the government of Rwanda to double the capacity at Cimerwa in 2001 to
100,000 tons per year. However, not all construction materials firms ben-
efited from this early boom in the construction sector. The production of
corrugated roofing sheets remained significantly below pre-war levels in
2002 (Figure 1.9), with companies such as Tolirwa and Prometal operat-
ing below 50% of their pre-­war output in 1998. The reason for this, as we
discuss in the section on liberalization and privatization, was competi-
tion from imported products following the gradual liberalization of the
trade sector, but also a price hike in raw material imports from Europe in
1997,8 forcing companies to identify new suppliers in Asia. Despite these
new challenges, the immediate aftermath of the genocide was a period of
investment and diversification for firms in Rwanda’s construction sector.
Examples include Uprotur, which was back to pre-­war production levels in
1998 and invested in a new production line for low-cost galvanized roofing
sheets in 1996–97.

8 
Interviews with construction material firms, Tolirwa and Uprotur.
24 CHAPTER 1

The only other sector to return to pre-­war production levels quickly was
the tea sector; this was in complete contrast to the coffee sector, which
suffered disproportionately from the crisis. Supported by European Com-
mission funding between 1994 and 1­ 997, almost all companies in the tea
sector – 10 out of 11 factories at the time were publicly owned – had re-
turned to pre-­war production levels by 1998 (IMF 2000). The quick recov-
ery allowed the tea sector to catch up with the coffee sector, which had pre-
viously been the country’s largest foreign-­exchange income earner. Since
1998, tea and coffee have been on a par in terms of their export potential;
one year, tea is the largest export crop, the next, coffee. This change in the
relative importance of both sectors for the Rwandan economy was the re-
sult not only of the genocide but also of large fluctuations in global coffee
prices, which severely affected production. As a result, the production of
coffee (in volume) in 2002 was only 70% of what it was in 1993 and 50% of
what it was in the late 1980s.
In the early reconstruction of Rwanda’s manufacturing and agro-­
processing sectors immediately after 1994, entrepreneurs invested very
little new capital. Only as demand picked up and with it capacity utili-
zation after about 1998 did capital investment in machinery and new fa-
cilities increase significantly. Figures 1.10 and 1.11 show that before 1999
the manufacturing and agro-­processing sectors hardly received any long-­
term credits (a tenure greater than five years) from the local commercial
banking sector. In 1998, for example, aggregate long-term credits to the
manufacturing and agro-­processing sectors amounted to a mere 0.92% of
total long-term credits contributed by the domestic commercial banking
sector that year, or US$270,000. This increased to an average of US$7m per
year between 1999 and 2003.
These statistics suggest that during the 1994–98 period firms focused
mostly on low-cost repairs and getting the required working capital to
restart operations in stalled factories. Only after 1998 did firms start to
replace expensive machinery and restore damaged facilities. This period
of new capital investment has shaped Rwanda’s manufacturing and agri-
business sectors today. It also corresponds to the beginnings of the privat-
ization process of large manufacturing and agro-­processing firms and the
early days of a renewed high growth and investment phase in Rwanda’s
manufacturing and agro-processing sectors, coinciding with the entry of
Rwanda into the EAC.

Phase 2: Acceleration of the privatization of state enterprises in

the manufacturing and agribusiness sectors (2005–12)
Due to the state of the economy in the immediate aftermath of the geno-
cide and the complications involved in the process, the implementation of
the 1996 Privatization and Public Investment Law only gathered traction
ORIGINS AND EVOLUTION 25

Box 1.1  Liberalization and privatization of Rwanda’s coffee sector.

In January 1995 one of the first major economic policy decisions of the incom-
ing government was to open the coffee export business to private investors.
In practice, this meant gradually withdrawing OCIR-Café from commercial
activities, ending the state’s monopoly on the marketing of coffee, liberalizing
producer prices and putting in place a policy of free entry into the market.
The immediate outcome of this new policy was a wave of new entrants into
the coffee sector, including Salama Café, Kagera Coffee, Al Café, Caferwa,
Coffex and Rwacof. Within two to three years, however, all of these new pro-
cessors/exporters were out of business, except for Rwacof and the state-owned
Rwandex.
One of the reasons so many new entrants failed – in addition to volatility
in global coffee prices – is that the sector-specific policy mix was still evolving
and being fine-tuned. Examples of this fine-tuning, which had a direct impact
on the profitability and incentive structure for firms, included (see IMF 2000):
•  Evolving measures to control producer prices: the coffee stabilization
fund, which enabled OCIR-Café to control producer prices, was discon-
tinued in 1995 and replaced with a progressive export tax on coffee in that
same year; this export tax, which had to be adjusted based on world prices,
was then replaced with an ad valorem export tax of 16% in 1998, before
being abolished altogether in 1999.
•  Evolving measures to finance OCIR-Café: in 1995 OCIR-Café charged a
handling fee of US$48 per ton; this was replaced with a fee of 3% of the
final freight on board price at the port of Mombasa, although there were
many discussions about how this price was calculated.
•  Evolving regulations on surrender requirements on export proceeds: in
1995, 90% of export proceeds had to be surrendered; this was reduced to
50% in December 1996, with the requirement being abolished in 1997.
It is only during the 2002–5 period, almost a decade later, that major new inves-
tors/coffee processors entered the coffee market, including companies such as
the Coffee-Business Center in 2002, Rwanda’s second largest exporter today, as
well as the Kivu Arabica Coffee Company and Rwashoscco in 2005.
The privatization of the coffee sector started in 1997 with the sale of the
Gikondo coffee factory to Rwacof, but it was not until 2007 that the privati-
zation process of Rwandex – in which the government had a 51% stake – was
completed. The delay in implementing the privatization of Rwandex was due
to complex negotiations between government and the shareholders on the mo-
dalities of the privatization process and lingering corporate tax arrears and
debt issues. Facing a huge debt burden after privatization, the company filed
for bankruptcy and was liquidated quickly thereafter. The assets of what used
to be Rwandex were bought by Westrock EA Holdings – a US-owned holding
company based in Mauritius – for US$1.6m in 2009, which set up the Rwanda
Trading Company (RTC), today one of the largest players in Rwanda’s coffee
market.

after 2005. It has played a key role in attracting private investment and
large players – both domestic and foreign – to the manufacturing and
agribusiness sectors. Throughout the process, starting in 1997 and even
26 CHAPTER 1

250%
Output (share of 1993 value) Beer
200% Sugar
Corrugated
150%
sheets
100% Cigarettes
Textiles
50% Cement

0% Green coffee
1993 1995 1997 1999 2001

Figure 1.9  Performance of selected sectors (1993–2002).

Source: IMF Statistical Annexes (1998–2004).

more so after 2005, the privatization of government-owned construction

materials and agribusiness firms has attracted large private domestic in-
vestors, such as Crystal Ventures, the Rwanda Investment Group (RIG),
the Horizon Group and Rwanda Mountain Tea, and institutional inves-
tors such as the Rwanda Social Security Board, as well as foreign investors,
from Kenya, Uganda, Belgium, Australia and the United States. The main
privatizations since the promulgation of the privatization law are listed in
Table 1.4.
At the time of transfer, many of these firms were still in the reconstruc-
tion phase. For some firms, the impact of the privatization process will
have been to fast-track the reconstruction and scaling of their operations.
Examples include:
•  Uganda’s largest sugar processor, the Madhvani Group, took over
Kabuye Sugar Works in 1997. The Madhvani Group gradually in-
creased the capacity of the factory with new machinery from an es-
timated 210 tons per day in 1997 to 275 in 2001, 325 in 2003, 475 in
2005–6 and 600 in 2007.
•  ICM Rwanda Agribusiness took a majority stake in three rice mills
previously owned by government in 2006 and 2008 (Rwamagana,
Gikondo and Bugarama). It has invested heavily in new machinery
and expanded rice production areas and it is today the largest player
in Rwanda’s rice processing sector.
•  Pembe Flour Mills, which took over the defunct Minoterie de Byum-
ba in 2007 and has become Rwanda’s second largest agribusiness
firm behind Bralirwa in the space of five years, investing US$6m to
improve facilities and production capacity at the flour mill.
In the case of other state-owned enterprises, the initial sale was not always
very successful, but subsequent changes in ownership succeeded in turn-
ing these companies around, for example:
ORIGINS AND EVOLUTION 27

Manufacturing sector (% total credit)

Share aggregate credit (%) 30 Manufacturing sector (% long-term credit)
25
20
15
10
5
0
1995 1996 1997 1998 1999 2000 2001 2002 2003

Figure 1.10  Commercial credit to the manufacturing sector (1995–2003).

Source: IMF Statistical Annexes (1998–2004).

Short term (<1 year)

100 Medium term (<5 years)
manufacturing sector (%)

Long term (>5 years)

80
Share of credit to

60

40

20

0
1995 1996 1997 1998 1999 2000 2001 2002 2003

Figure 1.11  Tenure of bank credit to manufacturing sector (1995–2003).

Source: IMF Statistical Annexes (1998–2004).

•  Briqueterie Rwandaise Ruliba (a manufacturer of clay products) was

first privatized in 2002. While the new shareholders refurbished ma-
chinery, restarted operations and introduced new clay products, the
company quickly ran into operational and financial difficulties with
time-to-delivery lags of about six months, which was unsustainable.
It was not until 2009, when the company was taken over by Building
Material Investments Limited (BMI) – a JV by the Social Security
Fund of Rwanda and Crystal Ventures Limited – that significant
investment was made to increase production capacity (which has
doubled in the space of three years) and resolve managerial and op-
erational constraints.
•  Horizon Sopyrwa (previously Opyrwa, the pyrethrum processor),
which was privatized in 2000. While operations at the company had
restarted, by 2008 Sopyrwa had run into financial difficulties, lack-
ing adequate funds to pay staff and farmers, with no regular buyers
for its products. In that same year the company was taken over by
the Horizon Group, which has invested significant resources in re-
structuring the company and revamping machinery.
28 CHAPTER 1

Table 1.4  Key privatizations since 1997.

Year of
privatization  Company  Buyer
Usine à Café de Gikondo Rwacof
1997
Kabuye Sugar Works Madhvani Group (Uganda)
Rwanda Investment
Ovibar
1998   Company (RICO)
Laiterie de Nyagatare KOABOMO co-op
Usine à Café de Nkora UPROCA co-op
1999
Rubirizi dairy Rwandan investor
Development and Business
Sorwal (29.5%)
  Prospects (Debupro)
2000
Etiru Public auction
Opyrwa Rwandan investor
Sonafruits Ecomeki
Minoterie de Gatara Kabandana Venant
2001
British American Tobacco
Tabarwanda   (through Tabacofina)
 VanderElst
Briqueterie Rwandaise Rwandan investor
 Ruliba
Usine à Café de Nkora Seven Lakes Trading
2002
Diocese Catholique de
Maisserie de Mukamira   Ruhengeri, Association
  pour le Développement Rural
2003 Sorwathé (23.5%) Sorwathé and Assopthe
2004 Pfunda Lab International
Bugarama Rice Mill ICM (Australia) + co-ops
Gikondo Rice Mill ICM (Australia) + co-ops
Cimerwa Rwanda Investment Group
2006
Laiterie de Nyabisindu Horizon Group
Rubaya-Nyabihu Tea Rwanda Mountain Tea (RMT)
Estates
Minoterie de Byumba Pembe Flour Mills Group
2007
 (defunct)
Belgian investor
2007–9 Rwandex
Westrock EA Holdings
2008 Rwamagana Rice Mill ICM (Australia)
2009 Kitabi Tea Factory RMT
ORIGINS AND EVOLUTION 29

Year of
privatization  Company  Buyer
Tea Group Investment Company
2011 Mata Tea Factory Ltd, JV between RMT and Jay
Shree Tea & Industries (India)
2012 Bralirwa (30%) Public IPO

Sources: Privatization secretariat (2004), interviews.

•  Cimerwa, which was privatized in 2006 but required a new round of

capital injection from the Rwanda Social Security Board in late 2011
to consolidate operations and expand production (The New Times,
Government repossesses Cimerwa, 19 October 2011).
•  Rwandex (coffee processor), which was privatized in 2007 before
running into unsustainable debt problems. Rwandex was liquidated
in 2009 and its assets sold to US-owned Westrock EA Holdings. The
new coffee processor resulting from this acquisition – the Rwanda
Trading Company – invested about US$5m to upgrade machinery,
purchase new equipment and increase capital.
While it is still too early to gauge the success of the privatization policy
and its lasting impact on the manufacturing and agribusiness sectors, the
policy did result in the entry of a number of large groups – both regional
and international – into the Rwandan market, and has succeeded in trans-
ferring ownership of the vast majority of production in these sectors from
government to the private sector.

Phase 3: Growth, consolidation and entry into the East African

Community (2006–12)
Towards the end of the decade, new business creation and investment in
growth took over from reconstruction as the main driver of growth in
Rwanda’s manufacturing and agribusiness sectors. There are signs that
things started to change in 1999, when long-term credit (greater than five
years) to the private sector increased substantially from less than US$0.3m
in 1998 to more than US$6m in 1999 (Figures 1.10 and 1.11) and when
investment over GDP reached the pre-­war maximum of 17% of GDP
that same year (Figure 1.12). As can be seen in both Figures 1.12 and 1.13,
however, the big acceleration in investment activity came in 2006–7, as
evidenced by the tripling of machinery imports in 2007 from US$20m to
US$60m and by the increase of investment over GDP from 15% in 2006 to
22–­23% in 2009. This period of growth corresponded to new firm creation
in the manufacturing and agribusiness sectors; significant capital invest-
ment to increase production capacity in existing firms; the consolidation
30 CHAPTER 1

of the sector, with large groups playing an increasingly important role; and
Rwanda’s entry into the East African Community in 2007, which led to a
wave of new investments in the manufacturing and agribusiness sectors
from large East African groups.
The period from 1999 to 2­ 005 saw many new private investors enter-
ing the local manufacturing and agribusiness sectors. Between 1999 and
2005 we estimate that about 20 new manufacturing firms were created
(Table  1.5). Among these are some important companies for Rwanda’s
economy today, including the Coffee Business Center, one of the largest
coffee processors and exporters; Société Rwandaise des Chaussures, one
of the most export-oriented firms in the manufacturing sector; Premier
Tobacco Company, producer of popular and well-established cigarette
brands in Rwanda such as Filter Star King and Premier Filter; Minimex,
the country’s largest maize processor; ICM Rwanda Agribusiness, the
largest rice processor in the country; and Master Steel, one of the largest
manufacturers of construction materials. During this period significant
capital investment was also targeted at expanding the production capac-
ity of existing large firms. Examples include Cimerwa, which at the time
was still publicly owned, and where production capacity was doubled to
100,000 tons per year in 2001; Inyange, the country’s largest dairy pro-
cessor today – established in 1997 – which introduced a water production
line in 2001 and a juice production line in 2004; and Kabuye Sugar Works,
which continued to invest in the expansion of production capacity at the
plant throughout the entire period.
Although this amounted to significant investment, many of the compa-
nies started during this period remained small and only took off after 2005.
Minimex, for example, only started processing in 2005–6; ICM Rwanda
purchased its first rice mills in 2006; Premier Tobacco Company installed
its first leaves-processing line in 2005.
The 2006–12 period was marked by the creation of even larger firms
and increasing investment in existing firms, in particular, in firms that
were first registered between 1999 and 2­ 005. Large firms created during
this period include Rwanda Mountain Tea, the country’s largest tea pro-
cessor today with an annual turnover of more than US$16m; Pembe Flour
Mills and Bakhresa Grain Milling, the two largest wheat flour producers,
which have a joint turnover of about US$50m, thereby making them the
two largest manufacturing firms after Bralirwa; SteelRwa, a rebars pro-
ducer for the construction sector, which in its first year of operations had
already achieved a turnover of more than US$8m; Safintra, the largest
roofing sheets producer in the country with a turnover of about US$11–
12m; and in 2012 Granite East Africa, with capital investments of more
than US$10m. Large investments in increasing capacity during this period
included:
ORIGINS AND EVOLUTION 31

25
Reconstruction
20

15
% GDP

10
Growth
5

0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Figure 1.12  Gross fixed capital formation (% GDP).
80
70 Growth
60
50
US$m

40
30
20
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Figure 1.13  Imports of machinery (US$m).

•  Inyange (beverages), which in 2005 embarked on a multi-year

US$35m project to increase its capacity tenfold. Today, Inyange has
some of the most modern bottling and packaging equipment in the
region, with the capacity to produce 5,000 litres of milk per hour,
5,500 litres of juice per hour and another 5,000 litres of water.
•  Minimex (maize milling), which saw its production capacity in-
crease significantly over the period, leading to an increase in pro-
duction levels from 890 tons of maize in 2006 to 8,750 tons in 2011,
a tenfold increase.
•  Mutara Enterprises (furniture), which is, at the time of writing, in
the process of finalizing a US$7.5m plant in the newly established
Kigali Special Economic Zone (KSEZ).
•  The Rwanda Trading Company (coffee), which took over the assets
of Rwandex in 2009, and invested an estimated US$5m to not only
upgrade and repair machinery but also install new capacity.
•  Brasserie des Mille Collines (beer), which is, at the time of writing,
undergoing a multi-million dollar expansion plan that comprises
a new waste water treatment plant and the doubling of production
capacity in the brewery.
32 CHAPTER 1

Table 1.5  Manufacturing and agribusiness firms

created between 1995 and 2012.
  Firm /
Year factory name  Sector   Main product
1995 Mutara Furniture Furniture
1995 Caferwa Coffee Coffee
1996 Rwacof Coffee Coffee
1997 Inyange Industries Beverages Milk, yogurt, water, juice
Kabuye Sugar
1997 Staple crops Sugar and sugar molasses
Works
1998 Saban Sarl Leather products Leather products
1998 Shema Fruits Food processing Processed fruit
Société Rwandaise
1999 Footwear Plastic shoes
de Chaussures
2000 Roto Tanks Plastic products Plastic tanks
Kigali Steel &
2000 Metal products Kitchen utensils
Aluminium Works
2000 Electromax Beverages Water
Agro Coffee
2000 Coffee Coffee
Industries
2000 Rubirizi Dairy Dairy Milk
Construction
2001 Ufametal Roofing sheets
materials
Coffee Business
2002 Coffee Coffee
Center
Premier Tobacco
2002 Tobacco Cigarettes
Company
2002 Minimex Staple crops Maize bran, grit and flour
Rwanda Plastic Various plastic products
2002 Plastic products
Industries (e.g. chairs)
2003 Aqua-San Plastic products Plastic tanks
Toilet paper and sanitary
2003 Suku Paper Works Paper products
pads
2003 Adma International Food processing Biscuits
Construction Roofing sheets, hollow
2003 Simaco
materials section tubes
Rubaya-Nyabihu
2004 Tea Tea
Tea Factory
ORIGINS AND EVOLUTION 33

  Firm /
Year factory name  Sector   Main product
Kivu Arabica Coffee
2005 Coffee Coffee
Company
2005 Rwashoscco Coffee Coffee
ICM Rwanda
2005 Staple crops Rice
Agribusiness
Construction Metallic construction
2005 Master Steel
materials materials
Rwanda Leather
2005 Leather products Leather products
Industries
Ikirezi Natural
2005 Specialty plants Essential oils
Products
Rwanda Mountain
2006 Tea Tea
Tea
2006 Uprofoam FMCG Mattresses
2006 Afrifoam FMCG Mattresses
Kigali Cement Construction
2007 Cement
Company materials
2007 Pembe Flour Mills Staple crops Wheat flour
Construction
2007 Safintra Roofing sheets
materials
Cassava flour,
2008 Shekina Enterprises Food processing
dried cassava
Cleaning products,
2008 Trust Industries FMCG
toilet paper
2008 Nshikili Tea Factory Tea Tea
2008 Sosoma Industries Food processing Maize meal
Rwanda Trading
2009 Coffee Coffee
Company
Bakhresa Grain
2009 Staple crops Wheat flour
Milling
2009 Savannah Dairy Milk Milk
2009 Kitabi Tea Tea Tea
Brasserie des Mille
2010 Beverages Beer
Collines
Construction
2011 SteelRwa Rebars
materials
Construction
2012 Granite East Africa Granite
materials
34 CHAPTER 1

•  Kigali Cement, which is in the process of increasing production cap-

acity with the construction of a new grinding mill.
A trend that has contributed to these high investment levels is consol-
idation in the manufacturing and agribusiness sectors. Increasingly, out-
put in the latter is clustered around large industrial groups or investment
holding groups, which have the capacity to raise the required financial re-
sources and human capital to turn manufacturing and agribusiness firms
around and invest in increasing production capacity. The largest local in-
vestment group is the Crystal Ventures Group, which has a majority stake
in Inyange (beverages), Mutara Enterprises (furniture) and a managing
stake in Ruliba Clays (clay products) and East Africa Granite (granite for
the construction sector) through Building Materials Investments Limited
(BMI). BMI is a JV between Crystal Ventures, the Rwanda Social Security
Fund and the Horizon Group, and took over ownership of Ruliba Clays,
which was in financial difficulty in 2009, before creating East Africa Gran-
ite in 2012. The Horizon Group is another significant player in Rwanda’s
manufacturing and agribusiness sector. The Horizon Group, which has in-
vestments in the construction and logistics sector, as well as BMI, also took
over full ownership of Sopyrwa – the country’s pyrethrum processor – in
2008. Sopyrwa was edging towards bankruptcy when the Horizon Group
took over, resulting in new investments in capacity as well as a manage-
ment and systems overhaul. Another significant player is the Rwanda In-
vestment Group (RIG), which has investments in the energy business but
has also had a minority stake in Rwanda’s largest cement factory, Cimerwa,
since 2006.
Other groups are also forming around individual investors. The largest
such group comprises Petrocom (petrol), Ufametal (construction mater-
ials), Kagugu Dairy and Rwanda Mountain Tea (tea), which includes one
of the largest players in Rwanda’s petrol market, the largest tea processor
in the country as well as one of the largest construction material firms.
Since its inception in 2006, Rwanda Mountain Tea has been growing into
the largest player in the local tea market, taking majority ownership stakes
in the Rubaya, Nyabihu, Kitabi, Mata and Gisakura tea factories previous-
ly owned by the government. On a smaller scale, the owners of existing
manufacturing firms have also been investing in new manufacturing busi-
nesses or taking over companies in trouble. Examples include construc-
tion companies that also own mattress manufacturers, such as Simaco and
Afrifoam since 2003, Uprotur and Uprofoam since 2006, as well as Trust
Industries (detergents) that bought the assets of Socobico (toilet paper),
which had run into financial difficulties.
An equally important trend is the entry of large manufacturing
groups from Kenya and Tanzania into the Rwandan market, following
the country’s entry into the East African Community (EAC) in 2007. In
ORIGINS AND EVOLUTION 35

the immediate aftermath of Rwanda’s entry into the EAC, large regional
groups started investing in Rwanda: the Pembe Flour Mills Group owned
by the Kenyan Bajaber Group of Companies in 2007, Safintra owned by
the Kenyan Safar group in 2007, the Tanzania-based Bakhresa Group in
2009–10, the Manji Family which has interests in the entire region and
invested in SteelRwa in 2007–11, the Kenya-based Athi River Mining com-
pany – the largest cement manufacturer in the region – which took a mi-
nority stake in the Kigali Cement Company, and the Kenya-based East
African Growers group, which is, at the time of writing, investing in com-
mercial avocado production. The commercial impact of these investments
has been very large: Pembe Flour Mills and Bakhresa Grain Milling are,
after only five years of operation, the second and third largest manufac-
turing firms in the country; Safintra is the market leader in roofing sheets;
and SteelRwa is already, after only one year of operation, the country’s
largest exporter of construction material products. Successful investments
share the characteristics of having the significant financial and human re-
source backing of large groups and business models based on investing in
Rwanda with a view to accessing not just the Rwandan but also the Bur-
undi and eastern DRC markets, which are difficult to service from Uganda,
Tanzania and Kenya.
Does this increased dynamism we observe since 2006 signal a shift
in the economic fortunes of Rwanda’s manufacturing and agribusiness
sectors? Are these sectors now poised to grow, based on a different set of
fundamentals, characterized by a more stable business environment, more
private involvement, regionalization within the East African Community
and the entry of large groups and investors into the Rwandan market? We
try to give some partial answers to these questions by studying the largest
firms in Rwanda’s manufacturing and agribusiness sectors, focusing on
their origins, capabilities and key themes such as products, systems and
resources.
Chapter 2

Main Findings

2.1  Our Framework

The objective of this deep dive into Rwanda’s manufacturing and agribusi-
ness sectors – or what Sutton and Kellow (2010) refer to as enterprise map-
ping1 – is to provide policymakers, investors and academics with a better
understanding of the history and current capabilities of Rwanda’s leading
agribusiness and manufacturing firms. The study is based on the premise
that to understand why firms are different – why some succeed and others
fail, why some diversify and others specialize, why some export and others
do not – one needs to study their origins and evolution (i.e. what brought
them to where they are) as well as their capabilities and how these capabil-
ities came to be.
To map Rwanda’s agribusiness and manufacturing sectors, we select-
ed 43 representative firms based on a number of key criteria, including
revenue and employment. The vast majority of the firms profiled have
revenues over US$1m and more than 30 full-time employees. Our sam-
ple includes 42 of Rwanda’s 47 identified manufacturing firms with more
than US$1m in annual revenues. We also included three firms with less
than US$1m in revenues because they provided an interesting story and
some insights that have added value to the study. We excluded from this
exercise all firms engaged in extractive or service-oriented activities such
as mining and construction, since firms in these sectors use very different
technologies compared with the manufacturing sector. A list of the pro-
filed firms, including key statistics, is located in Appendix 1.
Our approach to profiling these firms is derived from our understand-
ing of the prolific literature on firm-level capabilities. There appears to be

1 
The concept of enterprise mapping was first developed by Professor John Sut-
ton, tested and implemented for the first time in Ethiopia.
38 CHAPTER 2

a consensus among academics and management professionals on three

points2:
1.  First, one can conceptualize a firm’s capabilities as its ability to effec-
tively deploy, combine, develop and change its resources.
2.  Second, there is a dynamic aspect to a firm’s capabilities:
•  firms hold specific capabilities that are linked to their origins
and history and condition their evolution (i.e. there is a certain
path dependency); and
•  a key aspect of a firm’s capabilities is its ability to break free from
this path dependency and reconfigure its competencies to ad-
dress changes in the market and the business environment.
3.  Finally, some capabilities are more important than others and form
a firm’s “core competencies”; these can include its products, systems
and resources, which ultimately determine the firm’s ability to com-
pete in export markets.
To capture these different aspects of firm-level capabilities, we structure
our analysis around five key themes (see Figure 2.1):
1.  Company origins: to understand how firms started, who started
them, and what motivated them to enter the industry.
2.  Products: to understand the dynamics of innovation and diversifi-
cation and to increase sophistication at the firm level.
3.  Systems: to understand strategic management structures, product
development systems, manufacturing processes, available technol-
ogy, sourcing and supply chain strategies, marketing and sales, and
human resources management systems.
4.  Resources: to get a better understanding of the tangible (financial
and physical), intangible (knowledge and reputation) and human
resources of Rwandan manufacturing and agribusiness firms.
5.  Exports: which are related to a firm’s competitive advantage,
measured by cost leadership, differentiation and resilience to new
entrants/substitutes.
Firm and sector profiles, structured along these five dimensions, are
presented in Chapters 3–9. This chapter provides insights from the 43 firm
interviews to draw a map of Rwanda’s agribusiness and manufacturing
sectors, in terms of ownership, products, systems, resources and exports.
We start this chapter with a brief discussion of the size of firms, as this is
key to understanding Rwanda’s agribusiness and manufacturing sectors.

See Porter (2004), Prahalad and Hamel (1990), Chandler (1992), Dosi and
2 

Marengo (1994), Clark and Iansiti (1994), Leonard (1995), Teece and Pisano (1994),
Quelin (1997), Makadok (2001), Sutton (2005) and Grant (2009).
MAIN FINDINGS 39

CORE COMPETENCIES

SYSTEMS
Strategic
management
PRODUCTS
Product RESOURCES
Historical view development EXPORTS
of product Manufacturing Tangible
development Diversification
process &
Complexity technology Intangible
of products Sophistication
Marketing,
Human
sales and
distribution
Sourcing/supply
chain
Human
resource
management

ORIGIN & EVOLUTION OF FIRM CAPABILITIES

Figure 2.1  Framework for analysing firm-level capabilities.

2.2  Size of Firms in Rwanda’s Manufacturing

and Agribusiness Sectors

As we will see throughout this chapter, be it in terms of ownership struc-

ture, products, systems, resources or exports, size matters. In addition to
providing an overview of the size of firms in Rwanda’s manufacturing and
agribusiness sectors, we highlight two interesting points: (i) the case of
Bralirwa, which is a clear outlier; and (ii) a change in the structure of the
manufacturing and agribusiness sector at the US$5m mark.
In 2011, we identify 47 firms in Rwanda’s agribusiness and manufac-
turing sectors with more than US$1m in annual revenues. The combined
output of these 47 firms was approximately US$437m (current USD).3 Out
of these 47 firms:
•  4 had annual revenues of more than US$20m;
•  12 had annual revenues of more than US$10m;
•  24 had annual revenues of more than US$5m.
Moving forward, we refer to companies that have more than US$5m in an-
nual revenues as large firms. This divides our sample into two, with about

3 
As a point of comparison with the introduction, this corresponds to US$214m
in constant US$ 2000.
40 CHAPTER 2

Table 2.1  Rwanda’s 10 largest m

­ anufacturing
and agribusiness firms by turnover.

 Reported
Year  turnover
Rank  Company incorporated   Main product  (2010–11)
1 Bralirwa 1963 Beer and soft drinks US$130–135m
2 Pembe Flour 2007 Wheat flour US$25–30m
 Mills
3 Bakhresa Grain 2009 Wheat flour US$20–25m
 Mills
4 Cimerwa 1984/2006* Cement US$20–25m
5 Rwanda 2006 Black and green tea US$14–16m
  Mountain Tea
6 Sulfo Industries 1962 Soaps, detergents, US$14–16m
etc.
7 Rwacof 1997 Coffee US$12–15m
8 ICM Rwanda 2005 Rice US$11–15m
 Agribusiness
9 Coffee Business 2003 Coffee US$11–13m
 Center
10 Safintra 2007 Roofing sheets US$10–12m
* Year of privatization.

half being large firms and half smaller firms. Rwanda’s largest 10 firms in
the manufacturing and agribusiness sectors are listed in Table 2.1.
As can be seen in Table  2.1, Bralirwa is a clear outlier. Bralirwa cur-
rently has an annual turnover of more than US$130m, compared with
less than US$30m for the second-largest manufacturing or agribusiness
firm, Pembe Flour Mills. That means that Bralirwa contributes to about
one-third of the total output of Rwanda’s manufacturing and agribusiness
sectors. Bralirwa is an exception because it has had a de facto monopoly
in two sectors for 40–50 years: (i) the local beer sector from the 1960s
through to 2010 when Brasserie des Mille Collines, its only local competi-
tor, started; and (ii) the soft drinks sector since 1974, when Bralirwa signed
a licensing agreement with the Coca-Cola Group. Bralirwa is also an ex-
ception because it is – along with Sulfo and Sotiru – the oldest company in
Rwanda. It has had 50 years of in-country experience, which has enabled it
to develop effective supply and distribution channels, supported by one of
the world’s largest beer producers, the Heineken Group.
While the case of Bralirwa is unique, we will see throughout this chap-
ter that fundamental differences exist between large and small firms. To
MAIN FINDINGS 41

5.0 Projected Actual

Log turnover (US$m)
4.0 Break at the
US$5m mark
3.0

2.0

1.0

0
0 5 10 15 20 25 30 35 40 45 50
Rank of firm based on turnover

Figure 2.2  Actual versus projected size of manufacturing firms.

highlight the fact that something changes in the composition of Rwanda’s

manufacturing sector at the US$5m mark, we project the relationship be-
tween the size of a firm (in terms of turnover) and its ranking (again in
terms of turnover) using a simple formula inspired by size-rank power
laws.4 As can be seen in Figure 2.2, while our projections perfectly pre-
dict the relationship between size and ranking until the US$5m mark (the
last firm with a turnover of more than US$5m is ranked 24), the actual
and projected curves deviate thereafter. This implies that firms below the
US$5m mark decline in size much faster than we would have expected
them to based on this formula; another way of interpreting this is that
there are fewer firms below the US$5m mark than we would expect. This
break at the US$5m mark could signal that firms that are smaller than
US$5m face different or more binding constraints than larger firms. We
explore this possibility in more detail in the ensuing sections, focusing on
ownership structures, products, systems, resources and exports.

2.3  Main Findings: Ownership Structure

Defining a large group as any holding group, investment group or indi-

vidual investor that has business interests in more than three companies
(revenues over US$1m) either domestically or internationally, we estimate
that 80% of output in Rwanda’s 47 largest manufacturing and agribusi-
ness firms is controlled by large groups, about 70% by foreign capital and
20% by individual Rwandan entrepreneurs (see Figure 2.3). Large groups

4
The formula we use is rank i = (turnover Bralirwa / turnoveri) – 2.51, where rank i
is the turnover ranking of firm i, turnoveri  the actual turnover of firm i, and
turnover Bralirwa the turnover of Bralirwa. We have also included a constant (2.51) to
adjust for the size differential for Bralirwa and the second-largest firm. For more
information on size-rank power laws, see, for example, Reed (2001).
42 CHAPTER 2

Foreign entrepreneurs (5)

Rwandan entrepreneurs (19)

Foreign groups (15)

Rwandan groups (8)

Figure 2.3  Decomposition of ownership in sample of 47 firms.

also tend to control the largest firms in Rwanda’s agribusiness and manu-
facturing sectors: 90% of the output of firms with more than US$5m in
annual revenues are owned by large groups; only 20% of the output of
companies with revenues less than US$5m are owned by large groups.
Ownership is one of the key distinctions between large and smaller firms
as defined above. We first focus on (i) individual Rwandan investors and
family-run businesses, before analysing (ii) foreign investments, (iii) the
role, performance and implications of large groups, including (iv) domes-
tic investment groups.

(i) Individual and family-run business in the manufacturing and

agribusiness sectors
Based on available data, individual and family-run businesses contribute
approximately 20% of the output of the manufacturing and agribusiness
sectors. The largest individual and family-run businesses in Rwanda’s
manufacturing sector today are listed in Table 2.2 and include manufac-
turers of construction materials, textiles, paper products and mattresses,
as well as coffee and food processors.
Although the origins of individual and family-owned firms in the
manufacturing sector vary significantly both between firms and over time,
some common characteristics can be observed: (i) particularly in the pre-
1990 period, the trading profession was a key source of training for entre-
preneurs, (ii) mobility within the region (due to both push and pull factors)
contributed and continues to contribute valuable expertise to Rwandan
businesses, and (iii) the professional origins of firms appear to be becom-
ing more diverse over time.

From trade to manufacturing

Many of the individual or family-run businesses that started before the
1990s were created by entrepreneurs who had been traders for many years.
Their trade gave them better knowledge of markets and local preferences
and enabled them to establish relationships with suppliers, distributors
MAIN FINDINGS 43

Table 2.2  Top 10 individual and family-run

manufacturing and agribusiness firms.
Turnover, Full-time Year of
Rank  Firm US$ (2011) employees creation
1 Coffee Business Center 10–15m 26 2003
2 Master Steel 7–9m 56 2005
3 Ameki 6–8m 380 1982
4 Tolirwa 5–7m 100 1979
5 Utexrwa 4–6m 600 1984
6 Suku Paper Works 4–6m 50 2003
7 Minimex 3–5m 80 2002
8 Urwibutso 3–5m 239 1993
9 Rwanda Foam 3–5m 80 1983
10 Kivu Arabica Coffee Company 2–4m 17 2005

Note that we define individual and family-run firms as firms that either have an
individual or (one or more) members of a family with significant ownership and
commitments towards the business. However, firms that have business interests in
more than three companies (revenues greater than US$1m) either domestically or
internationally have been classified as “large groups”. For example, Pembe Flour,
Sulfo Industries, Bakhresa Grain and SteelRwa have been classified as large groups
even though individual families are the controlling shareholders.

and the local banking sector. Examples of traders who established success-
ful businesses include Mr Tadjin Jaffer, who was born in 1932 in Uganda
and moved to Rwanda in the early 1950s while supporting his father and
uncle’s general trading business in Uganda. By 1995, Mr Jaffer had opened
a small trading business as well as a petrol station. At the time, he also sup-
ported a soap-manufacturing unit that his uncle had started in Burundi in
1961, where he learned the art of manufacturing soap. It is this experience
and the in-country knowledge he had acquired over the years that enabled
Mr Jaffer and his wife, Mrs Khatun Jaffer, to start a soap-manufacturing
unit in Kigali in 1962, just after independence. Today, Sulfo Industries has
a turnover of US$13–15m in Rwanda alone – with a product portfolio of
about 150 items – as well as business interests in the Democratic Republic
of Congo, Kenya and Uganda. It is one of the few examples of a family-run
business that has turned into a large group, based on our definition.5 Other

5 
This pattern is observed in several EAC countries and is documented exten-
sively in the case of Ethiopia (Sutton and Kellow 2010).
44 CHAPTER 2

companies that were started by ex-traders in the pre-1990s period include

Ameki, Tolirwa, Rwanda Foam, Utexrwa and Uprotur.6
Although the pattern in the post-1990s period is weaker, there contin-
ue to be some examples of traders establishing successful manufacturing
firms, including Mr Assinapol Rwigara, who was a distributor of cigarettes
for more than 30 years before starting the Premier Tobacco Company (cig-
arettes manufacturer) in 2002 and Mr Kalisa, who owned a trading busi-
ness in Burundi before starting Afrifoam in Rwanda in 1999.

Regional mobility of entrepreneurs

In a recent paper, Bahar et al. (2012) found that the probability that a prod-
uct is added to a country’s export basket is on average 65% larger if a neigh-
bouring country is a successful exporter of that product as well, and they
interpret this result as evidence of international intra-industry knowledge
diffusion. This pattern is increasingly evident with Rwanda’s entry into
the East African Community, but is not new and has been at play since
independence through the movement of the Asian community and other
expatriates in East Africa. Examples include Mr Jobanputra, whose family
had business interests in the textile subsector in Uganda and played an
important role in him starting Utexrwa in Rwanda.
Regional crises have played an important role as push factors in region-
al mobility. For example, the founder of Anik Industries, Mr Patel, moved
to Rwanda after being expelled from Uganda in 1972 during the Idi Amin
regime and the persecution of Uganda’s Asian community.
Conversely, the end of the war in Rwanda in 1994 was an important
pull factor that attracted regional investors to (or back to) Rwanda and led
to the creation of some new business. Examples include Mr Kalisa, who
originally owned a trading business in Burundi from 1983 to 1993 but
returned to Rwanda in 1994 before creating Afrifoam in 1999 and Simaco
in 2003; Mr Alphonse Sano, who started Société Rwandaise des Chaus-
sures in 1999, bringing with him 32 years of experience working for the

Ameki was started by Mr Jacques Rusirare of Ameki, who used to run a trans-
6 

port and hardware trading company; the family that runs Tolirwa (construction
materials), which started in 1979, had been running an electronics goods trading
firm and a small auto-repair garage in Kigali since 1973; Mr Makuza, who started
Rwanda Foam in 1983 (mattresses) and Amagerwa (construction materials) in
1965, and had first started as a trader of hardware materials; Mr Kishor Joban­
putra, who set up Utexrwa in 1984, had started as trader in Kigali dealing in a var-
iety of goods such as hardware items, groceries and textiles; the owners of Uprotur
(construction materials), which was created in 1987, had started off as importers/
exporters of cement, tubes and other construction material products in 1975, a
decade before starting the company.
MAIN FINDINGS 45

Bata shoe factory in Burundi, where he was the general manager; and Mr
Gasamagera, who returned to Rwanda from Switzerland after the war to
establish a logistics firm in 1998, called Safari Center, and then Suku Paper
Works (a paper products manufacturer) in 2003.

The new Rwandan entrepreneur

While the experience of many entrepreneurs who started manufacturing
or agribusiness enterprises before the 1990s was trading oriented, the
profiles of more recent entrepreneurs are more varied, with backgrounds
that include trained professionals such as lawyers and accountants, entre-
preneurs with specific sector expertise, as well as self-made entrepreneurs.
Minimex was started in 2002 by Felicien Mutalikanwa, a lawyer who
had a background in the mining sector; Jean-Bosco Seminega, who found-
ed the Kivu Arabica Coffee Company in 2005, was a consultant for Che-
monics (a US-based consultancy) and the Rwanda Development Bank
(BRD) before starting his own coffee business; Mr Mugabo started Trust
Industries in 2008 having been in the cleaning business for many years be-
fore deciding to experiment with producing his own detergents and soaps;
and Mr Mbatezimana, founder of Shekina Enterprises, is an accountant
by training.
Alongside these professionals, several self-made businessmen have
shown a remarkable capacity for innovation and creativity. The best known
of these is Sina Gérard of Urwibutso, who has grown his business from
being a small bakery and vegetable retail shop halfway between ­Kigali and
Ruhengeri in 1993 to one of Rwanda’s most diversified companies, with
some of the best-recognized products in the country, a turnover of US$3–
4m and about 200 full-time employees. Other entrepreneurs that fit the
self-made businessman description include Mr Rwagasana, the founder
of the Coffee Business Center in 2003, who had worked for 17 years in the
coffee sector before starting his own coffee processor with self-fabricated
machinery, and Mr Mugabo of Trust Industries (see above).

(ii) Foreign investment in Rwanda’s manufacturing and agribusiness

sectors
Foreign ownership is relatively prevalent in Rwanda’s manufacturing and
agribusiness sectors, a fact that is masked by low Foreign Direct Invest-
ment (FDI) numbers, which between 2000 and 2010 averaged about 0.84%
of total GDP in terms of the FDI flow (World Bank 2011a). In our sample
of Rwanda’s 47 largest manufacturing and agribusiness firms, we estimate
that firms that are either fully owned by foreign capital or in which foreign
investors hold a majority stake accounted for about 70% of the total output
in 2011, with an estimated aggregate output of US$280–290m. The sectors
46 CHAPTER 2

Table 2.3  List of largest foreign investments in

Rwanda’s manufacturing sector today.

Nationality

Ownership
investment

investor
Foreign
Year of
No. Sector  Firm
Heineken The Nether- Majority
Beverages

1 Bralirwa 1971
Group lands
Brasserie des
2 2009 Unibra Belgium Majority
Mille Collines
Kabuye Sugar Madhvani
3 1997 Uganda Full
Works Group
ICM Agribusi- ICM Agri­
4 2005 Australia Full
ness Rwanda business
Staple crops

Pembe
Pembe Flour Flour Mills
5 2007 Kenya Full
Mills / Bajaber
Group
Bakhresa Bakhresa
6 2009 Tanzania Full
Grain Milling Group
The Nether-
7 Minimex 2011 Mr Mansell N/A
lands
Adma
processing

8 2003 Mr Dakik Lebanon Full

International
Food

9 Sorwatom 2011 Dillux Kenya Majority

10 Safintra 2007 Safal group Tanzania Full

Construction
materials

Athi River Minor-

11 Kigali Cement 2011 Kenya
Mining ity
2007– Manji Canada /
12 SteelRwa Full
  11 Family East Africa
Flametree
13 Roto Tanks 2001 Kenya Full
Plastics

Group
Aqua-San
14 Aqua-San 2003 Kenya Full
Tech Group

where foreign investment is more prominent include coffee, tea, staple

crops, alcoholic beverages and construction materials. Regional investors
are very active in the light manufacturing and staple crop sectors, whereas
European and American investors are more present in the tea, coffee and
alcoholic beverages sectors. As can be seen in Table 2.3, foreign investment
is relatively diverse in terms of its origins, and includes investors from
MAIN FINDINGS 47

Nationality

Ownership
investment

investor
Foreign
Year of
No. Sector  Firm
Kigali Steel &
Shumuk
15 Aluminium 2001 Uganda Full
Group
FMCG

Works
Anik Indus-
16 1986 Mr Patel Uganda Full
tries
Mr Joban-
17 Textile Utexrwa 1984 Uganda Full
putra
18 Rwacof 1997 Sucafina Switzerland Full
Coffee

Westrock United
Rwanda Trad-
19 2009 EA Hold- States / Full
ing Company
ings Mauritius
Tea Import- United
20 Sorwathé 1986 Majority
ers Inc. States
Imporient United
21 Pfunda 2004 Full
Tea Kingdom
McLeod
22 Gisovu 2008 India Majority
Russel
Tea

Tea Group
Jay Shree
Investment
Tea &
Company India Equal
23 2011 Industries
(Mata and (via Dubai) stake
via Birla
Gisakura tea
Holdings
factories)

Kenya, Tanzania, Uganda, India, Lebanon, Switzerland, the Netherlands,

Belgium, the United Kingdom, the United States, Canada and Australia.
There are three possible interpretations of this large contribution of
firms controlled by foreign investors to the output of Rwanda’s manufac-
turing and agribusiness sectors:
(i) Foreign investment in the manufacturing and agribusiness sectors
is actually quite high and the manufacturing and agribusiness sec-
tors are priority sectors for FDI in Rwanda.
(ii) FDI has targeted the largest and most successful firms in Rwanda’s
manufacturing and agribusiness sectors over the years, which
would explain why firms controlled by foreign investors account
for such a large share of total output.
(iii) Firms controlled by foreign investors have performed better and
grown faster than other firms.
48 CHAPTER 2

The most likely explanation is the third option, as the manufacturing

and agribusiness sectors have not been priority sectors for FDI, which has
flowed mostly to Rwanda’s banking and telecom sectors, and the majority
of foreign investments have not targeted the most successful companies
but have either involved greenfield investments or the takeover of firms
that had run into financial difficulty. Examples of greenfield investments
over the past few years include Safintra (2007), SteelRwa (2007–11) and
Bakhresa Grain Milling (2009); examples of takeovers include the cases of
Kabuye Sugar Works, which took over Sucrerie Rwandaise in 1997, Pembe
Flour Mills, which took over the defunct Byumba Flour Mill in 2007, ICM
Rwanda Agribusiness, which took over three underperforming govern-
ment rice mills in 2006 and 2008, the Rwanda Trading Company, which
bought the assets of what used to be Rwandex in 2009, Sorwatom, which
was taken over by Dillux in 2011, and Minimex, which underwent an in-
depth restructuring when it received foreign equity investments in 2011.
One of the main arguments supporting the hypothesis that foreign in-
vestment has performed comparatively better is that the vast majority of
these investments have been made by larger groups, which have significant
capital and human resources and extensive experience in their respective
areas of operation. Out of the 22 foreign investments listed in Table 2.3,
large foreign industrial groups conducted 18, and we estimate that these
comprise approximately 80% of the aggregate output of firms owned by
larger groups. We discuss this issue of the comparative performance of
companies owned by large groups and companies owned by individuals in
more detail in the next section.

(iii) Large groups in Rwanda’s manufacturing and agribusiness sectors

and implications for future growth
One of the main takeaway messages from this book is that firms owned
by large groups are driving growth in Rwanda’s manufacturing and agri-
business sectors and have been outperforming firms owned by individ-
ual investors. The two indicators on which we base this assessment are
size and profitability. On the first point, firms owned by groups have been
able to scale much faster than other firms. Groups own 17 of Rwanda’s
largest 20 manufacturing and agribusiness firms. Examples that illustrate
how quickly firms have come to scale include the recent takeovers by large
groups of underperforming firms owned by individual investors. For ex-
ample, Sopyrwa has grown from a US$1m business in 2009 – one year after
it was taken over by the Horizon Group – into a US$6–8m business today,
just three years later; the ex-Byumba Mill, which was at a complete stand-
still in 2007, has grown into a US$27m business today under the watch of
Pembe Flour Mills; Brasserie des Mille Collines, which was taken over by
Unibra in 2009, had achieved sales of about US$10m by 2011.
MAIN FINDINGS 49

Firms owned by individuals Firms owned by groups

50 {Small, profit making} {Large, profit making}

40
30
20
EBITDA (%)

10
0
–10 {Small, not
–20 profit making}
–30
–40 {Large, not profit making}
–50
10 11 12 13 14 15 16 17 18 19 20
Log income (US$m)

Figure 2.4  Firm profitability and size (2008–10). Source: Own calculations
based on 2008–10 Rwanda Revenue Authority Tax Data.

Not only do groups own firms that are significantly larger on average,
but they also tend to perform better. As can be seen in Figure 2.4, available
data on profitability levels in Rwanda’s manufacturing and agribusiness
sectors during the 2008–10 period seem to suggest that (i) larger compa-
nies in Rwanda’s manufacturing sector tend to be more profitable than
smaller firms, and (ii) firms owned by groups tend to perform better than
firms owned by individual investors. 46% of firms that had revenues of less
than US$5m between 2008 and 2010 were profit making, compared with
85% for firms with revenues greater than US$5m. Similarly, 45% of firms
owned by individuals were profit making compared with 73% for firms
owned by larger groups. Size and ownership, which are intricately related,
matter in Rwanda’s manufacturing sector.
Our hypothesis as to why this might be the case is that large groups
have the capacity to overcome several constraints that might be binding
for individual investors, including:

Access to long-term finance. This is a prerequisite for achieving scale. Firms

owned by larger groups benefit from greater internal financial resources
and are in a much better position to raise capital. To give the reader a sense
of scale, the Tanzania-based Bakhresa Group of Companies, for example,
which between 2009 and 2011 invested US$24m to set up a new flour mill
in Rwanda, is part of a US$300m plus conglomerate. That equates to about
three-quarters of the size of Rwanda’s entire manufacturing sector. Given
its sheer size, the Bakhresa Group was able to secure financing from the
IFC for this project, including financing for the land acquisition, the con-
struction of the mill, machinery, warehouses and the purchase of trans-
portation trucks, which is something not many companies owned by in-
dividual investors would have been in a position to do. Many firms owned
50 CHAPTER 2

by large groups have made large upfront investments to either upgrade

facilities or set up new factories from scratch (see, for example, the cases
of Pembe Flour Mills, Inyange Industries, Mutara Enterprises, Sopyrwa,
Ruliba Clays, SteelRwa, Safintra, Cimerwa, Brasserie des Mille Collines
and the Rwanda Trading Company).

The ability to attract qualified management staff and technical experts.

Firms owned by large groups have been able to attract experienced man-
agers and technicians, often with many years of experience in their re-
spective sectors. Given the scarcity of skills for very specific operational
and technical tasks domestically, firms owned by larger groups have hired
foreign experts for key management and technical positions (we will come
back to these points in the section on resources).

Access to raw materials and packaging. Firms owned by large groups,

in particular, groups within the region, have been able to benefit from
­intra-group synergies that have facilitated the supply of raw materials. An
example of a company that has developed a significant domestic advantage
because of this is Safintra. Safintra, which is owned by the Safal Group
(registered in Mauritius, but originally from Tanzania), imports its raw
materials from sister companies in Kenya and Tanzania. Safintra is able
to supply its raw materials for the roofing sheets it produces within two
days, compared with more than ten days for competitors, giving it a sig-
nificant market advantage. Other companies that benefit from intra-group
bulk sourcing include Roto Tanks, which imports its LLDP (linear low
density polyethylene) from its sister company in Uganda, Kigali Cement,
which imports its clinker and gypsum from the Athi River Mining Group
in Kenya, and Kigali Steel and Aluminium Works, which sources its raw
materials from Shumuk Aluminium Industries in Uganda. Firms that are
part of more diversified groups, such as Bakhresa, for example, can also
import other types of inputs from sister companies. Bakhresa has four dif-
ferent packaging companies, one of which supplies Bakhresa Grain Mill-
ing in Rwanda. Bakhresa Grain Milling has even managed to lower its
transportation costs by using its own transport and logistics firms operat-
ing out of Tanzania.

Product quality. Anecdotal evidence suggests that firms owned by large

groups also tend to invest more in product quality control and research
and development, be it in the coffee, tea or construction sectors. In the tea
sector, Sorwathé, for example – in which an American group has a major-
ity stake – has a laboratory on site and was the first company in Rwanda’s
tea sector to diversify into green tea, organic tea, white tea and silver-tips
tea. As a result of investments in quality control, both from a product
and process perspective, Sorwathé has achieved ISO 9001:2008 and ISO
MAIN FINDINGS 51

22000:2005 standards certification, as well as being Fairtrade, Rainforest

Alliance, Ethical Tea Partnership and RBS (Rwanda Bureau of Standards)
certified. Sorwathé’s equivalent in the coffee sector is Rwacof, owned by
the Swiss group Sucafina. Rwacof has a modern laboratory on site to con-
trol a certain number of quality parameters, a lab that is supported by an
experienced team of cuppers. Rwacof has already achieved the Starbuck’s
Coffee and Farmer Equity (CAFE) certification and the 4C certification,
and, at the time of writing, was expected to receive the Fair Trade certifi-
cation by mid 2012. In the construction sector, SteelRwa is a good example.
The company has a chemical lab and a physical lab on site, including a fully
automatic 60 ton machine which analyses yield strength, tensile strength
and elongation for its rebars.

Surviving uncertainty and volatility in demand, particularly during the

start-up phase. Given their financial advantage, firms owned by larger
groups are also more likely to survive during times of difficulty and in par-
ticular during the start-up phase. A good example is again Bakhresa Grain
Milling, which experienced more than a year of delays before operations
could start due to a variety of external factors. Bakhresa Grain Milling
was able to survive this phase and meet its financial obligations towards
lenders because of support from its parent company; companies that do
not have this financial buffer might not have survived. The same is true
for Kabuye Sugar Works, which is owned by the Uganda-based Madhvani
Group of Companies (a group with a turnover of more than US$100m) and
survived two years of flooding that severely damaged the sugar cane crops
and led to a large reduction in aggregate output.
This implies that in the current business environment of Rwanda’s
manufacturing and agribusiness sectors, smaller firms owned by individu-
al investors find it difficult to compete. As long as long-term finance, skills,
sourcing and transportation constraints remain binding, smaller firms in
the manufacturing sector are likely to be outperformed by firms owned
by larger groups. While investments aimed at resolving these constraints
are firmly on the government of Rwanda’s agenda, these are medium- to
long-term investments that take time to materialize and even longer to
bear fruit.
In the short term, these results suggest that ensuring high growth rates
in the manufacturing and agribusiness sectors will require policies that
facilitate the emergence and operations of large groups and make it attrac-
tive for large foreign groups to enter the Rwandan market. However, it is
imperative to keep in mind that the successful attraction of large groups
will require the regulatory authorities to remain vigilant with respect to
potential anti-competitive behaviour to ensure that the smaller companies
are still able to compete in such an environment.
52 CHAPTER 2

Horizon Group
Crystal Ventures Group
• Sopyrwa
• Mutara Enterprises
• Minority investor in BMI,
• Ruliba Clays (BMI)
including Ruliba Clays and
• Inyange Industries
East Africa Granite
• East Africa Granite (BMI)
• AgroPharm

Petrocom Group
& Rwanda
Rwanda Investment Mountain Tea
Group (RIG) • Ufametal
• Cimerwa (29.5%) • Kagugu Dairy
15% of total
• 5 tea factories
output in manu- • Tea packaging firm
facturing and agro-
processing
sectors

Figure 2.5  Manufacturing firms owned by domestic

private investment groups in 2012.

(iv) Domestic investment groups

The main domestic groups in Rwanda’s manufacturing and agribusiness
sectors account for about 15% of aggregate production. They are summa-
rized in Figure 2.5; the main foreign groups are listed in Table 2.3.
The domestic groups operating in these sectors are relatively young and
highly diversified. Their interests in the manufacturing and agribusiness
sectors are currently only second to other larger investment areas. This is
in contrast to regional groups such as the Madhvani Group, Athi River
Mining, the Bakhresa Group of Companies, the Safal Group, the Flame
Tree Group, the Shumuk Group and Pembe Flour Mills, which have ori-
gins going back several decades and have developed expertise in specific
industrial sectors.
The three main domestic investment groups are Crystal Ventures,
Horizon and Rwanda Investment Group. The Crystal Ventures Group, the
largest investment group in Rwanda, started in 2009, building on the as-
sets of another local investment company that had started in 1995. Besides
investments in four manufacturing firms, Crystal Ventures currently has
investments in NPD Contraco (one of the largest construction companies
in Rwanda), MTN (the largest mobile phone operator), Real Contractor
(construction and real estate development), Intersec (security services),
Graphic Print Solutions (printing and publishing), Media Systems Group
Limited (media) and Bourbon Coffee (a coffee chain). The Horizon Group
was started in 2007 by the Ministry of Defence and is currently owned
MAIN FINDINGS 53

by Zigama CSS, a microfinance cooperative bank, and MMI, the Military

Medical Insurance. Its main investment areas, besides Sopyrwa, include
construction (Horizon Construction) and logistics (Horizon Logistics),
but the company also has stakes in real estate development through Gacu-
liro Property Developers and fibre-optic infrastructure and maintenance
through Green Horizon. The Rwanda Investment Group (RIG), another
major domestic investor, was created in 2006. Its main investment area,
besides Cimerwa, is in the energy sector through the Peat Energy Com-
pany (PEC) and the Rwanda Energy Company (REC).
The fact that domestic investment groups are young and have only re-
cently entered the manufacturing sector suggests that they have yet to re-
alize the full potential of intra-group synergies. As recent restructuring
efforts reveal, these companies are still in the process of developing and
putting in place effective management systems to leverage and centralize
various functions – such as marketing, human resource management and
management information systems – that can lead to economies of scale
across the group. Moreover, given their limited experience in manufactur-
ing, domestic groups are not yet in a position to draw on internal resources
and technical expertise in the same way regional or international groups
do. This explains why they have had to attract external expertise for their
operations, in particular, foreign managers and technicians.
To leverage financing, share the burden of risk, deepen ties within
certain value chains or attract foreign investment, groups in Rwanda’s
manufacturing and agribusiness sectors have also entered joint-ventures
or joint-ownership agreements. These initiatives have taken a variety of
forms and have involved many players, from cooperatives to domestic
groups, foreign investors and institutional investors. Examples of some of
these joint initiatives, which highlight the increasingly important role of
institutional investors such as the Rwanda Social Security Fund, are listed
in Table 2.4.

2.4  Main Findings: Products

Despite their small size, Rwanda’s manufacturing and agribusiness sectors

are relatively diverse from a products perspective. Diversity is the result
of (i) path dependency and economic decisions that were taken decades
ago; (ii) the structure and scattered nature of production in these sectors;
and (iii) the fact that, to survive, smaller firms in particular have had to
diversify their product range and production lines. While product diver-
sity is relatively high (see Figure 2.6), the products Rwanda manufactures
are not very complex in terms of the specific competencies, inputs, ma-
chinery and infrastructure they require. As can be seen in Table 2.5, these
include products in the light manufacturing sector (basic construction
54 CHAPTER 2

Table 2.4  Examples of joint ownership by groups in

Rwanda’s manufacturing and agribusiness sectors.
 Investment Year  Shareholders   Main objective
Bugarama, Gikondo, 2006 ICM Agribusiness The purchase of
Rwamagana 2008 Rwanda (60%), Rice three rice mills and
rice mills cooperatives (40%) the strengthening of
integration in the rice
value chain
Building Materials 2009 Rwanda Social Security Leverage funding and
Investments Fund, pooling risk for new
Crystal Ventures Group ventures in the con-
and struction materials
the Horizon Group sector, based on
locally available raw
materials
Cimerwa 2011 Government of Rwanda Secure US$135m loan
(30.6%), Rwanda Social from the African
Security Fund (37.5%), Development Bank
Rwanda Development to fund new cement
Bank (8.5%) and RIG plant
(21.2%)
Tea Group 2011 Rwanda Mountain Tea Leverage funding and
Investment (50%), Jay Shree Tea & expertise to purchase
Company Industries (50%) and manage tea fac-
tories in Rwanda

materials, furniture, textiles and other basic fast moving consumer goods)
and low-value-added activities in the agribusiness sectors (mostly mill-
ing activities for staple crops and export crops, dairy and beverages). Cur-
rently there is no manufacturing of confectionery products (Sulfo Indus-
tries and Adma International have stopped their confectionery activities
in Rwanda), frozen food products, processed and packaged meat, rubber
products, glass, pharmaceutical products, chemical products (other than
paints), electronics, machinery or transportation vehicles.

2.4.1  The Dynamics of Diversification in Rwanda’s Manufacturing and

Agribusiness Sectors
History. As described earlier, history has played an important role in shap-
ing the output of Rwanda’s manufacturing sector today. Coffee and py-
rethrum, for example, were introduced in the late 1930s by the colonial
administration; tea in the 1950s by European and Asian investors; beer
at the time of independence following investments by the Belgian-owned
Bralima; and sugar and rice in the 1960s, supported by loans and tech-
nical expertise from China. The import substitution strategy adopted by
MAIN FINDINGS 55

Figure 2.6  Word cloud representing the products of

Rwanda’s agribusiness and manufacturing sectors.

government in the 1970s and 1980s also played an important role. While
public enterprises in the manufacturing and agribusiness sectors might
have lacked efficiency, they did mark the very beginning of Rwanda’s mill-
ing, export crop and construction sectors. The majority of facilities that
were set up at the time are still in use today. Lastly, the success of East
Africa’s Asian community in the manufacturing sector, crises in neigh-
bouring countries and the end of the 1994 genocide led to the transfer of
knowledge and new inbound investments into Rwanda from the region.

Structure of the manufacturing and agribusiness sectors. Diversification

is also a function of the current structure of the manufacturing and agri-
business sectors, in which production is scattered across products, with
little or only nascent competition within certain product categories. New
entrants have focused on products with no incumbents, thereby becom-
ing “pioneers” in their specific sector. Sugar, textiles, shoes (at an indus-
trial scale), soaps, cosmetics, batteries, tobacco, pyrethrum, granite and
reinforced steel for the construction sector (rebars) are examples of prod-
uct categories where there is, at the time of writing, only one domestic
producer. In several other subsectors, increased competition is very recent,
for example, Brasserie des Mille Collines, Bralirwa’s only competitor in
the beer market, started in 2009; Bakhresa Grain Milling, which is P ­ embe
Flour Mills’s only real domestic competitor in the wheat flour market,
56 CHAPTER 2

Table 2.5  The products of Rwanda’s

manufacturing and agribusiness sectors.
 Sector  Products
Coffee Specialty arabica coffee, ordinary arabica coffee
Tea CTC black tea, green tea, white tea, silver-tip tea,
organic tea, orthodox tea
Staple crops Flour (wheat, maize, cassava, sorghum), sugar, rice, by-
products of the milling industry (wheat pollard, maize bran,
maize grits, sugar molasses), maize-based porridges
Dairy products Milk, yogurt, cream and cheese
Other food Chilli-pepper sauce, tomato paste, dried fruits and
processing vegetables, packaged nuts, biscuits, packaged bakery
products (bread, doughnuts, etc.)
Specialty plants Refined pyrethrum extracts, pyrethrum-based crude
oleo-resin, pyrethrum marc, processed tobacco/cigarettes,
essential oils
Beverages Beer, traditional alcoholic beverages (e.g. banana wine),
soft-drinks, fruit juices, drinking water
Construction Cement, galvanized and corrugated roofing sheets, metal
materials tubes, PVC tubes, metallic frames, gutters, nails, wire, clay
bricks and tiles, granite, rebars for the construction sector,
paints
Plastic products Tanks, mobile toilets, septic tanks, drums, chairs, shoes
Fast moving Batteries, hand-wash, soaps, cosmetic products, cleaning
consumer goods detergents, napkins, toilet paper, sanitary pads, candles,
kitchen utensils, tin containers, corrugated cartons
Furniture and Wood furniture, metallic furniture, aluminium furniture,
mattresses foam mattresses, blackboards
Textiles Finished garments, finished fabrics

started activities in 2011; the Kigali Cement Company, which is ­Cimerwa’s

only domestic competitor in the cement market, started in 2007; Trust
Industries, the only domestic competitor to Sulfo Industries in the deter-
gents market, started in 2008. While this is an important development for
Rwanda’s manufacturing and agribusiness sectors, incumbents in these
markets continue to hold a significant market advantage; Bralirwa’s share
of the beer market is estimated to be about 90%, compared with 95% for
Cimerwa in the cement market (excluding imports) and an estimated 75%
for Pembe Flour Mills in the wheat flour market. This lack of competition
in several product markets suggests that one of the main drivers of diver-
sification in Rwanda’s manufacturing and agribusiness sectors has been
new product discovery towards new production areas where there were
no incumbents.
MAIN FINDINGS 57

In the few markets where domestic competition is greater – namely, in

the steel-based construction materials, paints, paper products, furniture
and water-tanks markets – diversification has happened organically or by
default to ensure survival. A good example of organic diversification is the
case of Ameki, which operates across the paints, furniture and w ­ ater-tanks
sectors. Ameki started as a producer of wooden furniture products in 1982.
To offer a more complete range of products to clients, the company decid-
ed to explore the possibility of also selling varnishes and wood glue. Given
that varnishes and paints are intricately related – both in the production
methods and the inputs they require – Ameki also started producing
paints, leading to the establishment of Ameki Color in 1984. Furthermore,
given that the raw material used to manufacture paints (polyester resin)
can also be used to make fibreglass products, the company eventually ac-
quired the expertise and machinery to manufacture fibreglass tanks and
sheets and subsequently established Ameki Tanks in 1995.
This organic diversification is only possible in products that are closely
linked in terms of the technology, expertise and the inputs they require.
Firms in the coffee, tea, and staple crop sectors, which require very specific
expertise and machinery that are not easily transferable to other products,
tend to be less diverse. The raw material for tea production, for example,
is tea, and the machinery used to process tea only suits tea production;
the same goes for coffee, rice, sugar, wheat flour and maize flour. Firms in
Rwanda’s tea, coffee, sugar, wheat, maize and rice sectors only make one
product.

Diversification as a means of survival. For many firms, especially smaller

firms in competitive markets, diversification has also been a means of
survival. This survival happens in two ways: (i) by upgrading products
and keeping up with competition; and (ii) by diversifying risk. A good
example that illustrates both of these dynamics at play is Uprotur. Uprotur
started producing simple galvanized roofing sheets in 1996. Following the
entry of Ufametal into the market in 2001, Uprotur decided to introduce
Pre-Painted Galvanized Iron (PPGI) sheets in 2003. Furthermore, Upro-
tur enhanced its simple galvanized sheets by introducing a new produc-
tion line to manufacture corrugated sheets to combat competition from
an incumbent, Tolirwa, and the new entrant, Ufametal. Through this com-
petitive diversification process, Uprotur’s initial product – simple galva-
nized sheets – had acquired two more attributes: colour and corrugation.
This enabled Uprotur to offer a more complete range of products and to
compete with its competitors on the thickness of the roofing sheets, their
shape and colour.
As the example of the roofing sheets sector and Uprotur suggests, risk
mitigation is also a key driver of diversification. The roofing sheets market
suffers from two major problems: the seasonality of demand (roofs tend to
58 CHAPTER 2

be installed in the dry season only) and difficult access to raw materials,
in particular, cold-rolled coils, which take months to import and are ex-
tremely costly to transport. Due to low demand and/or delays in sourcing
the raw material, the machinery is often at a standstill, which results in low
capacity utilization and burdensome fixed costs. To overcome this prob-
lem, Uprotur decided to further invest in diversifying its product base: the
company introduced PVC tubes in 2001, purchased a foam factory in 2006,
started producing nails in 2007 and installed a production line for metallic
wiring in 2008. This has enabled Uprotur to avoid standing idle even when
demand for a certain product was low.
Many firms in Rwanda’s manufacturing sector follow a similar ap-
proach. In the construction sector, firms such as Tolirwa, Ufametal and
Simaco are also highly diversified in similar product areas (nails, barbed
wire, gutters, etc.). The owners of Ufametal, Simaco and Amagerwa (all
construction materials firms) even own foam mattress companies, just like
Uprotur. Small firms in the food-processing and beverages sectors, such
as Urwibutso, Agro-Processing Industries and Shekina Enterprises, are
also highly diversified: Urwibutso makes everything from juices, wines,
water, chilli pepper, peanuts, to flour and bricks; Agro-Processing Indus-
tries deals with dairy, crops (maize, soya, cassava, pineapples, mangoes),
coffee and sericulture; Shekina Enterprises, despite its small size, makes
dried fruits and vegetables, cassava flour and traditional drinks. Trust
Industries, which competes with Sulfo Industries on detergents, started
producing paper products (toilet paper) just a couple of years after begin-
ning operations. Another recent entrant into the paper products industry
is Afri­foam, a foam mattress manufacturer owned by Simaco, the con-
struction materials firm mentioned above. Anik Industries, another rel-
atively small-scale manufacturing firm with a turnover of US$1–2m, also
competes in the paper market. It also produces napkins, candles and nails.
Firms owned by larger groups do not need to diversify as much as
smaller Rwandan firms to mitigate risk (as they are supported by large
and often very diversified groups). Instead they have more leeway to invest
in increased specialization and sophistication. In the construction sector,
for example, the only firms that are not highly diversified are owned by
larger groups and include Safintra, SteelRwa, Cimerwa, the Kigali Ce-
ment Company and most recently East Africa Granite. Safintra, which
is owned by the Safal Group of companies, is able to offer a better ser-
vice and ­higher-quality roofing sheets as a result of this specialization; its
­order-to-delivery time is significantly lower than competitors as it sources
its raw materials from sister companies in the region, and its roofing sheets
product range includes Dumusaz, roofing sheets with a mixed coating of
aluminium and zinc alloy that are much more durable than the normal
galvanized sheets in the market. While most firms owned by larger groups
in Rwanda are highly specialized, low diversification in these firms is also
MAIN FINDINGS 59

the consequence of the sectors they tend to operate in, namely tea, coffee
and staple crops, which as discussed above are not very diverse.

2.4.2  The Dynamics of Increased Value Addition and Sophistication in

Rwanda’s Manufacturing and Agribusiness Sectors

Although the current level of product sophistication in Rwanda is compar-

atively low, firms have been actively investing in gradual – and sometimes
radical – improvements in the quality and complexity of their manufac-
tured products. Increased value addition in Rwanda’s manufacturing and
agribusiness sectors has taken several forms.

Packaging. In some cases, the innovation that led to increased value addi­
tion has simply been packaging. A good example is the case of Sorwatom,
producer of one of the most straightforward products on the market,
tomato paste, for which the only ingredients are tomato, water and salt.
Sorwatom used to package its tomato paste in tins, but shifted to small
70 g aluminium packets, which are more practical for consumers (smaller
quantities, easier to conserve), upgrade the feel and aesthetic of the prod-
uct and are cheaper to produce. All this entailed was the purchase of new
packaging equipment, a pasteurizing machine and a cooling and drying
unit. Another example is Inyange Industries, which recently purchased
state-of-the art packaging equipment from Tetra Pak and Krones, ena-
bling it to conduct all packaging in-house, provide better protection and
much more flexibility with the shape and size of its packaging, which can
be better tailored to the needs of customers.

Design. Improved design has also been the source of value addition. A good
example is Ruliba Clays. Clay products for the construction sector, blocks,
bricks, roofing tiles, etc., are not yet very well embedded in Rwanda due to
low customer awareness about the costs and benefits of clay construction
materials. Ruliba Clays is investing significant resources to change this, fo-
cusing in particular on increasing the variety of shapes, sizes and designs
available to customers, as well as increasing the practical value of these
products, which can be used for decoration, ventilation and partitioning.
Ruliba Clays offers multiple designs for each of its main products, includ-
ing blocks, bricks, roofing tiles, pavers, maxpans/hourdis and floor tiles.
Materials. The use of better or different materials has also been a driver
of innovation in some sectors. A good example to illustrate this point is
Manumetal, Rwanda’s oldest furniture manufacturer, which started in
1967. While Manumetal had a dominant position in the metal furniture
market until the early 1990s, its position gradually started to erode with
the entry of new players and high competition from imports. Manumetal
then moved into the production of wood furniture, but again faced steep
60 CHAPTER 2

competition from established companies and cheap imports. In 2000, fol-

lowing a change of ownership, it purchased an aluminium unit, which
­enabled it to diversify into aluminium furniture but also aluminium
frames for windows, doors, partitions and, most recently, blackboards. As
a result, the move to aluminium has positioned Manumetal as a strong
player in Rwanda’s growing office furniture market.
Quality control and certifications. Improved quality control, often moti-
vated by tighter oversight by the Rwanda Bureau of Standards (established
in 2002) and the quest to qualify for certain quality certifications (e.g. ISO),
is having a very significant impact on Rwanda’s manufacturing and agri-
business sectors today. An increasing number of companies are receiving
ISO certifications, either for Quality Management or Food & Safety Man-
agement Systems. Examples of ISO-qualified companies include Bralirwa,
Inyange Industries, Sulfo, Sorwathé and Utexrwa. In the coffee and tea
sectors, in particular, companies are quickly moving towards receiving
quality, sustainability or organic production certifications. The compa-
nies with more certifications are Sorwathé in the tea sector (ISO, Fair-
trade, Rainforest Alliance, Ethical Tea Partnership and Rwanda Bureau
of Standards certified) and Rwacof (CAFE, 4C, Fairtrade – forthcoming at
the time of writing). As discussed in the section on firms owned by large
groups, the latter have also been investing in labs to test the quality of their
products.
Technological leaps. Improvements in value addition have also come from
technological leaps, which often come at the start-up stage or when com-
panies are taken over, leading to new capital investments. An example
of a company that has undertaken such a leap is SteelRwa, which argu-
ably produces the most complex product in Rwanda today. SteelRwa’s re-
inforced bars for the construction sector (or rebars) are produced using a
­t hermomechanically treated (TMT) process. It is an intensive process that
requires careful monitoring as it involves extremely high temperatures fol-
lowed by intense water pressure, and results in a steel bar that has a strong
external layer and a ductile core. This gives TMT bars a certain number
of advantages, including better corrosion resistance, better ductility and
bendability, good wieldability and as a result increased safety.

Branding. A factor not related to production that has had an impact on

increased value addition is branding. A good illustration is Urwibutso, a
food-processing company. Urwibutso has developed famous brands that
convey sentiments and symbols that are widely recognized throughout
the country. Examples include urwibutso, which means “a memory”;
agashya, which means “innovation”; akarusho, for all its alcoholic prod-
ucts, which means “better than the rest”; and finally, akabanga, for the
famous ­chilli-pepper sauce, which means “small secret”.
MAIN FINDINGS 61

2.5  Main Findings: Systems

In the absence of detailed financial information and production data, a

useful aggregate indicator of firm-level performance is the level of capacity
utilization. Based on the interviews conducted as part of this study, low
capacity utilization seems to be a systemic issue within Rwanda’s manu-
facturing and agribusiness sectors, with about half of the firms interviewed
operating at below 50% of their installed capacity. While excess capacity
is a common feature for manufacturing firms even in the most developed
nations – for example, in the United States current capacity utilization is
about 79% (Federal Reserve, July 2012), in Canada 81% (Statistics Canada,
1st quarter 2012) and 80% in the Eurozone (European Commission, June
2012) – the significantly lower levels of capacity utilization in Rwanda’s
manufacturing and agribusiness sectors signal that industrial production
is likely to be hampered by many underlying and potentially binding con-
straints. Constraints that can lead to low capacity utilization include issues
related to the sourcing of raw materials, losses due to faulty machinery
or the unreliable provision of electricity or water, high factor costs, de-
mand-related issues (low demand, seasonal demand or the volatility of
demand), management shortcomings, skills shortages and low access to
finance (for skills and finance, please see section on resources below).
In this section we argue that the most binding constraint for firms
in Rwanda’s manufacturing and agribusiness sectors today is access to
raw materials both domestically and from abroad. Our reasoning is that
(i) many firms face real supply issues that have had a significant impact on
capacity utilization; (ii) firms are increasingly investing in upstream activ-
ities, which is reflective of the fact that they are actively trying to alleviate
their supply constraints; and lastly (iii) there is sufficient reason to believe
that other constraints are comparatively less binding, although it is not
possible to formally exclude or favour one constraint over another based
on existing available data on the manufacturing and agribusiness sectors.

2.5.1  Many Firms Face Real Supply Constraints Leading to

Low Capacity Utilization

Based on available data, the supply of raw materials is a challenge for

manufacturing and agribusiness firms across the board, but in particu-
lar in the staple crops, specialty plants, food-processing, dairy and con-
struction materials subsectors. The type of supply constraints firms face
are subsector – and firm – specific, but can be grouped into the following
categories.

Supply shortages in the domestic market. Low supply has been a major
constraint for firms such as Kabuye Sugar Works (sugar), Minimex
62 CHAPTER 2

(maize), Inyange Industries (dairy), Sopyrwa (pyrethrum), Sorwatom (to-

mato paste), the Premier Tobacco Company (cigarettes), SteelRwa (rebars)
as well as processors in the rice, tea and coffee sectors. Supply shortages
arise due to a variety of factors: in the coffee sector, for example, the prob-
lem is excess demand combined with natural cyclical fluctuations; in the
sugar sector, limited land availability combined with high vulnerability to
flooding; in the tea sector, low productivity in areas surrounding industri-
al blocks; in the scrap-metal sector, which is the key input for reinforced
steel bars for the construction sector (rebars), the problem is excess de-
mand in East Africa. To overcome domestic shortages some firms have
permanently or temporarily switched to imports. Sorwatom, for example,
which until recently could only rely on sufficient fresh tomatoes during
one out of three annual harvests, temporarily switched to importing
semi-processed tomato paste from China as a stop-gap solution. In other
sectors, where the raw material cannot be transported over long distances,
such as the sugar, rice, pyrethrum, tea and dairy sectors, supply shortages
directly translate into reduced capacity utilization.
The low and irregular quality of domestic supply. The quality of domestic
supply is particularly problematic for crops such as wheat, maize, tomatoes,
coffee and tea. These crops are very vulnerable to variations in climatic
conditions, pests, diseases, the lack of fertilizer, and pre- and post-harvest
handling. Examples of how the low quality of raw materials has affected
firms include the cases of Pembe Flour Mills and Bakhresa Grain Milling,
which cannot use domestic (or regional) wheat for their flour milling oper-
ations as it lacks sufficient quantities of protein and wet gluten; Sorwatom,
which loses a large share of its tomato supply because the fresh tomatoes
have been damaged by bad post-harvest handling and transport; or Mini-
mex, which has had to import maize from Uganda to supply quality maize
grits to Bralirwa, for which it is the sole domestic supplier.
Inadequate domestic supply. Related to the issue of quality, one could
argue that the lack of certain “export-grade” varieties of crops, fruits
and vegetables has prevented some industries with high potential from
developing altogether. One good example is the avocado-packaging sec-
tor. While Rwanda is a relatively large producer of very high quality avo-
cadoes for which it has the perfect agro-climatic conditions, the avocadoes
Rwanda produces do not suit the preferences of European and American
consumers, who prefer the Hass and Fuerte varieties. The seedlings for
these “export grade” varieties are more costly and not readily available on
the domestic market, leading to little uptake from smallholder farmers
(Monitor Group 2012).
The structure of domestic supply markets (or lack thereof). The structure
of domestic supply markets has led to supply shortages or irregular supply
MAIN FINDINGS 63

in several sectors, including, for example, the milk and clay products sec-
tors. In the dairy sector, the vast majority of milk produced by farmers
makes its way to the final consumer (without being pasteurized) through
informal vendors rather than through the more structured process in-
volving equipped milk collection centres (MCCs), which test and cool the
milk, and milk processors such as Inyange Industries, Masaka Farms and
Nyanza Dairy. One of the main constraints preventing the development
of a more structured process is the lack of MCCs, shortcomings in the
management of MCCs and competition from the informal sector, which is
well established and offers a cheaper, albeit raw, product to the customer.
For Rwanda’s largest milk processor, Inyange Industries, this has meant
systemic low capacity utilization over the years, even though the company
is now actively investing in alleviating its supply constraint. Another sec-
tor that has been constrained by the structure of domestic supply markets
is the clay products sector (bricks, tiles, etc.). According to Ruliba Clays,
the largest manufacturer of clay products for the manufacturing sector in
the country, the geographical disparity of raw material sources (namely,
kaolin and clay) and the absence of structured supply chains in the sector
is leading to supply shortages which have the potential of disrupting future
growth.

The high cost of imported raw materials. The high cost of imported raw
materials can lead to low capacity utilization and low productivity through
(i) delays in delivery; (ii) high transportation costs; and (iii) high upfront
payments. Costs associated with importing raw materials disproportion-
ately affect Rwanda’s steel-based construction materials, which relies on
the imports of heavy cold-rolled coils for the production of roofing sheets,
tiles and gutters. It typically takes three to four months, if not more, to im-
port the coils, often leading to lengthy delays in delivery and idle machine
time. Rwanda’s geographic isolation, the lack of a railway link between
Kigali and the port cities of Mombasa or Dar es Salaam and limits on the
maximum permissible truck-load are also contributing to high transpor-
tation costs that significantly reduce the sector’s ability to compete with
finished imported products from the region and overseas. Delays and high
transportation costs also come with high upfront costs and payments to
satisfy the import guarantees and demands of foreign trading partners
(see, for example, Société Rwandaise de Chaussures).

2.5.2  Firms Are Actively Investing in Overcoming Their Supply

Constraints

According to the growth diagnostics literature, one way of verifying

whether a constraint is potentially binding or not is to look for evidence
that firms are investing significant resources towards overcoming or
64 CHAPTER 2

circumventing the constraint (Hausmann et al. 2008). We see this hap-

pening in Rwanda’s manufacturing and agribusiness sectors in relation
to the supply of raw materials. One of the most notable trends transpiring
from our interviews is that firms are increasingly investing in upstream
activities to alleviate their supply constraints.

Coffee. In the coffee sector, for example, coffee processors and exporters
are actively broadening the scope of their activities, moving from their
core activities of dry milling and marketing processed coffee to also man-
aging wet mills (the majority of which are, at the time of writing, owned
by farmer cooperatives) and providing extension services to farmers and
co­operatives. By moving upstream, coffee processors are trying to solve
two key problems: low capacity utilization in wet mills and shortcomings
in pre- and post-harvest handling methods. Coffee Business Center (CBC),
for example, one of the largest exporters in the country, fully owns two wet
mills, with an equity stake in another four, and is planning to expand its
network of wet mills to eight by the end of the year. Rwanda Trading Com-
pany (RTC), the third-largest exporter in the sector today, is also moving
upstream by (i) entering into exclusive supply contracts with approximate-
ly forty wet mills in return for financial, technical and marketing assis-
tance; and (ii) by purchasing a wet mill of its own. Firms, with the support
of NGOs such as TechnoServe, are also exploring new business models
targeted at creating the right incentives for farmers and cooperatives to
produce high quality coffee. One example of this is Kivu Arabica Coffee
Company, which is trying to promote a service delivery model to farmers
and cooperatives that consists of providing a service to cooperatives in
exchange for a fee. Typically, these services would include a line of work-
ing capital for farmers at the beginning of the coffee season, management
support at the wet mill, dry milling, quality control and the marketing and
exporting of the final product.

Maize. Another sector where firms are actively exploring ways to engage
in upstream activities is the staple crops sector. A good example is Min-
imex, which has set up two innovative new ventures aimed at alleviating
its supply constraint. The first, started in 2005, is called BraMin and is a
JV between Bralirwa and Minimex. The objective of BraMin is to develop
high quality maize production in experimental mechanized farms and ex-
tend the benefits to neighbouring areas through an out-­grower scheme.
500 farmers are currently supported by BraMin on the use of high yield
varieties, the lease of modern equipment, training and sales guarantees.
Minimex’s second subsidiary is called ProDev. ProDev runs a modern
maize drying and storage facility and sells a service to farmers, which is
to dry and store their grain at a certain cost, or to sell directly to Minimex.
This service brings Minimex closer to maize farmers and co­operatives.
MAIN FINDINGS 65

Lastly, Minimex is currently experimenting with what is called a “warran-

tage system” in the Nyagatare district. Under this system, farmers safely
store their produce in a warehouse and wait for the right time to sell their
produce on the market. Because the maize is stored, financial institutions
are willing to give loans to farmers at attractive rates using the grains as
collateral. Securing buyers is not a problem for the farmers, as demand
outstrips supply and because Minimex and the World Food Programme
(WFP) are cooperating with the farmers participating in this scheme.

Rice. ICM Rwanda Agribusiness has opted for joint factory ownership
with producer cooperatives. The three rice mills owned by ICM Rwanda
Agribusiness are JVs between ICM Rwanda and rice cooperatives, with
ICM taking a 60% stake and the cooperatives a 40% stake. This setup cre-
ates strong incentives for cooperatives to ensure the mills are successful
and gives them a stake in strategic decision-making.

Dairy. To alleviate supply constraints, Inyange Industries has signed a sup-

ply contract with the Nyagatare Farmers’ Union for a minimum of 35,000
litres a day, while simultaneously purchasing the Savannah Dairy located
in Nyagatare District (March 2012). By bringing facilities closer to pro-
duction areas and by working in direct relationship with farmer unions,
Inyange Industries is aiming to secure more reliable sourcing systems.

Pyrethrum. After being taken over by the Horizon Group in 2008, one of
the main focus areas of Horizon Sopyrwa has been to re-establish firm–
farmer relationships, notably by organizing pyrethrum farmers into co-
operatives, eliminating middle men and by providing various support ser-
vices to farmers (including training, improved clones and free seedlings).
One of the main constraints the firm was facing beforehand was low cap-
acity utilization due to raw material shortages, amplified by the fact that
farmers had been moving away from pyrethrum to other crops.

Construction materials. An example of a firm that is actively seeking up-

stream solutions domestically is the Kigali Cement Company (KCC). KCC
is currently trying to identify limestone deposits in Rwanda to manufac-
ture clinker, which is one of the main ingredients in cement. This would
enable the company to reduce its dependency on imported clinker and
significantly reduce production costs.
Other ways in which firms have been adapting to sourcing constraints
is by purchasing raw materials in bulk and storing them for future use
(e.g. Sulfo Industries), diversifying and regularly rotating suppliers (e.g.
­Rwanda Foam), building lasting relationships with trusted suppliers (e.g.
Uprotur) and in the case of firms owned by large regional groups, pooling
raw material purchases with sister firms in the region (e.g. Roto Tanks).
66 CHAPTER 2

Table 2.6  Cost of electricity in Rwanda and other comparators (2009).

 Country   Cost of electricity
Rwanda US$0.24 per kWh
Kenya, Uganda, Tanzania US$0.1–0.12 per kWh
South Africa US$0.04 per kWh
Source: MINICOM (2011).

2.5.3  Evidence Seems to Suggests That Other Constraints Are Less

Binding

In addition to evidence that firms face very real supply issues and are ac-
tively investing to overcome them, there is sufficient evidence to suggest
that other constraints are less binding.

Electricity supply and the cost of electricity

Rwanda faces a significant energy constraint, in terms of installed capac-
ity, geographic coverage and unit costs, which in 2009 were twice those in
neighbouring Kenya, Uganda and Tanzania (Table  2.6). Although firms
in Rwanda benefit from a more reliable supply of electricity than firms in
the region, it is not surprising that the high cost and limited availability of
electricity have been a major issue for energy-intensive manufacturing and
agribusiness firms, in particular, firms in the construction materials sector
that are large consumers of electricity.
The high cost of electricity has impacted production and capacity utili-
zation throughout the sector by raising the minimum production level at
which running machines is justified and becomes profit making, i.e. econ-
omies of scale only start to kick in once a certain production level can be
guaranteed based on available raw materials or demand. The cost of elec-
tricity therefore exacerbates underlying sourcing or demand constraints,
with firms having to delay production until they can secure the required
amount of raw materials or a minimum order size. In some cases, for ex-
ample, Uprotur’s PVC tubes production line, the cost of electricity makes
production unviable altogether. By raising what we refer to as “minimum
viable production levels”, the cost of electricity has contributed to making
Rwanda’s business environment difficult for smaller manufacturing firms.
The limited supply of electricity – resulting from the fact that installed
capacity in the country remains low – has also led to low capacity utiliza-
tion and limits expansion opportunities for companies with high electrici-
ty consumption. Firms with multiple production lines, such as companies
in Rwanda’s steel-based construction materials sector, often need to rotate
production lines as they do not have enough allocated electricity capacity
to run all the machines at the same time. This leads to idle machine time.
MAIN FINDINGS 67

The insufficient allocation of electricity for companies such as SteelRwa,

which runs energy-intensive activities, also limits future expansion oppor-
tunities. SteelRwa, which is Rwanda’s third-largest electricity consumer,
has an allocated capacity of 3.5  MW, but would require approximately
4.5 MW to run at full capacity.
Rwanda’s electricity constraint has been binding for the manufacturing
and agribusiness sector in several ways:
•  it has put clear boundaries on the geographic distribution of indus-
try in the country, due to limited geographic coverage of electricity;
•  it has made energy-intensive manufacturing or agribusiness activ-
ities difficult to implement in Rwanda, even though the example
of SteelRwa, which entered the market in 2011, suggests that it is
­possible;
•  it has contributed to making the business environment difficult for
smaller firms that have not achieved sufficient scale to overcome
fixed electricity costs; and
•  it has exacerbated demand constraints by increasing the minimum
required order size for viable production, as well as supply-related
issues.
Nevertheless, in our firm-level interviews, the cost of electricity did not
come across as the main constraint to growth in Rwanda’s manufacturing
and agribusiness sectors at this point in time. Potential explanations in-
clude that (i) as a result of the electricity constraint, firms in Rwanda’s
manufacturing and agribusiness sector are operating in sectors that are
comparatively non-energy intensive; (ii) while costs in Rwanda’s electricity
sector are high, losses due to irregular supply and power outages are lower
compared with neighbouring countries; (iii) even though higher electric-
ity costs are passed on to the consumer and reduce the competitiveness of
Rwanda’s products on the domestic market, imports of finished products
face high transportation costs and import duty fees that protect domestic
producers and offset the cost of electricity.

Defective and outdated machinery

While there are examples of firms that had faulty machinery at the time
of the interviews, leading to idle machine time or increased spoilage rates,
ageing and defective machinery are not a binding constraint in Rwanda’s
manufacturing and agribusiness sectors today. The reason is that the vast
majority of equipment and machinery is relatively modern, as large parts
of the country’s industrial sector were rebuilt from scratch following the
1994 genocide. Moreover, as described in the section on ownership, firms
supported by large groups have benefited from significant capital invest-
ments over the past two years, aimed at increasing capacity and upgrading
68 CHAPTER 2

machinery. Nevertheless, maintaining machinery is costly in Rwanda

given the lack of qualified technicians domestically. When machines
break down, foreign technicians have to be brought in and spare parts
imported. This takes time and can lead to lower capacity utilization rates
in the meantime.

Demand-related constraints
Based on the interviews conducted as part of this exercise as well as market
size estimates derived from production and imports data, demand is not
the most binding constraint for Rwanda’s manufacturing and agribusi-
ness sectors today. Rwanda is one of the fastest growing economies in the
world, with a growing middle class and high imports of manufactured
products that directly compete with locally manufactured products. Back-
of-the-envelope calculations based on current production and import data
suggest that Rwanda’s manufacturing and agribusiness sectors currently
underserve local demand by a significant margin (see Table 2.7). A testa-
ment to the latent demand in the domestic market is the quick rise of Pem-
be Flour Mills and Bakhresa Grain Milling, both wheat flour mills, which
in the space of five years became the second and third-largest manufactur-
ing firms in the country, with an aggregate output of more than US$50m
in 2011.
While market size is not what is holding Rwanda’s manufacturing sec-
tor back, demand-related constraints do impact performance in a number
of ways:
•  Low consumer awareness about the comparative benefits of cer-
tain products, such as clay products for the construction sector (see
­Ruliba Clays) or processed animal feed (for which Sopar is the only
domestic manufacturer), are difficult to overcome and require sig-
nificant investments in customer education and advertising.
•  The seasonality of demand for some products (e.g. roofing sheets),
means that machines stand idle for long periods of time, leading to
low capacity utilization.
•  The unpredictable nature of demand for firms which deal with large
orders, such as the construction materials sector or in the water and
sanitation sector (see Aqua-San and Roto Tanks), lead to peaks and
dips in production, which make the management of sourcing raw
materials and human resources difficult.
•  Most firms do not have an established presence in smaller towns
outside Kigali and have to rely on wholesalers for distribution. This
implies that many firms are not aware of customer behaviour and
preferences in these markets, thereby missing out on potential de-
mand for their products.
MAIN FINDINGS 69

Table 2.7  Estimated size of market demand in key sectors (estimates are based
on size of domestic production, imports for domestic consumption, exports and
re-exports).
Estimated Domestic
Estimated domestic production
 Product market size production (% market size)
Sugar US$100m US$10–15m 15
Cement US$90m US$20–25m 28
Bars and rods in non-alloy steel US$50m US$10m 25
for the construction sector
Soaps and cleaning products US$50m US$15–20m 40
Rice US$40m US$10m 25
Cereal flour (e.g. maize, rye) US$30m US$5m 17
Furniture US$25m US$5–10m 40
Garments US$25m US$5m 25
Footwear US$20m US$2m 10

Weak management practices

The cost of weak management practices or the suboptimal organization of
systems and processes is difficult to isolate and quantify. Nevertheless, re-
cent corporate restructuring efforts in many manufacturing and agribusi-
ness firms signal that suboptimal management practice may have borne
significant costs for Rwanda’s manufacturing and agribusiness sectors.
Firms that underwent restructuring efforts between 2008 and today in-
clude: Sopyrwa (2008–9), Ruliba Clays (2009), Manumetal (2010), ­Utexrwa
(2010), Mutara Enterprises (2011), Minimex (2011), Kigali Cement Com-
pany (2011), Inyange Industries (2011) and Cimerwa (2011). This wave of
restructuring, combined with the recent entry of firms supported by large
groups such as ICM Agribusiness Rwanda, Safintra, SteelRwa, ­Pembe
Flour Mills, Bakhresa Grain Milling and Brasserie des Mille Collines,
suggests that professionalization in these sectors is increasing rapidly. In-
creased professionalization has taken the form of:
•  more experienced staff in management and technical positions,
often hired from abroad (see section on resources);
•  a rapid increase in the use of management information systems,
which are becoming increasingly embedded in Rwanda’s manufac-
turing and agribusiness sectors (see Table 2.8);
•  better quality-control systems, with investments in lab facilities and
certification;
•  a greater focus on marketing, consumer research and design.
70 CHAPTER 2

Table 2.8  Examples of firms that currently use

management information systems (non-exhaustive).
Management information system /
Accounting software   Examples of firms
SAP Inyange Industries, Ruliba Clays,
Safintra
Tally Tolirwa, Aqua-San, Roto Ltd
Sage Rwanda Mountain Tea, Pembe Flour
Mills, Premier Tobacco Company
Navision Bralirwa
Orian Bakhresa Grain Milling
Intact Rwanda Trading Company
Attache ICM Rwanda Agribusiness
Other customized systems Rwanda Foam, Sulfo Industries
Source: National Bank of Rwanda (BNR) Annual Reports.

2.6  Main Findings: Resources

In this section we focus on three key findings on resources: (i) the fact that
aggregate employment is comparatively low in Rwanda’s manufacturing
sector; (ii) that skills shortages are a significant constraint for firms, but
that firms are adapting to this problem by hiring foreign staff for manage-
ment and technical positions; and (iii) that access to finance is potentially
a binding constraint for smaller firms in Rwanda’s manufacturing sector.

2.6.1  Human Resources: Aggregate Employment Levels

In terms of employment, we estimate that the 47 manufacturing and agri-

business firms with revenues greater than US$1m contributed about 7,150
full-time factory jobs to the economy in 2011, which corresponds to an
average of about 160 per company.7 While we do not have full data on
casual employment, anecdotal evidence from 21 firms suggests that the
ratio of casual to full-time employees varies a lot by firm, ranging from
0:1 to about 11:1 depending on the company, with a median of 0.92:1 and
an average of 1.34:1. If this average ratio is accurate, total employment in
Rwanda’s largest manufacturing firms would amount to about 17,500 fac-
tory jobs (this does not take into account spillover effects on employment
in agriculture). As a point of reference, this corresponds to just 0.34% of

7 
Note that we can only account for full-time factory jobs as we do not have
reliable data on the number of casual labourers employed at the factory.
MAIN FINDINGS 71

Table 2.9  Largest employers in Rwanda’s

manufacturing and agribusiness sectors.
Reported
full-time
Year employees
Rank  Company incorporated   Main product (2011)
1 Sulfo 1962 FMCG: soaps, 700
cosmetics, deter-
gents, etc.
2 Utexrwa 1984 Textile 600
3 Kabuye Sugar Works 1969/1997* Sugar 550
4 Bralirwa 1963 Beer and soft 528
drinks
5 Sorwathé 1986 Black and green 520
tea
6 Ameki 1982 Paints, furniture, 380
tanks
7 Cimerwa 1984/2006* Cement 262
8 SteelRwa 2011 Rebars 240
9 Ruliba Clays 1988/2002* Clay tiles, bricks, 210
etc.
10 Inyange Industries 1997 Dairy products 195
and beverages
* Year of privatization.

Rwanda’s labour force. These numbers suggest that Rwanda’s manufactur-

ing and agribusiness sectors have significantly higher labour productivity
than the rest of the economy and that, conversely, the industries Rwanda
currently operates in are not very labour intensive.
Out of Rwanda’s 47 largest manufacturing firms in terms of turnover,
there are no companies with more than 1,000 full-time employees, five
companies with more than 500 employees, 18 companies with more than
100 employees, 37 with 50 or more, and 45 with 20 or more (see Table 2.9).

2.6.2  Human Resources: The Skills Gap

From a resource perspective, one of the main constraints firms in Rwanda’s

manufacturing and agribusiness firms face is a skills shortage for technical,
operational and managerial functions. The scale of the problem is exempli-
fied by the fact that approximately three-quarters of the firms interviewed
as part of this exercise have brought in expatriates for senior technical or
operational positions. Most of the firms that do not have foreign technical
72 CHAPTER 2

staff, such as, for example, Uprotur, tend to call on foreign technicians
when problems arise with the installed machinery. Approximately half of
all firms surveyed have foreign general managers, managing directors or
CEOs.
There is an increasing trend to hire East African nationals for manage-
ment and technical positions, with Kenyan managers and accountants in
high demand. This migration is taking place largely as a result of the EAC
Common Market Protocol (signed by Rwanda in 2007) that facilitates the
movement of labour within the five EAC countries by waiving work per-
mit fees for EAC citizens. Another key factor for EAC labour migration
is that firms with parent companies based in Kenya, Uganda or Tanzania
tend to bring in their technical and management staff to help set up oper-
ations in Rwanda, bringing with them years of industry experience and a
deep understanding of operating within the EAC context.
Interestingly, firms that do not have any foreign expatriates on the pay-
roll are typically industry stalwarts and experts themselves. One example
is Mr Rwagasana of Coffee Business Center, who worked in the coffee in-
dustry for 17 years before starting a coffee-processing company that has
become the second-largest coffee processor in the country.
While human resources are a constraint in the sector, the immediate
recourse has been to hire foreign experts to bridge the gap, albeit at an
increased labour cost. This additional human capital cost puts smaller
manufacturing firms at a disadvantage.

2.6.3  Financial Resources: Possibly Binding for Smaller Firms

Financial resources and access to finance are one of the main dividers in
Rwanda’s manufacturing and agribusiness sectors, with firms owned by
large groups on the one side of the spectrum, and firms owned by individ-
ual investors and entrepreneurs on the other. Firms owned by large groups,
which in some cases are US$100m-plus groups, not only have access to
significant internal resources but also have easier access to credit from the
banking sector and alternative sources of financing (e.g. multilateral in-
stitutions such as the International Finance Corporation). On the other
hand, anecdotal evidence suggests that firms owned by individual busi-
nessmen in Rwanda’s manufacturing and agribusiness sectors, which tend
to be smaller on average, have difficulties securing long-term financing
for capital investments and growth. This is partly a supply side problem,
with the banking sector still reluctant to provide loans to SMEs in the
manufacturing sector; but it is also a reflection of the fact that smaller
firms in Rwanda’s manufacturing sector are less profitable and face steeper
management, human capital, electricity, demand and quality constraints.
A quick look at total domestic bank credits to the manufacturing sec-
tor reveals a striking trend: on average, the share of total credit from the
MAIN FINDINGS 73

domestic banking sector flowing towards the manufacturing sector has

been steadily decreasing since 1995, from an average of about 18–19% of
total credits in 1995 to about 8% today (see Figure 2.7). This hints at several
potential dynamics at play: better business opportunities in other sectors,
which have succeeded in attracting a greater share of credits; lower growth
in demand for credit in the manufacturing and agribusiness sectors com-
pared with other sectors; and/or an increasing reliance on internal financ-
ing in firms in the manufacturing and agribusiness sectors. It also suggests
that (i) overall, growth in the manufacturing sector has not been tied to
credit growth; and (ii) if access to credit is a binding constraint for smaller
firms in Rwanda’s manufacturing sector, then this constraint is likely to
have been amplified since 1995 rather than diminished. We do not have
detailed financial data on the credit status of firms in the manufacturing
sector, so cannot formally confirm or reject this hypothesis.

2.7  Main Findings: Exports

2.7.1  Manufactured Product Exports (Excluding Export Crops:

Tea, Coffee and Pyrethrum)

Firms in Rwanda’s manufacturing and agribusiness sectors are not export

oriented, with only a small share of sales coming from exports: 9.1% in
2011 (when excluding export crops). This corresponds to total exports in
these sectors of about US$32.2m, which equates to just 0.5% of GDP or
17.4% of Rwanda’s total exports of merchandise products (i.e. non-service
exports). Manufactured product exports are nascent in Rwanda, possibly
due to (i) the historically low export orientation of the sector; (ii) the fact
that there is a lot of unmet demand domestically, which means that for
many firms exporting is not yet a priority; and (iii) the fact that many firms
in Rwanda’s manufacturing and agro-processing sectors might not yet be
in a position to compete in regional and international export ­markets.
The main products exported by Rwanda’s manufacturing and agribusi-
ness sectors in 2011 were products of the wheat milling industry (estimat-
ed US$13.2m), beer and other beverages (estimated US$9.5m), steel-based
construction materials and cement (estimated US$5.6m), FMCG such as
cosmetics and soaps (estimated US$1.5m), plastic products (estimated
US$0.7m), textiles and furniture (estimated at about US$0.2m each).
At the moment, only four firms in Rwanda’s manufacturing and agri-
business sectors have an export orientation of more than 25%, and 10 firms
have an export orientation of more than 10% (excluding export crops). The
most export-oriented firm in these sectors is Société Rwandaise de Chaus-
sures (SRC), which exports the vast majority of its plastic shoes to Burundi.
One of the reasons a company like SRC is able to export about 70% of its
74 CHAPTER 2

21
19

% of total credit
17
15
13
11
9
7
1996 1999 2002 2005 2008

Figure 2.7  Credit to the manufacturing sector (% total credit, 3-year

moving average). Source: National Bank of Rwanda (BNR) Annual Reports.

output to Burundi is because its founder – Mr Sano – spent 32 years work-

ing in the shoe sector in Burundi before moving to Rwanda. This experi-
ence enabled him to get to know the shoe market in Burundi ­inside-out
and to establish relationships with distributors in the country. It is not
a mere coincidence that out of all the firms in Rwanda’s manufacturing
sector, SRC is the one with the highest export orientation (see Figure 2.8).
While the story of SRC is just a one-off example, it does underline one very
important fact: that knowledge of the market in destination countries and
relationships with established distributors matter.
Excluding export crops, there were only eight firms in the manufac-
turing and agribusiness sectors that exported more than US$1m in 2011
(see Table 2.10). The largest among these was Bakhresa Grain Milling, fol-
lowed by Bralirwa, SteelRwa, Pembe Flour Mills and Brasserie des Mille
Collines. We estimate that
•  88% of manufactured product exports were made by firms owned
by large groups;
•  54% by firms owned by regional groups;
•  92% by firms with an annual turnover of more than US$5m; and
•  86% by firms that are specialized in their area of operation (i.e. oper-
ate within one or two product categories only).
These figures confirm the big divide between larger and smaller firms in
Rwanda’s manufacturing and agribusiness sectors, even though the exam-
ples of SRC or other exporters such as Rwanda Plastic Industries, suggest
that smaller firms can also participate in the exports market.
One fact that illustrates just how important these large firms are for
Rwanda’s manufactured-product exports sector is that according to avail-
able data manufactured-product exports increased by more than 60% be-
tween 2010 and 2011 after the entry of two regional firms into Rwanda’s
exports sector, namely SteelRwa and Bakhresa Grain Milling. In the space
MAIN FINDINGS 75

SRC
Bakhresa Grain Mills
SteelRwa
KCC
Master Steel
BMC
Rwanda Plastic Industries
Inyange
Roto
Sulfo
Aqua-San
Pembe
Mutara
Bralirwa
Utexrwa
Ufametal
Ruliba Clays
0% 10% 20% 30% 40% 50% 60% 70% 80%

Figure 2.8  Export orientation of manufacturing

firms (2011). Source: interviews.

of a year, Bakhresa Grain Milling has become Rwanda’s largest export-

er, while SteelRwa has become the third largest, contributing a combined
US$14m to Rwanda’s export package. Before SteelRwa and Bakhresa Grain
Milling started operations, the average export orientation of the sector was
just 4.5% (2010), compared with 9.1% today (Gathani and Stoelinga 2012).
The examples of S­ teelRwa and Bakhresa Grain Milling also underline an
important fact for policy makers to take into consideration, which is that
large East African groups invest in Rwanda with an eye on exports to the
region, as well as the domestic market.
One of the most defining features about Rwanda’s manufacturing and
agribusiness exports sector today (excluding export crops) is that an esti-
mated 99% of exports go to the DRC and EAC regions according to 2010
data. On average, between 2008 and 2010, 53% of manufactured exports
went to the DRC, 23% to Burundi, 8% to Kenya, 3% to Uganda, 1% to Tan-
zania and another 1% to other destinations (Gathani and Stoelinga 2012).
With the entry of B ­ akhresa Grain Milling and SteelRwa, the balance is
likely to have shifted even more in favour of the DRC. Back-of-the-enve-
lope calculations suggest that in 2011 an estimated 75% of manufactured
export went to the DRC (estimated US$22.2m), compared with 16% for
Burundi (estimated US$4.9m) and a total of 9% for Kenya, Uganda and
Tanzania combined (estimated US$2.5m).
76 CHAPTER 2

These findings suggest (i) that at this point in time the eastern DRC and
Burundi markets are the only markets where the products of Rwanda’s
manufacturing and agribusiness sectors can compete (excluding export
crops); and (ii) that there is a significant opportunity to expand exports to
these two markets, as highlighted by the doubling of aggregate exports to
the DRC after the entry of Bakhresa and the fact that many of the firms
interviewed expressed a keen interest in expanding exports to Burundi
and the DRC (e.g. Mutara Enterprises, Cimerwa, Ufametal, Kigali Steel &
Aluminium Works, Manumetal, among others).

2.7.2  Exports in the Tea, Coffee and Pyrethrum Subsectors

Exports in the tea, coffee and pyrethrum subsectors, which account for
about 50% of Rwanda’s total exports of merchandise products, are very
different in nature to other manufactured products, which account for
only 17.4% of total merchandise exports. While 99% of manufactured
product exports are exported to neighbouring countries, 99% of tea, cof-
fee and pyrethrum exports are destined for the European and American
markets (Gathani and Stoelinga 2012). Global markets for tea, coffee and
pyrethrum are much more structured than regional markets for manufac-
tured products:
•  they are driven by large international buyers, whereas regional ex-
ports for manufactured products tend to be driven by more personal
relationships with distributors that operate across borders;
•  searching costs are lower given that trading happens in organized
commodity exchanges, such as the Mombasa Tea Auction;
•  they are much more sensitive to variations in quality, whereas mar-
kets for other manufacturing products are more price sensitive;
•  they are more specialized, while markets for other manufactured
products are much more diverse.
Given the more international orientation of the tea and coffee sectors in
particular, it is not surprising that foreign buyers are much more involved
in local production, marketing and exporting. In the same way that local
coffee and tea processors have moved upstream to solve their own raw
material sourcing problems, international buyers have moved upstream by
investing in the local production and marketing of coffee and tea. Rwacof,
for example, is owned by the Swiss Group Sucafina; the Rwanda Trading
Company is owned by Westrock EA Holdings (US owned); Sorwathé by
Tea Importers Inc. (US owned); Pfunda by Imporient (UK owned); Gisovu
by McLeod Russel (from India); the Tea Group Investment Company is
50% owned by Jay Shree Tea and Industries (India). Larger investments
by foreign actors means these sectors are much better placed to compete
MAIN FINDINGS 77

Table 2.10  Largest exporters in the manufacturing and

agro-processing sectors excluding export crops (2011–12).
Cum.
share
Est. of
exports exports
Rank  Firms Products Destinations (US$m) (%)
Bakhresa Grain Wheat
1 DRC 10–12 34.0
Milling flour
DRC, Burundi,
2 Bralirwa Beer 6–7 54.4
Uganda
Burundi, Kenya,
3 SteelRwa Rebars Uganda, South 3–4 64.4
Sudan and DRC
Wheat
4 Pembe Flour Mills Kenya 2–3 71.5
bran
Brasserie des
5 Beer Burundi 1.5–2.5 77.7
Mille Collines
Cosmetics, DRC, Uganda,
6 Sulfo Industries 1–2 82.3
soaps Burundi
Con-
7 Master Steel struction Burundi, DRC 1–2 87.0
materials
Société Rwandaise Plastic
8 Burundi 1–2 91.0
de Chaussures shoes
Burundi, DRC,
Uganda,
Juices and Tanzania,
9 Inyange Industries 0.5–1 93.6
water South Sudan,
Congo-
Brazzaville
Plastic
10 Rwanda Plastics DRC 0.3–0.5 94.6
products
Source: interviews.

in global markets, even though – as we see in the sector and firm profiles
– the constraints coffee and tea factories face are very similar to the con-
straints firms in other agribusinesses have to deal with.

2.8  Summary of Main Findings

The objective of this study is more descriptive than it is prescriptive: it is

to provide policy makers and investors with a detailed understanding of
78 CHAPTER 2

the structure and capabilities of Rwanda’s manufacturing and agribusi-

ness sectors to support the development of more targeted industrial poli-
cies and investments. While many findings and insights in the preceding
sections concern ownership, products, systems, resources and exports, we
choose to highlight three general trends in particular that stand out and
that could prove useful in framing and targeting future industrial policies.
These include (i) the issue of firm size and ownership, and how they impact
firm performance; (ii) access to raw materials; and (iii) export potential in
the Burundi and DRC markets.

Firm size and ownership. What transpires from this entire section is that
firm size matters a lot. Smaller firms in Rwanda’s manufacturing and
agribusiness sectors (which we classify as firms with income levels of
US$1–5m) face a set of very different constraints to larger firms: they have
lower access to long-term finance, are less specialized, face bigger skills
constraints and they do not benefit from economies of scale, which ampli-
fies problems related to high electricity costs, high transportation costs,
irregular demand and low access to raw materials. These resource- and
cost-related constraints have translated into lower profitability and lower
firm survival rates, which is one explanation as to why there appear to be
as many US$1–5m firms as there are firms with annual turnovers above
US$5m, which is surprising given the small size of Rwanda’s manufactur-
ing and agribusiness sectors. The main difference between the two groups
of firms is ownership, with the vast majority of larger firms owned by large
groups (both domestic and international). Support from large groups has
significantly alleviated the finance and human capital constraint for these
firms (in terms of management and technical capacity) and has helped
them specialize, improve quality-control systems and find alternative
solutions to supply side issues. While these firms still face many systemic
constraints to growth, in particular, low access to raw materials, they are
in a much better position to compete than smaller firms.
This has important implications for policy makers. Finding solutions to
the type of problems smaller firms face – namely, resource constraints and
high factor costs – requires long-term investments that often take years
to bear fruit. To ensure high growth in the short term, while at the same
time tackling these long-term problems, policy makers will have to focus
on maintaining an enabling environment for these large firms to operate
in and attracting new large groups into the country.

Access to raw materials. For both smaller and larger firms, access to raw
materials is likely, on aggregate, to be the most binding constraint. Evi-
dence of this problem in most sectors ranges from staple crops, specialty
plants, food processing and dairy to construction materials. Low or diffi-
cult access to raw materials has had a direct impact on firm performance,
MAIN FINDINGS 79

leading to low capacity utilization and increasing production costs. While

certain firms have sought innovative methods to overcome these con-
straints, this supply chain constraint is more binding than other factors
– such as energy, technology, access to finance, demand, skills gap or man-
agement shortcomings – and should be a key priority area for the govern-
ment of Rwanda to focus its efforts on.

Exporting to Burundi and the DRC. On average, firms in Rwanda’s agri-

business and manufacturing sectors are not export-oriented: only two
firms in the country “produce to export” – Bakhresa Grain Milling and So-
ciété Rwandaise de Chaussures – which both export 50% of their output or
more. However, manufactured-product exports have been increasing very
rapidly over the past few years (by more than 40% in 2011 alone), largely
due to two interrelated factors: (i) higher demand for Rwandan products in
Burundi and DRC, which today receive about 75–90% of Rwanda’s man-
ufactured-product exports; and (ii) an increase in investments by large
East African Groups in the country (e.g. S­ afintra, Bakhresa Grain Milling,
Athi River Mining and SteelRwa), which invest in Rwanda with an eye
on exports to the region and, in particular, Burundi and the DRC, which
are more difficult to service out of Tanzania or Uganda. Facilitating trade
between Burundi and the DRC and increasingly attracting large groups
from the East African Community will be critical to the future growth of
the Rwanda’s manufacturing and agribusiness exports sector.
Chapter 3

Coffee

3.1  Sector Profile

3.1.1  Background and Overview

Alongside tea, coffee is Rwanda’s largest agricultural export and second

only to minerals as the country’s largest export, contributing US$68m in
export earnings in 2011 (NAEB 2011). Rwanda is increasingly recognized
as a premium origin among specialty coffee buyers, with growing sales to
the international market, particularly, Europe and the United States. Cof-
fee is grown in all provinces of Rwanda, but coffee farmers are primarily
concentrated in the western and southern provinces (OCIR-Café 2009).
The main coffee-harvesting season takes place between February and June.
The coffee sector in Rwanda today is considered a major success story
given its bedevilled past. In the late 1980s, global coffee prices crashed
and in 1994 war devastated the coffee sector infrastructure, wiping out
what was left of the faltering industry. Nearly two decades later, the coffee
sector has rebounded, with Rwandan coffee winning international compe-
titions and attracting the likes of premium coffee houses such as Starbucks,
Peet’s Coffee & Tea and Intelligentsia. Several factors have been behind
the rebirth of the Rwandan coffee industry, including privatization of the
industry in the late 1990s, the lowering of trade barriers in the sector, the
lifting of restrictions on coffee farmers, encouraging a shift towards fully
washed coffee, international donor funding and technical assistance such
as ­USAID’s SPREAD programme (Sustaining Partnerships to Enhance
Rural Enterprise and Agribusiness Development) and the Bill & Melinda
Gates–funded TechnoServe Coffee Initiative.1 Following the privatiza-
tion process in the late 1990s, over 12 coffee processors and exporters
exist today (owned by cooperatives, Rwandan entrepreneurs and foreign

1 
For a detailed analysis of the transformation of Rwanda’s coffee sector, see
Boudreaux (2010).
82 CHAPTER 3

Table 3.1  Largest coffee exporters (2010).

2010 % of fully % of semi- % of
weight washed washed total 2010
 Company (kg) coffee coffee exports
Rwacof 4,746,660 13%  87% 24%
Coffee Business Center 4,495,200  2%  98% 23%
 (CBC)
Rwanda Trading Company 2,934,360 16%  84% 15%
 (RTC)
ENAS 1,536,000 29%  71%  8%
Coopac 1,019,400 26%  74%  5%
Kivu Arabica Coffee 914,040 33%  67%  5%
  Company (KCC)
KayCo 532,800 36%  64%  3%
Gatare 375,180 21%  79%  2%
Impexcor 300,000  0% 100%  2%
Bufcoffee 277,980 40%  60%  1%

Source: NAEB 2010 Statistics.

investors), and approximately 200 coffee washing stations dotted across

the country.

Products
Arabica coffee comprises 98% of Rwanda’s total production, while robusta
beans represent the remaining 2% of coffee produced. Rwanda produces
both semi-washed (ordinary) and fully washed (specialty) coffee. Semi-
washed coffee is produced when farmers manually process cherries using
hand pulpers, which can result in inconsistent or inferior quality coffee.
Fully washed coffee is processed through centralized coffee wet mills or
washing stations that have the potential to produce very high-quality cof-
fee. Approximately 2% of total coffee produced is roasted and packaged for
local consumption.
In 2010, Rwanda exported nearly 20,000 metric tonnes of green coffee
beans, 78% of which was sold as semi-washed coffee (NAEB 2010). The
share of specialty coffee has increased substantially in the last decade, ris-
ing from less than 1% in 2002 to 22% in 2010 and 29% in 2011. In 2010–11,
Rwandan fully washed coffee sold at a premium of 30–35 cents per pound
over the benchmark NY-C futures market, while ordinary Rwandan coffee
sold at a 19–22 cent discount.2 As such, the move towards specialty coffee

2 
TechnoServe analysis using NAEB export data for 2010 and 2011.
COFFEE 83

led to a 50% increase in the average price of Rwandan coffee between 2006
and 2010.
Furthermore, roasted coffee production has increased from 32 metric
tonnes in 2006 to 330 metric tonnes in 2010, for a total market value of
US$2m, reinforcing the trend towards higher value-added production.
The top 10 coffee exporters are listed in Table 3.1. The majority of export-
ers own their own dry milling facilities and several own wet mills as well.
While the overall trend within Rwanda, encouraged by the ­National
Agricultural Export Development Board (NAEB), is to move towards
higher-value fully washed coffee, the shift towards fully washed coffee has
faced some challenges. As a commodity product, semi-washed coffee has
the advantage that it enjoys a more liquid market with frequent trading.
While fully washed coffee has the potential for higher returns, it involves
more sophisticated sales efforts and is subject to greater risks that hinge
on effective quality control, capacity utilization and costly management.
Consequently, some exporters have been reluctant to pursue fully washed
coffees. At the farmer level, inefficiency or mismanagement at wet mills
in the past has resulted in weak price incentives for selling cherries to wet
mills, slowing down the shift towards fully washing.

Systems
The supply chain for coffee varies based on the type of coffee. For semi-
washed (ordinary) coffee, exporters buy home-processed coffee parchment
from farmers via local dealers and traders, and then dry mill and export
green coffee. In the case of fully washed specialty coffee, exporters rely on
a combination of two strategies: (i) they buy cherries from smallholder
farmers, process them through the wet mill (if they own it), then dry mill
and finally export green coffee; and/or (ii) they buy fully washed parch-
ment from third-party wet mills, dry mill it and export green coffee. More
recently, a Coffee Service Provider model has emerged in Rwanda with
exporters providing dry milling, marketing, financing and/or price risk
management services to cooperatives and privately owned wet mills.
Models that exist in the market include:
•  Rwacof: the largest coffee processor, owned by a Swiss multinational,
buys and processes cherry, and dry mills and exports green coffee.
Rwacof also acts as a service provider for those cooperatives/farmers
who do not have dry milling facilities.
•  Coffee Business Center: a Rwandan-owned coffee processor that
sells the majority of its production to one buyer and also offers dry
milling services.
•  Rwashoscco: a cooperative-led processing company that dry mills
the parchment of its cooperative wet-mill members to export or
roast for local consumption.
84 CHAPTER 3

•  Kivu Arabica Coffee Company: a service provider model that pro-

vides dry milling, marketing and financing services to cooperatives
and privately owned wet mills for a fee, or buys the coffee from the
farmers and exports it under its own brand name.
Rwanda has now developed sufficient capacity to wash almost two-
thirds of all coffee cherry harvested. The number of coffee washing sta-
tions has grown from two in 2002 to nearly 200 in 2011. However, many
of the coffee washing stations that have entered the market are in financial
distress and there is an increasing trend for exporters to move upstream
by purchasing washing stations to compensate for the inefficiencies at that
level. Recently, several private investors and coffee exporters have taken
over unprofitable washing stations with the intention of turning these
businesses around (e.g. Kaizen Venture Partners, Dormans and Rwanda
Trading Company).
Ongoing issues in the coffee sector include the volatility of production
due to the natural cycle of the coffee trees, limited farmer access to fertiliz-
ers, the ensuing underutilization of washing station capacity and the lack
of consistency in the quality of specialty coffee.

Resources
Rwanda’s economy is increasingly diversified but the agriculture sector
continues to be the primary source of livelihood for 90% of the population.
It is estimated that less than 10–15% of the farmers farm coffee but the crop
remains a significant source of export revenue and jobs. The coffee sector
provides livelihoods to approximately 400,000 coffee farming households
(based on the 2009 coffee census) and many more jobs at washing stations,
dry mills and processing and export facilities.
Companies have also been investing significant resources towards hir-
ing cupping specialists, investing in cupping labs and building the cap-
acity of coffee farmers and cooperatives from pre-harvesting through to
washing. Furthermore, several coffee exporters are applying for certifica-
tion programmes such as Starbuck’s Coffee and Farmer Equity (CAFE)
certification, 4C certification and Fair Trade certification, highlighting
the increased competition in the global market for coffee and the need to
develop a stronger knowledge base through trained specialists and certifi-
cation programmes.

Exports
98% of Rwanda’s coffee production is exported to international markets.
Switzerland is the largest buyer of Rwandan coffee. Coffee exports to
Switzerland in 2010 totalled US$26.3m or 46% of aggregate coffee exports
that same year (Gathani and Stoelinga 2012). Current buyers of Rwandan
COFFEE 85

coffee include large Swiss firms (Sucafina, Schluter, Bernhard Rothfos

I­ ntercafé), Belgian firms (Supremo, Rucquoy Freres, N.V. Coffeeteam S.A.,
WBP, Koffie F. Rombouts N.V.), German firms (Hambourg Coffee Com-
pany, Roland Gerken), British firms (Twin Trading Ltd, Falcon Commod-
ities Ltd, Taylors of Harrogate) and American firms (Intelligentsia Coffee).
The majority of these buyers are coffee importers that sell the coffee on
to coffee roasters, often in other destinations. Rwandan specialty coffee
is sold by roasters and/or retailers such as Starbucks, Rogers Family Co.,
Costco, Peet’s Coffee & Tea, Sweet Marias and Sainsbury’s in the United
States and the United Kingdom.

3.2  Coffee Business Center (CBC)

The country’s largest Rwandan-owned coffee-processing company.
Year established 2002
Latest annual turnover (2010–11) US$13–14m
Number of employees (FTE) 26
Main business activity Semi- and fully washed arabica coffee
Export markets Belgium, USA, Japan and Australia

Company Origins
Coffee Business Center (CBC) was started in 2002 by its current manag-
ing director, Mr Jean Paul Rwagasana. Before CBC, Mr Rwagasana had
worked in the coffee industry for 17 years, including 11 years initially in
Burundi, followed by four years as the managing director at the Rwandan
coffee exporter, SICAF, and a year with AgroCoffee. Initially, Mr Rwaga-
sana rented a factory and fabricated his own machinery for dry milling
but subsequently he bought machines from Brazil. In 2004, he moved the
factory to Gikondo and fabricated his own dry mill. Today, CBC owns two
washing stations and has shares in another four. At the time of writing, it
is planning on having eight washing stations in total by 2012, and is nego-
tiating to purchase two other existing stations.
In its first year, CBC exported 29 containers of 320 bags of coffee (556
tons). Peak production occurred in 2006 when it exported 6,300 tons. Cur-
rent production is approximately 4,600 tons. CBC employs approximate-
ly 26 full-time staff, several casual workers and generated approximately
US$12–13m in annual revenues in 2010.

Products
CBC produces both semi- and fully washed coffee. It uses a dry milling
process for its semi-washed coffee, which entails sorting parchment coffee
86 CHAPTER 3

by size, density and colour, and then removing the pulp to reach the final
product, green coffee.
Semi-washed coffee makes up about 90% of CBC’s production (~4,300
tons), while fully washed makes up only about 10% of production (~300
tons). Many washing stations and exporters, including CBC, struggle to
obtain sufficient supply to run their operations at full capacity. The phasing
out of subsidies for fertilizer, pesticides and technical assistance in recent
years by NAEB has compounded significant challenges along the supply
chain, especially for the washing stations. Competition among washing
stations remains limited, however, as the official policy is that a washing
station can only collect coffee within a 6 km radius.
CBC’s installed capacity is about five tons per hour (for both fully or
semi-washed) or 100 tons per day. Production usually peaks in June and
July, and then diminishes to 30–40 tons by September and 20–30 tons by
December.
CBC’s main buyer in recent years has been the Belgian company
­Supremo, which until recently took 100% of CBC’s semi-washed coffee
(70% of overall exports). However, in 2012 CBC is going to sell 30% of its
semi-washed production to another buyer to diversify clients, achieve a
better price and lower its demand side risks. In addition, CBC sells fully
washed at a premium to buyers in the USA, Japan and Australia. Mr Rwa-
gasana knew Supremo from his prior work in other companies, and met
the other buyers at the NAEB Cup of Excellence Conference.
CBC also engages in limited domestic sales of roasted coffee at select
hotels and restaurants; it does not sell in the local supermarkets, as that
market seems oversupplied relative to the demand. CBC has a small roast-
ing plant that has been operational for one year and can produce 20 kg of
roasted coffee per hour. It imports packaging for the finished product from
the UK, and sells it under the brand “Pedro’s Coffee”.

Systems
CBC’s organizational structure is as follows: the CEO, Mr Rwagasana,
oversees departments of finance, quality control, production, and techni-
cal and maintenance. CBC installed Sage software in 2005 as its manage-
ment information system (MIS).
For its operations, CBC has automated sorters (to remove impurities
and bad coffee), automated huskers and four dryers – two fabricated by
the company and two imported from Brazil. CBC also has coffee silos for
storing processed coffee. Additionally, CBC provides dry milling services
for other coffee processors that do not have their own facilities for a fee.
Each washing station supplying CBC has at least 2,000 farmers sup-
plying it. CBC supports the washing stations by giving cash advances,
COFFEE 87

supplying fertilizer on credit and providing transport. CBC receives sup-

ply from its own washing stations as well as buying additional supply from
other washing stations. In general Mr Rwagasana sees a lack of financial
management skills at the washing station level and therefore believes that
investing in more washing stations will help to reduce CBC’s supply side
risks. CBC uses two shipping companies to export, with 80% of produc-
tion passing through Tanzania (Dar es Salaam) and 20% through Kenya
(Mombasa).
CBC has three cupping specialists in the quality-control area, who each
acquired training from NAEB. Its maintenance manager trained in Bra-
zil on the machines and Mr Rwagasana has also travelled extensively for
training and study tours.

Resources
CBC employs 26 permanent full-time Rwandan workers, as well as hiring
casual labour during peak periods.
The company has one main plant in Gikondo, ownership of two wash-
ing stations, shares in an additional four washing stations, and is negoti-
ating for another two washing stations. The washing stations are located
in Gitarama (one), Cyangugu (one), Byumba (two) and Gikongoro (four).
CBC does not currently have any certifications but would like to ac-
quire UTZ certification if it can obtain financing. Certifications can cost
up to US$80,000 per washing station but are increasingly necessary espe-
cially when doing business with European buyers.
CBC’s main advantages include Mr Rwagasana’s extensive experience
in the industry (over 27 years), including a strong understanding of the
production side as well as long-standing relationships with buyers. His
plans to integrate upstream by acquiring additional washing stations
should help the company grow in future years as it increases output and
secures more supply. In terms of challenges, CBC faces a lack of long-term
financing and constraints along the supply chain that will lead to dimin-
ished supply.

3.3  Kivu Arabica Coffee Company (KCC)

Implemented a new service-provider model in the coffee sector.
Year established 2005
Latest annual turnover (2010–11) US$3–4m
Number of employees (FTE) 17
Main business activity Semi- and fully washed arabica coffee
Export markets USA, Europe
88 CHAPTER 3

Company Origins
The Kivu Arabica Coffee Company (KCC) Ltd was registered in 2005 by
Jean-Bosco Seminega. Before starting KCC, Mr Seminega worked in the
coffee sector for several years, in various roles at Chemonics (a US-based
development consultancy) and the Rwandan Development Bank (BRD).
Motivated by the idea of introducing a new model for coffee processing,
Mr Seminega started KCC Ltd by bringing the drying mill closer to the
washing stations owned by farmer cooperatives and individuals and put-
ting in place a service-provider model. Through a joint investment togeth-
er with a friend, Mr Anecto Kayitare, and a bank loan of about US$140,000,
KCC built a drying mill near Cyangugu and started operations in 2005.
Today, KCC has 17 employees, annual revenues of US$3–4m, and
works with 11 different coffee cooperatives and five privately owned coffee
businesses.

Products
Initially, KCC was designed to only provide a service to coffee farmers
by milling their semi- and fully washed coffee, providing working capital
credit and support in marketing/exporting. Due to low volumes, however,
KCC also started purchasing ordinary and specialty coffee from farmer
cooperatives, milling it and exporting it under its own brand name.
Currently, KCC exports 65% of ordinary coffee and about 35% of spe-
cialty coffee. Its main clients comprise ordinary coffee buyers including
Schluter, Sucafina and Louis Dreyfus Coffee Group. For the specialty cof-
fee, KCC has built long-term relationships with clients such as Stumptown
Roasters, Intelligentsia, Sweet Maria, Peet’s Coffee and Peter Rogers ­Family.
TechnoServe, an NGO that supports coffee cooperatives in Rwanda, was
instrumental in creating some of these links (e.g. Peet’s Coffee).
KCC processes in total around 2,000 tons per season with the service
delivery share comprising between 35 and 40% of production. KCC is in-
creasing the share of service delivery because some private coffee com-
panies are interested in the model and they have approached KCC about
partnering during coffee season operations.

Systems
The model KCC is trying to promote is one of service delivery to coffee
farmer cooperatives, in cooperation with NGOs such as TechnoServe.
KCC provides four types of services to farmers/cooperatives: (i) a line of
working capital credit at the beginning of the coffee season and manage-
ment support; (ii) dry milling; (iii) quality control, with the support of
qualified cupping specialists; and (iv) marketing and exporting the cof-
fee. In practice, this means that cooperatives and individuals bring their
COFFEE 89

semi-washed or fully washed coffee to KCC. KCC mills it, stores it in the
NAEB warehouse, exports it on behalf of the farmers and retains a fee for
the service provided (from milling through to exporting).
KCC has a strong working relationship with the coffee farmers. Before
the beginning of the coffee season, KCC organizes meeting with leaders of
farmer cooperatives where they plan together the partnership in the com-
ing season. Training (technical and management) for the technical staff at
the cooperatives is organized and pre-financed by KCC. For participating
cooperatives, KCC facilitates access to fertilizer from NAEB. KCC techni-
cians also supervise the cooperatives’ wet mill operations before the start
of the coffee season. A credit (working capital) and marketing contract is
signed annually and if the operations are proceeding well, KCC provides
first disbursement of the working capital. Technical assistance (through a
monitoring process) is provided throughout the season. KCC also bene-
fits from the institutional support provided by supporting NGOs such as
TechnoServe that facilitates the partnership between farmers and coffee
service providers.
The benefit of this model for farmers is that they retain a larger share of
the gains from any improvements in the quality of the coffee. The spread
between ordinary and specialty coffee in 2010, for example, was US$1/kg.
A premium of +30 cents per pound was paid for good quality coffee, while
the difference in the cost of producing semi-washed versus fully washed
coffee was ±US$0.06/kg. This gives an incentive for farmer cooperatives to
produce better quality coffee and retain a larger share of the value added.
The downside to this model, however, is that the cooperatives also bear the
risk if global coffee prices drop. Rwacof and RTC also have similar service
delivery models in place.
The advantage for companies like KCC, Rwacof and RTC of providing
both models – service delivery and direct purchases of coffee parchments
from farmer cooperatives – is that farmers have the choice of one or the
other model and can make their own decisions on how to manage risk.
This is also true for coffee processors/exporters.
KCC’s future plan is to continue developing professional partnerships
with coffee farmer groups and individuals interested in the model on the
production side, and with buyers on selling side. Within the next two
years, KCC expects to shift its total export volumes of semi-washed and
specialty coffee to 50–50% and eventually, would like to arrive at a export
share of 60–70% of specialty and 30–40 % semi-washed.

Resources
KCC has 17 full-time employees, including one foreigner from the DRC.
Most management tasks are carried out by Mr Seminega (including fi-
nance, administration and operations). Quality control is ensured by a
certified cupping specialist.
90 CHAPTER 3

KCC assets, estimated at about US$1m, include a dry mill in ­Cyangugu,

with specialized machinery: hullers, grader, gravity separator colour
sorters, pulping machine and dryers. Machines were purchased in Brazil,
Uganda and Colombia.

3.4  Rwacof
The country’s largest Rwandan coffee-processing company.
Year established 1996
Latest annual turnover (2010–11) US$12–15m
Number of employees (FTE) 45
Main business activity Semi- and fully washed arabica coffee
Export markets USA, Europe

Company Origins
Rwacof, one of Rwanda’s top two coffee processors and exporters, was
started in 1996 by the Swiss-based Sucafina Group of Companies. During
the first two years of operation, the land and warehouses were leased from
OCIR-Café (the Rwanda Coffee Authority). In 1998, through the privat-
ization process, Rwacof bought the property from OCIR-Café. Sucafina
Group has established a network of coffee processors and exporters in a
number of countries, with a very strong presence in East Africa. Sucafina
owns Ugacof Ltd, which has been one of Uganda’s largest coffee exporters
since 1994, Tancof, which has been based in Tanzania since 1998, Bucafe,
which has been in Burundi since 2008, as well as other coffee processors
and exporters in Serbia, Vietnam and Brazil.
Today Rwacof exports about US$12–15m worth of coffee per year and
provides employment to about 200 people in its wet and dry mills (in-
cluding casual workers) and during the coffee-harvesting season it also
provides work to about 500 women for handpicking and sorting.

Products
Rwacof processes and exports ordinary and specialty arabica coffee. The
company has a processing capacity of 120 metric tonnes per day. Out of
their total exports, 75% is the mainstream ordinary washed arabica coffee
and the balance of 25% is fully washed or specialty arabica coffee. Rwacof
holds a market share of about 25% of Rwanda’s total coffee production.
Rwacof started producing specialty coffee in 2005 – following the govern-
ment of Rwanda’s initiative to encourage coffee processors to focus on the
specialty coffee market – by investing in washing stations which today
have about 40 employees. The washing stations were set up in K ­ arenge
on Lake Mugesera in the Rwamagana district. With coffee sourced from
COFFEE 91

TechnoServe-trained cooperatives and three other privately owned coffee

washing stations, Rwacof aims to increase the share of specialty coffee to
50% of its total exports over the next couple of years.
Rwacof’s coffee is sold directly to Sucafina. 100% of the processed coffee
is currently exported, with no roasting for the local market. As a rule of
thumb, 75% of the ordinary coffee ends up in Europe and 75% of the spe-
cialty coffee in the United States. The main clients for the specialty coffee
are Starbucks, Pete Rogers, Peet’s Coffee and Sweet Maria’s.
The plant is operating below capacity – due to a shortage of coffee driven
by number of processors in the local coffee market – Rwacof has also put
in place a service delivery model, working with cooperatives supported
by TechnoServe. Similarly to Kivu Arabica Coffee Company, cooperatives
and farmers can get their coffee dry milled and exported for a certain ser-
vice fee and also receive working capital credit.

Systems
Rwacof’s trading and marketing functions are handled by Sucafina.
­Sucafina pre-finances the coffee purchases and deals with the downstream
marketing and trading of the coffee in Europe and the United States.
­Sucafina has a very strong network of coffee suppliers and buyers and
maintains strong relationships with companies such as Starbucks that are
major clients for their specialty coffee. Rwacof itself is responsible for all
the processing, quality control and logistics.
With the support of Sucafina, Rwacof has also developed comparative-
ly strong quality-control functions across the value chain. Rwacof has a
modern laboratory to control certain quality parameters and has a very
experienced and qualified team of cuppers. Rwacof has also achieved a
certain number of quality and process certifications: (i) Starbuck’s Coffee
and Farmer Equity (CAFE) certification, which rewards producers of high
quality sustainably grown coffee; (ii) 4C certification – common code for
the coffee community association, which aims to increase sustainability in
the mainstream coffee sector; and (iii) Rwacof is expected, at the time of
writing, to have received the Fair Trade certification by mid 2012.

Resources
Rwacof’s main resources are (i) financial management and marketing
support from a multinational with more than 35 years of experience in
the coffee business; (ii) certifications from Starbucks, 4Cs and in a few
months also Fair Trade; and (iii) a modern plant on a 5 ha plot, including a
5,000 m² warehouse. The machinery imported from Brazil and Colombia
(the standard in the business) is modern and expanding, with Rwacof in-
vesting in new colour sorters and washing stations to increase the supply
of specialty coffee.
92 CHAPTER 3

Rwacof employs 45 full-time staff at the plant in Kigali. During the

coffee season, the company brings on board 30–40 casual workers at the
plant, another 30–40 people at the washing station and employs up to 500
handpickers. Only three expats are employed at the firm, all in managerial
positions: a managing director and financial manager from India and a
plant manager from Uganda.

3.5  Rwanda Trading Company (RTC)

A new entrant in the coffee sector.
Year established 2009
Latest annual turnover (2010–11) US$8–9m
Number of employees (FTE) 75
Main business activity Semi- and fully washed arabica coffee
Export markets USA, Europe

Company Origins
In 2004 Scott Ford, the former CEO of Alltel Corporation, met President
Paul Kagame and decided to start a social venture in Rwanda to focus on
the coffee sector. Five years later, following several visits to Rwanda, the
Rwanda Trading Company (RTC) was born in 2009 as a social for-profit
venture under a parent company, Westrock EA Holdings, based in Mau-
ritius and 100% owned by US investors. In the same year, Ford purchased
a central Arkansas coffee roaster to integrate downstream into the coffee
value chain. Renamed Westrock Coffee (formerly Coffee Legends), this
had a 56,000 square foot roasting facility in North Little Rock, Arkansas.
Although Ford lacked prior coffee experience, he was attracted to the
idea due to (i) the low competition in the local coffee market (especially
limited knowledge regarding international trading) and (ii) the opportu-
nity to have significant social impact as more than 400,000 farmers are
involved in coffee business in Rwanda.
Following formation of the company, RTC acquired a coffee plant
from Rwandex, a former coffee exporting company, for US$1.6m.3 RTC
subsequently invested US$500,000 in machinery upgrades, US$2.1m in
new equipment and US$1.3m in additional equity for a total investment
of US$5m. Recently, RTC has also purchased a coffee washing station to
supplement its supply chain.

Rwandex was previously owned 50% by the government of Rwanda and 50%
3 

by a British investor, and enjoyed a monopoly until 1994, after which it filed for
bankruptcy.
COFFEE 93

Today RTC owns and operates a state-of-the-art milling and export

facility in Kigali, Rwanda, with an installed capacity of 3,000 tons per year. 
RTC exported 6.3 million pounds of green coffee in 2010, 15% of Rwanda’s
total production (1.7 million pounds or 12% in 2009). In 2010, RTC’s an-
nual turnover was US$8–9m. RTC employs approximately 75 full-time
employees.

Products
RTC processes and exports semi- and fully washed arabica coffee. 90% of
RTC coffee is traded on the international commodity market (and goes
mostly to European buyers, although some of it passes over to the North
American market) and 10% is used for roasting at the US plant. The US-
based coffee roasting plant does not purchase more Rwandan coffee due to
its previously established links with, and preference for, South American
coffee producers.
RTC currently only operates at 60% capacity – 1,800 tons per year (out
of a possible 3,000 tons). This is due to limited supply and competition
from other Rwandan companies, as well as systemic inefficiencies and reg-
ulation that recommends fully washed coffee processing. The advantage
with fully washed (specialty) coffee is that prices are more stable; never-
theless, producing high quality specialty coffee is labour intensive and a
very delicate process that requires investment, time and a lot of capacity
building.
An additional challenge to the supply chain is that wet mills for fully
washed coffee currently only run at 10% capacity and as a result consume
the full premium from fully washing the coffee, leaving no marginal in-
centive to farmers who sell to them. Eventually, RTC predicts exporters
such as themselves will move upstream and take control of these ineffi-
cient mills and thereby improve their financial, technical and marketing
management. They currently own two washing stations.

Systems
To hedge against supply risk, RTC has entered into contracts with approx-
imately 40 wet mills. In return for financial, technical and marketing as-
sistance, these wet mills exclusively supply RTC. In addition, RTC enters
into the open market and buys semi-washed coffee from aggregators as
well as fully washed coffee from other private wet mills. The goal in 2012 is
to move to a 25%/75% split for fully and semi-washed coffee, and to reach
90% capacity by operating two to three shifts.
RTC’s management structure has the managing director, Matt Smith,
overseeing four departments: sourcing and procurement; finance and hu-
man resources; production; and quality control.
94 CHAPTER 3

Internally, RTC uses “Intact’’, a multi-currency accounting and busi-

ness software (implemented in 2012). For inventory management, they use
a proprietary system based on FileMaker Pro, which gives them a compet-
itive advantage over less technically sophisticated competitors. Also they
monitor data from TechnoServe-supervised wet mills using software de-
veloped by TechnoServe to increase transparency (in terms of labour costs
and quality), which is available to all exporters.
Three-quarters of RTC’s machinery was imported from Brazil, Colom-
bia and Germany (bought in 2009) and uses recent technology. The re-
maining quarter was recycled from Rwandex’s former operations.
Staff training is generally on-the-job and includes technical areas such
as agronomy and processing. RTC also works with NGOs such as Techno-
Serve to provide further training. Originally, RTC hired coffee consultants
to help set up their processes and they have since hired very experienced
local staff but their operation is still a trial-and-error process.
To ensure quality control RTC employs three cupping specialists in
their lab who have been trained by several NGOs. A sample from every
export/purchase is analysed in their lab. RTC does not currently have any
certifications, although they plan to acquire them for their washing sta-
tions (wet mills). In the future they are also seeking to enter into more
direct sales with international buyers.

Resources
RTC’s physical resources include one plant and two washing stations.
They also have strong financial resources, split 50/50 debt equity, with 70%
coming from their parent company and 30% from local banks.
RTC employs 75 full-time employees. Their senior management team
comprises two Americans, one Filipino, one Rwandan and one Burundian.
The remaining 70 employees are all Rwandan.
The use of the latest machinery and MISs gives RTC a competitive edge
in the local market. However, RTC continues to struggle with additional
challenges along the supply chain, including low fertilizer utilization by
farmers and accessing potential supply from the DRC. In addition, work-
ing with other wet mills and aggregators in Rwanda is a challenge due to
the unenforceability of RTC’s supply contracts.

3.6  Rwashoscco
Rwanda’s largest farmer-owned coffee exporter and roaster.
Year established 2005
Latest annual turnover (2010–11) US$3–4m
Number of employees (FTE) 40
Main business activity Semi- and fully washed arabica coffee
Export markets USA, UK and Japan
COFFEE 95

Company Origins
Rwashoscco – the Rwanda Small Holder Specialty Coffee Company – was
established in 2005 and is Rwanda’s largest farmer-owned coffee exporter
and roaster. Rwashoscco was created to assist the cooperatives that were
being supported by USAID’s PEARL project (Partnership for Enhancing
Agriculture in Rwanda through Linkages), which organized and trained
farmer associations and cooperatives. The project ended in 2005 and
consequently, Rwashoscco was created as a JV by four cooperatives with
PEARL bearing the initial set-up costs. After seven years of operations,
Rwashoscco has reached US$3–4 in annual revenues. It is now owned by
six cooperatives that represent approximately 13,000 farmers.

Products
Rwashoscco exports fully washed arabica specialty coffee to three different
continents and sells roasted coffee locally under the brand name “Café de
Maraba”, Maraba being one of the cooperative shareholders of Rwashoscco
and the area where the coffee originates from. About 87% of the company’s
sales comes from exports (about US$2.5m), while the remaining 13%
(about US$400,000) comes from local sales of Café de Maraba. Rwashosc-
co’s biggest exports market, not surprisingly, is the United States, where
the company has eight buyers. This link with the US market was facilitated
by PEARL in early 2005. Other markets include the United Kingdom (five
buyers) and Japan (two buyers). In terms of volume, Rwashoscco’s exports
currently amount to about 25 containers a year, or 450,000 tons of coffee.
The local clients for Rwashoscco’s Café de Maraba are mainly super-
markets, hotels and restaurants.

Systems
As we explain in the next few paragraphs, the management and ownership
structure of Rwashoscco is both a major strength and weakness. The com-
pany is currently owned by six cooperatives. Each cooperative has a man-
agement team as well as permanent staff to operate the washing stations.
The president of each cooperative sits on Rwashoscco’s board of directors,
which is in charge of all major strategic decisions.
Rwashoscco’s structure has evolved over time. Rwashoscco started as a
group of four cooperatives. This number eventually increased to 16, which
was both a testament to the success of the model, but also made decision
making very difficult and stretched the company’s ability to effectively
support and train the cooperatives. Among the 16 cooperatives there were
also many that failed to meet certain management and quality standards,
which forced Rwashoscco to rethink its membership policy.
Today Rwashoscco has stricter membership conditions. These include
(i) membership fees; (ii) ownership of at least one washing station; and
96 CHAPTER 3

(iii)  production of at least one container – 18,000  kg – of coffee per sea-

son. In line with these requirements, all picking, sorting, re-sorting and
washing operations are done at the level of the cooperative with the help of
Rwashoscco, which provides training on best practices. Cooperatives are
also responsible for related expenses. Some cooperatives also have their
own drying mills and roasting plants (i.e. Maraba and Bufcoffee).
Rwashoscco itself is responsible for (i) quality control using trained
cuppers; (ii)  marketing all the coffee from six cooperative shareholders;
(iii) linkages to organizations that have drying mills for cooperatives that
do not have their own; (iv)  encourage local consumption by promoting,
packaging and selling roasted coffee; and (v) training and supporting the
cooperatives through partnerships with various NGOs and development
programmes. To sustain operations, Rwashoscco levies a fee of 5% of sales
for overhead costs.

Resources
Rwashoscco’s main resources are (i) six established and well-equipped co-
operatives, representing over 13,000 farmers; (ii) highly skilled cupping
specialists, supported by a cupping lab in Kigali, and another one located
in the southern province; (iii) a warehouse and dry mill, which will soon
be equipped with new machines, and a roasting plant facility, all located in
Kigali; and finally, (iv) strong relationships with buyers in the US, Europe
and Japan.
Rwashoscco has 13 staff and each of the cooperatives also have managers,
coffee washing station managers, accountant and cashiers, which brings
the total administrative staff from 13 to 40, all of whom are ­Rwandan.
Chapter 4

Tea

4.1  Background and Overview

Tea production in Rwanda was started by European and Asian investors
in the mid 1950s. However, until the early 1970s, the output of the tea
sector remained limited; in 1970 there were only three factories (Mulindi,
Shagasha and Ntendezi) operating in the country. Tea became a priority
sector in the late 1970s with the launch of the Second Development Plan
and the subsequent establishment of OCIR-Thé in 1978. During the late
1970s and 1980s the government of Rwanda, supported by donor funding,
constructed 8 tea factories, bringing the total number of factories in the
country to 11 by 1986. These 11 factories still account for 100% of the out-
put of Rwanda’s tea sector today.
Since the end of the genocide and in particular over the past few years,
Rwanda’s tea sector has undergone significant changes that have trans-
formed it into one of the country’s largest export sectors, alongside mining
and coffee. Implementation of the National Tea Strategy (2009), which fo-
cused on finalizing the privatization of the tea sector, is now almost com-
plete. 75% of total production today comes from private tea factories, with
production increasing by 14% per year between 2006 and 2010 (World
Bank 2011b). Tea exports totalled approximately US$55.7m in 2010 and
US$61.9m in 2011.
There are currently 11 tea factories (see Table 4.1) located primarily in
the western, northern and southern provinces of the country. New en-
trants in the past 10–15 years include Birla Tea via Jay Shree Tea & Indus-
tries (Mata/Gisakura), McLeod Russel India (Gisovu), Imporient (Pfunda),
Nshili-Kivu and Rwanda Mountain Tea (RMT has JV agreements with
Jay Shree for Mata and Gisakura and JVs for Rubaya, Nyabihu and Kitabi).
The last two government-owned tea factories, Mulindi and Shagasha, are
currently being auctioned.
98 CHAPTER 4

Table 4.1  Rwanda tea factories and production data (2011).

Green leaf Made tea
production production Export sales
 Company (000s kg) (000s kg) (000s US$)
Mulindi  15,749  3,508  7,796
Gisovu   9,408  2,254  7,129
Sorwathé  14,129  3,295  7,096
Rwanda Mountain Tea (RMT) –   8,970  2,207  6,857
 Rubaya
Pfunda Tea Company   9,447  2,274  6,539
Kitabi Tea Company   8,248  1,988  6,320
Gisakura  10,084  2,373  5,425
Mata   9,133  2,136  5,187
Shagasha   9,418  2,047  3,878
Nshili-Kivu   3,720    978  3,030
Rwanda Mountain Tea (RMT) –  1,005  2,645
  4,226
 Nyabihu
Total 102,531 24,066 61,911
Source: NAEB 2011 Statistics.

Products
The most common variety of tea produced in Rwanda is the bulk black tea
known as CTC (curl-tear-crush) tea, the majority of which is sold at auc-
tion with small quantities retained for local consumption (packaged teas).
As local production is limited, companies cannot compete on volume with
international producers so there has been an increasing trend to compete
based on (i) quality (evidenced by investment in tea labs, cupping special-
ists, certification programmes and best practice trainings) and (ii) focus
on the high-end market (evidenced by the move towards specialty tea).
Several of Rwanda’s tea companies have introduced higher-value-­added
specialty teas such as organic, green, orthodox and even white-tips tea that
are geared towards the high-end international markets. Four tea compa-
nies sell packaged tea for both local consumption and export, including
Rwanda Tea Packers, Highland Tea, Pfunda Tea Company and Sorwathé.
High quality teas are sold directly to retail stores in Europe and elsewhere.
It is estimated that specialty teas such as orthodox teas can fetch a premi-
um of up to 75% over black CTC teas. However, it is important to note that
the market for value addition and specialty teas is still unproven. To in-
crease value addition, the ongoing focus of Rwanda’s tea sector continues
TEA 99

to be (i) boosting smallholder yields and (ii) improving quality through

better husbandry, plucking and factory operations.
Despite low yield issues with husbandry, plucking and factory opera-
tions, Rwanda’s tea is considered to be one of the world’s best, and regu-
larly fetches premium prices at Mombasa’s tea auction. At the first Afri-
can Tea Convention in Mombasa in July 2011, the Gisovu Tea Company
from Rwanda was nominated the best tea company among 35 companies
from the East African region, with another Rwandan tea company (Kitabi)
coming third.

Systems
Rwanda primarily produces bulk CTC black tea (cut-tear-curl), which is
handpicked and brought to the tea factories for processing. Packaging is
typically sourced from Uganda or Kenya and is then sent to the weekly
Mombasa tea auction (the second largest black tea auction in the world),
where it is re-exported to international markets.
The major systemic issue affecting the tea sector today is the under-­
capacity of tea factories, primarily due to the limited supply and poor
quality of green leaf production. As a result, several of the private tea fac-
tories have invested significant resources in improving farming practices
to increase the green leaf yield. According to IFAD (2005), yields are low
in Rwanda compared with Asia and also in neighbouring African coun-
tries. Average production in public sector plantations is about 1,400 kg/ha,
whereas private plantations now produce yields of up to 3,500 kg/ha by ap-
plying improved farming practices, especially adequate fertilizers. A fur-
ther reason is that there is a high dependence on smallholder leaf, which
has much smaller yields than estate leaf.
Tea cultivation tends to be clustered around factories, as the harvest
must be processed within a few hours of picking (IFAD 2005). Typically,
a factory will control a factory estate or bloc industriel of a few hundred
hectares in the immediate vicinity of the factory. This plantation, which
employs a few hundred people on a wage contract, will be surrounded by
plots organized into cooperatives, associations (e.g. ASSOPTHE) or small-
holder tea plots of about 0.25 ha each on average.
Two different structures have taken root in Rwanda’s tea sector today:
•  Tea investment groups. The largest player in Rwanda’s tea sector today,
Rwanda Mountain Tea (RMT), is an investment group with multiple
subsidiaries and investments in the tea sector. RMT’s subsidiaries,
such as the Rubaya-Nyabihu Tea Company and the Kitabi Tea Com-
pany, manage production. Each factory has its own ownership and
management structure. The group has also started a tea packaging
company in Rwanda, called Rwanda Tea Packers.
100 CHAPTER 4

•  The embedded tea factory. This is exemplified by Sorwathé, which

is 86.7% owned by American investors and 13.3% owned by a local
cooperative (all tea companies have ceded at least 10% of shares to
the local cooperatives, with a few having more). Most tea factories
follow this structure.

Resources
The tea sector currently provides direct employment for about 70,000
people and several thousand more are hired as casual workers during the
tea season. Unlike coffee, tea is harvested all year but production peaks
during the two rainy seasons. Due to capacity gaps in key positions, sev-
eral of the private tea companies have leveraged the expertise of tea-grow-
ing countries such as Kenya and Sri Lanka by employing expatriate staff
in senior management and technical positions. As in the coffee sector, sev-
eral private tea companies are also in the process of seeking international
certifications from organizations such as Fairtrade, Rainforest Alliance,
Ethical Tea Partnership, among others, in order to compete in the global
market.

Exports
Tea is exported primarily to international markets via the Mombasa auc-
tion and then re-exported to other destinations, mainly Europe and the
United States. The larger tea companies sell at least 15% of their made tea
directly to countries such as the United Kingdom, Pakistan, Egypt, the
United States, Canada, Ireland, South Africa, Japan, France, China and
Kenya. In 2011, Rwanda exported 22.9m kg of tea at a value of US$61.9m:
77% sold at the auction and 23% sold directly to buyers in internation-
al markets (NAEB 2011). However, it is important to keep in mind that
several tea factories tend to sell to their own sister companies, which are
accounted for as direct sales.

4.2  Rwanda Mountain Tea (RMT)

The country’s largest Rwandan-owned investor in the tea sector.
Year established 2006
Latest annual turnover (2010–11) US$15–16m
Number of employees (FTE) 155
Main business activity CTC black tea
Export markets UK, Pakistan, Egypt, etc.
TEA 101

Company Origins
Rwanda Mountain Tea (RMT) was formed in 2006 by Mr Egide Gatera (a
prominent Rwandan businessman who also is a majority shareholder at
Petrocom), his family and the Grand Lacs Trading Company. RMT’s first
purchase was the Rubaya-Nyabihu tea estates located in the northwestern
region of Rwanda, 90% of which were privatized in 2006 (the remaining
10% continues to be held by local tea cooperatives) as part of the govern-
ment of Rwanda’s privatization policy (enacted in 2000).
The Rubaya-Nyabihu plantations and factories were developed in the
late 1960s in northern Rwanda and comprise approximately 1,300 hec-
tares. In addition to the initial acquisition, RMT invested approximately
US$6.5m in upgrades to the machinery and infrastructure.
In 2009 RMT acquired 60% of another tea estate, Kitabi Tea Company,
a tea estate in the south of the country (the government of Rwanda and
local tea cooperatives retained 40%). Following this acquisition, RMT de-
cided to become more of an investor in the tea value chain rather than
a tea production company; to this end, RMT formed a subsidiary com-
pany, Rubaya-Nyabihu Tea Company, to oversee the daily operations of
the Rubaya and Nyabihu tea estates. RMT then focused on providing com-
mon services of procurement, finance, marketing, etc., for the Kitabi Tea
Company and the Rubaya-Nyabihu Tea Company.
In August 2009 RMT also started Rwanda Tea Packers, which focuses
on value addition by producing end-market, retail quality tea products for
local and regional markets. The government of Rwanda, through NAEB,
supported the venture by taking a 40% minority stake.
In January 2011 RMT also entered into a 50/50 JV with the Indian tea
company, Jay Shree Tea & Industries, through their D ­ ubai-based offshore
investment arm, Birla Holdings Ltd. This consortium created Tea Group
Investment Company Ltd., which acquired a 60% stake in the Mata and
Gisakura tea plantations located in the south west region of Rwanda (with
40% remaining with the government of Rwanda and the factories’ respec-
tive cooperatives).
All of RMT’s acquisitions required significant upgrading, which can be
categorized as follows:
•  Skills upgrading. RMT imported skills by recruiting Sri Lankan tea
experts as well as many experts from Kenya.
•  Capital investment. RMT invested significantly in upgrading the
machinery and factory infrastructure in all of its acquisitions.
•  Sales and marketing. RMT restarted bulk exports to Mombasa (85%
of sales) and started direct sales to Pakistan, Egypt and the United
Kingdom (RMT has an ongoing two-year relationship with Taylor’s).
Although direct sales are more profitable, only 15% of total sales are
102 CHAPTER 4

currently direct, due to the challenges of forming good relationships

with buyers and consistently needing to meet their demands for
high-quality tea.
•  Local sales. RMT, through Rwandan Tea Packers, has increased its
efforts to sell locally through value-addition and has started pro-
ducing loose tea and teabags for the Rwandan market (currently less
than 3% of total sales).
RMT has the capacity in its factories to process more than 16,000 tons/
year of tea but it currently achieves only 60% utilization (~10,000 tons/
year). RMT had an annual turnover of US$15–16m in 2011.

Products
RMT’s major product is bulk CTC tea, 85% of which is exported in bulk
50  kg bags to the Mombasa auction. The remaining 15% is mostly sold
directly to the United Kingdom, Pakistan and Egypt. Less than 3% is sold
domestically. In 2008 new management began exploring green tea, which
has a similar production process; however, so far RMT has only been pro-
ducing small amounts for local consumption. In the event that demand
increases RMT is prepared to increase supply.
As well as exploring green tea, RMT has been conducting a feasibility
study on the potential to expand its product lines through orthodox, white
and flavoured teas. Through attending international tea conventions it is
trying to determine what varieties are demanded by the market and adjust
its product mix accordingly. However, it is also mindful of the need for
new capital investment required for new product lines. Furthermore, since
local consumption is small and the company cannot compete on volume
with international producers, it plans to compete on quality, focusing on
the high-end market when the time is right.
In terms of upstream supply constraints, RMT focuses on increasing
green leaf yields through improved farming practices. It hopes in the fu-
ture that the areas under tea production can be expanded to ensure ade-
quate supply. RMT inherited a relationship with the local cooperative at
each of its three initial factories and continues to work with these cooper-
atives to upgrade the quantity and quality of the green leaf they produce.

Systems
RMT’s management structure has the managing director, Ephraim Tura-
hirwa, overseeing five departments: finance and administration; procure-
ment; IT; marketing; and legal and human resources. The overall technical
manager is Sri Lankan and the rest of the management team are Rwandan
nationals. RMT centralizes services such as procurement, finance and
marketing for all the tea plantations.
TEA 103

RMT’s board of directors, where Jean Karekezi is the chairman, does

not play a strong role in the day-to-day management of the firm, only in
monitoring targets and providing direction and strategy. In 2006 RMT
implemented Sage accounting software for the finance and accounting in
its factories as well as headquarters.
RMT’s machinery came from India (Vikram Ltd), Kenya and South Af-
rica. Experts came to install and provide training during the initial phase.
The chief maintenance managers in Kitabi and Rubaya are Indian and in
Nyabihu the chief maintenance manager is Kenyan.
For training, RMT sends some staff to Kenya, where they have an infor-
mal relationship with the Tea Research Foundation to provide six months
of training on the whole spectrum of production, from plucking to with-
ering and fermenting. Farmers and cooperatives are also provided with
training on best farm practices. RMT is currently working on formalizing
the training so that it can be provided on a quarterly basis.

Resources
Each of RMT’s factories has between 45 and 70 full-time employees. In
addition, between approximately 8,000 and 10,000 people work in the
plantations during the growing season. RMT employs experienced Indian,
Kenyan and Sri Lankan expatriates for many of the senior positions in
the factories and on the plantations; in total, they have six expatriates in
Rubaya, five in Nyabihu and four in Kitabi.
For financial resources, RMT uses long-term financing with a 60/40
debt-to-equity ratio. RMT is in the process of acquiring certifications
from Rainforest Alliance and ISO (through the assistance of UNIDO).
RMT’s assets include three tea factories and three warehouses, which
are each located at a factory and capable of storing up to 120 tons of tea. Its
headquarters in Kigali are leased. A tea factory project is also planned to
be constructed in 2012 in the Rutsiro District in the west of Rwanda.
In the future, RMT plans to construct a mini hydropower plant on the
River Giciye near Nyabihu, worth US$12 million. This plant will produce
4 MW of electricity for the national grid and will be the first of its kind for
a local company. The power generated from the plant will be used to power
RMT’s tea factories, while the surplus will be sold into the national ener-
gy grid and to the water utility, EWSA. RMT has signed a contract with
­Horizon Group to construct the plant.
RMT continues to face challenges in terms of increasing supply to
match increased demand. It would like to increase sensitization and
awareness around tea production in the western part of the country, as
the factories are currently limited by the quantity produced in their areas.
Another challenge is the feeder road infrastructure from plantation to fac-
tories, which sometime reduces the quality of tea received.
104 CHAPTER 4

RMT continues to benefit from the capital and management expertise

of the Grand Lacs Trading Group. The company’s efforts have shifted RMT
from a business model focused on individual factory production to one fo-
cused on longer-term investment across the industry, and thereby allowed
it to achieve critical economies of scale.

4.3  Sorwathé (Société Rwandaise de Thé)

One of the oldest tea growing and processing companies in Rwanda; a pio-
neer in introducing new varieties of tea.
Year established 1975
Latest annual turnover (2010–11) US$7–8m
Number of employees (FTE) 521
Black, green, orthodox, white and silver
Main business activity
tips tea
US, UK, Canada, Ireland, South Africa,
Export markets
Japan, Pakistan France, China and Kenya

Company Origins
Sorwathé is a tea-growing and tea-processing company in Rwanda and
was established in 1975. The tea factory is located in Kinihira, a small town
70 km north of Kigali. Sorwathé was the first private tea factory in Rwanda.
The major shareholder of Sorwathé is Tea Importers Inc, an American
company that has been involved in Rwanda’s tea sector since the early
1960s. At the time, its founder – Mr Joe Wertheim – was advising OCIR-
Thé on the marketing of Rwandan tea. In 1972, the Ministry of Commerce
of Rwanda invited Tea Importers to establish a factory in the Cyohoha/
Rukeri area (around Kinihira). This was an area where donor agencies –
FED (the French development fund) and USAID – had invested in drain-
ing swampland and planting tea. The closest tea factory to the planted tea
area was located 80 km away. This made transportation very costly. Tea
Importers Inc agreed and in 1975 Sorwathé was created as a JV between
the government of Rwanda and Tea Importers Inc. As part of this agree-
ment, Sorwathé was given a lease of 300 hectares of land for planting and
building a tea factory, the construction of which was completed in 1978
along with supporting infrastructure.
Today Sorwathé produces about 3,200 tons of made tea per year (about
14% of Rwanda’s annual production). It employs over 2,500 workers, of
which around 500 are full time. In 2009 Sorwathé granted shares to the tea
cooperative, Assopthe, the shares of which it now owns 13.33%. Its turn-
over in 2011 was over US$8m. The company is a prime mover in Rwanda’s
tea production sector in terms of variety as well as quality, machinery and
certifications.
TEA 105

Products
Sorwathé currently produces black and green tea, including orthodox and
CTC varieties. It also produces organic tea and specialty tea such as white
tea and silver tips tea. Sorwathé was the first factory in Rwanda to produce
orthodox tea, green tea, specialty tea and organic tea.
The bulk of its production is black CTC tea, which accounts for about
85% of production, followed by orthodox and green tea. The production
of CTC black tea was started in 1978. The CTC process shreds leaves into
very small particles to be used mainly for tea bags that brew very quickly.
Sorwathé started producing green tea in 1996, a process based on a
minimal oxidation of the tea leaf, maintaining it close to the natural state
of the leaf. In 2008 Sorwathé invested in a new production line and started
the production of orthodox tea, which is the traditional type of making
tea rolled in seasoned timber roller tables (similar to hand rolling). Over
the past two years, the company has also introduced white tea and silver
tips, which are specialty teas that are lightly manufactured using natural
methods that involve very specific ways of plucking and processing.
Another facet of the company’s diversification process was the intro-
duction of organic growing practices. Sorwathé was organic certified in
January 2012, whereby cultivation is done without the use of any chemical
pesticides or fertilizer. Each of these new processes has led to higher value
addition and Sorwathé is able to supply the customer with a number of tea
varieties.
Most (95%) of Sorwathé’s tea is exported, with only 5% sold for local
consumption. The main export markets are the United States, the United
Kingdom, Canada, Ireland, South Africa, Japan, Pakistan, France, China
and Kenya.

Systems
Sorwathé has the capacity to process 3,800 tons of CTC black tea per year,
but current production levels average about 3,200 tons per year (about 80%
capacity), due to a shortage of raw materials. Sorwathé grows its own tea on
280 ha of land but also purchases tea from neighbouring outgrowers. The
productivity levels of outgrowers are around 30% lower than the compa-
ny-owned tea land. Sorwathé continues to work with the tea cooperatives
through training programmes that share best practices with a common
objective of improving the productivity of the smallholders.
Sorwathé’s management structure is based on a two-tier system: (i) a
senior management committee that meets once a month to discuss strat-
egy and production performance; and (ii) a worker delegates committee,
which also meets monthly to discuss issues related to plantation and fac-
tory operations. This direct and systematic involvement of worker delegates
in firm-level operational decisions is unique in the Rwandan context. The
106 CHAPTER 4

connection with workers is also reflected in the company’s contribution in

the local community, through initiatives such as a literacy programme for
adults in Kinihira, which has benefited 15,000 people; the introduction of
rocket stoves, which have led to a large reduction in the local consumption
of firewood for cooking; support to establish a health centre in Kinihira;
a water project for the local population; the maintenance of local roads;
and support to the local authorities to implement projects and organize
festivities.
Sorwathé continues to develop its employees by training them in a
planned and structured basis. Training is mostly conducted internally but
Sorwathé has also hired external trainers in the past and encourages study
tours to other cooperatives.
Sorwathé is currently ISO 9001:2008 and ISO 22000:2005 certified.
These certifications ensure the effectiveness of their quality management
and food safety management systems, respectively. Sorwathé is also Fair-
trade, Rainforest Alliance, Ethical Tea Partnership and Rwanda Bureau
of Standards (RBS) certified. Furthermore, 116  ha of their plantation is
organic tea certified.

Resources
The physical resources of Sorwathé include 280 ha of tea land and 500 ha
of eucalyptus forest. The plant and equipment at Sorwathé’s disposal and
its ability to produce a wide variety of tea makes Sorwathé a leader in the
tea sector in Rwanda. Over the years, Sorwathé has introduced a range
of sophisticated machinery such as fluid bed driers, continuous ferment-
ing units, electrostatic stalk extractors, computerized drier temperature
equipment and withering monitors, etc.
In terms of human resources, Sorwathé currently employs 2,500 people
(including farmers and pluckers), with 521 workers employed on a full-
time basis. Through their outgrower programme with the tea cooperative,
ASSOPTHE, Sorwathé indirectly provides employment to an additional
4,500 farmers and their families.
The experience of the management committee and the systems they
have put in place have largely contributed to the company’s success and its
continuous quality improvements over the past 35 years.
Chapter 5

Staple Crops

5.1  Background and Overview

Rwanda’s main staple crops include maize, rice, Irish potato, wheat, cas-
sava and beans. Although these crops are critical for food security, few of
them are currently being processed on an industrial scale. Those that are
being processed on a large scale – maize, rice, wheat and sugar – are the
focus of this chapter. The processing of these staple crops is one of the larg-
est agribusiness sectors in Rwanda and the five companies that are profiled
in this chapter generated in excess of US$75m in annual revenues in 2010
and provide employment to approximately 950 people.

Maize. Both the public and private sectors view maize as a priority sta-
ple crop and as a result it has seen extensive investment and intervention.
Although the crop was introduced relatively recently, maize is the fourth
largest crop in Rwanda based on cultivation area, covering an estimat-
ed 10% of cultivated land (behind beans and bananas) (MINAGRI 2012).
Prior to 1996, maize farming was limited to the highlands but soon ex-
panded to other topographical settings. Since 2007, there has been a strong
push by the government of Rwanda to increase maize production through
the Crop Intensification Program, given its importance as a cereal reserve.
Based on official data, maize production increased by 5.1% between 2004
and 2007 and by 61.6% from 2007 to 2010, driven mainly by the use of
improved seeds (World Bank 2011b).
At the time of writing, only two large maize mills exist in the country:
Minimex and Maisserie Mukamira (which is currently in financial diffi-
culties). S­ osoma Industries is the only large company further downstream
in the value chain that uses the milled maize to create value-added prod-
ucts such as fortified foods for infants and family porridges.
108 CHAPTER 5

Wheat. Wheat was introduced in Rwanda in the 1920s by the INEAC

(­Institut National d’Etudes Agronomiques du Congo) but was later aban-
doned due to the limited market and unfavourable varieties. It was later
grown at higher altitudes (greater than 1,900  m) and is used for either
milling or direct consumption. However, given the small quantities, high
prices and poor quality of the local wheat, the largest millers in the coun-
try, Pembe Flour and Bakhresa Grain, import the majority of the wheat
they use to produce flour from destinations such as Australia.

Rice. Rice was introduced in Rwanda in the 1960s given the ideal agro-­
climatic conditions for rice production (i.e. abundant rainfall and the pos-
sibility of two harvests a year). Given the country’s hilly topography, which
limits the available area for cultivation, most rice paddies are located in
several river valleys. There are approximately 19 rice mills in Rwanda, 16
of which are privately owned. Rwanda is nevertheless a net importer of
rice, as these mills only meet 30% of aggregate rice consumption. Imports
of rice in 2010 amounted to US$16.5m.1
Sugar. Sugar was introduced in Rwanda for the first time in the late 1950s
in the Rusizi valley. It was not until the early 1960s, however, with the
support of Chinese development aid and technical expertise, that the
areas under cultivation were expanded, leading to the construction of a
small experimental sugar factory in the Kabuye area in 1969–70. This led
to the establishment of Sucrerie Rwandaise in 1976, which was later pri-
vatized in 1997 to become Kabuye Sugar Works, the only sugar processor
in the country. The company’s main constraint is access to land and the
vulnerability of allocated land to flooding, which leads to shortages in the
raw material, sugar cane. Limited production means that Rwanda faces
significant sugar shortages, forcing it to rely on imports through special
duty-free waivers for sugar imports outside the EAC.

Products
Maize. Three types of product are produced: (i) maize flour for consump-
tion by the general public; (ii) maize grits used in beer production; and
(iii) maize bran, which is used as animal feed. All products are sold locally
with limited exports to the eastern DRC.

Wheat. The main products are wheat flour and its by-product, wheat pol-
lard, which is used for the production of animal feed. Most animal feed
(produced by Pembe and Bakhresa Grain) is exported to the region due to
the lack of large-scale demand for animal feed in Rwanda. The wheat flour
is consumed locally with few exports to the DRC (by Bakhresa Grain).

1 
RRA data on imports, 2010.
STAPLE CROPS 109

Table 5.1  Staple crop agro-processing firms (2011).

Agro-processing firm involved in
 Sector
marketing of finished product*
Minimex
Coamiv
Maisserie de Mukamira
Maize
Sopar
RDI
Isimbi Super Maize Mill
Top Solution Company
Bakhresa Grain
Wheat
Pembe Flour
Tomatoes Sorwatom
Sugar Kabuye Sugar Works
Rwamagana Rice
Gikondo Rice
Bugarama Rice
Kabuye Rice
Rice Rwabuye Rice
Soproriz
Cavecuvi
CPCRB
Cooperative Dukorerehamwe
Source: MINAGRI 2011 data. *Note that this list is not exhaustive.

Rice. The main product is white rice, which is consumed locally with no
exports. The by-products of rice are used in animal stock feed and are also
sold for domestic consumption.

Sugar. The main products are raw sugar and molasses. By-products in-
clude bagasse (used for fuel for the boilers) and the final molasses (used as
cattle feed and fertilizer).

Systems
A key constraint in the staple crops processing industry is the shortage of
raw materials and access to land. Anecdotal evidence from the firm inter-
views indicate that most processing facilities are running below capacity
due to the limited supply and poor quality of the available raw materials.
110 CHAPTER 5

As a result, the wheat milling and maize industries rely on imports for
their raw materials. This is not an option in the sugar and rice industries as
paddy rice and sugar cane are not transportable over long distances. Cap-
acity utilization levels in the sector range from 65% and 62.5% at Kabuye
Sugar Works and Pembe Flour, respectively, to 46% at ICM Rwanda and
20% at Minimex.
Given that processors – with the exception of Kabuye Sugar Works – do
not grow the crops themselves, the quality and quantity of domestically
produced crop inputs is highly contingent on the performance of farmer
cooperatives, and, in particular, issues such as cooperative management,
as well as pre- and post-harvesting methods, the use of fertilizer and avail-
able storage and transport facilities in the vicinity of smallholder farms.
This constraint has forced processors to move upstream and explore ways
of better engaging with cooperatives and smallholder farmers. Innova-
tive models have included JVs with cooperatives (e.g. ICM Agribusiness
Rwanda), service delivery models to smallholder farmers (e.g. ProDev,
owned by Minimex), mechanized farming supported by outgrower
schemes (e.g. BraMin, a JV by Bralirwa and Minimex), farmer demonstra-
tion research plots, support in the procurement of chemicals and fertiliz-
ers and innovative finance models (e.g. the warrantage system introduced
in the Nyagatare district).
A distinguishing feature of this sector is the presence of large multi-
nationals. The wheat-milling sector is dominated by the Tanzanian con-
glomerate, Bakhresa Grain, and the Kenyan multinational, Pembe Flour;
the largest private player in the rice industry is owned by an Australian
agribusiness firm, while Kabuye Sugar Works is owned by the Madhvani
Group, one of the largest companies in Uganda with several regional in-
terests. The only company that is Rwandan owned is Minimex, the maize
miller, but it has also benefited from a capital infusion and management
skills from a Dutch investor.
The staple crops sector is still in the growth phase with numerous op-
portunities to expand the product range, especially higher-value-added
products to satisfy the needs of Rwanda’s growing middle class. A few
small processors like Sosoma Industries, which produces a highly nutri-
tional food product, also called sosoma (soya, sorghum and maize), has
ventured into this space but overall production is still limited. Processing
for Irish potato, cassava and beans is non-existent despite these staples
being among the most cultivated crops.

Resources
The staple crop processing industry comprises a few large players in each
sector, with direct employment numbers ranging from 80 to over 500 em-
ployees per company. All of the processing factories employ a much larger
STAPLE CROPS 111

number of casual workers during the harvesting season and work with
cooperatives, each thereby providing direct and indirect employment to
several thousand Rwandans.
Operating in the staple crop processing sector requires significant fi-
nancial and technical resources, particularly for investment in machinery
and storage, which the aforementioned companies can leverage through
their parent firms based in the EAC or internationally.

Exports
Exports in the staple crop processing sector are minimal with only the
wheat sector exporting its by-products to Kenya and Uganda and limited
maize flour sales to the DRC and Burundi. This is partly driven by the
fact that strong demand for processed staple crops far outstrips supply in
Rwanda.

5.2  Bakhresa Grain Milling

The country’s second largest wheat milling company.
Year established 2010
Latest annual turnover (2010–11) US$21–22m
Number of employees (FTE) 100
Main business activity Wheat flour
Export markets DRC

Company Origins
Bakhresa Grain Milling was incorporated in Rwanda in January 2009 and
began operations as a wheat mill in Rwanda in May 2011 after a year of
construction.
Bakhresa’s Rwandan operations are part of the Bakhresa Group, a fam-
ily business based in Tanzania and started by Said Salim Bakhresa in 1983
as a small restaurant/bakery in Dar es Salaam. Over time the company
moved into producing flour to meet the growing shortages in Tanzania.
Today Bakhresa is one of the largest industrial groups in the region, with
operations in Tanzania, Zanzibar, Uganda, Kenya, Malawi, Mozambique,
Rwanda and Zambia. 70% of the Bakhresa Group’s business derives from
wheat flour production, while other business interests include fruit juices,
ice cream, drinking water, carbonated soft drinks, bread, biscuits, confec-
tioneries, polyethylene sacks, laminated bags, packaging, printing, paper
bags, petroleum trading, services provision (in transportation/logistics),
ferry services and satellite telephones.
112 CHAPTER 5

Bakhresa used to export to Rwanda so it already knew the market well

when it decided to purchase land in the Kigali Special Economic Zone (the
first company to do so) for its first Rwandan plant. Bakhresa decided to
establish a plant in Rwanda to take advantage of the high cost of import-
ing to Rwanda and the benefits of the EAC customs union. The company
secured financing from the IFC for the land acquisition, mill construction,
new machinery, infrastructure, warehouses and transport trucks. This fol-
lowed similar financing arrangements for their grain storage facility in
Mozambique and wheat production plant in Malawi.
Bakhresa plans to start a 360 metric tonnes (per day) mill in Burundi in
mid-2012 and is exploring the possibility of establishing operations in the
Lubumbashi, DRC. However, obstacles to continued expansion include
transportation/logistics issues, high-energy costs, energy quality and tax-
ation rates.
The Rwanda plant produces wheat flour to cater for the Rwandan mar-
ket and the excess capacity will be supplied to eastern DRC. The plant has
a milling capacity of 250 metric tonnes per day and a storage capacity of
12,000 metric tonnes. The modern facility was built using all new state-
of-the-art machinery purchased from a company in Switzerland. In total
the company spent about US$24m to start the plant. The plant also has
its own fleet of trucks to transport raw materials and distribute finished
products. It also performs a trading function for other Bakhresa products.
If sufficient demand existed in Rwanda and costs could be brought within
an acceptable range, Bakhresa could potentially move into manufacturing
an extended range of products.
Bakhresa is one of two wheat flour producers in the country, vying
with Pembe Flour Mills as the largest wheat producer. Bakhresa generat-
ed US$21–22m in 2011 and employs approximately 100 full-time workers
(and another 60 indirect labourers).

Products
Bakhresa’s Rwanda plant produces wheat flour under the popular brand
name “Azam”. Its raw materials come primarily from Australia due to the
low quality and high prices of EAC wheat. Australian wheat is more com-
petitive than EAC inputs due to superior mechanization, lower costs of
energy and better subsidies along the supply chain.
The milling process entails several key steps: Bakhresa receives its raw
materials, i.e. the harvested wheat, by trucks, which are offloaded at their
intake facility. The offloaded wheat is pre-cleaned by an automated process
and is stored in the silos. Based on the production plan, wheat is drawn
from silos and put in tempering/conditioning bins. During this process,
all the screenings are removed and water is added to the bins to remove
the husk. After the conditioning is finished, the wheat is milled and sup-
plements to improve the milled wheat are added. The finished product, i.e.
STAPLE CROPS 113

wheat flour, and by-products (wheat bran and wheat pollard) are separated
automatically and stored in separate bins. Millers within the control room,
using advanced software, control all the above processes. From the fin-
ished flour bins, the flour is packed in various packing sizes depending on
the requirements. The packed flour is stored in the warehouse before being
loaded in trucks for dispatch to various destinations.
Bakhresa is currently working with MINAGRI to assess the potential to
grow wheat within Rwanda; it has already planted a crop and is analysing
the results to determine the quality of the yield.
Bakhresa exports 50% of its production to eastern DRC.

Systems
The managing director of Bakhresa Grain Milling (Rwanda) is Mounir
­Bakhresa, nephew of the founder, Said Salim. He oversees the mill/pro-
duction department, as well as finance, human resources and marketing.
All of B­ akhresa’s company functions are conducted from Rwanda; it does
not rely on the Bakhresa Group for any shared services aside from trans-
port/logistics and packaging. The Rwanda company also has a separate
board of directors.
Bakhresa Rwanda uses Orian, a customized software package from
India, as its MIS for its production and financial management.
The human resources department ensures that senior managers and
technicians are sent to Tanzania for training. Bakhresa also provides in-
ternal training with foreign experts. Since much of the machinery is new,
many of the production and maintenance managers have been sent to Dar
es Salaam for training.
To market its brand, Bakhresa employs various means, including
T-shirts, painted distribution trucks, limited radio advertising and corpo-
rate social responsibility (CSR) efforts. For example, Bakhresa organized
a football game between the Tanzania-based Azam Football Club and a
local Rwandan team.
Bakhresa has a fully fledged laboratory on-site for checking the quality
of its products which is overseen by the quality-control manager and his
team at the QC department.
For distribution Bakhresa works with large wholesale distributors
across the country. It also has its own fleet of 23 trucks to transport fin-
ished products. In addition, limited direct sales take place at the factory
site.
Bakhresa’s machinery was imported primarily from Switzerland, while
a few parts came from other parts of Europe. The sourcing destination
has not evolved over time despite the expensive costs associated with the
Swiss machinery due to the desire for high quality. In addition, Bakhresa
sources its packaging materials and trading finished products from its sis-
ter packaging company based in Tanzania.
114 CHAPTER 5

Resources
Bakhresa employs 100 full-time individuals in Rwanda and 60 indirect
contract workers. Fifteen of Bakhresa’s employees are expatriates who oc-
cupy senior finance, production and technical roles. They come from India,
Kenya, Tanzania and France.
Bakhresa has one large plant in the Kigali Special Economic Zone
(KSEZ). It has also bought land to construct housing for its staff. Other
physical assets include its fleet of trucks and a storage facility of 12,000
metric tonnes, located at the factory site.
Bakhresa’s strengths include being part of one of the region’s largest
business groups, with nearly 30 years’ experience in wheat flour milling. It
can therefore leverage an established supply chain from various countries
such as Australia, the United States, Russia, among others.

5.3  Pembe Flour Mills

The largest wheat milling company and the second largest manufacturing
company in Rwanda.
Year established 2007
Latest annual turnover (2010–11) US$28–29m
Number of employees (FTE) 40
Main business activity Wheat flour
Export markets N/A

Company Origins
Pembe Flour Mills was registered as a new business in Rwanda in 2007.
Pembe Flour Mills Group, headquartered in Kenya and with operations
also in Tanzania and Uganda, entered Rwanda at the invitation of the gov-
ernment of Rwanda, which was looking for potential bidders for a defunct
wheat factory in Byumba.
Pembe Flour Mills Group is a family business and part of the Bajaber
Group of Companies, which includes flour mills in Eldoret, Mombasa and
Nairobi, as well as Tanzania and Uganda. In addition it owns a polythene/
plastics company in Nairobi and a packaging factory in Tanzania. The
founders are Mr Salim Ahmed Taib and Salim Abubaker Ahmed.
For Pembe, the Rwanda acquisition made good business sense, as
­Pembe was already exporting to Rwanda. The wheat market in Rwanda
was not very competitive at the time, leaving an opportunity for Pembe to
capture the vast majority of the Rwandan market. Following the purchase
of the plant, Pembe undertook a huge restructuring of the factory and sur-
roundings, investing more than US$7m in the land, buildings, machinery
and infrastructure, which had become obsolete.
STAPLE CROPS 115

The key challenges at the time of the acquisition included inferior infra-
structure (transport, water, logistics), a lack of skilled labour and erratic
power sources.
Currently, Pembe Flour is the largest wheat milling company in Rwanda,
generating US$28–29m in annual revenues. It provides employment for 60
full-time workers (another 80–90 casual labourers) and has installed cap-
acity of 400 metric tonnes per day, of which 250 is utilized (62.5%).

Products
Pembe’s main product is wheat flour, sold under the “Pembe” brand name.
It also sells the by-products of production for animal feed.
Pembe’s machinery was initially imported from Italy and more recently
from Germany and Turkey. In December 2011, Pembe invested an addi-
tional US$3m to upgrade machinery and increase capacity to 400 metric
tonnes per day. Although there is currently insufficient demand to operate
at full capacity, Pembe anticipates that growth in local markets will re-
quire use of the additional capacity in the future.
Pembe imports 99% of its raw materials from the international market,
due to the low protein and wet gluten content, low quantities and high
costs of local production. Pembe does not see this changing in the near
term given the topography of Rwanda, its smallholder farming structure,
as well as the inclinations of its farmers. Although Byumba historically
was a wheat-growing area, it has proved difficult to boost domestic pro-
duction there. The products’ packaging is also imported from its sister
company in Kenya.
Pembe only exports the by-products of its wheat production process,
which is used in Uganda and Kenya, because there is no large-scale de-
mand for animal feed in Rwanda (due to lack of large-scale dairy or chick-
en farms). The company is considering commencing exports to Burundi
and the DRC if it decides against setting up a factory in Burundi. However,
the company sees significant challenges to exporting from Rwanda, in-
cluding bureaucratic procedures, ability to source sufficient raw materials
on a timely basis (it takes two to three months to receive raw materials)
and regional competitive factors – Burundi is already being serviced from
Tanzania. In addition, production costs are simply too high to commence
exporting.

Systems
Pembe’s managing director is Mr Taib, a member of the Bajaber family.
He oversees the following departments: finance, production, sales and
technical. Pembe uses Sage as its MIS for both accounting and inventory
management.
116 CHAPTER 5

Pembe ensures quality-control standards through an on-site, fully

equipped laboratory to test the content and quality of the wheat flour. The
Byumba factory also hosts a 3,500 ton silo storage and warehousing facil-
ity with an additional capacity of 7,000 tons if necessary.
In terms of distribution around the country, Pembe works with five
exclusive distributors. It also owns and maintains its own fleet of trucks
for transportation of finished products and raw materials. Marketing is
conducted on a ‘‘need to’’ basis. Pembe regularly sends staff to Kenya and
Uganda for training. The company also invites experts for training and
has paid for staff to complete relevant university courses.

Resources
Pembe employs 40 full-time workers and subcontracts 80–90 casual la-
bourers. The office includes three expatriates (from Kenya and Uganda),
who hold senior management positions.
In terms of physical assets, the firm has a plant, machinery and other
related infrastructure on 6 ha of land in Byumba, northern Rwanda. Its
non-physical assets include the extensive resources of the Bajaber Group,
including financial resources and management expertise.
Pembe’s market share is estimated to be fairly high given their first-­
mover advantage following the bankruptcy of Sotiru. Today it is one of
only two wheat producers in the country following the entry of the multi-
national Bakhresa Group in 2010.

5.4  ICM Rwanda Agribusiness

The country’s largest rice-growing and rice-processing company.
Year established 2005
Latest annual turnover (2010–11) US$11–15m
Number of employees (FTE) 160
Main business activity Rice
Export markets N/A

Company Origins
In 2005 the government of Rwanda invited ICM, an Australian agribusi-
ness company, to identify viable investment opportunities in Rwanda’s
agriculture sector. ICM is Australia’s largest privately owned agribusiness
company with over 45 years of experience. It is led by Douglas Shears,
the chairman and owner of ICM Australia. ICM has ongoing projects in
North Africa, with ICM Rwanda Agribusiness being the company’s only
business interest in the EAC.
STAPLE CROPS 117

ICM decided to invest in rice milling in Rwanda on the basis that

(i)  Rwanda has the ideal agro-climatic conditions for rice production
(i.e. abundant rainfall and the possibility of two harvests a year); (ii) de-
mand for processed rice is high, given that rice is a key staple crop for the
population; and (iii) there is a clear opportunity to invest in substituting
the imports of processed rice (which in 2010, for example, amounted to
US$16.5m2).
ICM put Australian experts on the ground for 15 months to analyse
possibilities for productivity increments in the sector. The outcome of this
effort was a decision to set up three JVs with rice cooperatives (two in 2006
and one in 2008 based in Rwamagana, Gikondo and Bugarama) to take
over government-owned factories that were being privatized and to invest
in extending rice production in surrounding areas.
Today, ICM Rwanda employs approximately 160 full-time staff and
generates around US$11–15m in annual turnover.

Products
ICM produces white rice through a rice milling process, which involves
removing the husk and bran layers to produce edible, white rice kernel
that is free of impurities. The grain milling process at ICM Rwanda is not
technologically sophisticated but it is fully automated. The company has
18 different stock-keeping units (SKUs) of rice products (i.e. different sizes
and packaging) to meet consumer preferences. Aside from the rice prod-
ucts, the rice by-products are used in animal stock feed and sold commer-
cially from the mills.
There is strong competition in the rice milling business with at least
19 rice mills located throughout the country. Sixteen are privately owned
(three of which belong to ICM). However, the average capacity utilization
of all the mills in the country is estimated at less than 35% due to shortages
in the supply of rice.
The main source of competition for domestic producers is from im-
ported products. Rwandan traders tend to import Pakistani rice via Mom-
basa, benefiting from preferential duty terms between Kenya and Pakistan.
ICM is currently not exporting but plans to export to Burundi and east-
ern DRC in the future. The main constraint to exports at this point in time
is the scarce supply of paddy rice in Rwanda, which limits the quantities
available for export.

Systems
The three JVs (each running one of the factories) are based on a 60/40
equity split between ICM and selected rice cooperatives. As part of the

2 
RRA data on imports, 2010.
118 CHAPTER 5

agreement, ICM provides capital, agronomy training, technical advice,

corporate governance, marketing and consumer advice. The cooperatives
supply the factories with raw materials.
ICM’s managing director in Rwanda oversees the finance, marketing,
logistics and agronomy departments. There are also separate management
structures for each of ICM’s three mills. ICM operates and manages the
mills on behalf of the JVs and charges a management fee in return.
The installed capacity at each of ICM’s factories is 24,000 tons per an-
num, with current usage averaging approximately 11,000 tons. ICM’s ma-
chinery was imported from Asia and Germany, although the company
has increasingly been purchasing machinery from Asia due to improving
quality and more competitive pricing. ICM’s packaging is directly im-
ported from Uganda.
ICM works with about 28,000 farmers spread over 14 rice-growing co-
operatives that are managed by unions. It works alongside them to de-
velop farmer demonstration and research plots. In addition, it is under-
taking a rice seed multiplication scheme to ensure sufficient high quality
disease-free seeds are available in the future. It also helps in negotiating
arrangements with chemical and fertilizer suppliers to ensure appropriate
logistics arrangements are in place.
In terms of distribution, ICM relies on 12 retail outlets located across
the country, out of which 6 are in Kigali. The company also works with a
wide range of distributors, supplying schools, hospitals and prisons, al-
though competition is often strong due to low-priced imported products.
ICM currently uses Attache as its MIS but will soon migrate to a new
customized ERP system that monitors mill production, the distribution
system, productions needs, as well as a host of other key indicators.

Resources
ICM employs 160 full-time staff, two of which are expats (the chairman,
Mr Shears, and the director of horticulture, Deidre Shears). In addition,
ICM employs 40–50 casual workers during the high season. ICM invests
significantly in training its staff, many of whom did not have inherent
agribusiness skills when they joined the company. Several employees are
in the process of getting degrees with support from the company.
In terms of physical assets the company owns 60% of the three rice
mills and leases its 12 retail outlets.
In general, ICM believes that until the current government of Rwanda
initiatives underway to construct and expand several additional irrigation
areas come on-stream, there will be limited supplies of paddy rice, which
will hamper the productive capacity of the many mills. In addition, one of
the main challenge facing ICM and the Rwandan rice industry, in general,
is the global rice surplus and the dumping of rice in Africa, which under-
mines domestic rice production.
STAPLE CROPS 119

5.5  Minimex
Rwanda’s leading maize milling company.
Year established 2002
Latest annual turnover (2010–11) US$4–5m
Number of employees (FTE) 80
Main business activity Maize flour, bran and grits
Export markets Eastern DRC

Company Origins
Minimex is Rwanda’s largest maize mill and was established in 2002 by a
Rwandan investor, Felicien Mutalikanwa, a lawyer by training who had
previously invested in the mining sector. Despite a slow start to opera-
tions and an ongoing issue with the supply of high quality raw materials
(i.e. maize), Minimex is today the undisputed market leader in Rwanda’s
maize processing sector. Its strength is built on four pillars: (i) a mod-
ern maize milling plant on the outskirts of Kigali; (ii) ProDev, its sister
company, which in 2011 established a modern maize drying and storage
facility in Rwamagana; (iii) its maize grits supply contract with Bralirwa
(the largest beer manufacturer in Rwanda), for which Minimex is the sole
supplier in the country; and (iv) BraMin, a JV with Bralirwa, aimed at op-
erating a modern maize farm in the eastern region of the country. By 2011,
Minimex’s annual revenues had grown to above US$4m and the company
was processing 8,750 tons of maize a year, compared with just 890 tons in
2006. While growth has been positive, in 2011 the plant only operated at
approximately 20.4% capacity (annual capacity is 43,200 tons a year).
In December 2011, Minimex received a fresh injection of capital from
a foreign investor, Claude Mansell, who was also the company’s new man-
aging director. Mr Mansell was Vice-President for Business Transforma-
tion at Capgemini before investing in Minimex. His discovery of Rwanda
as an investment destination was the result of a four-month sabbatical
from Capgemini, during which he was a Kiva Fellow in Rwanda. With
new management and financial resources in place, Minimex expects to
strengthen its growth over the coming years, building on an improved
sourcing strategy and new capital investments aimed at increasing pro-
duction capacity.

Products
Minimex produces three types of maize products targeted at very different
markets: (i) maize flour for consumption by the general public; (ii) maize
grits used in beer production; and (iii) maize bran, which is used as animal
feed (around 50% of the ingredients of typical chicken feed).
120 CHAPTER 5

Minimex’s main line of business is currently maize flour (approxi-

mately 57–62% of sales), followed by grits (25–30% of sales), for which it
is Bralirwa’s sole supplier in Rwanda. The company recently improved its
production of maize flour by producing finer flour that better meets the
market demand. Minimex’s factory currently produces Grade A maize
flour and Minimex is the only maize mill in the country whose products
and processes are certified by the Rwanda Bureau of Standards. Minimex’s
main clients for maize flour include the Ministries of Defence and Educa-
tion, which use this flour for the army and schools. Maize bran (15% of to-
tal income) is sold directly to farmers at the factory and recently to buyers
for large farms abroad (e.g. Kenya).
An additional service provided by Minimex via its sister company,
ProDev, is the drying and storage of maize produce for farmers. Locat-
ed at Rwamagana, the facility enables farmers to either directly sell their
produce to Minimex or dry and store their produce at a fixed rate per kilo-
gramme, and then resell to other buyers. The Rwamagana plant consists
of 50,000  m2 of  land with two silos, a dryer, a weighbridge and several
buildings.
The establishment of Minimex bridged a gap in Rwanda’s maize mar-
ket and value chain. In particular, prior to Minimex, there was no maize
miller able to satisfy the needs of Bralirwa, Rwanda’s largest company, for
maize grits. The creation of Minimex bridged gaps in three markets: the
beer processing market, the food processing market (maize flour) and the
animal feed market, a good example of a company that strengthened the
interconnectedness of the local economy.
In terms of product exports, Minimex currently exports some of its
flour to the DRC, but only in limited quantities through one distributor,
and some of the bran through direct sales to Kenya. However, the com-
pany plans to rapidly scale up its export activity as soon as some capacity
upgrades are completed and sourcing issues resolved.

Systems
Although Minimex has been in operation for 10 years, it is still in the
growth phase. The company is focusing on four key areas of growth in
the coming years: (i) further improving its storage infrastructure (partly
through its sister company, ProDev Rwanda); (ii) enhancing the milling
production capacity to meet market demand; (iii) upgrading its machin-
ery to allow for more flexibility in producing the three product types; and
(iv) improving local sourcing of high quality maize.
The company’s new management aims to double the milling plant’s
capacity from a current level of 144 tons per day to 288 tons by 2014. At
the time of writing, Minimex only produces 12.7% of annual demand,
which is estimated at about 70,000  tons. Minimex’s target is to process
25,500 tons of maize in 2012, 39,000 tons in 2013 and 52,000 tons by 2016.
STAPLE CROPS 121

The main challenge in achieving this growth rate is not production

capacity but sourcing. Minimex has been actively seeking solutions to im-
prove its sourcing of local high quality maize produce, which currently
falls short of requirements, meaning Minimex has to import a lot of its raw
material from Uganda, Zambia and Tanzania. Currently, 60% of the maize
is sourced locally, 40% regionally. This has significant cost implications, in
particular, due to high transport costs. Three initiatives to ease Minimex’s
sourcing constraints stand out:
•  BraMin, a JV between Minimex and Bralirwa, is a pilot project that
introduced Rwanda’s first mechanized/commercial soya and maize
farm. The objective is to support high quality production of maize
and extend the benefits to neighbouring areas, through an outgrow-
er scheme. 500 outgrower farmers are currently being supported
through (i) technology transfer (use of high yield varieties); (ii) farm
equipment made available for use by outgrowers upon payment for
service; (iii) post-harvest services (training); and (iv) guaranteed
sales to BraMin. BraMin operates two farms: the first started in
2005, the second yielded its first maize in August 2011.
•  ProDev, a subsidiary, runs a modern maize drying and storage facil-
ity, and enables farmers to dry and store their grain production at
a certain cost, or sell directly to Minimex. ProDev currently has a
storage capacity of 2,000 tons but is looking to increase this to over
10,000 tons in the near future. The facility has the capacity to clean
20 tons of maize per hour.
•  A new warrantage system. To overcome supply constraints of good
quality maize, Minimex is exploring new procurement options with
cooperatives. One of these new procurement modalities is a warran-
tage system that has been set up in the Nyagatare district. Under
the warrantage system, farmers safely store their produce in a ware-
house and wait for the right time to enter the maize market (i.e. when
prices are higher). Because the maize is safely stored and a market-
able quality is guaranteed, financial institutions are willing to give
loans to farmers at attractive interest rates (2%), using the grains as
collateral. Moreover, given that local demand for high quality grain
far outstrips supply, these farmer cooperatives are in a good position
to secure buyers, such as Minimex and the WFP. While this system
is still in the testing phase, it does appear to provide a win–win solu-
tion for both the farmers and the processors.
Minimex sells the flour directly to relevant institutions and indirectly
to the local retail/wholesale market. It distributes its maize grits directly to
Bralirwa and the maize bran directly to farmers at the factory.
122 CHAPTER 5

Resources
Minimex has become a de facto group, comprising the milling factory it-
self, BraMin, ProDev and a small stake in the Rwanda Grains and Cereal
Corporation, a public–private JV aimed at managing the grain trade in
Rwanda. Its main assets include a modern milling plant (machines were
purchased in bulk from Switzerland in 2008), a drying and storage facility
(ProDev), a commercial farm (BraMin), two silos and several trucks.
The company has about 80 employees, of which four are senior man-
agers. There are currently two foreigners at Minimex, including the gen-
eral manager, Claude Mansell, and a Kenyan director in charge of milling.
There has been significant turnover in the management staff, but that is
now poised to stabilize with the arrival of Mr Mansell. The stabilization
in the company’s management also comes with new financial resources,
which will enable it to reduce its reliance on debt financing and invest in
Minimex’s ambitious growth strategy.
In terms of knowledge/intangible resources, Minimex has two big ad-
vantages to offer: (i) its strong relationship with Bralirwa, through its sales
of maize grits and its JV, BraMin; (ii) the knowledge and capacity to up-
grade its products, for example, Minimex is in a good position to start for-
tifying its flour products, a requirement that became enforced by decree in
early 2012 and that will be costly for smaller competitors.
Minimex’s physical resources include a terrain of 50,000 m2, a modern,
fully automated mill and various pieces of equipment such as cars and
forklift trucks.

5.6  Kabuye Sugar Works

The only sugar-processing company in Rwanda.
Year established 1976 (privatized in 1997)
Latest annual turnover (2010–11) US$10–11m
Number of employees (FTE) 550
Main business activity Sugar
Export markets N/A

Company Origins
Kabuye Sugar Works (KSW), Rwanda’s only sugar processor, was the
first company to be privatized in post-conflict Rwanda. Called Sucrerie
Rwandaise at the time, the company was started by Chinese investors in
1976 and taken over by the Rwandan government in 1978. Activities at
the factory came to a halt in 1994. In 1997, KSW, which had a production
capacity of 210 tons a day at the time, was bought by the Madhvani Group,
a consortium which started in Uganda in 1914 and has been in the sugar
STAPLE CROPS 123

plantation and processing business for over 40 years (it is currently the
largest private sector business group in Uganda). The government allocat-
ed 3,158 ha of land to the Madhvani Group for sugar cane farming and
production and the factory started again in 1998.
Today KSW is one of Rwanda’s largest processing plants, with sales of
over US$10m and about 550 employees on a full-time basis. While capacity
at KSW has grown steadily over the past decade, it remains a small pro-
cessing plant by regional standards, with a processing capacity of 600 tons
of sugar cane a day. Similar industries in the region have a daily processing
capacity exceeding 4,000 tons a day in Uganda, 5,000 tons a day in Tan-
zania and 9,000 tons a day in Kenya. The main constraint to growth is not
machinery, know-how, finance or the size of Rwanda’s domestic market,
but access to land and the raw material, which is in short supply, costly to
import due to high transportation costs and very prone to weather fluctu-
ations (in particular, flooding).

Products
KSW produces raw sugar and molasses, which is a viscous by-product of
sugar cane processing (a bit like syrup or honey). By-products include ba-
gasse, which is used as fuel for the boilers, final molasses, which is used as
cattle feed, and filter cake, which is used as fertilizer. Intermediate prod-
ucts are primary juice, mixed juice and molasses of various natures.
KSW’s sugar is sold in bulk to wholesalers in bags of 50 kg, rather than
in smaller packages. Because of its proximity to the market and its distri-
bution system (KSW works with approximately 71 distributors), KSW has
price leadership in the Rwandan market although sugar prices fluctuate a
lot depending on local market and climactic conditions.
We estimate Rwanda’s sugar market in 2012 to be about US$80–90m,
with KSW – the only local producer – controlling about 25% of that mar-
ket. This means that there is definitely scope for local expansion in the
sugar-processing sector. Currently, 75% of Rwanda’s sugar is imported,
including from KSW’s sister company in Uganda – Kakira Sugar Works –
which can build on KSW’s distribution network.

Systems
KSW is still in the growth phase; since it started operations in 1998 it has
continuously upgraded its processing capacity from 210 tons in 1997 to
275 tons in 2001, 325 tons in 2003, 475 tons in 2005–6 and 600 tons in
2007. Since 2007–8, however, investments have slowed down because of a
shortage of the raw material, sugar cane. The KSW plant is currently run-
ning at about 65% capacity. This has made it difficult for KSW to generate
any economies of scale, especially given the fact that the machinery is not
highly automated and requires a lot of manual labour.
124 CHAPTER 5

All of KSW’s sugar cane is sourced locally and cannot be imported be-
cause of transport costs and the perishable nature of the crop. Therefore,
cultivation needs to be near the processing plant. KSW sources the sugar
cane from its own farm land and from neighbouring sugar cane producers
(which it supports with technical assistance, seeds for the first planting
and free transport to the processing plant). Out of 3,158  ha of the land
leased to KSW at the time of the privatization, only 1,800 ha are cultivated,
the rest being prone to flooding and under water for more than half of the
year. 2011 was a particularly bad year, as floods wiped out 50% of the crop.
KSW is currently exploring alternative options with the government
of Rwanda to increase sugar cane production. Options include (i) a new
allotment of land as the present unused land is not suitable for sugar cane
cultivation due to permanent water stagnation; (ii) desilting of river beds
to control the flooding in the sugar cane farms and reduce crop damage
due to water logging; and (iii) promoting sugar cane cultivation in upland
areas through private farms or cooperatives. However, the time period re-
quired for growing and harvesting sugar cane after reclaiming the swamp
is a minimum of three years, as the sugar cane crop typically matures at 21
months due to the climatic conditions in Rwanda.
KSW maintains an extensive quality-control laboratory on-site that
conducts analysis of the cane in the factory yard as well as in the field for
quantity and yield performance. Analysis of various intermediate prod-
ucts and by-products is also conducted at the laboratory, i.e. measuring the
sucrose content of the materials, auditing the quality of sugar going into
the bags, and the loss due to by-products.

Resources
KSW’s main resource is the fact that it is part of the Madhvani Group. The
Madhvani Group brings with it (i) more than 40 years of experience in
the s­ ugar-processing sector; (ii) stability, as it is a highly diversified group;
(iii) experienced managers and technicians; and (iv) significant financial
resources to support growth.
KSW’s board sits in Uganda, where strategic and policy decisions are
taken. The processing plant is managed by an Indian general manager and
five department managers, which include administration, engineering,
processing, finance and estate/plantation management. The company’s
management and highly skilled staff (e.g. plant manager, chief chemist)
are mostly sourced from abroad. In total, there are 16 expats at KSW,
mostly from Uganda and India. KSW’s technical staff and semi-skilled
factory staff are trained in Uganda.
KSW’s physical assets include a large 50,180  m2 plant on the Gatuna
road, just outside Kigali, which comprises factory buildings, machinery,
staff residences, sugar plantations, estate forest and an assortment of
­vehicles.
Chapter 6

Horticulture and Specialty Plants

6.1  Background and Overview

Rwanda’s horticulture sector comprises a large variety of fruits, vegetables,
essential oils and speciality plants such as pyrethrum and tobacco. As can
be seen in Figure 6.1, the largest crops in terms of cultivation area in 2010
were banana, beans and cassava, followed by maize, potatoes, sorghum
and sweet potatoes. Smallholder farmers – within cooperatives – pro-
duce these crops for domestic consumption. Currently, there is very little
processing, packaging or exporting of these products. Excluding tea, cof-
fee, pyrethrum and processed foodstuffs, total agricultural/agribusiness
exports of these products in 2010 amounted to a mere US$2.3m, 85% of
which is accounted for by beans (US$1.3m) and maize (US$0.5m).
Over the past few years, there has been an increasing focus on diver-
sifying from tea and coffee into horticulture and alternative high value
export crops. Rwanda has the right climatic and soil conditions to produce
a range of horticulture and floriculture products, including:
•  fresh fruits (such as avocadoes, passion fruit, strawberries, tree to-
matoes, gooseberries, pineapple, desert bananas, Japanese plums
and mangoes);
•  vegetables (mushrooms, soybeans);
•  spices (capsicum: paprika, bird’s eye chillies);
•  nuts (macadamia, cashew nuts);
•  cut flowers (roses, orchids);
•  specialty plants (essential oils, such as petunia and geranium, pyre-
thrum, vanilla and silk).
Small-scale investments in these sectors have started to take hold:
Sosoma Industries is a cooperative-based agro-processing firm that pro-
cesses sorghum flour, soya flour, maize flour, etc.; East African Growers, a
126 CHAPTER 6

Banana
Beans
Cassava
Maize
Irish potato
Sorghum
Sweet potato
Soya
Vegetables
Wheat
Peas
Fruits
Coffee
Yam and taro
Groundnuts
Tea
Rice
Sugar
0 50 100 150 200 250 300 350 400
Area (103 ha)

Figure 6.1  Area under cultivation (2010). Source: MINAGRI 2012.

leading Kenyan agribusiness group, has invested in commercial avocado

production in Rwanda; FreshPack processes and exports avocados, apples,
bananas, hot peppers, French beans and eggplants. There are also new
entrants focusing on mushroom production (Kigali Farms), plant propa-
gation for fruits and horticulture products (FAIM), essential oils (Ikirezi
Natural Products), macadamia nuts (Norlega) and soybeans (Soyco Ltd.
with the Mount Meru Group of Kenya). The Rwanda Development Board
and MINAGRI are actively trying to promote the horticulture sector to
larger investors.
In this chapter, we focus on two specialty plants, tobacco and pyrethrum,
that are being processed at an industrial scale, as well as the processing of
horticulture products such as tomatoes and dried fruits/vegetables.

Products
Tobacco. Tobacco is a small industry in Rwanda even though tobacco pro-
duction and consumption is centuries old. In 1975, Tabarwanda, a govern-
ment parastatal, was established to manufacture cigarettes. At the time, it
was the sole tobacco processor and manufacturer of cigarettes. It was later
privatized in 2002 when British American Tobacco bought the majority of
shares. Following a corporate restructuring effort in 2006, BAT moved the
production of cigarettes to Nairobi and maintained a distribution office in
HORTICULTURE AND SPECIALTY PLANTS 127

Kigali. Currently, there is only one large domestic manufacturer of ciga-

rettes in Rwanda, Premier Tobacco Company (PTC), which manufactures
various brands of cigarettes targeted at the rural market.

Pyrethrum. Only a few countries in the world produce pyrethrum, a

natural botanical insecticide. The country’s sole pyrethrum processor
is ­Sopyrwa, which produces refined pale extracts (used for aerosols and
liquid insecticides), crude oleo resin (used in mosquito coils formulation)
and pyrethrum marc (filler material for powder insecticides). Plans are
afoot to produce aerosols, crop protection and public health insecticides
for local consumption.

Dried fruits/vegetables. Numerous food-processing companies are based

in Rwanda but most operate at a small scale and are considered artisanal.
One of these companies is Shekina Enterprises, which has developed a
reputation for commercializing traditional food products by drying and
packaging horticulture products such as cassava, millet, sorghum, wheat,
soya, fruits, etc. The small company has also ventured into manufacturing
cassava flour and hopes to begin production of traditional beverages such
as fermented sorghum.

Tomato processing. Tomatoes are grown in abundance in Rwanda for

local consumption but there is only one company, Sorwatom, involved in
processing tomatoes to make tomato paste. There is limited new product
development and the domestic production of Sorwatom stalled when the
company ran into financial difficulties. Operations have recently resumed
production following a capital injection by a Kenyan investor.

Systems
The main issues transpiring from firm-level interviews with horticulture
and specialty plant processors is that the supply of raw materials (in terms
of quality and quantity) and the management of farmer/cooperative rela-
tionships are major constraints to growth. PTC, the sole tobacco proces-
sor, imports 98% of its raw material from the DRC and Uganda and re-
lies strongly on the cooperatives working in tobacco plantations. Tomato
supply for Sorwatom is unpredictable; they rely on production in one out
of Rwanda’s three harvesting seasons. Maintaining strong relationships
with cooperatives is critical to the success of horticulture firms given that
production of horticulture products is undertaken by small-scale farm-
ers and cooperatives. In the case of the pyrethrum sector, the turnaround
of Horizon Sopyrwa was contingent on the company’s ability to restore
the relationships with cooperatives to persuade them to resume growing
­pyrethrum.
128 CHAPTER 6

Resources
While a majority of Rwandan farmers are involved in the cultivation of
horticulture products, farming is primarily for personal consumption and
direct employment in either large-scale cultivation of horticulture crops
or processing horticulture crops is relatively small. The largest processing
firms include Urwibutso, Sosoma Industries, FreshPack, Shekina Enter-
prises. In contrast, processing firms in the specialty plants sector provide
direct employment to a large number of people, especially those engaged
in the cultivation and processing of pyrethrum (200+ direct employees
and 30,000 farmer families) and tobacco production (129 direct employees
and 2,000 contracted farmers).
Interestingly, all the companies profiled in this chapter are Rwan-
dan-owned, with the exception of Sorwatom, which recently had a capital
injection from a Kenyan company. However, there are new foreign en-
trants in the horticulture-processing sector such as East African Grow-
ers (Kenyan), Kigali Farms (Belgium) and Soyco Group (Kenyan JV with
Rwandan investors), among others, suggesting growing foreign interest in
Rwanda’s horticulture processing sector.

Exports
As indicated above, horticulture products are primarily exported in their
raw form with limited processing. The exceptions to this are PTC, Hori-
zon Sopyrwa and Shekina, which are profiled in this chapter. The most
export-oriented firm within the sector is Horizon Sopyrwa, which exports
90% of its pyrethrum production, valued at more than US$4m in 2011.

6.2  Premier Tobacco Company (PTC)

The sole local processor of tobacco and cigarette manufacturer.
Year established 2000
Latest annual turnover (2010–11) US$2–3m
Number of employees (FTE) 129
Main business activity Tobacco processing
Export markets DRC

Company Origins
Mr Assinapol Rwigara, the founder of Premier Tobacco Company, started
his work in the tobacco sector in the 1970s as a distributor for various
cigarette brands. In 1989, before the war broke out, he was importing
cigarettes for British American Tobacco (BAT) through his distribution
HORTICULTURE AND SPECIALTY PLANTS 129

company, Binter Impex. Distribution operations were halted due to the

war but, following the genocide, Mr Rwigara restarted as a distributor for
BAT and in 2000 began local production through a Secondary Processing
Department. This department made the cigarette filler by inserting pro-
cessed leaves into the cigarettes and then packaging the finished product.
In 1999 Mr Rwigara decided to leave BAT and started the Rwigass
Cigarette Company, which changed names to Premier Tobacco Company
(PTC) in 2002. In 2002, PTC began selling its two main brands – Filter
Star King and Premier Filter – using imported processed leaves from Paki-
stan. In 2005 PTC started a Primary Processing Department (PPD), which
would buy the tobacco leaves regionally and then crush them, separate
stems and blend and moisturize the remaining leaves for the cigarettes.
Mr Rwigara has other business interests in Rwanda including the new-
ly established Socaci Soaps, Cartons and Cosmetics Industries, previously
known as Sakirwa, which manufactures various FMCG. He is also in-
volved in real estate development, such as the construction of the Premier
Hotel in Kigali.
PTC’s turnover is approximately US$2–3m per year and its capacity is
currently 6,000 boxes per month.

Products
PTC’s initial brands in 2002 were Filter Star King and Premier Filter. Since
then, PTC has introduced three new products: Filter Star Light, Super Fil-
ter Star Light and Premier Super. PTC’s products vary based on the blend-
ing and level of nicotine to meet the different tastes of its consumers.
Because tobacco farming requires large tracts of land, nearly all of
PTC’s raw materials traditionally came from large plantations in eastern
DRC. However, Uganda has recently become a significant supplier and the
current split is approximately 70/30 between the DRC and Uganda. PTC
has no issues sourcing adequate supplies from the DRC. The company
contracts approximately 2,000 smallholders in Uganda and the DRC for
its supply chain. Only 2% of PTC’s raw material is sourced locally from
Rwandan smallholders.
PTC’s production process involves initially removing stems and veins,
and cutting the leaves into strips. Various tobacco strains are then blended
in rotating drums to get the desired cigarette flavour. For example, blends
of bright, Burley and Flue-Cured tobaccos are used along with mois-
ture-holding substances, such as apple juice or glycerine, and flavourings,
such as honey, licorice or mint.
PTC’s primary processing equipment was imported from India in 2005.
Its secondary processing equipment came from Europe and China in 2000
and 2001, respectively. In 2010 the company invested in new machinery
130 CHAPTER 6

including a green leaf threshing department that comprises machin-

ery that automatically crushes leaves, separate the stem from leaves and
moisturizes them; previously, this was done manually by several hundred
casual labourers. When the green leaf threshers are in full operation, PTC
plans to sell processed leaves to other African countries as well as to some
European countries. PTC has also partnered with Newco Leaf, based out
of Singapore, to help market the PTC tobacco leaf internationally.
PTC’s main competitor domestically is BAT, as well as other imported
cigarettes from Uganda and Burundi. PTC cigarettes are considered cheap-
er than BAT products and have stronger market share in the price-sensi-
tive rural areas (BAT is stronger in the urban areas).

Systems
PTC is managed by its CEO, Mr Assinapol Rwigara, who oversees oper-
ations and production. Operations comprise finance, human resources,
marketing, legal, and trade and logistics departments. Production includes
departments focused on primary processing, secondary processing and
green leaf threshing. Kenyan and DRC nationals oversee the production
departments. In addition, PTC has separate directors for its Uganda and
DRC operations. PTC has been using Sage software since 2006 as its MIS.
PTC’s distribution network includes seven distributors who cover all
the provinces of Rwanda. PTC exports intermittently to the DRC but has
encountered difficulties working with distributors there. It is also explor-
ing the possibility of exporting to South Sudan.
In terms of marketing, PTC is challenged by the fact that tobacco mar-
keting was banned in Rwanda in 2007. Its distributors now build aware-
ness through road shows to meet stores and potential clients. PTC meets
regularly with distributors and holds an annual appreciation dinner to
thank them for their support of its brand.

Resources
PTC employs 109 full-time staff, in addition to which there are approxi-
mately 20 expatriates from Kenya, the DRC and Burundi to oversee tech-
nical operations and maintenance.
Its main assets are a large 2 ha plant in Gikondo, which includes a ware-
house and machinery.
As the only local manufacturer of cigarettes in Rwanda, PTC has built
a thriving business and strong regional supply chain, and is now looking
to further diversify its product line by exporting processed leaves to Kenya
and Europe. It continues to face challenges due to the overall declining
HORTICULTURE AND SPECIALTY PLANTS 131

demand for cigarettes in Rwanda as well as high VAT and excise duties
levied on its products.

6.3  Shekina Enterprises

Innovative agro-processing company that introduced the popular “Akeza”
cassava flour.
Year established 2008
Latest annual turnover (2010–11) <US$1m
Number of employees (FTE) 41
Dry fruits and vegetables, traditional
Main business activity
beverages
Belgium, Canada, US, South Africa,
Export markets
DRC, Burundi

Company Origins
Shekina Enterprises, an agro-processing company, was started in 2008
by Mr Pierre-Damien Mbatezimana in Rulindo district, right next to
­Urwibutso. In the same vein as Mr Sina Gérard, Urwibutso’s entrepre-
neurial founder (see Section  7.6), the story of Shekina Enterprises and
Mbatezimana is one of entrepreneurship and creativity. Mr Mbatezimana
started off his career working as an accountant in his family’s trading busi-
ness. However, Mr Mbatezimana was very interested in finding ways to
add value to local crops, in particular, cassava leaves. He started carrying
out research and experiments on his own on how to dry fruits and vegeta-
bles and in 2005 created a self-made drier for cassava leaves, which he test-
ed at the National University of Rwanda’s laboratories. In 2007 his dried
cassava leaves were presented at an exhibition of Rwanda’s Private Sector
Federation, and received wide acclaim. In 2008 Mr Mbatezimana decided
to start a company to process dried cassava leaves using his own drier.
After four years in operation, Shekina Enterprises has less than US$1m
in total revenues and employs more than 41 people during the productive
season. Shekina makes about 75% of its revenue from exports to regional
and international markets.

Products
Shekina Enterprises is a pioneer firm in the dried cassava leaves market and
after four years remains the only dried cassava leaf producer in the coun-
try. Today an estimated 70% of its sales come from dried cassava leaves. In
132 CHAPTER 6

late 2008, Shekina Enterprises also started producing cassava flour under
the brand name Akeza, which in Kinyarwanda means something “good /
high quality”. Akeza currently accounts for about 20% of Shekina’s sales.
Over the past few years Shekina has also started experimenting with other
products, including the drying and/or milling of millet, sorghum, wheat,
soya, and even the drying of fruits and vegetables such as pineapple, ba-
nanas, eggplant, amaranth, carrots and leeks.
The newest product Shekina Enterprises will be bringing to market in
2012 is Shela, a traditional drink made of fermented sorghum. The com-
pany’s strategy is to sell these in branded fridges, in restaurants, shops, etc.
Shekina Enterprises has already invested in 30 fridges and plans to diver-
sify its juice range to include juice from pineapple rinds and tree-tomato
juice. The target clients for these juice products are low-middle-income
customers.
An interesting feature of Shekina Enterprises is that it has targeted the
export market from the outset, even if volumes remain very small. Most
agribusiness food processors (excluding commodities such as tea, coffee,
pyrethrum) start by serving the needs of the local market before exporting.
Shekina Enterprises found a niche market in the Rwandan diaspora in Bel-
gium, and later added the United States, Canada, South Africa, Burundi
and the DRC to the list. Dried cassava leaves, which are non-perishable,
are quite popular among the diaspora. Other items that are exported in-
clude dried eggplants, cassava flour, millet flour, sorghum flour, fermented
sorghum flour (for making the traditional sorghum drink), peanut flour
and dried pineapples.

Systems
Shekina Enterprises, like Urwibutso, is positioning itself as a firm that
commercializes and adds value to traditional Rwandan food products,
targeting, in particular, the lower-middle-income market. The company
works with traditional raw materials, which it sources directly from about
1,000 farmers in Rulindo district. Due to low volumes and its proximity
to the production source, Shekina Enterprises has faced few problems in
sourcing its raw material.
The main problem for Shekina Enterprises is keeping up with demand.
The plant is currently running at full capacity and has the capacity to pro-
cess about 1.5 tons of fresh produce per day, partly thanks to the purchase
of a second drier from South Africa. Shekina’s current machinery consists
of one milling plant, two driers, crushers, a bottling machine, two pasteur-
izers, grainers and a centrifuge for the company’s traditional drink pro-
duction line. All the machines – except the mill, the newly purchased drier
HORTICULTURE AND SPECIALTY PLANTS 133

and an industrial bottling machine that has been ordered from China –
have been fabricated by Mr Mbatezimana himself.
Shekina Enterprises imports its packaging for Akeza flour from Kenya
and the glass bottles for its traditional drinks from Tanzania. Sales are
made directly to supermarkets and restaurants using a couple of vans and
trucks, while exports are done through established distributors. Shekina is
currently also opening a new retail outlet in Kigali’s new city market and
has plans to open an outlet in Brussels this year with the aim of distribut-
ing across Europe. This will allow them to export fresh produce too, such
as avocados, sweet potatoes, cassava tubers, French beans, eggplants and
bananas.
The company is currently seeking Rwanda Bureau of Standards certifi-
cation for its Akeza and Shela brands, a step which will put the company
in a better position to raise capital and grow.

Resources
In terms of human resources, Shekina Enterprises currently employs 41
staff full time and has up to an additional 65 workers during the produc-
tion season. All staff are Rwandan. Mr Mbatezimana is the chairman;
Shekina Enterprises has recently hired a CEO to oversee all production,
finance and marketing operations. Given the small scale of the operation
to date, other than the CEO Shekina Enterprises does not employ a highly
qualified staff pool.
Current assets include the plant, machinery and a few transport vehi-
cles. To date Shekina Enterprises has self-financed its investments.

6.4  Horizon Sopyrwa (Société de Pyrethre au Rwanda)

The country’s only pyrethrum-processing company.
Year established 1972
Latest annual turnover (2010–11) US$5–8m
Number of employees (FTE) 72
Main business activity Pyrethrum
US, Europe, Asia, South Africa and
Export markets
Ghana

Company Origins
Horizon Sopyrwa is a private company located in the northern province of
Musanze. It produces pyrethrum, a natural botanical insecticide, derived
from the chrysanthemum flower. Sopyrwa has the capacity to produce
134 CHAPTER 6

3,000 tons of dry flowers a year and its factory contains a state-of-the-art
refinery, which produces the best quality pale extract that is mainly sold
to US clients. The production area “paysanat” of 14,000 ha of volcanic soils
is currently distributed to 30,000 pyrethrum growers organized into 23
cooperatives.
Pyrethrum was originally introduced to Rwanda in 1936 by private
growers on a small scale in the northwestern region of the country. Lat-
er in 1963, the government of Rwanda took an interest in the new cash
crop and promoted pyrethrum growing on a large scale by making avail-
able a belt of 14,000 ha in the Virunga National Park area, a region with
optimal conditions for pyrethrum growing (high elevation, volcanic soil
and well-distributed rainfall). At least 7,000 farmers grouped together in
a ­pyrethrum association were allotted two hectares each. They used the
land on a contract basis for food production and pyrethrum growing on a
rotational system.
In 1972 the government, supported by UNIDO, built a processing plant
(Usinex) for crude extract production in Musanze near the pyrethrum
farming community. Dry pyrethrum flowers, which were previously ex-
ported to Kenya to be processed, could now be processed in Rwanda, in-
creasing the value addition of Rwanda’s exports to the United States and
South Africa. In 1978 the planters’ association was merged with the pro-
cessing plant (Usinex) to form Opyrwa (Office du Pyrethrum du Rwanda),
a government-owned company.
During the following two decades, the pyrethrum industry in Rwanda
faced ups and downs, as was the case for its peers in East Africa (Kenya
and Tanzania). This was exacerbated by the 1994 genocide, which left the
pyrethrum business at its lowest state, as the processing plant was looted
and plantations abandoned. This hastened the privatization of the com-
pany, which was subsequently bought by a Rwandan investor in 2000. Fol-
lowing the privatization, the company was renamed Sopyrwa.
In 2008 the company faced multiple challenges, including (i) a lack of
funds to pay staff and farmers; (ii) no ongoing research to diversify its
product range; (iii) decreased plant yields; and (iv) an absence of consist-
ent buyers for its product. The company was then bought by the Horizon
Group, one of Rwanda’s largest holding groups, owned by Military Med-
ical Insurance (MMI) and Zigama Credit and Savings Society. The com-
pany was renamed Horizon Sopyrwa.
With the aim of turning the business around, Horizon undertook the
following key changes from November 2008.

Farmers. Horizon began by organizing the farmers and their production

again. They provided increased support to motivate the farmers to grow
HORTICULTURE AND SPECIALTY PLANTS 135

more pyrethrum, conducted research to increase crop yield and drying

processes (e.g. change from wood-burning drying to sun-drying and air
circulation), and organized farmers into their own cooperatives to elim-
inate middlemen. Horizon also introduced good agricultural practices,
training, improved clones, soil fertilization and free seedlings for farmers.
Farmers are now also provided with additional incentives, such as cows,
mattresses or cash, when they produce a high quality product.

Production and capacity utilization. Horizon’s major intervention on pro-

duction capacity was to introduce a two-season crop production cycle and
expand into new areas. The aim of the company is now to increase the
yield per hectare from 240 kg/ha to about 800 kg/ha by 2015.

Dryers. Eleven new dryers were bought that use more sophisticated tech-
nology and increase the quality of the pyrethrins in dry flowers from 1.2%
to 1.5%. The company has plans to increase the number of these dryers
from 11 to 24.

Land consolidation. In 2010, with government support, farmers under-

took land consolidation for pyrethrum such that pyrethrum is no longer
mixed with other crops such as maize or beans. As a result production
has increased by nearly 100% from 378 tons a year to 700 tons a year and
continues to grow. Ninety agronomists (ranging from university and high
school graduates to farmers who underwent training) were hired on an
ongoing basis to supervise this process.

Research. In 2011 Horizon Sopyrwa started conducting scientific research

on 12 varieties to select high yielding varieties and eliminate certain vir-
uses through in vitro fertilization and tissue culture methods. This has
helped to improve production from a single crop.

Management. A corporate restructuring plan was implemented in 2011

that included an institutional audit to determine skills gaps, which led to
replacement of some existing staff with qualified technicians. In addition,
new departments such as legal, marketing and procurement were created
to support the main business.
As a result of this turnaround plan, production has increased threefold
since 2009.
Horizon Sopyrwa has an annual turnover of US$5–8m (2011) and em-
ploys approximately 72 full-time staff. The company has an installed cap-
acity of 3,000 tons a year and a utilization rate of 29% (2011), which is
considerably higher than the 6% pre-Horizon level (2009). The plan for
2012 is to increase capacity utilization to 50%.
136 CHAPTER 6

Products
Horizon Sopyrwa has created a portfolio of three pyrethrum-based prod-
ucts: (i) refined extracts (pale), highly refined extract that is primarily used
in the manufacture of aerosol products, vaporizing mats, liquid evapo-
rating formulations and certain specialty veterinary and pharmaceutical
preparations; (ii) crude oleo resin, a dark viscous liquid containing 25–
33% pyrethrins used in the formulation of mosquito coils as well as space
sprays and dusts; and (iii) pyrethrum marc, the vegetable remains after
extraction used as a filler material in mosquito coils and in the formula-
tion of the pyrethrum powder insecticides.
The process to obtain the pyrethrum product is complex, involving
multiple stages of drying, extraction and refinement to remove any impu-
rities. The pyrethrum daisy plant is first dried at the cooperative and then
undergoes moisture and content analysis at the factory. The flowers are
ground to powder and passed through extractors, which produce the py-
rethrum liquid. This is in a semi-fine quality (i.e. 30% pyrethrum and 70%
organic matter) and subsequently undergoes further refinement to remove
the organic matter to obtain a pure pyrethrum liquid.
Currently, 90% of the Horizon Sopyrwa’s product is exported to clients
in the United States (four clients), Europe (five clients), Africa (two clients:
South Africa and Ghana), and Australia and New Zealand (one client),
with demand far outstripping supply. Other clients from Asian countries
have recently begun contacting Horizon Sopyrwa to supply pyrethrum.
Ten percent of production is retained in Rwanda to be used by Agro­
Pharm Africa (a company formed through a JV agreement with a UK-
based firm, AgroPharm and Horizon) to produce aerosols, crop protection
and public health insecticides for local consumption. One limiting factor
to growth of the Rwandan business is the availability of packaging. Cur-
rently, the plastic containers are imported from Spain and other suppliers
in the region. Installation of the machines began in December 2011 and,
at the time of writing, is due to be completed by August 2012. Prior to
the Rwandan operations of AgroPharm Africa, Horizon Sopyrwa would
send the pyrethrum to the AgroPharm in the UK to formulate the product,
which would then be sold to clients in West Africa.
Horizon Sopyrwa’s pyrethrum has also been used domestically through
a project with the Ministry of Health where the pyrethrum formula was
used to lace mosquito nets.

Systems
Following the takeover of the Horizon investment group, Horizon
­Sopyrwa business is clearly in the growth stage, with management focus-
ing on increasing the current production capability. Horizon Sopyrwa’s
HORTICULTURE AND SPECIALTY PLANTS 137

management structure includes the managing director, who oversees the

factory production, laboratory, crop production and the finance and ad-
ministration departments. The board of directors meets quarterly and
consists of nine members from Kenya, Europe and Rwanda, and currently
oversees various subcommittees on finance and administration. Horizon
Sopyrwa is also, at the time of writing, undergoing an evaluation for the
ISO 2001 certification, with the award expected this year.
The pyrethrum product is exported to its various destinations entire-
ly by air. A key challenge to growth of the business in the future will be
to negotiate affordable freight charges with Rwandair, Ethiopian Airlines,
Qatar Airlines and Emirates to export destinations as the business contin-
ues to expand.
Very few competitors exist in the pyrethrum market, with the main
sources being Kenya, Uganda, Australia, Papua New Guinea and China,
although notably projects in Kenya and Uganda have stalled in recent
years. As Horizon Sopyrwa cannot compete on quantity with these other
nations, due to the limited land they have focused on improving the quali-
ty of the product (through an improved drying system and better climatic
conditions). Rwandan pyrethrum is recognized as one of the best qual-
ity products in the world. This has created a competitive advantage for
­Horizon Sopyrwa and the chance of quickly becoming a key player on the
world stage.

Resources
Horizon Sopyrwa has 72 full-time employees and hires approximately 140
seasonal workers depending on demand. It works with 23 cooperatives
that comprise approximately 30,000 farmer families. Out of the 72 full-
time workers, there are two foreign experts: a laboratory manager and
a machine engineer, both of whom have several years experience in the
pyrethrum business. The staff at Horizon Sopyrwa is fairly highly skilled,
with at least two holding masters degrees and most staff with bachelors
degrees and/or several years of work experience.
The farmers with which Sopyrwa works currently own 14,000 hectares
of land, which they use under a contract that stipulates that at least 40%
of the land has to be utilized for pyrethrum and other rotational crops.
Of the 14,000, only 3,000 hectares are being used as land for pyrethrum
production. This creates an area of possible expansion for the pyrethrum
production process.
The company is currently in talks with the Rwanda Development Bank
(BRD) to increase capital investment to improve machinery and increase
the utilization of capacity. In terms of intangible resources Horizon
­Sopyrwa currently has very strong client and customer relationships and
also key management and financial support from the Horizon Group.
138 CHAPTER 6

6.5  Sorwatom
Rwanda’s only tomato paste manufacturer.
Year established 1986
Latest annual turnover (2010–11) <US$1m
Number of employees (FTE) 32
Main business activity Tomato paste
Export markets N/A

Company Origins
Sorwatom is Rwanda’s, and for a long time also East Africa’s, only tomato
paste manufacturer. It was created in 1986 by a group of 11 Rwandan in-
vestors who saw an opportunity to transform local fresh tomatoes into to-
mato paste, aiming to compete with tomato paste imports, which amount-
ed to an average of about US$400,000 per year at the time. The investors
purchased an Italian tomato paste production line (parts of which are still
in use today) for an estimated initial capital investment of about US$1.8m.
By 1988–89 the company had turned a profit, employed about 100 people,
worked with over 1,000 farmers and had started exporting to neighbour-
ing DRC (formerly Zaire).
Three key elements made this investment possible: (i) a loan from
BRD (Banque Rwandaise de Développement); (ii) tax exemptions under
the investor code at the time; and (iii) high tariffs on tomato paste im-
ports, which all but stopped in 1988. Between 1988 and 1994 tomato paste
imports amounted to a mere US$2,000–3,000 per year, compared with
US$400,000 during the period to 1980 to 1988.
Sorwatom’s history has been one of ups and downs. Production at Sor-
watom came to a complete halt in 1994. The facilities were damaged dur-
ing the genocide and the company closed its doors until 2004. Only in
2003–4 did the rehabilitation of the facilities and machinery start, with
new capital investments amounting to US$1.5m. In 2004, with a domestic
market for tomato paste estimated at about US$650,000, the factory was
up and running again. This time, however, the company would run at a
loss, facing both increased international competition from brands such as
Salisa and Merisa and a very unreliable supply of fresh tomatoes. In 2011
Sorwatom went bankrupt, failing to pay back a US$1.5m loan to Access
bank and accruing US$550,000 in arrears to farmers. The company was
taken over by Access bank and sold to a Kenya-based investor consortium,
Dillux.
Dillux is looking to inject new life into the company with a different
sourcing strategy and a revamp of its corporate systems. At the time of
writing this profile, production at Sorwatom had restarted.
HORTICULTURE AND SPECIALTY PLANTS 139

Products
Since it started operation, Sorwatom has focused on the production of one
product: tomato paste. Tomato paste is a simple product that requires only
two ingredients: fresh tomatoes and salt. The fresh tomatoes are cleaned,
sorted, crushed, softened, concentrated to about 28%, pasteurized and
finally packaged. The packets are then sterilized, cooled and dried. The
whole transformation process happens along a processing line, requiring
very little human intervention, except the transporting of the fresh toma-
toes to the entry point of the production line, the transfer of the tomato
paste to the pasteurizing and packaging line and the disposal of process-
ing waste, consisting mainly of tomato seeds and skins. The quality and
taste of the final product is highly contingent on the quality of the fresh
tomatoes at the entry point.
Product development at Sorwatom came in the form of new packaging
and was introduced in 2006 at a time when factory facilities were being
rehabilitated and upgraded and when major new investors came on board.
Sorwatom used to package the tomato paste in tins, but shifted to small
70  g aluminium packets, which are both more practical for consumers
(smaller quantities, easier to conserve) and cheaper to produce. The shift
to aluminium, which upgraded the look and feel of the product, required
the purchase of new packaging equipment, a pasteurizing machine and a
cooling and drying unit. The packets themselves are currently imported
from China, a connection that was made possible through a Chinese deal-
er based out of Kigali. Working at only 20% capacity, Sorwatom produced
2.9m sachets or 29,000 cartons in 2011, which according to back-of-the-­
envelope calculations amounted to a market share of about 30%.
New product development is not the immediate concern for the com-
pany, although Sorwatom could, in theory, diversify into other tomato de-
rivatives, such as ketchup and tomato sauce. However, as operations pick
up, product diversification is bound to be part of the corporate strategy.

Systems
Sorwatom’s main asset and strength is its processing line, which, despite
occasional breakdowns, is for the most part modern and in good condi-
tion. The processing line has the capacity to process 80 tons of tomatoes
per day, more than enough to meet the demands of the local market and
to export to neighbouring Burundi and DRC. The processing line is divid-
ed into two main sections: the first transforms the tomatoes into tomato
concentrate; the second takes the tomato concentrate from pasteurization,
through to packaging, cooling and drying. The challenge is to keep these
machines in good condition. Sorwatom currently does not have the in-
house capacity to make repairs, and instead calls in expensive external
140 CHAPTER 6

expertise whenever machines are faulty. This can also lead to lengthy and
costly delays, in particular, when spare parts are not readily available.
The biggest systemic problem Sorwatom faces is the supply of raw
material and the management of the relationships with farmers and co­
operatives. However, with the help of the government of Rwanda (through
NAEB) farmers are being mobilized and provided with agricultural inputs
such as seeds, fertilizers and chemicals. In addition to the unreliable qual-
ity of tomato supplies, scarcity has also been a major issue for the com-
pany. There is excess demand for fresh tomatoes on the market and since
2009 the company has only been able to rely on production in one out of
Rwanda’s three harvesting seasons, between the months of July and No-
vember. Due to heavy rains, 2011 was a particularly bad year. Given that
the minimum input required to start the machines is 30 tons of tomatoes
per day, Sorwatom has only operated for three to four months per year at
20% capacity over the past few years.
Due to low production, the company gradually accrued huge debts to-
wards its suppliers, consisting of 14 different tomato producer coopera-
tives. These debts led the company to a de facto bankruptcy in 2010–11 and
severely strained the trust relationship between the company and tomato
farmers. Sorwatom had supplied farmers with various inputs, including
fertilizer, pesticides and technical advice, but failed to make timely pay-
ments. Restoring supplier trust has been a key focus for the new investors.
Dillux is also strategically investing in new systems that should enable
the company to qualify for key certifications, such as the Rwanda ­Bureau
of Standards Quality Mark and ISO 22000:2005. This is expected to in-
volve investments of over US$1m, the upgrading of facilities and the cre-
ation of a lab where microbiological quality tests on the product can be
carried out. The company already has some quality-control systems in
place, including temperature controls to ensure the pasteurization and
cooling processes are effective and inspections are carried out at the clean-
ing phase. Dillux has purchased new computers to professionalize admin-
istrative procedures, and Sorwatom has been connected to the Internet for
the very first time.

Resources
Sorwatom’s main fixed assets are limited to the factory, storage space,
movable property, office furniture, the compound and administrative
units, which (apart from the processing line) need upgrading to meet the
standards required for certification. Its financial situation up until late
2011 was in the negative but the company can now count on the finan-
cial backing and management experience of a Kenya-based investment
consortium. Following a government bailout in March 2011, it could start
with a clean slate.
HORTICULTURE AND SPECIALTY PLANTS 141

Sorwatom’s brand name, though widely recognized and established

in Rwanda, is likely to have suffered from the fact that the product had
virtually disappeared from the shelves due to limited production. From a
knowledge perspective, the tomato paste Sorwatom produces is extremely
simple and very similar to other products on the market – there is nothing
in the ingredients or the mix that would set Sorwatom completely apart
from its competition. Sorwatom’s human resource base is currently limit-
ed to 32 full-time staff.
Chapter 7

Dairy and Beverages

7.1  Background and Overview

The beverages sector is the largest agribusiness industry in the country,
with annual revenues of more than US$150m. The formal beverages sector
dates back to the establishment of Bralirwa on the shores of Lake Kivu
in 1957. Today, Bralirwa remains the dominant player in this market. It
is also the largest company, and one of the oldest, in Rwanda (with an
annual turnover of US$130–140m in 2010). Bralirwa was the sole brewer
and manufacturer of soft drinks for decades. However, with the growth of
a consumer class in Rwanda, the sector has seen the entry of new players.
A recent entrant in the beer sector is Brasserie des Mille Collines (BMC),
which began operation in 2009 and markets the Skol brand. While BMC
remains comparatively small in size (US$10–11m in 2010), the company is
investing heavily in expanding production to serve both the Rwanda and
Burundi markets. Other players include Inyange Industries (US$7–8m in
2010), which is the leading food-processing firm in Rwanda, producing
fruit juices, drinking water and dairy products. Finally, one of the more
innovative Rwandan companies in the food-processing sector, Enterprise
Urwibutso, produces a wide variety of traditional drinks and mineral
­water.1
In contrast, the dairy sector is relatively informal. It is estimated that,
in 2008, an astonishing 96% of milk marketed was in the informal market
and at least half of all milk produced never reached the market due to
supply chain challenges, on-farm consumption and the price differential
between raw milk and processed milk (TechnoServe 2008). Following the
1994 genocide, which devastated the cattle population, the government of

1 
Urwibutso has been classified in the beverages/dairy sector as approximately
70% of its revenues are derived from fruit juices and alcoholic drinks, although it
also produces a wide variety of processed foods.
144 CHAPTER 7

Rwanda implemented several initiatives aimed at restocking cattle and

improving dairy production, through the “one cow per poor family” or
Girinka programme, importing exotic cattle breeds from abroad, and the
Dairy Cattle Development Support Project (Projet d’Appui au Développe-
ment de l’Evage Bovin Laitier, PADEBL), which supported the construc-
tion of milk collection centres (MCCs) and milk processing plants.2 As
a result, the cattle population and dairy production have both increased.
However, there is only a handful of processing plants in Rwanda, includ-
ing Inyange Industries (the largest dairy-processing company), Masaka
Farms, Nyanza Dairy (Laiterie de Nyanza) and Rubirizi Dairy (currently
stalled operations).

Products
Beverages. Bralirwa and Brasserie de Mille Collines are the only domestic
producers of beer and both actively compete with East Africa Breweries
Ltd., which imports Kenyan and Ugandan beers. Sparkling or carbonated
drinks are produced solely by Bralirwa, which has held the sole license
for Coca-Cola products since 1974. Inyange Industries and Enterprise
Urwibutso are the largest fruit juice manufacturers. Both face competi-
tion from Kenyan imports such as the Del Monte Group. The largest tra-
ditional drinks manufacturer is Enterprise Urwibutso (with their trade-
mark banana wine), but the subsector also includes smaller players such as
Shekina Enterprises (fermented sorghum drink) and cooperatives such as
­Coproviba (banana wine). Several companies produce mineral water, the
largest of which is Inyange Industries, which vies with Sulfo Industries’
Nil water brand, and other brands including Huye water.

Dairy. The only large dairy processors are Inyange, Masaka Farms and
Nyanza Dairy. Inyange is the dominant leader in this sector producing
pasteurized milk products such as fresh whole and skimmed milk, UHT
milk, fresh cream and yogurt. Masaka Farms, a relatively small producer,
produces a wide variety of yogurt, fresh cream, cheese and butter products.
Laiterie de Nyanza is known for its curd milk, cheese and yogurts. The
market is also awash with dairy product imports from Kenya and Uganda.

Systems
Beverages. The brewery sector relies on imports for most raw materials
(e.g. sugar, malt, hops, etc.) and packaging. Given that foreign investors
own the majority of the two breweries (Heineken and Unibra); these com-
panies can leverage an extensive sourcing network in Europe and in East
Africa. The larger-scale players in the market have established extensive

2 
The objective of the Girinka programme is to place dairy cows into the houses
of the poorest households in Rwanda to improve livelihoods.
DAIRY AND BEVERAGES 145

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6

Input
Producer Transporter MCC Processor Retailer
provider

Figure 7.1  Standard dairy value chain. Adapted from TechnoServe (2008).

distribution networks in Rwanda to ensure that their products are deliv-

ered to all parts of the country in a quick and inexpensive way – some-
thing that the smaller players in the beverage sector and the dairy sector
continue to struggle with. For example, Bralirwa maintains its own depots
across the country and Inyange has been following suit with three depots
servicing distributors and exporters. Further, as a testament to the scale of
the sector, several small trading companies focus exclusively on the distri-
bution of Bralirwa and Inyange products. Other firms, e.g. Urwibutso and
Laiterie de Nyanza, dealing in beverages such as fruit juices and tradition-
al drinks or in dairy products operate at a much smaller scale and rely on
sales agents or conduct direct sales from their factory.

Dairy. The dairy industry has significant challenges with its supply chain
in terms of receiving quality and quantity inputs from dairy farmers.
Given its size, Inyange has been able to solve this problem by moving up-
stream in the value chain by acquiring Savannah Dairy in 2012 and es-
tablishing supply contracts with a farmer’s union to reach its short-term
production targets. With a view to the Longer term, Inyange has com-
menced expansion of their chilling and storage facilities. For other dairy
processing companies that do not have Inyange’s financial capacity, the
supply chain remains a major challenge.
In a standard value chain (see Figure 7.1), farmers produce fresh milk
on their farms that is moved by a transporter to a milk collection centre
(MCC). The MCC chills the collected milk, preventing spoilage before sell-
ing it on to a processor. The processor adds value to the milk by extend-
ing its shelf life or producing by-products (TechnoServe 2008). The final
product is purchased from the processor and sold by a retailer to the end
customer.
In Rwanda’s case, milk production is undertaken on a micro or small
scale by farmers with a few cows. They bring the milk to the nearest town,
where they are tasted for basic qualities such as acidity. If it passes the test,
the milk is sold to informal roadside vendors. Very few channels exist to
move the milk to the larger processors, which require it to be of consist-
ent quality and quantity (TechnoServe 2008). Agricultural input for dairy
farmers is very low given the limited knowledge, cost and the availabili-
ty of the necessary animal feed. MCCs are typically run by cooperatives
but are a relatively new concept and, as a result, are not well established.
The investment required to set up an MCC is relatively high, especially
when taking into account the cost of chilling tanks, and quality-control
146 CHAPTER 7

equipment. However, there are some recent initiatives by the private sector,
such as Kivu Dairy, the first private MCC in the country, which, if success-
ful, has plans to expand throughout the country. Given the current state of
the dairy sector, most dairy processing companies are currently running
at between 35 and 50% capacity.

Resources
The beverages and diary sector is one of the largest direct employers in the
country with over 1,000 workers. Bralirwa is by far the biggest employ-
er in the sector, with 528 full-time employees, and several more casual
­labourers.
As an FMCG sector, this sector conducts some of the most extensive
marketing outreach and it is no surprise to see that the branding and mar-
keting of this sector’s products are driven by nationalistic and emotional
sentiments and symbols. A quick look at the array of product brands il-
lustrates this clearly, from Bralirwa’s Primus advertising that focuses on
national pride, Inyange, which is the Kinyarwanda term for a national bird
(the cattle egret), to Urwibutso’s assortment of brand names that connote
concepts that are recognized in the rural communities, e.g. Urwibutso,
which means a memory. This ensures that the products in the Rwandan
beverages and dairy sector are quite possibly some of the most recogniz-
able brand names in the country.

Exports
The beverages sector is domestically oriented, with less than 2% of current
production exported to neighbouring Burundi and DRC (an estimated
US$3.1m), which points to a strong domestic market and a potential op-
portunity for expansion.3 Nevertheless, the sheer size of the sector makes
it one of the largest non-coffee/non-tea exporters in the country.
The dairy sector is currently unable to meet domestic demand and ex-
ports are non-existent.

7.2  Bralirwa
The largest manufacturing company in Rwanda and the largest brewery.
Year established 1963
Latest annual turnover (2010–11) US$132–133m
Number of employees (FTE) 528
Main business activity Beer and soft drinks
Export markets DRC, Burundi and Uganda

3 
Based on 2010 export data (Comtrade).
DAIRY AND BEVERAGES 147

Company Origins
Brasseries et Limonaderies du Rwanda (Bralirwa) is the largest company
in Rwanda and leading producer of beer and sparkling beverages in the
country. It was also the first company to ever have been publicly traded
on the Rwandan stock exchange, following its successful IPO in 2010, in
which the government of Rwanda sold a 25% stake to the Rwandan people.
Prior to this, Bralirwa was owned 70% by Heineken and 30% by the gov-
ernment. At the time of the IPO, the government also sold a 5% stake to
Heineken, making Bralirwa a fully privately owned company.
Bralirwa’s history stems from the Belgian-owned company Bralima,
which operated in the DRC and, in 1957, decided to set up a factory on
the eastern shores of Lake Kivu to produce, distribute and sell beer and
soft drinks. In 1963 Bralirwa was incorporated and began operations as a
Rwandan company. In 1974 it obtained the license to be the sole producer
and distributor of Coca-Cola products in Rwanda (Coke, Fanta, Sprite,
etc.).
Today Bralirwa is 75% owned by Heineken, a leading global beer manu-
facturer, and 25% by the Rwandan people. It has two subsidiaries: BraMin,
a maize-growing company (of which it owns 50%) and Cogelgas4, a meth-
ane gas production company (of which it owns 62.4%). Bralirwa also has a
minority stake in Banque Rwandaise de Développement (BRD).
Bralirwa contributes significantly to the Rwandan economy, as both a
major employer and taxpayer. In 2010 the company’s production volumes
reached a record 1.3 million hectolitres (130 million litres) of beer and
sparkling beverages. It is the largest taxpayer in Rwanda, providing ap-
proximately 12% of the domestic tax revenues. Today, Bralirwa employs
over 528 full-time workers. In 2010, it generated US$132m in revenues.

Products
Bralirwa’s alcoholic beverages include beer brands such as Primus, Mut-
zig, Amstel, Guinness (under license from Diageo) and Turbo King. Its
sparkling beverages include Vitalo Eau Gazeuse (soda water) as well as
Coca-Cola licensed products such as Coca-Cola, Fanta, Sprite and Krest
Tonic. It also imports Heineken beer, Coke Zero and 50 cl PET bottles of
Coca-Cola and Fanta. It has the sole Coca-Cola production license, which
dates back to 1974.

Beer products.
•  Primus, Rwanda’s biggest beer brand and Bralirwa’s first product
was introduced in 1959 with the start of the Gisenyi operations. It

Cogelgas has since ceased operations.

4 
148 CHAPTER 7

is a regional brand that is also produced in Burundi, the DRC and

Congo-Brazzaville. The beer is bottled in 72 cl bottles and since 2007
also in 33 cl bottles to meet the changing market demand.
•  Mutzig is the premium local beer, which was introduced in 1987
and is ranked second in terms of beer volumes after Primus. Mut-
zig Draught beer was also recently introduced to cater to a specific
market.
•  Amstel, like Mutzig, is also positioned as a premium beer brand and
is one of the Heineken Group’s international beer brands.
•  Heineken is the flagship beer of the Heineken Group and is posi-
tioned as the top international premium beer.
•  Guinness is bottled under license from Diageo in 33 cl bottles.
•  Turbo King is a recently introduced dark beer, which is also sold in
Nigeria, the DRC and Congo-Brazzaville.
The company has two production sites: a brewery and sparkling bev-
erages plant in Gisenyi on Lake Kivu (Northern Province) and another
sparkling beverages plant in Kicukiro, Kigali, where the company’s head
office is also located. The Gisenyi plant (consisting of a brew house, fer-
mentation and lagering tanks, and two bottling lines) was set up in 1959
and has seen regular upgrading and investment to improve quality and
extend capacity. In 2008 at least US$0.5m was invested to increase capacity
and 2011 saw the installation of additional fermentation tanks and a cap-
acity extension of the brew house. Today, the current production capacity
of the Gisenyi plant is 1.1m hectolitres per year (approximately 130m bot-
tles). The Kicukiro plant was constructed in 1974, had an initial capacity
of 300,000 hectolitres per year and has also been upgraded over the years.
The company uses water, barley, malt, hops, yeast, maize and sugar as
raw materials in the production process. These raw materials are sourced
from Europe (malt and hops), Rwanda (maize and water) and Zambia
(sugar). Crowns and labels are produced in Kenya and Egypt. Packaging
materials, such as returnable glass bottles are imported from either Kenya
or Tanzania. To lower its supply chain risks, Bralirwa and Minimex es-
tablished a joint venture company, BraMin, which grows maize on 250 ha
of land in Rwanda in the first industrial agriculture operation of its kind.
Currently, Bralirwa’s beer market share is estimated at around 90% of
the domestic market and 99% of the sparking beverages market, which
Bralirwa hopes to maintain in the future. The Primus and Mutzig brands
comprise 88% of the Rwandan beer market and are, consequently, the lead-
ing brands in the country. In 2010 a new domestic competitor emerged,
Brasserie de Mille Collines, whose signature beverage is Skol. Bralirwa
also faces competition from imported products from East Africa Brewer-
ies Ltd such as Bell, Tusker, Club & Nile Special. However, given the rela-
tively high costs of importing beer from Kenya or Uganda due to costs of
DAIRY AND BEVERAGES 149

freight, fuel and insurance, Bralirwa is well positioned to compete against

imports.
Bralirwa currently exports to the DRC, Burundi and southwest Uganda.
The volume exported to the DRC (mainly into Goma) and Uganda repre-
sent around 5% of Bralirwa’s total sales.

Systems
The composition of the board of directors has changed since the listing of
the company. The board recently appointed Mr Jonathan Hall as its new
managing director. The senior management team consists of five directors,
including finance, commercial, technical, human resources and logistics.
The internal audit manager and the company secretary also report to the
managing director.
In 2010 Bralirwa installed a fully integrated proprietary and custom-
ized MIS software called Navision, leveraging the licensing arrangements
with the Heineken Group.
Bralirwa uses an extensive distribution network to reach all corners
of Rwanda, which comprises professional distributors (who own their
own warehouses) and third-party transporters. It also owns strategically
located depots in Mukeri, Nyagatare, Musanze, Nyabibaha, Ngoma and
Karubanda.
Bralirwa performs ongoing consumer research and continuously in-
vests in marketing and raising brand awareness to build maximum con-
sumer relevance and acceptance. It has positioned Mutzig as the leading
high-quality beer in Rwanda and uses international advertising cam-
paigns adapted to the Rwandan context for many of its products. Primus
is positioned as a national brand and the advertising is based on national
pride. Bralirwa envisions Primus as its major source of future growth as
it is seen as an aspirational product, the advertising for which has been
aimed at those with new sources of disposable income in Rwanda, includ-
ing the growing urban population.
Quality management is encouraged through the company’s total pro-
ductive management (TPM) programme, a management efficiency and
quality programme aimed at measuring and monitoring the progress of
their key performance indicators (KPIs). This programme aims at trans-
lating the production process into higher-quality and quantity products,
while minimizing losses. Bralirwa also has to adhere to the quality, safety
and environmental policies of the Coca-Cola Group and Heineken.
Bralirwa actively engages in corporate social responsibility (CSR) ac-
tivities, including HIV/AIDS and malaria awareness and prevention pro-
grammes. It also supports numerous local schools and charity groups. The
company has its own health clinics in Gisenyi and in Kigali. All employees
and family members are treated free of charge.
150 CHAPTER 7

Resources
The company has over 1,000 employees, which includes 528 full-time staff
and 45 managers. It employs five expatriates in senior positions, including
human resources, finance, technical operations and overall management.
The company’s assets include a beer and sparkling beverages plant on
the shores of Lake Kivu capable of producing 1.1 million hectolitres per
year. In addition it has a sparkling beverage plant in Kicukiro, Kigali. Ad-
jacent to the Kicukiro plant is a waste-water treatment plant5 with a cap-
acity of 210 cubic metres per day to minimize environmental degradation
from the plant wastage. The company also owns several of the depots that
it uses around the country as well as its aforementioned stakes in BraMin,
BRD and Cogelgas. In addition it owns two residential properties in Kigali,
used for housing its staff.
In terms of non-tangible assets, the company has deep financial and
technical resources6 through its parent company, Heineken, and strong
brand equity (built over nearly 50 years of business) in Rwanda.

7.3  Brasserie de Mille Collines

A new entrant in the beer sector and the country’s second brewery.
Year established 2009
Latest annual turnover (2010–11) US$10–11m
Number of employees (FTE) 75–80
Main business activity Beer
Export markets Burundi

Company Origins
Brasserie de Mille Collines (BMC) is a local brewery established in 2009
and owned by UNIBRA. UNIBRA is a Belgian-based company that oper-
ates in the beverages sector in several African countries.
In 1964 an international alliance – Skol International Limited – was
formed by four international brewing companies, whose aims were to pro-
vide a worldwide service in technical and marketing fields for the promo-
tion of Skol International beer.
Leading breweries in many different countries were licensed to brew
Skol to a standard formula, brewing to perfection using only natural in-
gredients: pure water, a unique blend of hops and barley malt. This led to

Bralirwa plans to invest in a new waste-water treatment plant in Gisenyi.

5 

This includes technology transfer and technical assistance agreements, trade-

6 

mark licensing agreements and distribution and bottling agreements.

DAIRY AND BEVERAGES 151

an increasing popularity to rank among the top three to four beer brands
by volume in the world.
Today, BMC is estimated to control 10% of the beer market share within
a relatively short period of time and provides employment to at least 135
people, including casual labour. Approximately 20% of sales are exported
to Burundi.

Products
BMC produces two beer brands: Skol Malt and the recently introduced
Gatanu 5 Lager. Skol Malt is a 100% malt beer and is their flagship brand.
Using only three ingredients (malt, water and hops), the brewer has won
two international gold medals for its quality (in 2010 and 2012) from the
Monde Selection International Institute for Quality Selection. Skol’s rapid
acquisition of market share reflects consumers’ aspirations for high-qual-
ity beer. Gatanu 5 has recently been introduced into the market. Gatanu,
which means five in Kinyarwanda, is also the most affordable beer on the
market, selling for 600 Rwf for a 65 cl beer.
BMC is currently undergoing a US$15m expansion plan to grow its pro-
duction capacity, which currently stands at 100,000 hectolitres.

Systems
BMC plans to grow both in capacity and efficiency. This means using tech-
nology for energy-efficient production methods such as their US$0.5m
state-of-the-art waste-water treatment plant, which is remote-controlled
via the Internet by its European supplier to ensure the treatment meets
the highest standards. This has enabled the company to reduce its energy
consumption by 18% in the past six months.
BMC carefully utilizes marketing to break into the premium beer mar-
ket, dominated to date by the Mutzig and Primus brands. The main value
proposition of the Skol beer is that it is a 100% malt beer with no sugar
or sugar substitutes used in its production. This has resonated with the
drinking population of Rwanda, who are becoming more health conscious
and are reducing their sugar intake – a testament to Rwanda’s growing
middle class.
Other marketing channels include radio, direct promotional material
(caps, T-shirts, branded fridges, etc.) distributed widely to point-of-sales
and national promotion campaigns that enable consumers to win mer-
chandise and luxury items such as mobile phones, laptops and cars.
BMC distributes through numerous sales agents and wholesale distrib-
utors located throughout the country. When it first began operations, the
company decided to focus on one area to build up a distribution system
and establish the brand. Distribution was concentrated in Kigali only,
the core of the Rwanda beer market but gradually from September 2010,
152 CHAPTER 7

distributors have been expanding all over the country and are looking at
warehouses to achieve further coverage.
Training is another large component of BMC’s operations. Internal
training ranges from computer skills, sales to equipment installation and
training. This is supplemented by regular training trips to Nairobi, espe-
cially to the bottling plants.

Resources
BMC is managed by Mr Weingarten, a stalwart of the brewing industry in
Germany. The company employs approximately 135 staff, of which 75–80
are full-time employees.

7.4  Inyange Industries

Rwanda’s leading food-processing company, including dairy and beverages.
Year established 1997
Latest annual turnover (2010–11) US$10–11m
Number of employees (FTE) 195
Main business activity Dairy products, drinking water, fruit juices
Burundi, eastern DRC, Uganda, Tanzania,
Export markets
South Sudan and Congo-Brazzaville

Background
Inyange started in 1997, as part of Crystal Ventures Group7, with the vi-
sion of becoming the leading food-processing company in Rwanda. In
1999 it began operation, which included processing and selling pasteur-
ized milk and yogurt. Later the plant introduced bottled mineral water (in
2001) and fruit juices (in 2004). In 2005, realizing that domestic demand
for all Inyange products was much higher than its facilities could supply,
Inyange embarked on an ambitious US$35m project to increase its plant’s
capacity in Masaka tenfold. This increased capacity and more than ful-
filled the local demand, while also giving Inyange the opportunity to ex-
pand its market to the neighbouring countries, thereby taking advantage
of Rwanda’s strategic position in the East African Community’s customs
union.

7 
Crystal Ventures Group is one of Rwanda’s largest investment groups. The
CVL Group of Companies portfolio consists of NPD Cotraco, Real Contractors,
Bourbon Coffee, Intersec Security, Mutara Enterprises, Media Systems Group,
BMI, GPS Rwanda and CVL Developers.
DAIRY AND BEVERAGES 153

Today, Inyange Industries is Rwanda’s leading food-processing com-

pany, with an annual turnover of US$10m, and it employs 195 full-time
employees.

Products
Inyange’s product lines focus on three main areas:
•  dairy, which includes pasteurized milk products such as fresh whole
and skimmed milk, UHT milk, fresh cream and yogurt (the com-
pany has plans to add higher-value products such as ice cream, but-
ter and cheeses);
•  mineral water, which includes bottled purified water in two sizes of
(500 ml and 1 l); and
•  fruit juices, which include nectars and juice drinks with a wide range
of flavours.
Exports are currently 10–12% of Inyange’s total sales. Inyange has re-
lationships with distributors in Burundi, eastern DRC, Uganda, Tanzania,
South Sudan and Congo-Brazzaville. The estimated market share of the
company ranges from 80% in dairy to 75% in mineral water and 55–60%
in juices. Inyange’s main competitors include Nil and Huye for mineral
water, foreign imported juices and Masaka Farms for yogurt.
Inyange’s plant in Masaka (on the outskirts of Kigali) has a capacity
to produce 5,000 litres per hour of mineral water, 5,000 litres per hour of
milk, and 5,500 litres per hour of juices in the familiar Tetra Pak one-litre
bricks. They also have a Krones production line for water and fruit juices
with the capacity to produce 13,000 half litres per hour and 10,000 litres
per hour. At the time of writing, it operated at only 35–40% capacity, al-
though the company hoped to increase this to 50% by the end of 2012.
In March 2012 Inyange acquired Savannah Dairy located in Nyagatare,
and began a US$2m plan to expand capacity of the chilling and storage fa-
cilities to 15,000 litres per hour and 40,000 litres, respectively. In addition,
Inyange entered into a supply contract with the Nyagatare Farmers’ Union
for a minimum of 35,000 litres daily, which should help Inyange reach its
short-term production target of 50,000 litres per day. In the longer term,
Inyange hopes to reach its full capacity in dairy, which is approximately
100,000 litres per day.
For packaging, Inyange uses an aseptic filling process and does all
the packaging internally. Inyange has the capacity to provide packaging
for other customers but would need to import the raw materials. Also, it
would need to find the right opportunity that is not in conflict with its
other business interests.
154 CHAPTER 7

Systems
Inyange employs current technologies from around the world. Its water
and beverages machinery was brought from Germany; the milk line came
from Australia, Denmark and the United States; and packaging equipment
came from the leading global supplier of packaging solutions, Tetra Pak.
The plant in Masaka also has a state-of-the-art waste and water-treatment
plant on site. In term of food-processing facilities, the plant is considered
to be on a par with regional competitors such as Del Monte. Inyange has
employed SAP as an MIS since mid-2010.
The company uses three types of training to keep employees current on
the latest systems and technologies: internal training by local experts; tech-
nical courses on installation and training by European experts brought in
especially for that purpose; and external training opportunities such as
study tours and courses, depending on the needs of the company.
For distribution, Inyange also works with accredited distributors for
each of the provinces with sales targets per distributor. Inyange maintains
three strategically located depots in Kigali (main warehouse), Rubavu and
Rusizi to serve the distributors and exporters in neighbouring countries.
The company acquired ISO 22000-2005 in 2012. It also aims to achieve
ISO 14000 certifications on its environmental systems. The Rwanda Bu-
reau of Standards (RBS) has certified its quality standards, which allows it
to export throughout the EAC.

Resources
Inyange has 195 full-time employees and 200 casual employees. In 2010
it increased shifts to three times per day to meet increasing demand. The
company employs nine expats, including seven technicians from the EAC
and two from outside the region.
To achieve strong brand recognition, Inyange engages in significant
marketing around the country through billboards, radio and television
advertising.
As part of CVL group, Inyange enjoys access to substantial managerial
and financial resources. Inyange has plans to expand the supply chain and
upgrade factory capacity. It also plans to diversify products to different
customer segments by introducing new packaging that addresses middle
customer segments, e.g. loose milk packages. In terms of exports, it would
like to increase exports especially to Congo-Brazzaville. Inyange is con-
sidering divesting some of its assets to investors to raise funding for these
expansions.
Inyange continues to try to overcome a number of challenges along the
supply chain including achieving quantity and quality targets from farm-
ers. It struggles with the cost of packaging and lack of human capital in
Rwanda. Despite these challenges, in little over 10 years it has managed to
achieve substantial market share in Rwanda and beyond.
DAIRY AND BEVERAGES 155

7.5  Laiterie de Nyanza (Agro-Processing Industries)

One of the oldest dairy plants in Rwanda.
Year established 2010
Latest annual turnover (2010–11) <US$1m
Number of employees (FTE) 60
Dairy products, coffee, horticulture/crop
Main business activity
production, and sericulture
Export markets N/A

Company Origins
The history of Laiterie de Nyanza (Nyanza Dairy) stretches back to pre-­
independence Rwanda in 1937 with the establishment of a dairy farm in
the southern district. The dairy company had to stop activities during the
political instability from 1957 to 1963 but restarted operations through
funding by UNICEF in 1965. The management of the dairy farm was
passed to the Ministry of Agriculture and in 1983 the name was changed
for a period to Laiterie de Nyabisindu to reflect the name of the commune.
The company stopped operations in 1994 and resumed them in 1995, but
had limited activity until 1999.
In 1999 the company was handed over to the Ministry of Defence under
the management of the Rwanda Defence Force (RDF) Production unit –
the Rwandan national army’s production arm. Significant areas of idle
government land that were used as former military training grounds in
eastern Rwanda were consequently transformed into agricultural farm-
land. RDF production started working in dairy (through the Nyanza Dairy
processing plant and Songa Dairy Farm, which hosts the dairy cows), cof-
fee and sericulture projects.
During the privatization era that followed the genocide, the company
was partially bought by the Horizon Group and renamed Horizon Agro-
Based Production in 2006, which brought together other agro-processing
units that RDF Production would manage such as coffee and horticulture
production under one company.
Desiring a clear break from the RDF Production unit, Horizon Agro-
Based Production was formally registered in 2010 as a private company
called Agro-Processing Industries (API) Ltd., which now operates inde-
pendently of the RDF. The primary shareholders include 50% sharehold-
ing by the MMI (Military Medical Insurance) and 50% by Zigama Credit
and Savings Society (CSS).
Nyanza Dairy plant is one of the oldest dairies in Rwanda, yet it is
relatively modern thanks to a significant capital investment of about
US$800,000 in 2010 to upgrade and invest in new pasteurizers, homogen-
izers and other stainless steel equipment. The API Group employs about
156 CHAPTER 7

60 full-time workers, produces between 3,000 and 4,000 litres per day and
generated less than US$1m in annual revenue in 2010.

Products
Dairy. Nyanza Dairy has processed curd milk and dairy products such
as cheese and yogurt for local consumption since 2002. The company has
plans to produce UHT milk and milk powder through its milk collection
and processing centre in the south of the country. Today, Songa Dairy
Farm owns over 500 Friesian cows to supply Nyanza Dairy and the plant
also receives supplies from farmers within the area.
API has other interests in the agribusiness industry in Rwanda. The
four strategic business units include coffee, dairy, crop/horticulture pro-
duction (maize, soya, cassava, pineapple and mangoes) and they have re-
cently initiated a sericulture project.

Coffee. API operates nine washing stations and one mini-station around
the country. In 2011 API exported approximately 207.3 tons of green ful-
ly washed arabica coffee through the National Agricultural Export Board
(NAEB).

Crop and horticulture production. API has cultivated 1,000 ha for cassava
plantations, 800 ha for maize production, 74 ha for pineapple production,
5,000 mango tress and also grows soya beans. Most production is sold for
domestic consumption but there are plans to develop the soya bean and
sunflower crops to supply Mount Meru Soyco Ltd, which is building a
plant for oil production at Kayonza in Eastern Province. The production
areas are located in the eastern part of the country in the Gako and Gabiro,
where the military camps are located.

Sericulture. API is a partner on the MINAGRI-led National Sericulture

Centre with other stakeholders such as the sericulture cooperatives, the
Rwanda Silk Farmers Federation (RSFF) and the textile firm, Utexrwa.
The aim of the project is to enable technological transfer of multiplication
and distribution of silk mulberry cuttings to farmers, which will be used
to produce a wide variety of silk products. The NSC project operates 45
regional sericulture centres, including Kigali. While the plantation of the
mulberry trees and training has commenced, production has not begun at
the time of writing.

Systems
Nyanza Dairy plant currently operates at 50%, producing between 3,000
and 4,000 litres per day out of an installed capacity of 8,000 litres per day.
The main constraint to full capacity utilization is the unpredictable de-
mand for dairy products.
DAIRY AND BEVERAGES 157

For its operations, the dairy plant imported machinery from Kenya in
2002 and regularly solicits technical assistance for packaging from Tetra
Pak in Kenya. They also rely on Ugandan expertise for new product devel-
opment, machine maintenance and marketing consultants.
They work with 10 distributors, 6 based in Kigali and 4 across the coun-
try, to distribute their dairy products. The company does not have any re-
tail outlets but direct sales are conducted through the plant in Nyanza
District only to the primary schools in the area. Nyanza Dairy’s products
are well known throughout Rwanda, especially their popular curd milk
product, obviating the need for high marketing expenses. The company
does not currently export and has no plans to commence in the near future.
The competitive landscape for dairy products is limited to the much
larger Inyange Industries (which recently also bought Nyagatare/Savan-
nah Dairy) and smaller players such as Masaka Farms. Another competi-
tor, Rubirizi Dairy, has since closed operations.

Resources
API provides employment to at least 60 full-time workers. Nyanza Dairy
directly employs 28 full-time workers; 30 are based in the coffee plantation
and 4 workers are located in the sericulture project.
API operates out of its headquarters in Kigali city but has vast land as-
sets for its horticulture/crop production, coffee and sericulture projects.
Nyanza Dairy is located in the southern Nyanza District and consists of
the dairy processing plant and Songa Farm, which hosts the dairy cows.

7.6  Enterprise Urwibutso (Sina Gérard)

Innovative pioneer of processing traditional foods and drinks.
Year established 1993
Latest annual turnover (2010–11) US$3–4m
Number of employees (FTE) More than 200
Food processing: fruit juice, traditional
Main business activity food products and beverages, flour,
mineral water, etc.
EAC (Uganda, Kenya), Middle East
Export markets (Oman) and Europe (Belgium, UK,
France)

Company Origins
Enterprise Urwibutso was started in 1983 as an informal company by Mr
Sina Gérard, a visionary entrepreneur who remains at the company’s helm
over 30 years later. Urwibutso, which in Kinyarwanda means “a memory”,
158 CHAPTER 7

started as a small vegetable retail shop and bakery along the Kigali–­
Musanze road selling local produce. Its strategic location – in ­Nyirangara/
Rulindo, almost exactly at the halfway mark between Kigali and Musanze
– made it a regular stopover for travellers and customers. However, what
differentiated Urwibutso from other little retail stores and bakeries at the
time – and this is something that has become a hallmark of the company
today – was innovation. Today Urwibutso is a highly diversified agribusi-
ness firm, employing over 200 people with sales surpassing US$3.5m, with
a very strong brand name, strong supplier networks and with exports to
neighbouring countries, the Middle East, the United States and Europe.
Its founder, Mr Sina Gérard, is the archetype of the successful self-made
entrepreneur, who went from starting a small retail shop to managing a
small business empire, and stands out as a source of inspiration for other
entrepreneurs in Rwanda today. In his own words, he wants his company,
Urwibutso, to serve as “a memory” of what is possible for future genera-
tions of entrepreneurs in Rwanda.

Products
According to the founder and the company’s CEO, the main source of
­Urwibutso’s growth and success has been continuous and consistent prod-
uct innovation. Urwibutso’s first breakthrough came in 1987, four years
after its establishment, when the small shop/bakery introduced a new
doughnut that quickly gained fame and remains popular to this day. In
1993 – at around the same time the company was officially registered for
the first time – Urwibutso started producing passion fruit. This led to
the introduction in 1998 of what is today Urwibutso’s best-selling prod-
uct, passion fruit juice. The move into passion fruit juice firmly shifted
the company from pure agricultural production into the industrial trans-
formation of agricultural products or agribusiness. Since then innovation
at Urwibutso has come at a rapid pace, and has included banana wine in
2000, pineapple juice and strawberry juice in 2002, biscuits and the fa-
mous chilli pepper oil Akabanga in 2004, oil from passion fruit seeds in
2007, cereal-based flour in 2008, yogurt in 2009, packaged peanuts in 2010,
wine in 2011 and mineral water in 2012.
While the core of its business remains the transformation of agricultur-
al products and beverages, Urwibutso has also diversified into the flowers
market (roma and antholium), livestock, catering/restaurants, tile produc-
tion, construction, carpentry and ecotourism. What binds these activities
together is their rural nature. Mr Gérard’s vision was to bring tradition-
ally homemade products to an industrial scale, be it food products or soil-
based products such as tiles. Urwibutso’s innovation has often been pack-
aging or quality control as in the case of banana wine, flowers, peanuts,
jam or the introduction of new varieties, such as strawberries and vines,
hitherto not produced in Rwanda.
DAIRY AND BEVERAGES 159

With Rwanda’s entry into the East African Community in 2007 and
growth in Rwanda’s agribusiness sector, Urwibutso’s products are facing
increased competition. There are now multiple players in Rwanda’s mar-
ket for fruit juice (Inyange, Kenya’s Del Monte), yogurt (Inyange, ­Masaka
Farms, Kenya’s Bio), flour (Pembe Flour, Bakhresa) and water (Nile,
­Inyange, Huye). Many of these players, in particular, Inyange in the local
market, have much more sophisticated machinery, capital and expertise
than Urwibutso. The challenge for Urwibutso is to respond to increased
demand and better consumer awareness about taste and quality, in an ever
more competitive and sophisticated consumer market.
One of Urwibutso’s main assets in Rwanda’s increasingly competi-
tive markets is the strength and recognition of its product brand names.
­Urwibutso’s products have names in Kinyarwanda that convey an idea and
are recognized countrywide. The company’s key brand names include:
•  Urwibutso (“a memory”) for its mandazi/doughnuts;
•  Agashya (“innovation”) for all its juice products;
•  Akarusho (“better than the rest”) for all its alcoholic products;
•  Akabanga (“small secret”) for the famous chilli pepper sauce;
•  Akashyoshye (“the sweetest”) for its yogurt;
•  Akanozo (“the perfect”) for its cereal flour;
•  Akandi (“other innovation”) for its mineral water.
The driver behind this innovation and ambition to expand into new
product areas has undoubtedly been Mr Gérard himself:
Given that I’m a totally independent man, my objective every year has been
to put a new product on the market. Every year our clients, suppliers, and
competitors are curious to discover what new product we will bring to
­market.

Systems
Urwibutso is organized into six different and autonomous entities: a fac-
tory for juices started in 2000 (about 60% of aggregate revenues), a bakery
registered in 1993 (16% of revenues), a factory for alcoholic drinks started
in 2000 (10% of revenues), a factory for Akabanga started in 2004 (8% of
revenues), a workshop for woodworking started in 1998 (5% of revenues)
and other activities (less than 7% of revenues). Each entity is managed in-
dependently and has its own budget and personnel. In terms of personnel,
the bakery has the most staff – about 90 – compared with 80 in the juice,
alcohol and Akabanga factories.
More than anything, the system that defines the company is participa-
tory management and the management’s relationship with the company’s
200+ staff. According to the management, human resources management
and maintaining the satisfaction level of employees has been the key to
160 CHAPTER 7

­ rwibutso’s success; “our staff feel like family,” claims the CEO. To main-
U
tain staff motivations levels, the company distributes livestock to its em-
ployees, provides free seeds and inputs (e.g. for passion fruit and straw-
berry), sources the produce of its staff, who for the most part are also
farmers/landowners, and provides free education through a school that
was set up by the founder, called Fondation Sina Gérard, which today has
279 students in kindergarten, primary and secondary.
A second strength is the network of farmers and cooperatives ­Urwibutso
works with. Suppliers and partner cooperatives are all located in the vicin-
ity of Urwibutso’s factories. Proximity has enabled Urwibutso to develop
trust relationships with these cooperatives, to train their management,
provide extension services, closely monitor production and reduce trans-
portation costs and losses. The outcome for Urwibutso has been a reliable
and flexible sourcing system, which is something most agro-processing
firms in Rwanda lack. This network of cooperative relationships has also
enabled Urwibutso to experiment with new varieties and crops. When
­Urwibutso started processing passion fruit juice in the late 1990s, for ex-
ample, passion fruit was not being grown at a commercial scale, while now
it is. More recently, Urwibutso has started experimenting with strawber-
ries and grapes. Working together with FAIM (a private plant nursery that
was started in 2011), Urwibutso has recently been testing new varieties of
strawberries and bananas.
There is strong nationwide demand for Urwibutso’s main products, in
particular, passion fruit juice, banana wine and Akabanga. The company
distributes these products through Urwibutso outlets in Rulindo and
­Kigali, direct delivery, wholesalers and an online shop.

Resources
Urwibutso’s main resources are its widely recognized brand names, its
network of suppliers and its six production sites in the Rulindo area.
The company employs up to 400 staff, with about 200 permanent staff,
of which about 90 work in the bakery, 45 in the Akarusho factory, 25 in the
juice factory, 12 in the Akabanga factory, 12 in the woodworking facility
and 8 in the brick production site. All employees are Rwandan, except for
a German engineer who is responsible for the machinery. Urwibutso sup-
ports its employees with training opportunities; in 2012, for example, two
workers were pursuing degrees in food science and biometrics in Egypt
and India.
Chapter 8

Construction Materials

8.1  Background and Overview

Today, the construction materials sector is the largest manufacturing sec-
tor in Rwanda, generating over US$70m in revenues. It is also one of the
fastest growing sectors in terms of new firm creation.1 In 2006, the share
of construction materials/metals firms was only 2% of total firms; by 2010,
this had increased to 16%, with over 60 new firms registered in the sector
(Gathani and Stoelinga 2012).
The fate of the construction materials sector is closely tied with the 1994
genocide and the reconstruction effort that followed. Prior to 1994, there
were a few pioneering firms in the sector, such as Tolirwa (Rwanda’s first
manufacturer of galvanized roofing sheets, established in 1979), Ameki
(one of the oldest companies in the sector, which began a paints production
line in 1984), Uprotur (manufacturer of various construction materials,
established in 1987) and Ruliba Clays (established in 1985 to manufacture
clay products). All of the above companies (with the exception of Ruli-
ba Clays) were created by entrepreneurs who can trace their roots to the
trading business. These traders would import the necessary construction
materials from within the region and from abroad, and, having acquired
more than a few years of knowledge about the industry and local demand,
they moved into manufacturing.
The big influx of new construction firms, established by both Rwandan
entrepreneurs and regional investors, first occurred after the 1994 geno-
cide and especially during the past 10–15 years. The early companies in
the sector in the post-1994 period were started by Rwandan entrepreneurs
such as Jeremie Kalisa of Simaco (who also began as a trader) who were

Please note that this sector does not include firms that are engaged in con-
1 

struction services.
162 CHAPTER 8

encouraged by the post-genocide reconstruction demand and began pro-

ducing steel roofing sheets. More recently, several Rwandan groups have
entered the sector, including Ufametal, which was created in 2001 as a
subsidiary of the Petrocom Group, and Master Steel (one of the largest
Rwandan construction materials firms) in 2005. These have been closely
followed by large regional conglomerates such as Safintra, part of Kenya’s
Safal Group, and SteelRwa, one of the largest rebar manufacturers, with
business interests in several African countries. Both Safintra and SteelRwa
were created in 2007. Rwanda’s two cement companies, Cimerwa (owned
by the Rwanda Investment Group and two institutional investors) and
­Kigali Cement Company (now partly owned by the Kenyan multinational
Athi River Mining Company) were also created in the post-genocide peri-
od (2006 and 2007, respectively).

Products
At least 10 large construction materials firms exist in Rwanda. The main
products manufactured locally are roofing sheets of various sizes, pro-
files and colours, clay products including bricks, tiles and blocks, cement,
paints, steel tubes, steel reinforcement bars (rebars) and accessories such
as wire, gutters, ridges and nails.
One of the key characteristics of the construction materials sector is
the increasing level of diversification compared with the agribusiness sec-
tor. While the tea, coffee and mining sectors remain the backbone of the
economy with a large share of the country’s exports, there are limited op-
portunities for diversification in these sectors. In comparison, the manu-
facturing sector, and especially the construction and light-manufacturing
sector, is already seeing a high level of diversification and should continue
to be the source of new product development and diversification as there
are many more products that firms specializing in construction materials
can organically diversify into.

Systems
A significant systemic challenge for the construction materials sector, sim-
ilar to most Rwandan industrial sectors, is the supply of raw materials.
With the exception of Cimerwa and Ruliba Clays, which source their raw
materials domestically (i.e. cement clinker, clay, kaolin), all other firms
profiled in the construction materials sector report importing almost all
their raw materials from abroad. A limited number of these companies
are able to source from within the region such as Kigali Cement Com-
pany, which imports clinker from Kenya, and SteelRwa, which sources
scrap metal from Burundi and the DRC. Given transportation lead times
CONSTRUCTION MATERIALS 163

and clearance issues with the ports of Mombasa and Dar es Salaam, some
companies face lag times of up to three months to import raw materials.
Compounded by the seasonality of demand for construction materials and
high production costs (particularly due to energy costs), it is no surprise to
see that capacity utilization rates are relatively low in the sector, ranging
from less than 10% (Uprotur) to 25% (Tolirwa) to 42% (SteelRwa).
Strategies adopted by companies in the sector to mitigate challenges
raised by the supply chain and low capacity utilization appear to be in-
fluenced by their ownership status. Companies that have the support of
large groups are in an advantageous position as they are able to leverage
the supplier network of the parent companies to source raw materials. For
example, Safintra imports the processed raw material from its parent com-
panies in the EAC region, meaning that it drastically reduced the time
it takes to complete an order. Similarly, Kigali Cement sources its clink-
er and gypsum from Athi River Mining Company in Kenya. Rwandan
companies that cannot rely on the support of large regional groups have
diversified their products to avoid relying on a single production line and
the possibility of the absence of a single raw material halting production
altogether. For example, Uprotur has diversified into several product lines,
including nails and wire, and Tolirwa now has seven different production
lines. In addition to mitigating the supply chain risks, this level of diversi-
fication also helps to mitigate market demand risk; however, paradoxically,
it also exacerbates the issues of capacity underutilization in the sector as
most companies do not run all of their production lines at the same time.

Resources
The manufacturing sector, in general, is not a significant employer com-
pared with the agribusiness sector. The 10 companies profiled in this
chapter provide employment to fewer than 1,500 people. As is the trend in
the economy in general, foreign experts, from the region or from further
afield, fill most of the senior management and technical positions.
We also observe that a key criterion of firms in the construction indus-
try is that they have each developed a strong knowledge base before estab-
lishing themselves in the sector. For Rwandan firms, this has been devel-
oped organically over time as several firms began with trading operations
before gradually learning the system over a 5–10-year period and moving
into manufacturing. Similarly, companies that are part of large regional
groups such as Safintra, SteelRwa and Ufametal leverage the knowledge
base of their parent companies in the region to succeed in this competitive
market.
164 CHAPTER 8

Exports
In general, Rwanda is not a large exporter of manufactured products rela-
tive to the agribusiness sectors (with the key exceptions of Kigali Cement,
SteelRwa and Master Steel, which export more than 10% of their produc-
tion). However, the number of exporting firms is gradually increasing. In
2006, only two firms were exporting construction materials, Simaco and
Kigali Steel & Aluminium Works (KSAW); by 2010, there were about 64
exporting firms including Tolirwa, Master Steel and Safintra (Gathani and
Stoelinga 2012). Exports are targeted at the DRC and Burundi markets. In
fact, 15% of the total DRC/Burundi export basket comprises construction
materials (Gathani and Stoelinga 2012).

8.2  Ameki Color

The country’s largest domestic paints manufacturer.
Year established 1982
Latest annual turnover (2010–11) US$6–7m
Number of employees (FTE) 380
Furniture, paints and fibreglass tanks
Main business activity
and sheets
Export markets DRC, Burundi, Uganda

Company Origins
In 1982, Ameki (Atelier de Meubles de Kigali) was started as a small fur-
niture workshop in Kicukiro, Kigali, by Mr Jacques Rusirare, a Rwandan
entrepreneur who, prior to starting the workshop, had a small transport
and trading business dealing in hardware items. As the furniture business
grew, the company decided to move upstream by manufacturing furni-
ture varnishes and wood glue. In 1984, they registered these operations as
Ameki Color and the product line progressed gradually with new products
added to the portfolio year after year. By 1991, the production portfolio
had increased to a large variety of paints, wood and office glue and win-
dow putty. The genocide in 1994 destroyed the entire factory, which was
rebuilt from scratch with a new addition – Ameki Tanks. Given that the
raw material used to manufacture paints (polyester resin) can also be used
to make fibreglass tanks, the company further diversified into manufac-
turing fibreglass tanks and sheets. As a result, Ameki Tanks was incorpo-
rated in 1995, which capitalized on the need for additional construction
materials.
Today, Ameki is one of Rwanda’s largest manufacturing companies
and Ameki Color is the largest paint manufacturer in the country. ­Ameki
CONSTRUCTION MATERIALS 165

Color is the company’s most successful operation and comprises 70% of

total sales, followed by Meubles (20%) and Tanks (10%). Paints are export-
ed to Burundi, Uganda and the DRC but in limited quantities. The group
provides employment for close to 400 people and generated a turnover of
approximately US$6–7m in 2010.

Products
Ameki Meubles. Products include home and office interior furniture in
wood and metal (steel) such as tables, sofas, beds, chairs, etc.

Ameki Color. Emulsion paints, water-based silk vinyl emulsion paints,

acrylic emulsion paints, epoxy paints, wood and office glue, synthetic
roofing paints and road marking paints. Current production is estimated
at 60 tons per day and full capacity is 80 tons per day, which means that
Ameki Color currently runs at an estimated capacity utilization rate of at
least 75%.

Ameki Tanks. Fibreglass tanks, fibreglass sheets and most recently fibre-
glass auto parts such as bumpers and roofs. Given that the production pro-
cess for fibreglass tanks takes a long time, production capacity is limited to
one fibreglass tank per day.
Ameki has three separate production lines for each of its product cat-
egories with an extensive range of machinery for each production line.
­Ameki is currently exploring the possibility of producing a new line of
automotive paints and is also looking into improving the quality of var-
nishes, which will improve the quality of the furniture items. Ameki is
currently in the process of buying additional machinery for the wood and
furniture production lines.
The main customers for these products are individual buyers, compa-
nies (especially construction firms for paints and tanks) and government
agencies. In terms of competitors, the furniture market is dominated
by Manumetal and Mutara Enterprise; Ameki Color is the largest paint
manufacturer in the country and its main competition comes from im-
ported paints such as Sadolin and Basco as opposed to other domestic
manufacturers such as Sigma Coat, Shalom or Rwanda Color; and finally,
in the plastic tanks sector, Ameki Tanks competes with Roto Tanks and
Aqua-San.

Systems
Ameki employs a sophisticated sourcing strategy for their raw materials,
with relationships developed with suppliers across 10 different countries.
Most of the raw materials for their manufactured products are imported
166 CHAPTER 8

and the company has made a conscious decision to ensure that most raw
materials can be obtained from a variety of destinations. There has a been
a gradual shift to Asian markets
For furniture, the wood is imported from the DRC and sourced local-
ly, the metal and fabrics are imported from China, the leather is sourced
locally from a small leather producer (Sodeparal), but some leather vari-
eties are also procured from China. For paints, chemicals such as the res-
ins and additives are sourced from Egypt, Turkey, Kenya, Europe, China,
India, Uganda and South Africa. Kaolin, another key ingredient in the
manufacture of paints is available in large quantities locally. Turkey, Egypt
and South Africa are also key suppliers of resins for the manufacture of
wood and office glue. Finally, the polyester resin that combines with fibre-
glass rolls to create the fibreglass sheets and tanks are sourced from Egypt,
Kenya and China.
The machinery is primarily sourced from Germany though smaller ma-
chines have been fabricated locally at the factory. Experts from Europe
were invited to install and provide regular training for the machinery but
this trend has been diminishing with the gradual development of techni-
cal skills by the Ameki technicians.
In terms of product design, Ameki has also looked to Europe for in-
spiration, with a lot of the furniture designs based on recent product cat-
alogues that highlight the latest trends. Increasingly, customers have been
providing their own customized designs and Ameki also has a small team
in place that focuses on internal designs to suit the local market.
Ameki has set up a distribution strategy with at least 400 distributors,
ensuring that Ameki products have national exposure. The company does
not maintain any retail outlet but has a small furniture showroom at the
Gikondo plant. Ameki also works with distributors in Burundi and east-
ern DRC too. The widespread distribution network is supplemented by
strong marketing outreach efforts relying on radio, television, billboards,
trade fairs, magazine advertisements and the sponsorship of large events.

Resources
Ameki’s strongest resource is its brand name, established over a 30-year
period under the stewardship of Mr Rusirare. Its diverse product portfolio
ensures the company can provide turnkey solutions to construction com-
panies and individual buyers looking for interior furnishings, including
paints and customized furniture.
Across the three companies, Ameki provides employment for 380
people, all of whom are Rwandans. It has one large 2  ha plant near the
Gikondo Industrial Area but they are scheduled to move to the Kigali Spe-
cial Economic Zone (KSEZ) soon.
CONSTRUCTION MATERIALS 167

8.3  Cimerwa
The country’s largest construction materials and cement manufacturing
company.
Year established 1984
Latest annual turnover (2010–11) US$19–21m
Number of employees (FTE) 262
Main business activity Cement
Export markets Burundi and the DRC

Company Origins
Cimerwa, located in the western district of Rusizi, is one of Rwanda’s larg-
est manufacturing companies and the leading manufacturer of cement
in Rwanda. Following the discovery of limestone, quartzite and clay in
the Rusizi area and pozzolana in Gisenyi in the 1970s, the state-owned
company commissioned a factory in 1982 and production commenced in
1984. The Cimerwa plant was constructed as part of a joint venture using
a 30-year US$13m interest-free loan signed between the government of
Rwanda and the Chinese government in July 1976. Upon commissioning
in 1984, the plant was managed by CBMC, a Chinese company, under a
Build, Own, Operate and Transfer (BOOT) agreement until expiry of the
loan in July 2006 between the two parties. By 2001, the company had in-
creased capacity to 100,000 tons per year by expanding the kiln capacity
and installing a second cement grinder. After the loan from the Chinese
government expired, the company was privatized at the end of 2006 when
the government of Rwanda sold a 90% equity stake to Rwanda Investment
Group (RIG), one of Rwanda’s largest investment groups, and retained the
10% balance of shares.
Since RIG’s acquisition, the company has been operating with an in-
stalled capacity of 100,000 tons per year to serve the domestic market,
although the estimated domestic demand is approximately 370,000 tons
(2012) and as much as 800,000 tons per year if Burundi, eastern Congo and
southern Uganda are included. Cimerwa hopes to increase its production
capacity through capital investment in a new plant.
In 2010, the African Development Bank (AFDB) approved a US$130m
loan to Cimerwa for the construction of a new plant, which required Ci-
merwa to raise 40% of the initial funding. Following RIG’s inability to
raise this capital, the government of Rwanda stepped in through an equity
investment that saw it increase its shareholding to 30.6%. The ownership
structure of Cimerwa now comprises the Rwanda Social Security Board
(37.5%), the Rwanda Development Bank (8.5%), RIG (21.2%), with the
168 CHAPTER 8

remainder of the shares held by smaller investors. The change in owner-

ship has seen a new management team brought in and plant construction
was expected to commence in late 2012. The new plant capacity is expected
to reach 700,000 tons per year and the plant will use a dry manufacturing
process and a combination of peat and heavy fuel oil to substantially re-
duce fuel costs.

Products
Cimerwa is the only cement producer that maintains a full manufacturing
process in Rwanda as it sources the raw materials locally and manufac-
tures its own clinker. Raw materials include limestone (travertine), quartz-
ite, gypsum, pozzolana and clay.
The raw materials are extracted from quarries (Cimerwa has its own
quarries for limestone and quartzite) and crushed into a raw meal, which
is blended and heated in a kiln at a temperature of about 1450  °C. The
product leaves the kiln as a material called clinker. The clinker is then
passed through a cement grinder with at least 3–4% of gypsum, which
provides dampness to the concrete. The finished product is a powder that
is stored in silos before it is packaged and sold. The new plant will employ
a dry process technology compared with the wet process used currently,
where raw materials are mixed with water and boiled to get clinker.
It is expected that the limestone, sandstone and pozzolana require-
ments for the new plant will be met by increased production from the
existing mines and only one new clay quarry will need to be developed.
Cimerwa manufactures two products: Portland Pozzolana Cement
(PPC) 32.5N and 42.5N. The difference in the two products relates to the
composition of the main raw materials: the 42.5 variety comprises 85%
clinker and 5% gypsum, whereas the 32.5 variety contains 65% clinker,
30% pozzolana and 5% gypsum.
With the construction of the new plant, it is expected that Cimerwa will
have enough production capacity to satisfy domestic demand and com-
mence exports to Burundi, eastern DRC and southern Uganda in large
quantities. Cimerwa’s main competitors include domestic producers such
as Kigali Cement Company and Great Lakes Ltd. and imported cement
such as Tororo and Hima from Uganda.

Systems
Cimerwa benefits significantly by being able to source most of its raw
materials locally. Furthermore, the nearby Njambwe River also meets
their water supply needs. Cimerwa already operates a water treatment
plant, which is located 3 km from the plant and supplies treated water to
the plant and the surrounding communities through company-owned
CONSTRUCTION MATERIALS 169

pipelines. Since 1984, Cimerwa has been operating an on-site health cen-
tre that comprises a pharmacy, a 14-bed hospital and a laboratory, which
is open to Cimerwa staff and the local population, who pay a subsidized
fee to visit the clinic.
In terms of their distribution and sales strategy, Cimerwa focuses on
five main groups: (i) home representatives, who are approved sales agents
in various districts and towns of Rwanda; (ii) companies such as construc-
tion firms that buy directly from the factory; (iii) product importers in the
DRC and Burundi; (iv) independent traders; and (v) Cimerwa employees,
who are allowed to purchase the cement for their personal construction
works.

Resources
Cimerwa employs 262 staff, the majority of whom are engaged in the pro-
duction department, which includes manufacturing service, maintenance
and quality control. Nearly 40 employees occupy management positions in
different departments and are hierarchically organized.
In terms of physical resources, Cimerwa owns a large plant in R
­ usizi
about 350  km away from Kigali and 50  km from the nearest town,
­Kamembe. Cimerwa’s physical resources include land concessions cover-
ing a 13 ha area. The company also owns their own quarries where they
extract the limestone and quartzite.

8.4  Kigali Cement Company

The latest entrant in the cement sector and the country’s second largest do-
mestic manufacturer of cement.
Year established 1999
Latest annual turnover (2010–11) US$1–2m
Number of employees (FTE) 42
Main business activity Cement
Export markets Burundi and the DRC

Company Origins
The Kigali Cement Company (KCC) was established in 1999 by a Rwan-
dan entrepreneur, Mr Ndayambaje Jean Damascene. In November 2011,
Mr Damascene sold 35% of the company to Athi River Mining (ARM)
Limited, a multinational company that is the largest cement manufacturer
in East Africa. Between 2007 and 2011, KCC imported clinker (the main
ingredient in the cement mix) from ARM for its production, allowing the
two companies to build a relationship before the sale.
170 CHAPTER 8

KCC is a relatively small operation producing 100–120 tons per day but
it is currently constructing a second milling plant, which will expand cap-
acity by 80–100 tons per day.
ARM is listed on the Nairobi Stock Exchange and in addition to cement
it also manufactures NPK fertilizer, sodium silicate and other industri-
al minerals. Presently, ARM has four cement plants in East Africa: two
plants in Kenya (Nairobi and Mombasa, each with a capacity of 2,000 tons
per day) and another two plants in Tanzania (the first in Dar es Salaam,
with a capacity of 2,500 tons per day, and a second plant, with a similar
capacity, is being commissioned in Tanga).
ARM’s investment in Rwanda was motivated by the desire to become
the largest cement manufacturing company in Africa and the move to
Rwanda was a logical step as the company seeks to consolidate its position
in the region.
Today, KCC is the second largest cement manufacturing company in
Rwanda after Cimerwa Ltd. After ARM acquired its stake in the company,
KCC developed an ambitious expansion plan to meet the ever-increasing
demand within the region. The company provides employment to 42 per-
manent employees and 70 casual employees. Following the acquisition by
ARM, the company generated revenues of US$1–2m in the six-month peri-
od between December 2011 and May 2012.

Products
Since 1999, KCC has manufactured and sold PPC (Portland Pozzolana
Cement) 32.5 cement under the brand name Digit. The main ingredients
for the manufacture of cement are clinker (processed limestone), pozzala-
na and gypsum. Each of these materials provides strength to the cement
and the proper composition of the ingredient materials is critical in deter-
mining the quality of the finished product. KCC has an on-site laborato-
ry to examine the exact composition of inputs. The three ingredients are
ground into powder and combined according to specific composition per-
centages in the grinding mill and are then packed into high-tensile paper
bags. Grinding and packing are the two main processes in the production
of cement at KCC.
KCC competes with Cimerwa and Great Lakes Ltd., as well as with
imported cement such as Tororo and Hima from Uganda. However, cur-
rently these competitors do not appear to pose a major challenge to KCC
as the demand for Digit outstrips supply, with the company often having
no spare inventory of finished product and customers having to place ad-
vance orders for their cement. KCC supplies cement at a price lower than
its competitors.
KCC is interested in exploring limestone deposits in Rwanda to manu-
facture the clinker in the country and reduce the dependency on imported
CONSTRUCTION MATERIALS 171

clinker, thereby reducing its production costs. KCC is also interested in

exploring deposits of other raw materials in the country to diversify their
current product portfolio.
The main customers include local construction companies and individ-
ual buyers. KCC began to export in January 2012 and exports account for
33% of its total sales. Export sales are made mainly to the DRC (95%), as
well as Burundi (5%). However, exports are not a priority for KCC as it is
currently focusing on meeting local demand for its products. Market de-
mand is estimated at 1,000 tons per day.

Systems
ARM’s investment into KCC has impacted the company in several ways.
Current production capacity has increased from 40 tons per day to 100–
120 tons per day. With the commissioning of the second grinding mill at
an estimated cost of US$1m, capacity is expected to increase to 200–240
tons per day. The factory currently runs at around 75–80% capacity utili-
zation as it operates 18–20 hours per day. Minor breakdowns and electric-
ity cuts are the main reasons for underutilization of capacity.
In terms of sourcing, KCC imports all clinker and gypsum from its
parent company in Kenya. The pozzalana is obtained from its own quarry
located in the Ruhengeri area. Packaging materials are also imported from
Kenya. For its existing plant, KCC has not imported new machinery as
the existing machinery is performing satisfactorily. The company has also
maintained the same packaging, brand and workforce. However, ARM
has lent their technical expertise in adjusting and aligning the production
process, which had led to the increase in production capacity since the
turn of 2012.
Another key aspect that KCC leverages is the goodwill and reputation
of ARM. Rhino Cement, ARM’s flagship brand (not sold in Rwanda), is
popular and recognized across the region for its quality, which has paid
dividends for KCC’s Digit.
KCC, with all sales taking place at the factory, does not utilize an exten-
sive distribution strategy. Given that production is very small at this stage
and that demand outstrips supply, there is no pressure on the company
to establish a more sophisticated distribution network at this point. For
the same reasons, the company has also refrained from large marketing
outreach.
Quality control is a key value proposition for both ARM and KCC.
Every two days, samples are sent to Nairobi for testing at ARM’s state-of-
the-art laboratory. KCC also regularly tests the cement quality at its own
laboratory by constructing cement cubes and analysing their strength and
drying time.
172 CHAPTER 8

Resources
KCC currently employs 42 permanent employees and approximately 70
casual workers including two experienced Indian expats at senior manage-
ment levels who are deputed from ARM, Kenya. At least half of the per-
manent workforce is highly skilled occupying positions in senior manage-
ment positions in technical, machine maintenance, sales, logistic, HR and
accounts functions.
In terms of physical resources, the company’s factory has its own plant,
machinery, buildings and land located on the outskirts of Kigali City.
Other assets include a pozzalana quarry in Ruhengeri and a small fleet of
trucks that transport the raw material to the factory.
To date, ARM has made significant investments in KCC that have
turned the company into a major player in the domestic market. ARM’s
ambitious expansion plans are expected to raise KCC’s profile, particularly
with the completion of a second grinding mill and exploration of industri-
al minerals for new product development such as clinker, sodium silicate,
etc.

8.5  Ruliba Clays

The country’s largest clay-based construction materials manufacturer.
Year established 1985/2009 (privatized)
Latest annual turnover (2010–11) US$1–2m
Number of employees (FTE) 210
Main business activity Clay bricks, tiles and blocks
Export markets N/A

Company Origins
Ruliba Clays, Rwanda’s largest manufacturer of clay-based construction
materials, was created in 1985 as a government enterprise. With the sup-
port of the Swiss Cooperation and government capital investments, the
company purchased machinery and started production in 1988. After the
1994 genocide, Ruliba Clays (at the time called Briqueterie Rwandaise
Ruliba SA) was privatized and ownership transferred to a consortium of
private and institutional investors (about 40 of them). The new sharehold-
ers refurbished machinery and restarted operations, but the real impetus
came when Ruliba was taken over by Building Material Investments Lim-
ited (BMI) in November 2009 – a joint venture by the Social Security Fund
of Rwanda, Crystal Ventures Limited (Rwanda’s largest investors) and the
Horizon Group (another large Rwandan investment group).
BMI is an investment company, established in 2009, that aims to invest
in the manufacture of construction materials using locally available raw
CONSTRUCTION MATERIALS 173

materials. In addition to Ruliba Clays, BMI currently owns East African

Granite Industries (EAGI), which mines granite and produces a variety of
granite-based tiles. Both clay and granite are locally available materials.
With the backing of Rwanda’s two largest investors, BMI has invested
heavily in transforming Ruliba Clays through new capital investments, the
introduction of new products and an overall organizational restructuring.
Today Ruliba Clays has about 210 employees. The company is in the
growth phase and is currently undergoing an executive restructuring
­process.

Products
Ruliba Clays produces six types of clay product: (i) blocks; (ii) bricks;
(iii)  roofing tiles; (iv) pavers; (v) maxpans/hourdis; and (vi) floor tiles.
These come in various shapes and sizes and serve different purposes, such
as decoration, ventilation, partitioning, among others. Ruliba Clays cur-
rently offers 40 different designs for these products and is continually in-
troducing new ones. Ruliba started with the production of clay blocks in
the late 1980s and moved to bricks following the privatization in 2002 to
producing tiles in 2003. Each step has required Ruliba Clays to introduce
finer production techniques and better design.
The main customers of Ruliba Clays are large public and private institu-
tions, real estate developers, but also individual buyers. Sales are made to
customers directly, through two outlets: one in Kigali, the other in Gisenyi.
Ruliba has an estimated 70% of the local market share for clay construc-
tion materials; its main competitors in the market are Amagerwa Bricks
and Tiles, and hand-making producers. Local production in the country
is currently estimated at about 20,000 tons per year, while annual demand
is estimated at about 45,000 tons. This means there is a large unsatisfied
demand and a growing threat from substitute products such as cement
and roofing sheets. The threat not only comes from the fact there is a pro-
duction gap, but also lies in customer perceptions. Clay products are still
seen as expensive and there is limited awareness about their benefits, such
as their thermal and acoustic insulation, durability, resistance to fire and
low water absorption.
The challenge for Ruliba Clays is to increase production and the diver-
sity of the designs by investing in product development, such as the pro-
duction of coloured products, which Ruliba Clays is currently looking into.

Systems
Since the takeover by BMI, Ruliba Clays has been undergoing a major re-
structuring process. BMI has (i) invested in human capital, by bringing
on board highly qualified managers and ceramic experts; (ii) made new
capital investments, refurbishing its machinery to increase production
174 CHAPTER 8

capacity, resulting in reduced delivery time from six months to two weeks;
(iii) increased quality control by investing in a lab to test the quality and
weight of raw materials and finished products; (iv) increased its market-
ing effort to change the perception of both customers and suppliers; and
(v) tried to target markets in Burundi, the DRC and potentially also west-
ern Uganda.
Despite recent improvements, including a doubling of output, Ruliba
Clays is still running at 45% capacity. The company is now hoping to enter
a rapid growth phase to address unsatisfied demand and increase capacity
utilization.
The production of clay building materials requires three main inputs:
clay, kaolin and water. Clay and kaolin are locally available and relatively
cheap inputs, but the geographical disparity of raw material sources and
the absence of structured supply chains could impede growth in the mar-
ket. Ruliba Clays mainly sources its clay and kaolin from different owners
of quarries 25–40 km outside Kigali.
One of the main changes BMI has promoted is a new marketing and
distribution strategy. The company has changed its name (from Briquete-
rie Rwandaise Ruliba SA to Ruliba Clays Ltd) and its branding and logo.
Ruliba Clays is very actively trying to drive a change in perceptions about
clay products as a more accessible and attractive building material. Its cus-
tomer service has improved, with a reduction in delivery time from six
months to two weeks. Furthermore, with the new effort to improve quality
and design, Ruliba Clays is actively trying to better understand and adapt
to customer needs. One of the company’s main challenges on the market-
ing front is a poor distribution network.
Finally, BMI has also revamped Ruliba’s administrative management
functions, in particular finance. Since 2010, a new accounting and re-
sources management system (SAP) has been in place.

Resources
In terms of human resources, Ruliba Clays currently employs about 210
people, out of which 30 are in management positions. Out of the workforce
of 210, only four are expatriates, including the general manager (from
India), two ceramists from Uganda and a machine operator from Tanza-
nia. Some training is conducted internally, but workers are regularly sent
to Uganda Clays or other regional clay factories to learn about production
techniques.
The fact that Ruliba Clays is now part of a bigger group has strength-
ened its financial position. Its debt-to-equity ratio has been reduced to
20:80 and the company is actively seeking additional capital investment.
The company’s current asset base includes an upgraded production
plant and two quarries covering 50 ha, and the company is in the process
CONSTRUCTION MATERIALS 175

of purchasing new land assets to hedge against future price increases for
raw materials such as clay and kaolin.

8.6  Safintra
One of Rwanda’s largest roofing sheets manufacturers.
Year established 2007
Latest annual turnover (2010–11) US$11–12m
Number of employees (FTE) 40
Main business activity Roofing sheets and profiles
Export markets N/A

Company Origins
Safintra is a steel and roofing solutions provider based in Kigali and is
a part of the Safal group of companies. The Safal Group2 is the leading
manufacturer of flat and long steel products in eastern South Africa. Head-
quartered in Mauritius, Safal was established to consolidate the operations
of several allied companies in Kenya, Uganda, Tanzania, Ethiopia, South
Africa, Zambia, Angola and Malawi.
Safintra was incorporated in Rwanda in 2007 and began operations
in October 2008 after an initial capital investment of US$1.5m was de-
ployed to lease land, machines and vehicles. Prior to beginning operations
in Rwanda, Safintra’s sister company in Uganda exported to Rwanda but
they encountered long lead times for delivery (up to 15 days to export from
Uganda). From 2005 onwards, the group decided to start roll-forming op-
erations in Malawi, Zambia, Angola, Mozambique, Rwanda and South
Africa. The objective was to be close to the customer and to provide an
efficient service to increase their competitive advantage.
Safintra had a turnover of US$11m in 2011 and approximately 40 full-
time employees. It does not currently export to neighbouring markets be-
cause of some unresolved customs issues.

Products
Safintra’s three main manufacturing product lines are galvanized sheets,
Dumusaz and coloured sheets. These products are roll formed into various
shapes and customized lengths. It also trades in finished steel products

The Safal Group has been operational for over 50 years in Africa. Headquar-
2 

tered in Mauritius, its origins began as early as 1960 with the founding of Alaf Ltd.
in Tanzania. The current chairman is the prominent Kenyan industrialist Manu
Chandaria.
176 CHAPTER 8

such as construction steel. The galvanized sheets are a popular product

for the low-income population in Rwanda and across Africa. The ­Safal
Group has also embarked upon providing a technically superior product,
Dumusaz, which are roofing sheets with a mixed coating of aluminium
and zinc, making them more durable than the normal galvanized sheets
(which only have a zinc coating).
The company sources the metal coils from its parent companies in
Kenya, Uganda and Tanzania. The Kigali unit completes the upstream
process of roll forming, which is where sheet metal is progressively shaped
through a series of bending operations to form a sheet into a wide variety
of profiles. There are no plans to move into the downstream operations
as Safintra’s larger operations in Kenya, Uganda and Tanzania are well
placed to meet the demand of downstream operations and because metal
coating plants are very capital intensive.

Systems
The main differentiator for Safintra is their sourcing and delivery time.
While other competitors take 10–12 days to complete an order, Safintra is
able to supply within two days because it imports the processed raw ma-
terial from its parent companies. This also means that the company is able
to run a leaner operation in terms of inventory.
Safintra works with about 20 distributors in the country, which stock
the galvanized sheets and Dumusaz sheets. It also has a direct sales team,
which concentrates primarily on customized products. A year after com-
mencing operations, Safintra launched a large marketing campaign by
advertising on billboards across Kigali City and through radio and print.
Currently, the plant is producing 700–800 tons per month, which
equates to between 70 and 80% of total capacity, which is sufficient for the
domestic market.

Resources
The company employs 40 full-time workers, including two expatriate ex-
perts from India and Ethiopia who occupy the managing director and
finance/production manager roles and bring several years of experience
working with other Safal Group companies to Safintra’s operations. Safin-
tra’s daily operations are independent from its sister companies but group
strategy meetings are held quarterly and key functions are centralized. For
example, Safintra will soon be migrating to the SAP management infor-
mation system in line with its Kenyan equivalent.
Safintra’s current premises (960 m²) are leased and located in Kicukiro
but plans are afoot to move to the Kigali Special Economic Zone (KSEZ)
towards the end of 2012, where they will expand into new product lines,
CONSTRUCTION MATERIALS 177

which will require additional capital investment in machinery. Safin-

tra has already bought a 35,200 m² plot in the new KSEZ and intends to
widen its current product basket and bring in state-of-the-art machines for
manufacturing additional steel items.

8.7  Simaco/Afrifoam
One of the county’s most diversified construction materials companies.
Year established 2003
Latest annual turnover (2010–11) US$2–3m
Number of employees (FTE) 85
Foam mattresses, construction materials,
Main business activity
drinking water, toilet paper
Export markets Burundi

Company Origins
Afrifoam was started in 1999 after its founder, Jeremie Kalisa, and a close
friend identified a gap in the foam market based on market research. Mr
Kalisa originally owned a trading business in Burundi from 1983 to 1993
but following the Rwanda genocide in 1994 decided to return home and
create Afrifoam. After approximately three years of manufacturing foam
mattresses, the owners (Jeremie Kalisa and his daughter) decided that
to succeed they needed to diversify the business. Consequently, in 2003
they started Simaco, a company that manufactures steel roofing sheets, in
response to growing demand in the construction sector, buoyed by the
post-genocide reconstruction of the country.
The respective businesses have continued to develop and diversify.
­Simaco recently introduced the manufacturing of black hollow tubes
and paints and Afrifoam has moved into the production of toilet paper
and bottling of mineral water under the brand name Gasabo. In terms of
future diversification, Simaco now plans to begin the production of clay
bricks.
Since their incorporation, the companies have faced several challenges:
•  For Simaco, access to raw materials, which it imports from coun-
tries such as China, India and Belgium, has been a challenge. The
company has had difficulties with logistics, delivery times (with an
average wait time of three months from ordering to receiving goods)
and transportation costs.
•  For Afrifoam, low demand for Afrifoam products due to steep com-
petition in the mattresses sector, in particular, from Uganda and to
the general low purchasing capacity of the Rwandan population.
178 CHAPTER 8

At the end of 2011 the turnover for the business was US$2–3m with 70%
of total revenues derived from the hollow-section tube products.

Products
Afrifoam is primarily a manufacturer of foam mattresses. These are pro-
duced in a variety of sizes and tailored to the specific needs of the custom-
er. Afrifoam sells approximately 60,000 mattresses per year, which corre-
sponds to just below 30% of its production capacity.
Other products under the Afrifoam group include Gasabo mineral
water (0.5, 1.0 and 1.5 litre varieties) and, most recently, toilet paper. Com-
petitors for foam mattresses include RwandaFoam and Flexifoam. Gasabo
mineral water is produced in small quantities and is still not a match for
the bulk-produced Inyange, Nil (Sulfo Industries) or Huye bottled waters.
Simaco started as a producer of steel roofing sheets, which are processed
in the Kigali factory using imported cold-rolled coils from China and
India. Hollow-section tubes, introduced in 2008, are a key component of
the business. Simaco is the sole manufacturer of these tubes in the country,
with an estimated 40% of market share based on 55% of the sales compris-
ing roofing sheets and 45% of hollow-section tubes. The main competitors
for hollow-section tubes are Petrocom, Uprotur and Nova. Competitors
for steel roofing sheets include Tolirwa, Safintra, Petrocom (Ufametal) and
Uprotur. Simaco has recently started manufacturing paints and will short-
ly move into clay bricks.
Afrifoam and Simaco recently started exporting a selection of their
products to Burundi, and are experiencing good sales in hollow-section
tubes and roofing sheets. However, exports (10%) are still low compared
with domestic sales (90%). The main challenge to exporting is obtaining
the EAC Certificate of Origin, as well competition from cheaper Ugandan
producers, who have the ability to buy cheaper raw materials in bulk.

Systems
Production is run out of three separate factories in Kigali: one for foam
mattresses, one for paints and one for steel products. A fourth factory is
currently under construction for the processing of clay bricks. The total
investment in these factories is worth approximately US$200,000. The four
factories have been located on separate sites due to the lack of space to host
multiple production lines in one factory.
Afrifoam currently only operates at under 30% capacity for its foam
products due to low demand in the market and high competition from
Uganda; Simaco, on the other hand, is currently operating at a much
healthier capacity utilization of about 70%. Simaco has plans to increase
CONSTRUCTION MATERIALS 179

capacity further by purchasing new machines for the tubing process. The
machinery used in all the processes is primarily imported from China
with a few pieces from India. The companies have now consolidated strong
relationships with suppliers in these countries.
Both Afrifoam and Simaco currently source their raw materials from a
diverse range of countries. For Afrifoam, the foam is imported primarily
from South Korea (70% of imports) as well as Dubai, Germany, the United
Kingdom and France. Raw materials for the toilet paper are imported from
China. Simaco imports the cold-rolled coils for its sheets and tubes from
China and India, while chemicals for paint manufacturing are sourced
from Dubai. Sustaining supplier relationships in multiple destinations
is key to ensuring both Afrifoam and Simaco have access to competitive
prices for their raw materials.
The products manufactured by Afrifoam and Simaco are mostly sold
directly to customers, although the companies have recently started work-
ing with distributors as well. At the moment, neither have a specific re-
tail outlet, meaning sales are made directly at the factory. The companies
undertake a fair amount of advertising for their products with the main
forms being radio and television adverts and brochures.

Resources
Afrifoam and Simaco currently employ a total of about 80–90 people, in-
cluding four managers, of which two are Indian expats. They also employ
Chinese engineers, who are responsible for maintaining the machinery.
The main management team consists of Mr Kalisa as the managing direc-
tor and a general manager who oversees the commercial and production
departments.
The main assets of Afrifoam and Simaco are the four factories, which
are based in different areas of Kigali. The company is entirely family owned,
with major shareholders including Mr Kalisa and his daughter.

8.8  SteelRwa
One of the few steel rebar manufacturers in the entire EAC region.
Year established 2007
Latest annual turnover (2010–11) US$8–9m
Number of employees (FTE) 240
Main business activity Steel reinforcement bars
Burundi, Kenya, Uganda, South Sudan
Export markets
and eastern DRC
180 CHAPTER 8

Company Origins
SteelRwa, which registered in 2007 and started operations in March 2011,
is the only local manufacturer of high-tensile reinforcement steel bars (re-
bars) for the construction sector. The company was set up by the M ­ anji
family (Canadian–Indian origin), who have existing large-scale steel
manufacturing companies in the DRC (Fameco) and Angola (Fabrimetal
Angola) that were established during the mid 2000s. They decided to invest
in Rwanda after considering three key factors: (i) with no rebar manufac-
turers in Burundi, Rwanda or neighbouring DRC and a rapidly expanding
construction sector, there was a clear investment opportunity in the re-
gional rebars market; (ii) although the Manji family was looking to invest
in Burundi, the project was infeasible in Burundi due to significant power
outages; and (iii) SteelRwa developed a strong working relationship with
the Rwanda Development Board, which offered the company an attractive
incentive package.
SteelRwa has an annual turnover of more than US$8m, making it one
of the top five manufacturing firms in the country (excluding coffee pro-
ducers). SteelRwa is currently the third largest consumer of electricity in
the country, employs more than 240 staff and exports 40% of its output.

Products
SteelRwa manufactures high-tensile thermomechanically treated (TMT)
steel bars, otherwise known as rebars, which are currently the most com-
plex construction materials product manufactured in Rwanda. The re-
bars come in different grades and specifications, and vary in yield, tensile
strength, chemical composition and percentage of elongation. SteelRwa
has two laboratories on site to measure and test each of these characteris-
tics. Rebars are used to reinforce concrete.
All rebars produced by SteelRwa are TMT. The two main process-
es to manufacture rebars include (i) cold twisted deformation and
(ii)  ­thermomechanical treatment. The thermomechanical treatment pro-
cess involves rolling the bars at high temperatures (usually around 1,000–
1,200 °C) and then passing them through a quenching line which applies
intense water pressure on the outer layer of the bar while leaving the hot
core unaffected. After the quenching process is over, the heat of the core
tempers the quenched outer layer of the bar, resulting in a bar that has
a strong external layer (called tempered martensite) and a ductile core
(ferrite pearlite). This gives TMT bars a certain number of advantages, in-
cluding better corrosion resistance, better ductility and bendability, good
weldability and as a result increased safety. SteelRwa currently controls
an estimated 30% of the local market and is already exporting to Burundi,
Kenya, Uganda, South Sudan and eastern DRC (40% of revenues come
CONSTRUCTION MATERIALS 181

from exports). SteelRwa is currently one of the only manufacturing firms

outside the coffee and tea sectors with exports to Kenya. The company’s
main competitor in the region is Tanzania due to lower power tariffs.

Systems
Despite the company’s impressive entry into Rwanda’s construction mar-
ket, the plant is currently running below optimal capacity, at about 42%.
The plant’s capacity is 36,000 tons per year, with output at about 15,000 tons
per year (we estimate annual demand for rebars in Rwanda to be about
45,000 tons per year). Two main reasons why the plant is running below
capacity include (i) a shortage of raw material; (ii) a shortage of electricity
(current allocation is 3 MW, but SteelRwa would need at least 4.5 MW to
run at full capacity). Given that raw material and electricity are scarce,
there is also an upward pressure on the price of the finished product.
The main raw material for rebars is scrap metal. 85% of the scrap metal
is sourced locally and the remainder is sourced from the DRC and B ­ urundi.
Currently the two main problems with the sourcing of scrap metal include
(i) the supply of scrap metal locally is tightly controlled by the scrap-­metal
association and (ii) scrap metal shortages in the whole of the EAC, with
countries such as Kenya, Uganda and Tanzania having put in place ex-
port bans on scrap metal, to both EAC and non-EAC countries. SteelRwa,
which is banned from importing scrap metal from Tanzania, has filed a
complaint that is currently being reviewed by COMESA/EAC and SADC’s
Non-Trade-Barriers reporting mechanism (see www.tradebarriers.org).
One of the systems that distinguishes SteelRwa is that the company has
two fully equipped laboratories on site: (i) a chemical lab (spectrometer),
which conducts tests on the composition and parameters of elements such
as carbon, sulphur, silicon, phosphorus and manganese; and (ii) a physical
lab, which includes a fully automatic 60 ton UTM machine, which analy-
ses yield strength, tensile strength and elongation. This is also one of the
reasons why SteelRwa received RBS certification from the start of opera-
tions. SteelRwa will also seek ISO2008 certification in the near future; its
sister companies in Angola and DRC are both ISO2008 certified.

Resources
SteelRwa’s plant is currently located on 10 ha of land, of which 3 ha have
been built up, in the Rwamagana district in the Eastern Province. Steel­
Rwa’s machinery, in particular, its semi-automatic rolling mills and TMT
technology, is state of the art and considered the best in the industry.
In terms of human resources, the company employs 240 people of which
35 are expatriates in management positions (all Indian nationals). Senior
managers in the company have 10–15 years of experience and expertise
182 CHAPTER 8

from the sister plants in Angola and the DRC is often brought in, in par-
ticular, for training.
SteelRwa’s main resources are assets in terms of (i) group experience
in the manufacturing of rebars; (ii) a very experienced management team;
and (iii) state-of-the-art machinery and laboratories.

8.9  Tolirwa (Tôlerie Industrielle du Rwanda)

Rwanda’s first galvanized roofing sheets manufacturer.
Year established 1979
Latest annual turnover (2010–11) US$6–7m
Number of employees (FTE) 110
Roofing sheets, wire-nets, binding wire,
Main business activity barbed wire, gutters, ridges and roofing
nails
Export markets N/A

Company Origins
Tolirwa, Rwanda’s first manufacturer of galvanized roofing sheets, was
established in 1979 as a family-owned business. The family had been run-
ning an electronics goods trading firm and a small auto-repair garage in
Kigali since 1973. Seeing an opportunity to invest in locally produced con-
struction materials, the family imported Japanese machinery and tech-
nical expertise, and started cutting and galvanizing cold-rolled coils to
produce customized roofing sheets for the local market. Demand was high,
and by 1984 Tolirwa had invested in a new plant.
Today, Tolirwa has over 110 employees and an annual turnover of ap-
proximately US$6–7m.

Products
Tolirwa started in 1979 with the production of simple galvanized roof-
ing sheets. It has since both upgraded and diversified its product lines. In
1979, it introduced pre-painted roofing sheets, which are both aesthetically
more appealing and have longer durability. In 1990 the company intro-
duced corrugated and profiled roofing sheets. Today, Tolirwa offers four
types of roofing sheets in six different colours: high profiled, super echo
profile, tile-forming and corrugated. These upgrades required additions to
the production line.
Tolirwa, like several other companies in the construction sector in
Rwanda, has diversified into other products to deal with the seasonality
of the roofing sheets business. These products include wire-nets, binding
wire, barbed wire, gutters, ridges and roofing nails. They are all derived
CONSTRUCTION MATERIALS 183

from the same semi-processed raw material (cold coils). Most recently, in
2012, the company also started the production of iron tubes and pipes.
The main customers for Tolirwa’s products are individual home-build-
ers, construction companies, real estate developers and hardware distrib-
utors. Government projects are not a major source of income at this point
in time, due to competition and tender conditions. Most sales are made
directly at the plant, but Tolirwa has two outlets in Remera and Nyabugo-
go in Kigali. The minimum turnaround period from importing of raw ma-
terials to final product delivery is four months.
Tolirwa’s competitors in the local market are Safintra, Rubungura and
Master Steel. The main threat, however, comes from cheap imports of fin-
ished products, mainly from Uganda and Kenya, which (for major con-
struction projects) are often VAT and duty exempt.

Systems
Tolirwa is still a family-run business. In addition to the family’s decades
of experience in the galvanized sheets business, the company is supported
by an experienced management team consisting of expatriates and locals
with experience in their respective fields.
Tolirwa has seven product lines, including roofing sheets, tubes, nails,
steel bars, door frames and steel bottle sections. The machinery used for
these products is mostly new, modern and efficient. A few product lines
still use machines that were installed over 20 years ago.
As with all of Rwanda’s steel product manufacturers, the plant is run-
ning at low capacity levels, currently about 25%. The main reason for this
low capacity utilization is (i) high electricity costs, (ii) high labour costs,
and, most importantly, (iii) insufficient market demand due to competi-
tion from cheap imports from Uganda and Kenya. Imports from Uganda
and Kenya have increased in some product lines by over 100% during the
last five years.
Tolirwa used to import all of its semi-processed raw material – cold-
rolled coils – from Japan. But following a price hike in 1997, it diversified
its sourcing to Taiwan, India and, most recently, South Africa. Establish-
ing efficient sourcing systems is key for the construction materials busi-
ness, as inputs tend to be heavy and very costly to transport.
Tolirwa has recently invested in improving management, in particular,
by automating its accounting and stock management systems. This was
made imperative by the diversification of Tolirwa’s product range. The
management software used by Tolirwa is Tally.

Resources
Tolirwa employs over 110 people, including 7 in management positions, 30
technicians with an average of five years’ experience, over 50–60 casual
184 CHAPTER 8

factory workers and 10 people in maintenance roles. Over the past 43 years,
the company has acquired extensive knowledge in the production of steel-
based construction materials.
Over the years, Tolirwa has established a strong brand name. The com-
pany tries to differentiate its products from competitors based on their
quality, reflected by the thickness of the end product.
In terms of assets, Tolirwa’s main resources are a very large plant in the
Gikondo Industrial area (Kigali), modern equipment/machinery and two
retail outlets in Remera and Nyabugogo (Kigali).

8.10  Ufametal
One of Rwanda’s leading construction materials companies. It is part of the
diversified activities of Petrocom Ltd.
Year established 2001
Latest annual turnover (2010–11) US$8–9m
Number of employees (FTE) 20–25
Main business activity Iron sheets, steel tubes and profiles
Export markets Burundi, DRC

Company Origins
Ufametal is part of Petrocom Ltd., which was registered as a company in
Rwanda in 1995, providing international transport and logistics services
for petroleum. The success of Petrocom, in tandem with the damage to
most of the construction material factories in Rwanda during the 1994
genocide and the anticipation of a huge boom in Rwandan development
and construction, drove the owners to take advantage of the market gap
and diversify their business interests into construction materials by creat-
ing Ufametal in 2001.
Petrocom Ltd. was created by a group of local businessmen through a
holding company known as Grand Lacs Trading. The other sections under
the Petrocom portfolio include Kagugu Dairy, a small dairy farm based in
the Gasabo district of Kigali that was set up in 1995.3 Other interests of the
Grand Lacs Trading Group include Rwanda Mountain Tea Company, one
of Rwanda’s largest tea processing companies.

3 
Kagugu Dairy produces fresh milk that is supplied to Inyange Industries,
Nyanza Dairy and also directly to certain schools. Attempts have recently been
made to petition the Rwanda Development Board (RDB) for a license to enable
Kagugu to begin processing and selling their milk directly. This is expected to be
passed soon and commercial production to begin in 2013.
CONSTRUCTION MATERIALS 185

The turnover for Petrocom Ltd. is Rwf8bn (approximately US$13m),

with 52% of sales from Ufametal (approximately US$8m), 40% from inter-
national transport and 8% from Kagugu Dairy. Ufametal exports limited
quantities of construction materials (less than 3% of total production) to
Burundi and eastern DRC.

Products
Ufametal is responsible for three different types of construction materials:

Iron sheets. Pre-painted iron sheets that are manufactured in various pro-
files and thicknesses for both commercial and home roofing.

Hollow section tubes. Various customizable sizes of tubes and pipes.

Profiles. Different shapes of steel that can be used for accessories such as
gutters and ridges.
None of the company’s main products are currently exported on a con-
sistent basis. Some sales have been made to companies in Burundi and
eastern DRC but these were one-off sales. Ufametal does have an interest
in expanding its exports and at the time of writing planned to introduce
representatives in these countries by the end of 2012.

Systems
Most corporate functions of Petrocom Ltd., such as legal, marketing, inter-
nal audit, administration and finance are centralized, thereby providing
access to shared services for Ufametal and Kagugu Dairy too.
Currently, the Ufametal factory is running at 70% capacity. The main
constraints for capacity are the cost of raw materials, the logistics of im-
porting the materials and also strong competition. Ufametal works with
both hot- and cold-rolled coils; hot-rolled coils are imported from the
United States and cold-rolled coils from South Africa, India and China.
The need to import such heavy raw materials, plus clearance issues at the
port of Mombasa, makes this a costly process. The limited demand for
Ufametal’s products is linked to the number of competitors in the con-
struction material field, in particular, from China, Kenya and Uganda,
but also from Rwandan firms such as Tolirwa, Master Steel, Safintra and
­Simaco.
Ufametal has made a concerted effort to try and differentiate itself from
the competition. It has done this by focusing on the quality and thickness
of its roofing sheets and other steel products, and also by operating on a
high-volume, low-margin model. Given the strong competition, Ufametal
has engaged in extensive marketing efforts through adverts on radio, tele-
vision, print and billboards.
186 CHAPTER 8

The company’s main customers are construction firms, schools, minis-

tries and churches. Sales to these businesses are primarily made directly
from its factory and the company has its own fleet of trucks for distribu-
tion.
Ufametal’s machinery was originally imported from China and in 2011
the company invested over US$500,000 in upgrading and purchasing new
machinery aimed at improving capacity and introducing new products.
Ufametal is focused on training and improving the skills of their em-
ployees. They have brought in experts from China and have hired per-
manent technicians to help operate the machinery. In addition to this,
approximately US$33,000 is allocated to training needs every year, with
heads of departments recommending training courses to their employees
every fiscal year.
The company has undertaken research into new product development,
with Ufametal examining the potential to manufacture screws for iron
sheets. The products was at the time of writing expected to enter the mar-
ket before the end of the year.

Resources
Ufametal leverages the resources of Petrocom Ltd. in several ways. Petro-
com Ltd. employs 272 full-time employees: 20–25 employees at ­Ufametal,
25 at Kagugu Dairy and the remaining 220+ at Petrocom. The group em-
ploys 10 expatriates, including a Chinese engineer at Ufametal and a gen-
eral manager at Kagugu Dairy from Burundi.
In terms of physical assets the firm has one large plant in Kigali, 150 ha
for dairy farming and one workshop. The current land used for Kagugu
Dairy is a wetland so the company is planning to move to Kigali Special
Economic Zone (KSEZ) in Phase 1 of the development and has plans to
construct a much larger factory.
Financially, the holding company has a low debt : equity ratio, which
stands at 30 : 70, and has secured the majority of its debt funding from local
and international banks. Petrocom Ltd. is planning to get ISO certification.

8.11  Uprotur
A family-owned construction materials company.
Year established 1987
Latest annual turnover (2010–11) US$2–3m
Number of employees (FTE) 80–90
Main business activity Construction materials
Export markets N/A
CONSTRUCTION MATERIALS 187

Company Origins
Uprotur, a family-run construction materials manufacturer, was estab-
lished in 1987. The Rwandan owners of Uprotur originally started off as
importers/exporters of cement, tubes and other construction material
products in 1975. Having acquired more than a decade of knowledge
about the industry and domestic demand, the owners decided to import
machines from Italy and start producing metallic tubes and hollow section
frames domestically. At the time, Uprotur was the only domestic manu-
facturer of these products.
Following the 1994 genocide, and in response to the ensuing recon-
struction boom, Uprotur quickly diversified, adding new production lines
and new metallic and plastic construction materials to its product offering,
with the objective of becoming a one-stop-shop solution for the construc-
tion sector. These included roofing sheets, PVC tubes, nails and wiring.
Seeing an opportunity to further diversify into other sectors as well, the
family took over a bankrupt foam-mattress manufacturing firm in 2006
that never restarted operations after the genocide. They quickly turned it
around and by 2008 had set up Uprofoam, using new machinery from Ita-
ly. This move aligned Uprotur’s operations with other domestically owned
businesses such as Afrifoam/Simaco and RwandaFoam/Amagerwa that
operate both in the construction materials sector and the mattress sector.
Competition in both markets is steep. The mattress market suffers from
low-cost competition from Uganda, forcing the domestic market into the
middle and higher-end market segments. Uprotur’s competition in the
construction sector comes from larger domestic construction material
manufacturers such as Safintra and Master Steel, and from the imports of
finished products from the region and Asia.
In this profile we focus exclusively on Uprotur.
Today Uprotur’s turnover is estimated at US$2–3m and the company
currently employs about 80 staff full time, 60 of which are factory workers.

Products
Uprotur is a highly diversified construction materials firm. Its current
products include:
•  hollow section frames and metallic tubes (since 1987);
•  low-cost galvanized roofing sheets (1996–97);
•  PVC tubes (2001);
•  pre-painted roofing sheets (2003–4);
•  corrugated roofing sheets (2007);
•  nails (2007);
•  metallic wiring (2008).
188 CHAPTER 8

In terms of volume, Uprotur’s main products are metallic tubes for

roofs and galvanized roofing sheets.
As can be seen in the list above, the company has consistently increased
the diversity of its product portfolio since 1987. Increased diversification
has gone hand in hand with increased sophistication, e.g. roofing sheets.
Initially, Uprotur imported pre-cut coils, which not only were more ex-
pensive but limited the company’s flexibility to tailor its products to the
specific demands of customers. In 1992 Uprotur purchased a cutting ma-
chine that enabled it to cut 10 ton cold-rolled coils. In 1996 the company
invested in a slitting machine from Italy used to start the production of
galvanized sheets. These were enhanced by new machinery from Italy, in-
stalled in 2003, geared towards the production of pre-painted galvanized
iron (PPGI) sheets, for which there is high demand in the country. Finally,
Uprotur installed a new production line in 2006–7 for the corrugation of
galvanized sheets. Through this process the initial product – simple galva-
nized sheets – acquired two more attributes: colour and corrugation.
Competition for Uprotur’s products is strong, with Rwandan manu-
facturers at a disadvantage due to high transportation costs for raw ma-
terials and comparatively high electricity costs. Uprotur estimates that it
costs them about US$200 per ton to transport cold-rolled coils to Kigali
from the ports of Mombasa or Dar es Salaam, compared with an estimated
US$80 for companies operating in Uganda. Two other factors that, from
Uprotur’s perspective, put local companies at a disadvantage are VAT-free
and duty-free imports of construction materials for large construction
projects and the fact that companies feel there is not yet enough quality
control from the Rwanda Bureau of Standards on imported construction
materials (in particular, in terms of thickness, which in the steel market is
one of the main quality attributes).
As a result of these constraints, Uprotur has focused on the housing
market and smaller-scale construction projects, and is trying to position
itself as a high-quality producer of roofing sheets. Rwandan customers are
very sensitive to the quality of roofing sheets, so this is one market in par-
ticular where Uprotur can differentiate itself from international and local
competition and build customer loyalty.

Systems
Uprotur’s total production capacity is estimated at about 5,000  tons per
month. This capacity is split between seven production lines: metallic
tubes, hollow sections, galvanized roofing sheets (including pre-­painted
sheets), corrugated roofing sheets, PVC tubes, nails and lastly wiring.
Monthly production currently ranges between 80 and 200  tons, which
amounts to a capacity utilization of less than 10%.
CONSTRUCTION MATERIALS 189

Low capacity utilization is due to a number of factors: (i) demand is

seasonal, especially for roofing sheets, which are only produced during
the dry season (May to September); (ii) limited electricity availability
means that machines need to be rotated (the company cannot run all its
machines at the same time); (iii) high electricity costs mean that it is only
cost efficient to run machines once a certain order size has been secured
(Uprotur’s PVC production line has been brought to a halt due to extreme-
ly high electricity consumption and associated costs); (iv) production is
contingent on the availability of raw materials, which can take up to three
months to be imported and are often subject to delays; and (v) Uprotur’s
most recent machine – a welding rod imported from China used for the
production of wiring – was out of order in mid-2012, bringing the pro-
duction line to a halt. However, low capacity utilization is also a self-per-
petuating constraint: one of the reasons that Uprotur is so diversified is
because the company believes that relying on a single production line – for
which demand is uncertain – is too risky; investing in multiple production
lines ensures production is almost always ongoing, even though this does
exacerbate low capacity utilization.
Key to Uprotur’s survival is the elaborate sourcing relationships the
company has established over the past 25 years with its suppliers. Upro-
tur sources its raw material (mostly cold-rolled coils) from India, using
traders with which it has strong relationships in Belgium, England, Dubai
and South Africa. Operating through established traders and bulk buyers
ensures better prices and quality for the raw material, which is very vul-
nerable to oxidation. To transport the cold-rolled coils from the ports of
Dar es Salaam or Mombasa to Kigali, Uprotur uses Rwandan transporters,
with which it has long-standing contracts.
In the past Uprotur used exclusive distributors, but now the company
only works through wholesalers. The company has a sales point, which is
currently being moved from the city centre of Kigali to Nyabugogo.

Resources
Uprotur’s strategic resources include 25 years of know-how in Rwanda’s
construction sector, a trained team of technicians, and seven relatively
modern production lines based in a factory in Kigali’s industrial area.
The company employs about 80 workers, although employment levels
vary based on production levels. All employees are Rwandan, although
foreign technicians (in particular, from Italy) are sometimes called in to
repair faulty machines. Every production line in the factory has a trained
technician to operate it.
Chapter 9

Other Light Manufacturing

9.1  Background and Overview

The light manufacturing industry in Rwanda can today be grouped into
four main product categories: plastic products, FMCG, furniture and mat-
tresses, and textiles. The manufacturing process for these products is typ-
ically less capital intensive than heavy industry (which does not exist in
Rwanda) and is geared more towards consumers rather than businesses.
It is difficult to trace the history of the light manufacturing sector (ex-
cluding the construction materials sector) but firm registration data from
1970 to the 1990s (see Table 1.2) indicates that during the 1980s there were
several new entrants in the FMCG and furniture/mattress sector, with
established players such as FMCG manufacturer Sulfo Industries (1962)
and furniture maker Manumetal (1967) having started much earlier. We
observe around 10 new entrants during the 1980s that produced a variety
of goods that are no longer produced today, such as matches, soaps, tooth-
paste and leather shoes. Today, the light manufacturing sector is dominat-
ed by one of its oldest and largest stalwarts, Sulfo Industries, which gener-
ates a wide variety of FMCG products and is the sector’s biggest company
(annual turnover: US$13-14) and employer (700 employees).
The origins of today’s light manufacturing companies are in line with
some of the general trends we observe in the industrial sector and com-
prise (i) companies established by traders that moved into manufacturing;
(ii) companies that were established to contribute to the post-genocide
reconstruction; and (iii) EAC regional groups expanding their reach to
­Kigali. The entrepreneurs behind the establishment of Sulfo Industries
(1967), Utexrwa (1985) and Rwanda Foam (1983) all have their roots as
traders before they ventured into the manufacturing business, having ac-
quired several decades of experience and know-how. Following the 1994
genocide, Mutara Enterprises (1995), Société Rwandaise de Chaussures
(1999), Suku Paper (2003) and Trust Industries (started in 2008 although
192 CHAPTER 9

Table 9.1  List of key light industry firms in Rwanda.

Light
industry
product
category  Companies  Products
Plastic water tanks, septic tanks, pond-
liners and perma-well liners and sanitation
Aqua-San Rwanda
solutions (mobile toilets, sanitation slabs,
Plastic products

eco-toilet), etc.
Plastic water tanks, horizontal water
tanks, plastic mobile toilets, plastic septic
Roto Ltd.
tanks, plastic drums and other plastic
products
Société Rwandaise de
Plastic shoes
Chaussures
Manumetal Metal, wood and aluminium furniture
Mutara Enterprises Office and home furniture
Rwanda Foam: foam mattresses and other
Furniture and

related foam products such as pillows,

mattresses

Rwanda Foam /
cushions, car seats, and insulation
Amagerwa
Amagerwa: furniture and construction
materials
Other manufacturers
of mattresses: Afri-
Foam mattresses
foam, Kigali Foam,
Uprofoam, etc.
Soaps, cleaning detergents, personal care
products, food items, packaged drinking
Sulfo Industries water, plastic moulded items (e.g. jerry
cans), corrugated cartons, candles,
casseroles and tin containers
Chemical cleaning detergents and paper
products (toilet paper, serviettes, kitchen/
Trust Industries
hand towels, medical towels, facial tissues
FMCG and hand tissues)
Paper products: toilet paper, sanitary pads,
Suku Paper Works
napkins, pocket tissues

KSAW Kitchen utensils

Anik Industries Candles, napkins and nails

Soft Group Cleaning tissues and other products
Textiles
and Utexrwa Finished garments and finished fabrics
fabrics
OTHER LIGHT MANUFACTURING 193

the cleaning services company began in 2000) were all started by Rwan-
dan entrepreneurs who returned to Rwanda from either the region or
abroad and saw an opportunity to provide key household items – such
as furniture, plastic shoes, paper products and cleaning detergents – for
the recovering economy. Finally, in the early 2000s, several companies
with roots in either Kenya or Uganda started companies in Rwanda in-
cluding Aqua-San Rwanda (2003) under the Kenyan Aqua-San Tec Group,
Roto Ltd. (2001) under the Kenyan Flame Tree Group and Kigali Steel &
Aluminium Works (KSAW) (2001), a subsidiary of the Ugandan-owned
­Shumuk Group of Companies.

Products
The sector can be grouped into four main product categories. With the
exception of the textiles sector that has only one manufacturer in the
country, there are a number of firms operating in each product category. A
summary of key manufacturing firms for each product category is provid-
ed in Table 9.1 (please note that the list is not exhaustive).

Systems
Two main trends observed in the light manufacturing sector mirror the
challenges faced in the construction materials sector: supply chain and
sourcing difficulties for raw materials and low capacity utilization. Almost
all the companies profiled in this chapter import the basic raw materials
from a diverse set of destinations in the region and globally. These include
China, India, Iran, Ukraine, Turkey, Norway, South Korea, South Africa,
Dubai, as well as EAC neighbours such as Kenya, Uganda and Tanzania.
Long lead times, cost, demand seasonality and transportation difficulties
mean that many of the firms operate under capacity (and many of these
below 50%). There appears to be an increasing trend to source raw ma-
terials from the region to alleviate costs and lead times. For example, Man-
umetal sources most of its raw materials locally and imports metal and
aluminium parts from Kenya, Uganda and South Africa; Mutara Enter-
prises plans to source all its raw materials from the region, including the
DRC, Kenya and Uganda. Larger companies such as Sulfo Industries are
able to store imported raw materials in warehouses located across the city
of Kigali. Finally, companies that are part of regional groups rely on the
parent companies to conduct the bulk sourcing agreements, e.g. Aqua-San,
Roto, and Kigali Steel & Aluminium Works (KSAW).
A key challenge for light manufacturing industry in Rwanda is the in-
creasing number of finished imported products from places such as China,
Malaysia, Kenya and Uganda, which are sold in the Rwandan market at
comparatively cheap prices. Often, these products are the biggest compet-
itive threat to the domestic manufacturers, even more so than their local
counterparts.
194 CHAPTER 9

Resources
The aggregate light manufacturing industry is close to the construction
materials sector in terms of revenue and employment generation. Based
on the 12 companies profiled in this sector, estimated revenues (2010) total
just under US$50m, with employment at approximately 1,900 people. As
is the case for most sectors, foreign experts from the region or abroad fre-
quently fill key management and technical positions.

Exports
Very few firms in this sector export and firms which do export focus al-
most exclusively on the Burundi and eastern DRC markets. The most ex-
port-oriented firm in the sector, in terms of percentage of the turnover
that is generated from exports, is Société Rwandaise de Chaussures, gen-
erating a remarkable 80% of sales from exports, followed by Roto Tanks
(30%), Sulfo Industries (10%) and Aqua-San (10%). The ability to export to
Burundi and the DRC has been a key motivating factor for investment by
companies that are part of regional groups (such as Aqua-San, Roto and
KSAW), as they view Rwanda as an ideal base from which to export to
those markets.

9.2  Anik Industries

One of the pioneers of manufacturing candles, shoe polish and mirrors.
Year established 1986
Latest annual turnover (2010–11) US$1–2m
Number of employees (FTE) 30
Main business activity Candles, nails and napkins
Export markets N/A

Company Origins
In 1986, Mr Patel, an entrepreneur from Uganda, registered Anik Indus-
tries as a business in Rwanda. Originally from Uganda, Mr Patel’s family
owned a coffee factory but were expelled in 1972 during the reign of Idi
Amin, and subsequently moved to Rwanda. Anik Industries was originally
created as a candle manufacturing business, later diversifying its product
range into the production of nails and then finally napkins.
The decision was made to enter into the manufacture of these items
as Mr Patel saw a good market opportunity to be the first company in
Rwanda to produce them. In addition to the current diversified portfolio,
the company also used to manufacture mirrors and shoe polish. During
the genocide of 1994 their production lines for these two products were
OTHER LIGHT MANUFACTURING 195

destroyed and it was not deemed financially viable to restart them. They
restarted activities in 1996.
Anik Industries has faced multiple challenges over the years, specifical-
ly, a lack of skilled labour and technical knowledge in Rwanda.
Today Anik Industries has a turnover of US$1–2m and 30 full-time em-
ployees.

Products
Anik Industries has developed three main products since its inception in
1986 – candles, nails and napkins – which each comprise an equal share
of sales.
The company currently imports all its raw materials as they are not
available locally. Paraffin, wax and wicks for candles are imported from
China and Iran; paper for napkins is brought from China, India and Nor-
way; steel wire for the nails is imported from the Ukraine, Turkey and
South Africa. This variety of import streams across multiple countries
enables Anik Industries to minimize its exposure to supplier disruption.
Conversely, it can also have the impact of driving up prices due to high
transportation costs, thereby making the company’s products less compet-
itive in the Rwandan market.
Anik Industries’ products are technically complex to manufacture but
because of this the company has few local competitors. The company’s major
competitors have either moved out of candles or closed down. The main
challenge for Anik Industries, as with other manufacturers in Rwanda,
comes from cheap imports from the Chinese market, where products can
be produced at lower prices due to lower labour costs and an abundance
of raw materials. In particular, this has forced the company to consider
whether it should continue to produce candles and to lobby the govern-
ment of Rwanda to help protect local businesses.

Systems
To further develop the company over the coming years and improve profits,
Anik Industries needs to improve the capacity of its production. Currently,
the company is running at 50–60% capacity with the business conducting
8 hour shifts. The main reasons behind this have been identified as (i) sea-
sonal demand (this varies for each of the products, making manufacturing
requirements hard to predict); (ii) the cost of energy; (iii) periodic short-
ages of raw materials; and (iv) the lead time to import raw materials.
One option for growing the business is diversification into new prod-
ucts, either in the current product lines or by entering a new market entire-
ly. In line with this, Anik Industries recently conducted feasibility studies
into the establishment of a glass-manufacturing unit, given high demand
196 CHAPTER 9

from construction companies and the lack of an existing local manufac-

turer. At the time of writing the new unit was expected to commence oper-
ations in early 2013, providing the company can secure required financing
and credit arrangements.
The packaging used by Anik Industries is either purchased locally or
imported from Uganda depending on the product. The customers are pri-
marily individuals or hardware stores, with sales being either direct to re-
tail units or individually from the factory in Kicukiro. To further enhance
sales, Anik Industries markets its products either through radio commer-
cials or advertising via brochures.

Resources
In addition to Mr Patel, who is the managing director, the company cur-
rently has 30 full-time staff, including 5 managers. The company has
two expats in the roles of production manager and chief accountant.
­Twenty-five employees are responsible for the day-to-day working of the
factory. The only skilled employees are those responsible for machinery
repair and maintenance.
Anik Industries has one plant in Kicukiro, Kigali, and an office down-
town, where a retail and wholesale showroom is located.

9.3  Aqua-San
Part of Kenya’s Aqua-San Tech Group, one of the largest providers of water
sanitation solutions in Rwanda.
Year established 2003
Latest annual turnover (2010–11) US$1–2m
Number of employees (FTE) 25
Main business activity Water tanks and sanitation solutions
Export markets Burundi, eastern DRC

Company Origins
Aqua-San Rwanda is part of the Aqua-San Tec Group of companies. Oper-
ations in Rwanda commenced in 2003. Aqua-San is engaged in manufac-
turing water and sanitation solutions such as septic tanks, rainwater har-
vesting tanks, mobile toilets and sanitation slabs. The group was started in
Kenya and Uganda 20 years ago by the Shah family, initially focusing on
the production of water tanks before moving into an array of water and
sanitation products. The group currently has operations in another sev-
en countries including Kenya, Uganda, Tanzania, South Sudan, Ethiopia,
Mauritius and Burundi.
OTHER LIGHT MANUFACTURING 197

Aqua-San’s familiarity with the Rwandan market dates back to several

years before it registered in Kigali, as the company was previously export-
ing to Rwanda from its operations in Uganda and Kenya. In addition to
a promising local market, Aqua-San saw Rwanda as a promising base to
export to eastern DRC, Burundi1 and potentially even Lubumbashi in
southern DRC.
In Rwanda, Aqua-San started as a manufacturer of water tanks but has
gradually diversified its product portfolio to become a solution provider
for water and sanitation. Having invested an initial US$200,000 to com-
mence operations, Aqua-San Rwanda generated US$1–2m in 2010 rev-
enues, 10% of which was generated from exports to Burundi and eastern
DRC. Aqua-San has plans to start manufacturing facilities in Burundi and
Lubumbashi, DRC, to replace the current distribution offices by the end
of 2012.

Products
Aqua-San’s product portfolio can be split into two main groups: water
tanks and sanitation products.

Water tanks. Aqua-San’s first products were standard water tanks with
various holding capacities. The company later introduced its popular
rainwater harvesting tanks, marketed in Rwanda under the brand name
AquaTank. Other products within the water tank portfolio currently in-
clude septic tanks, pond-liners and perma-well liners (which are plastic
liners for wells).

Sanitation. Products include the newly introduced injection-moulded

mobile toilets, sanitation slabs and an innovative eco-toilet, which is fit-
ted with urine-diverting mechanisms that enable the urine to be used as
fertilizer.
Aqua-San Rwanda plans to manufacture new products such as high
density polypropylene pipes (HDPE) pipes that serve as hot and cold pres-
sure pipes, plastic furniture such as school furniture, and Biogaz units.
­Aqua-San has recently developed compact Biogaz units that can use a var-
iety of feedstock including plant and food waste as well as animal dung to
generate biogas for cooking and manure as a by-product. The unit is suffi-
ciently compact to be used in urban as well as rural households.
At the time of writing, Aqua-San aimed to make 2012 a year of diversi-
fication as the company feels it has reached saturation point for its current

The company has plans to begin full-fledged operations in Burundi too by the
1 

end of 2012.
198 CHAPTER 9

product portfolio. Most of Aqua-San’s customers are long-standing cus-

tomers such as NGOs and government agencies. This has motivated the
company to diversify its product portfolio and to move into unrelated
products such as school furniture and energy products.
The manufacturing process is similar for most products and is based
on rotational moulding technology. The imported raw materials (polypro-
pylene granules) are pulverized into powder form, placed and heated in
a customizable mould that is slowly rotated and later cooled to solidify.
The entire manufacturing process can last between 45 minutes and one
hour. Aqua-San’s prices are higher than its competitors as it differentiates
its products through two key attributes: (i) raw materials, which are 100%
pure and not recycled, thereby providing more flexibility and preventing
cracking in unpredictable weather conditions; and (ii) technology – the
water tanks contain more than 2.3% carbon black melt which is com-
pounded into the polyethylene to form a protective barrier against the
harmful effects of the sun’s UV rays, thereby increasing the lifespan of
the tanks.
Aqua-San is trying to position itself as a one-stop solution for water,
sanitation and energy products, through the introduction of package
deals designed for its different customer segments, including institutions,
farmers and families. An example of a farmer package might include rain-
water harvesting tanks, sanitation slabs, Biogaz units, grain silos and a
­perma-well liner. These packages have proved to be highly successful.

Systems
Aqua-San Rwanda is a subsidiary of the larger Aqua-San Group, which
is headquartered in Kenya. The Nairobi-based board of directors makes
strategic decisions, while day-to-day operations are managed in-country.
The company leverages technical and financial expertise from the Aqua-
San group and shares the same suppliers. However, given the nature of the
market and the fact that products often have to be tailored to the specific
requirements of NGOs and government agencies, which buy in bulk, all
product research and development for products sold in Rwanda is con-
ducted in Kigali.
Despite its modern machinery and saturation in the local market, Aqua-
San’s current capacity utilization is only 25%. This relatively low level of
utilization can be explained by the small size of the Rwandan market, the
unpredictable nature of demand and by delays related to the sourcing of
raw materials. Raw materials are imported from India via the port of Dar
es Salaam, a process that can take up to three months. Aqua-San Rwanda’s
long-standing relationship with Indian suppliers can be attributed to the
network developed by its sister companies in Kenya and Uganda. Given the
limited availability in the country, the company also imports accessories
(for example, taps) as well as spare parts for machinery from Uganda. The
OTHER LIGHT MANUFACTURING 199

bulk of the company’s machinery was imported from Germany; smaller

machines and tools are fabricated in situ as needed.
Aqua-San works with about 20 distributors that market their products
across the country; the company employs a similar model for its export-
ing arm. The company currently maintains two retail outlets in Kigali
(Kicukiro and Nyabugogo) and, at the time of writing in mid-2012, also
planned to open a retail outlet in eastern DRC. Its main competitors in
Rwanda are Roto Tanks, Ameki Tanks and Rotassairwa.
In terms of management information systems, Aqua-San has been
using Tally, but the group plans to implement an ERP system throughout
its subsidiaries.

Resources
Aqua-San’s main resources are its ability to leverage the financial and tech-
nical resources of the Aqua-San Tech Group, which has been in operation
for two decades.
The company also relies on its strong brand, which is well recognized
in the country and can leverage the group’s reputation that has been estab-
lished all over East Africa and Ethiopia. The company also benefits from
the knowledge and skills of its sister companies through regular visits by
their experienced production managers.
The company employs 25 full-time workers, with four expatriates (three
Indian and one Kenyan) in senior management positions such as the gen-
eral manager, the admin/marketing manager, the financial controller and
the plant engineer. The skill levels of the staff vary, with the most skilled
personnel being in plant engineering and maintenance positions.
The company is currently leasing its facilities in the Gikondo Industrial
Area but plans to move to the Kigali Special Economic Zone (KSEZ) in
three to four years’ time.

9.4  Kigali Steel & Aluminium Works

Primary manufacturer of kitchen utensils in Rwanda.
Year established 2001
Latest annual turnover (2010–11) US$1–2m
Number of employees (FTE) 20
Main business activity Steel and aluminium kitchen utensils
Export markets Eastern DRC

Company Origins
Kigali Steel & Aluminium Works (KSAW) is Rwanda’s primary manu-
facturer of aluminium kitchen pots commonly known as sufurias. The
200 CHAPTER 9

company is part of the Ugandan-owned Shumuk Group of Companies.

The Shumuk Group started in Uganda in 1984 and currently has a large
portfolio of firms ranging from a forex bureau, property investments, a
travel agency and a dairy plant to hotels, all based in Uganda. The com-
pany manufactures aluminium products in Kampala and used to distrib-
ute to Rwanda and Burundi. In 1995, after the genocide, the company saw
an opportunity to take over a defunct factory in Kigali and slowly began to
refurbish the facility and its existing machinery. In November 2001, they
registered the company as Kigali Steel & Aluminium Works and began
to test the market by producing small quantities of aluminium utensils
(1 ton per month) but today have expanded production to over 30 tons per
month.
Another factor that encouraged the company to commence manu-
facturing operations in Rwanda was its desire to gain a dominant market
share for aluminium products in Uganda, Burundi, Rwanda, South Sudan
and eastern DRC. Rwanda would serve as an entry point into the eastern
DRC market, into which KSAW has just started exporting. The company
also has a distribution arm in Burundi but also plans to start manufactur-
ing in Bujumbura.
Today, KSAW vies with Sulfo as the main producer of aluminium kit-
chen utensils in Rwanda. Its turnover in 2011 was US$1–2m and the com-
pany provides employment to over 20 workers.

Products
Currently, KSAW’s sole product is aluminium kitchen pots referred
to as sufurias. Production for these items is fairly basic with two main
machines that mould the imported aluminium sheets into the shape of
kitchen utensils. The sheets are sourced through KSAW’s Ugandan sister
company but the company also recycles aluminium scrap to increase cost
efficiency. Some of the extra scrap metal is also sent back for the group’s
Ugandan operations.
By the end of the year, KSAW plans to begin manufacturing kettles,
frying pans and aluminium cups. Most of the machinery is in place but
the company is awaiting a few more pieces of equipment before production
can start.
KSAW’s main competitors are imports from Kenya and Dubai and
local players such as Sulfo Industries and Harjit ETS.

Systems
KSAW currently produces approximately 50  tons per month, while full
production capacity is estimated at between 60 and 65  tons per month.
Accordingly, capacity utilization is estimated at 75%, due to inconsistent
demand.
OTHER LIGHT MANUFACTURING 201

As with most companies that have origins in other East African coun-
tries such as Kenya or Uganda, KSAW relies heavily on the technical and
financial expertise of its parent company. All raw materials and machin-
ery sourcing is conducted from the head office in Kampala. Aluminium
sheets are imported in bulk from India and China by Shumuk Aluminium
Industry (Uganda) and then sent to KSAW as required. The only local in-
put is the recycled scrap metal. Product development is also conducted in
Uganda, with the utensils only differing from the Ugandan products in
terms of the dyes used. Most of the existing machinery was refurbished
but new equipment was imported, again via Uganda, from India and the
United Kingdom.
KSAW’s products are targeted at the low-income market and
­middle-class customers by virtue of their pricing and consequently have
garnered a major share of market leadership in household utensils. Whole-
sale sales are conducted directly from the factory but the company has
plans to develop a showroom on the premises.

Resources
The company currently employs approximately 20 full-time staff, with
two expats from Uganda and India comprising the senior management.
KSAW’s factory is located near the Bralirwa operations in Kigali. Given
the large space they have acquired, KSAW plans to build a showroom and
flats for residential use.
In terms of knowledge resources, KSAW relies heavily on Shumuk
­A luminium Industries Ltd., which also ensures that quality standards are
maintained as the parent company holds an ISO 9001-2000 certification in
Quality Management.

9.5  Manumetal
The country’s oldest and largest furniture manufacturing company.
Year established 1967
Latest annual turnover (2010–11) US$2–3m
Number of employees (FTE) 57
Main business activity Furniture
Export markets N/A

Company Origins
Manumetal is the oldest and largest furniture manufacturer in Rwanda.
Established in 1967 by a Belgian consortium, the company has now been
in existence for almost 50 years. Manumetal manufactures three types of
furniture products – metallic, wooden and aluminium-based furniture
202 CHAPTER 9

– targeted mostly at the rapidly expanding local office market. While fur-
niture remains its core business, the company has, over the past decade,
diversified into the production of aluminium-based structures, such as
windows and doors. Today the company employs over 57 people and has
an annual turnover of almost US$2–3m. Since 2000, Manumetal has been
fully owned by two Rwandan investors: Mr Tribert Rujugiro, a prominent
businessman with vast business interests in the country and international-
ly, and Mr Robert Bayigamba, an investor who had previously worked for
the Belgian consortium.

Products
Manumetal started as a manufacturer of metal furniture and metal frames
with equipment and machinery imported from Belgium (these machines,
although upgraded, are still in use today). Manumetal was the only large
manufacturer of metal furniture in Rwanda up to the late 1990s but as the
years passed Manumetal’s position as a market leader was slowly eroded
due to the entrance of new players such as Mutara Enterprises and Prime
Impex and imported finished goods from China, Dubai and Malaysia. A
few years later, Manumetal entered the wood furniture industry, where
there was significantly more competition, with companies such as Rwanda
Furniture Works, Ameki, Namdhari Furniture and Economats. The tran-
sition to wood was motivated by a growing demand for more aesthetic
wood products, and made possible by Manumetal’s long expertise in fur-
niture making and the fact that the production of metal and timber furni-
ture requires much of the same machinery.
The big break for Manumetal came with the change of ownership in
2000, and significant capital investments aimed at the production of al-
uminium furniture. A major contract to furnish Kigali’s first modern
shopping centre – the Union Trade Center – made it possible for the
company to make the move to aluminium. Today Manumetal is one of
the manufacturers of aluminium furniture in Rwanda (other companies
include Tomini, ESK and Union Trading); its main competitor, Mutara
Enterprises, assembles imported aluminium products and has yet to start
domestic production. This has made it possible for Manumetal to compete
in the burgeoning local office market, with furniture products specifically
targeted at offices, libraries, shops, hospitals and schools. Manumetal also
produces furniture for the home interior market.
Manumetal’s aluminium unit has enabled the company to diversify.
The unit manufactures windows, doors, partitions and, most recently,
blackboards supported by aluminium frames. In Rwanda’s rapidly grow-
ing construction industry, this is a line of business with great potential,
estimated to contribute 20% to the company’s overall income. Manumet-
al also has plans to further diversify and invest in an electrical unit to
OTHER LIGHT MANUFACTURING 203

produce items such as solar water heaters (an untapped market that we es-
timate at about US$1m annually based on import figures) and, potentially,
galvanized products.
Manumetal is aiming to position its furniture products as a high qual-
ity local alternative to imports from India, China or Malaysia, which are
the biggest threat in the domestic market. The company has invested in
product design by bringing in product design consultants, and has a team
of 36 trained technicians. While the company planned, at the time of writ-
ing in mid-2012, to start exporting to neighbouring eastern DRC and Bur-
undi, Manumetal did not at this point have the ability to compete in the
broader EAC market due to high competition and the presence of very well
established furniture manufacturers in Uganda and Kenya. In the domes-
tic market, Manumetal’s main competitor remains Mutara Enterprises
and smaller furniture shops, which predominantly assemble knockdown
furniture but do not manufacture on the scale of Manumetal.

Systems
To strengthen its position as a high quality local alternative to cheap fur-
niture imports from Asia, Manumetal has been investing significant re-
sources into strengthening its systems. In particular, in 2010, Manumetal
underwent a corporate restructuring effort. This effort was supported by a
specialized team of management consultants who helped the firm develop
a new sales strategy, restructure loans and reorganize the management
structure with the creation of a new position of a chief operating officer
(COO) and changes in the board of directors. The creation of the COO
position was aimed at strengthening the finance, HR, procurement, sales
and production functions of the company to respond to the reduction in
the company’s capacity utilization (at 60%) and sales.
Manumetal has also adopted a more aggressive marketing strategy,
hiring a brand consultant who supports product design, and launching
a campaign to increase brand awareness. This marketing effort reflects
a shift in the company’s focus, from government tenders – for which it
is not as price competitive as it used to be – to the wider office and do-
mestic furniture market. This change in focus will require strengthening
Manu­metal’s distribution network. Currently sales are handled directly by
Manumetal’s sales team and on-site showrooms, but Manumetal plans to
develop a network of furniture distributors in the near future. In terms of
systems enhancements, the firm has also put in place a more robust system
to track the actual cost of inputs going into each product, adjusting prod-
uct pricing accordingly. This has gone hand in hand with improvements
to the management control function, the acquisition of a new accounting
software system and the introduction of targeted staff training.
204 CHAPTER 9

Manumetal’s plant currently consists of three production lines: metal,

timber and aluminium. The plant still retains the original metal process-
ing machinery that was imported from Belgium when the firm started op-
erations in the late 1960s, but these machines have been repaired and up-
graded over time. For the production of metal and timber furniture, much
of the same machinery and equipment can be used, the difference being
that timber products take much longer to manufacture. A large investment
was made in a more modern aluminium production line. The staff and
technicians who operate these machines undergo regular training, and
quality control is maintained at various stages of the production process
by the finished goods team, which analyses products for any defects and
conducts the final checks.
Manumetal sources most of its raw materials locally from a limited and
trusted network of domestic suppliers. Metal panels and aluminium, how-
ever, are sourced from Uganda, Kenya and South Africa.

Resources
In terms of human resources, Manumetal currently has 57 employees with
8 management staff, 36 technicians and the remaining employees spread
over administration and casual roles. Although the production of quality
furniture requires highly skilled technicians, Manumetal has been able to
meet its staffing needs locally and currently only has one foreign member
of staff. Foreign consultants are nevertheless brought on board from time
to time for very specific tasks, e.g. the management restructuring process,
brand development, marketing and targeted training for technicians and
administrative staff.
The firms’ physical assets include one factory plant, three workshops
and a showroom on the same premises. Manumetal is currently conduct-
ing a feasibility study on a second plant, which will focus on the produc-
tion of solar heaters and, potentially, galvanized products.
Manumetal has access to the local debt market, with the Bank of ­Kigali
providing most of the external debt financing. The firm’s primary cost
drivers are salaries (fixed) and raw materials (variable).

9.6  Mutara Enterprises

A large player in the furniture manufacturing industry in Rwanda.
Year established 1995
Latest annual turnover (2010–11) US$3–4m
Number of employees (FTE) 85
Main business activity Furniture
Export markets Eastern DRC
OTHER LIGHT MANUFACTURING 205

Company Origins
Mutara Enterprises Ltd started operations in 1995 as a locally owned im-
port/​export firm by importing foodstuffs, furniture and general consumer
goods. In 1996, with the local furniture industry still retooling after the
1994 genocide, Mutara Enterprises saw an opportunity to enter the furni-
ture market, importing knockdown modular furniture from Malaysia and
Korea and reassembling the furniture in Kigali. While the vast majority of
Mutara Enterprises’ sales still come from assembled furniture, the com-
pany has also started to manufacture furniture in the country. Plans to
rapidly expand the local manufacturing of furniture include a new manu-
facturing plant expected at the time of writing to be set up by mid 2012 in
Kigali’s Industrial Economic Zone.
Today Mutara Enterprises, with a turnover of about US$3–4m and
about 85 employees, is the largest player in Rwanda’s furniture market.
The company is owned by the Crystal Venture Ltd Group Holdings (CVL),
which gives the company a significant advantage over competitors in
terms of capital, management capacity and intra-group synergies. With
a clay brick company, a real-estate construction company and a furniture
company, the Crystal Venture Group can offer clients a complete package,
from construction with locally produced materials through to furnishing.

Products
Mutara Enterprises is positioning itself as a one-stop-shop for office and
home furniture. This also includes partitions, carpeting, ceilings, air-con-
ditioning and all other interior furnishings. 75% of these products are
currently imported as knockdown furniture from Asia and reassembled
in Kigali. The remaining 25%, including lounge and rattan sofas, are man-
ufactured in Kigali (small-scale local manufacturing started in mid 2006).
In addition to furniture, Mutara Enterprises also distributes both Sam-
sung and LG products, the idea being to sell these products along with the
supporting furniture (e.g. plasma television units and display wall units).
The target customers for these products are Rwanda’s burgeoning office
market, the growing middle class and also regional markets such as the
DRC. While the company is in the process of diversifying its customer
base, the majority of Mutara Enterprises’ current sales come from public
sector tenders.
With the furniture market split along the quality versus price spectrum,
Mutara Enterprises currently operates in the high-end furniture market.
Its only real local competitor is Manumetal. However, with its new manu-
facturing plant under construction, Mutara Enterprises also aims to move
into the mid-level furniture market, targeting in particular Rwanda’s
growing class of middle-income households. Mutara Enterprises is well
positioned to address the needs of this market: (i) its distribution network
206 CHAPTER 9

with three showrooms in different cities (Butare, Rubavu and Kigali) is

an advantage over local competitors; and (ii) its advantage over interna-
tional competition is an in-depth knowledge of the Rwandan customer.
One example of the idiosyncratic preferences of Rwandan customers is the
seven-seater sofa, which is much preferred to the standard five-seater sofas
that are easily available on international markets. It is largely on the design
of these products that Mutara Enterprises plans to differentiate itself from
the competition.
The expansion of manufacturing activities is also designed to increase
exports. Mutara Enterprises started exporting furniture products to east-
ern DRC in 2011 and has plans to rapidly expand into the DRC market.
Rwanda’s furniture exports are currently extremely limited, totalling only
about US$170,000 in 2011, with Mutara Enterprises being the only large
furniture manufacturer to have entered the export market.

Systems
Mutara Enterprises is in the growth phase, an effort that has gone hand
in hand with an overhaul in management structures and a new expansion
strategy for production, sales and exports.
Both at the group and company levels, a significant restructuring effort
is underway, supported by specialized restructuring consultants. The re-
structuring has led to three key changes: (i) a reduction in costs at ­Mutara
Enterprises through a streamlining of production activities and a 20%
reduction in staff levels; (ii) changes in senior management; and (iii)  in-
creased intra-group synergies. Mutara Enterprises has recently settled
on a new managing director to turn around the company after a period
of instability during which Mutara Enterprises changed its general man-
ager three times in the space of one year. The company is also increasingly
drawing key competencies from the Crystal Ventures Group, which is in
the process of centralizing the HR and procurement functions group-wide.
To this effect, a group-wide HR unit was created in mid 2011. Moreover,
Mutara Enterprises and its sister firms are pooling resources to invest in
growth: the company’s new furniture manufacturing plant, for example,
will be shared with Graphic Print Solutions (GPS), the Group’s printing
company.
It is worth noting that the move to manufacturing products, as opposed
to local assembly, was not a natural evolution of Mutara Enterprises’ cap-
abilities as the skillset required to manufacture is very different from the
simple tasks involved in assembly. Instead, it was a deliberate move which
initially required Mutara Enterprises to import technical expertise from
Burundi to help start rattan manufacturing activities and train staff.
The company’s capacity to manufacture is limited by its machinery,
which is now outdated and in need of replacement. To respond to this,
OTHER LIGHT MANUFACTURING 207

Mutara Enterprises is investing in a new modern plant, which will re-

quire an initial capital investment of US$7.5m and is expected to provide
employment to 70 people. The move to manufacturing will also require
the firm to alter its product mix in line with customer needs, for example,
by decreasing the share of handmade solid furniture as this takes much
longer to manufacture.
For its manufacturing activities, Mutara Enterprises plans to source
raw materials regionally. Timber (Cyprus, pine and saligna) is found local-
ly, with hardwoods being imported from the DRC; foam is sourced from
Rwanda, fabrics from Rwanda and Uganda; only fittings are currently im-
ported from Korea; local or regional sourcing of raw materials is one of the
characteristics and strengths of Rwanda’s furniture industry. The sourcing
of these raw materials is again an area where Mutara Enterprises can ben-
efit from the expertise of the Crystal Ventures Group.

Resources
Capital resources and, in the very near future, Mutara Enterprises’ mod-
ern manufacturing plant are a key component of the company’s competi-
tive advantage over other players in Rwanda’s furniture industry. As part
of Rwanda’s largest industrial holding group (Crystal Ventures Group
Holdings), Mutara Enterprises has a stronger capital backbone and easier
access to finance (both debt and equity) than its smaller local competitors.
The new US$7.5m plant, which in terms of value is larger than the entire
furniture market in Rwanda, is a testament to the firm’s ability to raise
capital. The plant is expected to be partly financed by the local banking
sector and to share facilities with Graphic Print Solutions.
In terms of human resources, the company currently employs 85 people,
of which 23 are in administration, sales and management. This number is
expected to more than double when the manufacturing plant starts opera-
tions. Senior management roles are currently filled by experienced foreign
nationals, including a Kenyan sales and marketing manager, a quantity
surveyor from Uganda and a British general manager, who has had 24
years’ exposure to furniture manufacturing in southern Africa. While the
senior management of the company is stable and highly qualified, one of
the main challenges for the company is acquiring the technical know-how
to shift from assembly to manufacturing. To address this, Mutara Enter-
prises has sourced technical expertise in neighbouring Burundi to assist
in the building of the technical knowledge required to manufacture rattan
lounge suites.
Finally, Mutara Enterprises has a well-established brand name in
Rwanda. The brand has been supported by a recent increase in marketing
expenditures and by the company’s distribution network (in particular, its
three showrooms in Butare, Rubavu and Kigali).
208 CHAPTER 9

9.7  Roto Ltd.

One of the country’s largest plastic tanks and sanitation solutions manufac-
turers.
Year established 2001
Latest annual turnover (2010–11) US$3–4m
Number of employees (FTE) 60
Rotational moulded products: plastic water
tanks, horizontal water tanks, plastic
Main business activity
mobile toilets, plastic septic tanks, plastic
drums, and other plastic products
Export markets Burundi, DRC

Company Origins
Roto Ltd. is a subsidiary of the Kenyan Flame Tree Group of Companies,
which has been in the manufacturing industry (cosmetics, plastics and
energy) for over 20 years. In addition to Rwanda, Flame Tree Group has
manufacturing operations in Kenya, Ethiopia, Sudan, Rwanda, Mozam-
bique, Malawi and distribution offices in the DRC and Burundi. Roto
Rwanda was registered in 2000 and began operations in 2001. Initially,
Roto Rwanda was set up as a trading office that imported plastic tanks
from their Uganda sister company but they began manufacturing oper-
ations in 2006 following the burgeoning trade in the plastic tanks sector.
The move to manufacturing in Rwanda was motivated in part by the po-
tential to export directly to Burundi and eastern DRC from Rwanda, as
opposed to from Uganda.
At the time, the only other manufacturers were Ameki and R ­ otassairwa.
Today, Roto Rwanda is one of the major players in the plastic products
sector (including a new entrant, Aqua-San), producing a variety of rota-
tional-moulded products such as plastic water tanks, plastic mobile toilets,
plastic septic tanks, plastic drums and other plastic products. Other busi-
ness interests for Roto include distribution of Flame Tree Group’s cosmet-
ics products such as hand and body lotion, hair care products and nail
polish.
Roto generated revenues of US$3–4m in 2011 and provides permanent
employment to 60 people.

Products
Roto produces a variety of plastic products using the rotational moulding
production process. This process entails pulverizing the linear low density
polyethylene (LLDP) raw material to powder form, which is then placed
in a customizable mould and rotated while heated at high temperatures.
OTHER LIGHT MANUFACTURING 209

Products include plastic water tanks, horizontal water tanks, plastic mo-
bile toilets (eco-san toilet, flush type, eco-loo and mobile toilet–bathroom),
plastic septic tanks, plastic drums and other plastic products such as eco-
slabs, cattle troughs, washbasins and meat boxes. In 2011, Roto also began
manufacturing PVC pipes, thereby diversifying its product range. There
are no plans to introduce any new products in the immediate future.
Roto’s primary customers include NGOs that are engaged in large-scale
project work, construction firms, hardware stores and individual buyers.
Half of Roto’s sales are derived from domestic purchases, at least 20% is
dedicated to large-scale project work in Rwanda, and 30% is exported to
Burundi and eastern DRC, where the company has distribution offices.
One challenge that the company faces is that the competitive landscape
in these export destinations is aggressive as all the local manufacturers of
plastic tanks also export to the same markets.

Systems
Similar to most companies that have East African origins, Roto’s sourcing
is handled by its sister company in Kenya, which contracts the bulk pur-
chasing agreements. The LLDP raw material is sourced primarily from
South Korea via an established supplier and the machinery was imported
from Kenya, Uganda and India. Given the bulk sourcing agreements in
place, Roto has managed to avoid the fate of many manufacturing firms by
having adequate supplies of raw material.
Roto uses a mixed distribution strategy by conducting approximately
60% of direct sales from the company’s offices in Kicukiro, Kigali, and
40% through selected distributors. In terms of marketing, Roto relies on
posters and billboards across Kigali and through word-of-mouth sales, es-
pecially with their distributor network.
The Flame Tree Group is currently aiming for ISO certification in Qual-
ity Management Systems for all its subsidiaries in the near future. Roto
has already applied for RBS certification. Roto has been using the popular
Tally accounting system as an MIS, but the group plans to implement an
ERP system throughout its subsidiaries.

Resources
Roto has over 60 employees, including five Indian expatriates who occupy
senior management positions. In terms of financial and knowledge re-
sources, Roto can rely on the multinational and extensive experience of
the Flame Tree Group. As a result, Roto Tanks has an established brand
presence in Rwanda and the region, despite being in a competitive domes-
tic market with other players such as Aqua-San, Ameki and Rotassairwa.
210 CHAPTER 9

9.8  Rwanda Foam

Rwanda’s first and largest foam mattress company.
Year established 1983
Latest annual turnover (2010–11) US$3–4m
Number of employees (FTE) 80
Main business activity Foam mattresses
Export markets N/A

Company Origins
Rwanda Foam was established in 1983 as the first foam mattress company
in Rwanda. Mr Makuza started the company after he identified a gap in
the market caused by a lack of local production. Mr Makuza has an exten-
sive background in mechanical engineering and had started Amagerwa
in 1965, which began as a mechanical workshop and hardware materials
trading firm but now manufactures furniture and construction materials
such as nails, clay bricks and tiles.
Following this successful venture and using capital from the ­Amagerwa
business, Mr Makuza saw another opportunity in foam products in the
early 1970s and visited the Vitafoam plant in Kenya to learn more about
the process. From there he brought back an expert from Vitafoam to help
him start the production process, using machinery he imported from Den-
mark. Initially, the firms faced significant challenges including political
instability, difficulty in obtaining trading licenses, and government bur-
eaucracy. Both factories were destroyed by the war in 1994 and required
substantial rehabilitation afterwards. New machinery was purchased from
England, with machinery experts flown in to oversee the installation and
initial training.
Rwanda Foam (and Amagerwa) currently has eight shareholders that
include the family members of Mr Makuza. In addition, the Makuza fam-
ily has other business interests in MCS, a real estate development company.
Today, Rwanda Foam is the oldest and longest established foam mattress
manufacturing firm in Rwanda with an annual turnover of US$3–4m and
approximately 80 full-time employees.

Products
Rwanda Foam manufactures foam mattresses and other related foam
products such as pillows, cushions, car seats and insulation. Products such
as mattresses can be ordered to different sizes and density to ensure the cli-
ents get exactly what they desire. The products are not technically complex.
The major challenge is importing the raw materials and ensuring that they
arrive on time at the agreed cost.
OTHER LIGHT MANUFACTURING 211

The main competitors for Rwanda Foam are Afrifoam, Uprofoam and
Kigali Foam, as well as a new entrant from India. Given the increase in
competition, as well as new cheaper products, the company has decided to
focus on making better quality goods at a higher price to help differentiate
itself. At the same time, the company has worked on creating economies
of scale to help lower the price of the goods it produces. It is estimated
that Rwanda Foam currently has a 70% share of the market in Rwanda.
Quality control is undertaken on the final products by the production de-
partment. This is seen to be imperative to the success of the company, as
mixing chemicals is a specialized task.
The main competitors for Amagerwa are furniture makers Mutara En-
terprises and Manumetal, and in clay bricks and tiles they compete direct-
ly with Ruliba Clays and other construction materials firms.

Systems
Amagerwa and Rwanda Foam were established as family businesses. The
board of directors is made up of family members and Mr Makuza’s sons,
Robert and Patrick, hold the positions of chairman and general man-
ager respectively. Robert also manages Amagerwa. Both brothers studied
abroad in Europe and have been the main leaders of the company since
their return. The founder, Mr Bertin Makuza, has since retired.
The company has five main departments covering the following areas:
technical, production, sales, administration and human resources, and
logistics and procurement. Since 2008–9, the company has implemented a
customized MIS for accounting, sales and inventory.
Rwanda Foam has two main production units made up mostly of auto-
mated machinery, including two cutting machines and two shredding
machines. It has recently improved its internal waste management system
so that waste is converted to condensed blocks that can be used as pil-
lowcases and other products. In 2012 it made a large investment in a new
recycling programme whereby the company recycles and retreats old foam
mattresses and then resells them.
Rwanda Foam currently operates at full capacity with approximately
90,000 tons of foam produced per year.
Rwanda Foam uses a variety of suppliers for their key raw materials
and has a strategy of changing suppliers on a regular basis. This is because
the materials used in foam production are oil-based chemicals and so are
open to wide fluctuations in prices depending on the oil taxes imposed by
the corresponding governments. The oil-based, price-sensitive chemicals
were previously imported from Germany and other European countries,
however, they are now sourced more cheaply from Korea, China and South
Africa. Rwanda Foam also imports fabric coverings for the foam from
Pakistan and India, as well as procuring a small amount of fabric from
212 CHAPTER 9

Utexrwa. Aside from the significant lead time required for procurement,
Rwanda Foam faces no major obstacles obtaining raw materials.
For distribution the company works with several wholesale distribution
companies in Kigali, but also completes retail sales from its four depots in
Gakinjiro, Nyabugogo, Muhima and Kimironko. Rwanda Foam has also
undertaken extensive marketing to advertise its products throughout the
country, including through radio, television and billboards. In addition,
its long-standing reputation as the first company to produce quality mat-
tresses gives it an advantage over new entrants. Rwanda Foam does not
currently export its goods and it has no plans to do so in the near future.
In terms of training, Rwanda Foam initially brought in technical ex-
perts from England when it installed its new machinery after 1994, and
continues to perform on-the-job training to keep staff knowledgeable. In
addition it hired consultants in 2011 to provide customer service train-
ing. Rwanda Foam has been certified by the Rwanda Bureau of Standards
(RBS).

Resources
All 80 of Rwanda Foam’s employees are Rwandan. Amagerwa has approx-
imately 50 employees, all of whom are Rwandan too.
In addition, the company benefits from diversified business lines, which
cushion against unforeseen shocks to any single product. The long family
history in the business, as well as well-educated senior management, give
it an added advantage.
Rwanda Foam’s assets include one plant plus a warehouse and four re-
tail outlets. It also has trucks for transporting raw materials from Dar es
Salaam, which help reduce the price of their goods. Amagerwa’s assets in-
clude two plants, machinery and a modern and sophisticated kiln to bake
bricks and tiles.
In the future Rwanda Foam plans to relocate to the KSEZ. It faces
strong price competition from imported products but hopes to maintain
market share by offering superior quality and a trusted brand.

9.9  Société Rwandaise de Chaussures (SRC)

The only manufacturer of plastic shoes and the most export-oriented manu-
facturing firm in Rwanda.
Year established 1999
Latest annual turnover (2010–11) US$2–3m
Number of employees (FTE) 100
Main business activity Plastic shoes
Export markets Burundi, eastern DRC
OTHER LIGHT MANUFACTURING 213

Company Origins
Société Rwandaise de Chaussures (SRC) is a home-grown shoe manufac-
turer that started operations in 1999–2000. Alphonse Sano, an entrepre-
neur with experience in the shoe business, and Tribert Rujugiro, one of
Rwanda’s wealthiest investors, started SRC. Mr Sano had been working
for Bata Shoes in Burundi for over 32 years, starting his career as a factory
worker and working his way up to general manager level, until operations
were halted following the 1994 genocide and the ensuing instability in
Burundi. Mr Sano moved to Rwanda in 1996 with the intention of starting
a shoe business.
For a brief period, before setting up the manufacturing plant, Mr Sano
imported shoes from Bata Uganda and Bata Kenya. This enabled him to
test the demand for shoes in the local market and to identify potential
clients and opportunities. One such opportunity was the supplying of
gumboots for the Rwandan army, which was importing all of its footwear
from Kenya at the time. With a loan from a local bank, investment capital
from Mr Rujugiro and a contract with the Ministry of Defence to supply
the army with gumboots, SRC was established, invested in a factory and
started operations.
Today SRC is Rwanda’s only large-scale shoe manufacturer, with a
turnover of approximately US$2–3m and 100 full-time employees.

Products
SRC started with the production of plastic shoes, in particular, gumboots
and slippers, with machinery imported from Taiwan. Its main client
for this product was the Rwandan Ministry of Defence. After the army
switched to leather boots, which SRC was not able to produce, SRC invest-
ed in new machinery from China and Taiwan to start the production of
ethylene-vinyl-acetate (EVA) shoes. EVA is a polymer that provides soft-
ness and flexibility and is typically used as a shock absorber in sport shoes.
EVA shoes are shoes for the masses. Made in bright green, blue and red
colours and sold for less than US$2 for a pair, they are cheap, comforta-
ble and have a very simple design. The shoes have become a hallmark of
the Rwandan countryside. SRC’s shoes are also very popular in Burundi,
where the company makes approximately 70% of its sales. Outside the tea,
coffee and pyrethrum sectors, SRC is the most export-focused manufac-
turing firm in Rwanda. The company also has limited exports to the DRC.
There is significant competition in the local market, with cheap im-
ports from Kenya and, in particular, China. We estimate annual imports
of rubber and plastic shoes, which are SRC’s direct competition, to average
about US$5m per year, leaving SRC with a local market share of about 10–
15%. However, with a well-established brand and design, as well as price
214 CHAPTER 9

competitiveness, the main challenge for SRC is not the quality or price of
imports, but rather its ability to keep up with demand.

Systems
SRC’s main priority over the next few years is to increase production levels
by fixing faulty machinery and, potentially, investing in increased capac-
ity. Currently, the plant produces 1.8m pairs per year out of an installed
capacity of 5.4m pairs per year. The low capacity utilization is due to faulty
moulds in its plastic injection machine. To better maintain and run the
equipment SRC is in the process of recruiting permanent technicians from
Kenya. These are skills that are currently not available locally.
To maintain price competitiveness, SRC needs to have an efficient sour-
cing system in place. SRC sources its raw material from three countries:
Kenya for the PVC that goes into the production of plastic shoes, Uganda
for the whitening chemicals and South Korea for the EVA. While imports
from Kenya and Uganda are not problematic, imports from South Korea
come with very stringent conditions, including 50% payment of the order
up front and the remaining 50% on receipt of the bill of lading. This leads
to high upfront and administrative costs.
SRC runs an operation with few overhead costs. Its administrative staff
comprises six people, including Mr Sano himself, as well as managers for
production (from Kenya), finance, personnel, marketing and procurement.
The marketing function does not involve advertising and publicity cam-
paigns, but rather price monitoring and maintaining relationships with
distributors in Rwanda, Burundi and the DRC. SRC owns several trucks
and vans for direct distribution of the finished products to consumers.

Resources
SRC’s main resources are (i) long-established knowledge of the footwear
market in the region; and (ii) established distributors in Rwanda and Bur-
undi. It is this knowledge and network that has enabled the company to
survive in the very competitive business environment. In terms of physical
assets, SRC has a large 6,590 m2 factory located on the Gatuna Road a few
kilometres from the city of Kigali.
The company has 100 employees, of which two are foreigners, a pro-
duction manager from Kenya and a technician from the DRC. The main
competencies gap, according to Mr Sano, is the lack of skilled technicians
capable of repairing faulty machinery.

9.10  Suku Paper Works/Safari Center

One of the largest manufacturers of paper products.
OTHER LIGHT MANUFACTURING 215

Year established 2003

Latest annual turnover (2010–11) US$5–6m
Number of employees (FTE) 50
Paper products: toilet paper, sanitary
Main business activity
pads, napkins, pocket tissues
Export markets N/A

Company Origins
Suku Paper Works – a manufacturer of paper products for personal hy-
giene – was started in 2003 by a Rwandan entrepreneur, Mr Benjamin
Gasamagera. After returning to Rwanda from Europe following the 1994
genocide, Mr Gasamagera set up a logistics firm in Kigali in 1998, called
Safari Center, building on his previous experience working for a Swiss In-
ternational forwarding company. In addition to providing logistics servic-
es, Safari Center imported chemicals such as fungicides and pesticides and
construction materials such as plywood. However, fascinated by the Chi-
nese manufacturing sector and realizing that most products in Rwanda
were imported, Mr Gasamagera was keen to start his own manufacturing
firm. Although he failed to raise capital for several business plans in the
early 2000s, he eventually succeeded with the paper products concept that
became Suku Paper Works.
Mr Gasamagera developed the concept following a trip to Dubai during
which a colleague remarked how difficult it was to obtain paper products in
Rwanda. Mr Gasamagera’s subsequent research revealed that the technol-
ogy required to start production was not very sophisticated and required
a relatively small amount of capital. A business plan was developed, the
company identified suppliers and sourcing destinations for the raw ma-
terials and an initial capital investment of approximately US$100,000 was
obtained from the banks. At the time of the company’s establishment, the
paper market for personal hygiene was dominated by one player, S­ ocobico
(now Trust Industries).
Suku has faced two key challenges since incorporation in 2003: a skills
constraint and difficult access to raw materials. As a new company Suku
had to import skills from China to start the production of various soft
paper products and to train local staff. The logistical challenges that come
with operating out of a landlocked country, coupled with the difficulty in
anticipating demand for Suku’s products, has forced the company to resort
to sourcing raw materials several months in advance.
In 2011, Suku Paper Works had estimated revenues of about US$5–6m
and employed approximately 50 full-time staff. Since 2003, a number of
new entrants have started competing in the paper products market, in-
cluding Soft Group, La Plume, BHS and, most recently, Afrifoam.
216 CHAPTER 9

Products
Suku Paper Works manufactures paper products for personal hygiene, in-
cluding the following.

Toilet paper. This was the first product the company started producing in
2003. The machinery required was originally imported from China and
the installation of the machinery, as well as training of local staff, were
provided by Chinese technicians. Toilet paper is not technically complex
to make, as the vast majority of tasks are automatically performed by the
machines. The product is the company’s most successful and the 3–5m toi-
let paper rolls produced annually account for approximately 70% of total
revenues.

Sanitary pads. Following the success of the toilet paper products, the com-
pany then moved into sanitary pads three years later, noting the shift from
cotton-based pads to paper products. The process behind this involves im-
porting semi-finished sanitary pads from China and completing the pro-
duction in Rwanda. The company plans to invest more capital into its ma-
chinery to conduct the entire manufacturing process in Rwanda by 2013.
For sanitary pads too, the only other domestic manufacturer at this point
in time is Socobico/Trust Industries. Production capacity is about 500,000
pieces per year and comprises about 20% of revenues.

Napkins and pocket tissues. These products were also introduced by Suku
in 2006 with production capacity at about 50,000 napkins and 100,000
pocket tissues. Each product accounts for 5% of total revenues.
Suku also has plans to begin manufacturing baby diapers and kitchen
towels by the end of 2012.

Systems
Suku’s business model focuses on paper products that are not technical-
ly complex to manufacture, with the bulk of the raw materials being im-
ported and then processed locally to create the final product. Suku differ-
entiates itself from its competition by offering a higher-quality product (as
measured by the weight of paper in the toilet paper) priced at a premium.
The capacity utilization rates for the toilet paper production line are be-
tween 70 and 80%, as compared with between 40 and 50% for napkins and
pocket tissues (due to the low market demand for these products).
Currently, Suku sells directly from their factory and through a whole-
sale outlet in Kigali town. The company also has a small fleet of trucks
to transport the goods to various locations as requested by customers.
No goods are currently being exported due to problems experienced by
the company in the past, such as corruption in eastern DRC and stiff
OTHER LIGHT MANUFACTURING 217

competition from other EAC companies in Burundi. Suku markets its

products through television, radio and also through various distributors.
For raw material imports, the company has built up a range of con-
tacts, initially in China but subsequently also in Kenya, Egypt and Tanza-
nia. Due to the increasing costs of importing the raw material, Suku has
started working with Chinese colleagues in Moshi, Tanzania, to recycle
paper. Waste-paper collection in Kigali is outsourced to a separate firm,
which then delivers it to Moshi, where the paper is recycled and brought
back to Kigali. While this has helped to lower the cost of sourcing raw
materials, the recycled paper quality is low, which means the company
must still import raw materials from China. Suku currently imports ap-
proximately 60% of raw materials from China and 40% of recycled paper
from Moshi, Tanzania.

Resources
Suku employs 50 full-time employees, all Rwandans. Chinese technicians
were initially hired on a temporary basis to install the machinery and help
train local staff. Technical capacity is still a constraining factor, with only
two qualified technicians on the team.
A key asset to the business is the owner, Mr Gasamagera. He is an estab-
lished entrepreneur with many years’ experience in developing businesses.
The structure of the business sees Mr Gasamagera taking the role of man-
aging director and overseeing the finance and administration operations,
including the factory production.

9.11  Sulfo Industries

Rwanda’s oldest and largest FMCG manufacturer.
Year established 1962
Latest annual turnover (2010–11) US$13–14m
Number of employees (FTE) 700
Soaps, cleaning detergents, personal care
products, food items, packaged drinking
Main business activity water, plastic moulded items (e.g. jerry
cans), corrugated cartons, candles,
casseroles and tin containers
Export markets Uganda, Burundi, eastern DRC

Company Origins
Sulfo Rwanda Industries is one of the oldest and largest companies in
Rwanda. The company was established in 1962 by Mr Tajdin H. Jaffer and
Mrs Khatun Jaffer.
218 CHAPTER 9

Mr Jaffer, having come to Rwanda from Uganda in 1950, gained busi-

ness experience by working for a trading business set up by his father and
uncle. Having learned the trade, he soon opened his own small shop in
Gatsibo and a petrol station in Kigali. He was also associated with a tra-
ditional soap-manufacturing unit started by his uncle in Burundi in 1961
where he learned the art of soap making. This laid the foundation for him
to start a soap-manufacturing unit in Kigali, which culminated in the
establishment of Sulfo Rwanda Industries in 1962. Sulfo was originally
founded as a partnership and later converted to a public limited company.
At the time of its establishment it was the only soap-manufacturing indus-
try in Rwanda.
In 1970, Sulfo started manufacturing cosmetics and in the 1980s com-
menced manufacturing a selection of the products under franchise agree-
ment licenses with leading multinationals such as Unilever–UK (Omo
detergent powder), BDF–Germany (Nivea range of products), Bayer–­
Germany (Baygon insecticide) and Hoyu–Japan (Bigen Hair dye) till the
mid 1990s. The association with such multinationals has been a rewarding
experience from which Sulfo has learned best practices in manufacturing
FMCG products.
Today, Sulfo Rwanda is the largest manufacturer of FMCG in Rwanda,
with a product portfolio of over 150 products. In addition to manufac-
turing its own products, Sulfo has franchising agreements with Canadian
Beverages Ltd. and Pearl Industries UK.
Sulfo Rwanda also has a trading division dealing in automobiles, auto
spare parts, liquid petroleum gas, tyres, batteries, cooking utensils, refrig-
erators, imported FMCG items (such as the PZ Cussons range of products,
Kakira Sweets and Bitez products). Finally, Sulfo also has a garage and
machine shop for repair and maintenance of motor vehicles.
Sulfo’s 2010 turnover was approximately US$13–14m, of which 10% is
accounted for by exports to Uganda, Burundi and eastern DRC. Mr Jaffer
is Sulfo’s chairman and is supported by Mrs Khatun Jaffer, his wife, who
has been actively involved in the company since its inception. The Jaffer
family has other business interests in the DRC, Kenya and Uganda.

Products
Currently, Sulfo’s product portfolio offers over 150 items, including:
•  laundry and toilet soaps;
•  powder and liquid detergents, scouring powder;
•  personal care products, both hair care and body care;
•  confectionery;
•  pure drinking water;
•  plastic moulding, novelty items;
•  corrugated cartons;
OTHER LIGHT MANUFACTURING 219

•  candles;
•  casseroles and tin containers.
Sulfo began manufacturing its own packaging materials such as bottles,
closures and corrugated cartons to avoid relying on imports, although la-
bel printing is still outsourced to Uganda, Kenya or India. The company
also provides packaging materials to a few companies in Rwanda, albeit on
a relatively small scale.
Sulfo’s main brand names, which are widely recognized in the Great
Lakes region, include Claire, Black Pearl, Nil, Tembo, Makasi, Sante,
­Malaika, Nina, Inyerneri, Safari and Beaute.
Sulfo used to manufacture confectionery products, candles and cook-
ing oil, but has stopped these production lines. The company’s confection-
ery production line was brought to a halt due to the competition from out-
side products, high cost and the ban on plastic packaging applied to local
industries. Similarly, Sulfo has found the manufacturing of candles and
cooking oil to be unviable due to cheap imports, in particular, from China
and Uganda.
The main competitors to Sulfo’s large production portfolio come from
imports for most FMCG items such as soaps and cosmetics. For Nil water,
Sulfo faces competition from locally manufactured products.
Sulfo’s most successful export product line is its wide range of cosmet-
ics. Sulfo’s exports contribute in excess of 10% to total revenues and are
concentrated on the Uganda, Burundi and the eastern DRC markets.

Systems
A unique feature of Sulfo when compared with other Rwandan compa-
nies in the agribusiness and manufacturing sectors is the diversity of its
product portfolio. Maintaining such a large product portfolio requires a
sophisticated and diverse supply chain system, which Sulfo has developed
over its 50-year history. 99% of the raw materials are imported from des-
tinations as diverse as Malaysia, Indonesia, India, South Korea, Europe,
the United States, Iran and the Middle East. Due to the long lead time in
importing, Sulfo stores over 600 varieties of imported raw materials in a
number of warehouses across Kigali.
Sulfo’s ability to import in bulk and store the imported raw materials
ensures that the company does not face issues on account of timely avail-
ability of raw materials, which is a key challenge for Rwanda’s manufac-
turing sector. The main challenge for Sulfo lies in dealing with the limited
and fluctuating demand in the domestic market, especially when faced
with steep competition from cheap imports. Currently, soap production
has the lowest capacity utilization, estimated at 30%, mainly because of
competition from outside products.
220 CHAPTER 9

The company relies on direct sales, with 65–70% of sales from Kigali
outlet and its two branches at Gisenyi and Cyangugu. Sulfo also main-
tains its own fleet for delivery in Rwanda. The company operates through
distributors. The company has a strong brand presence in Kigali through
posters, billboards and radio advertisements.
Given the scale of its operations, Sulfo has a dedicated asset manage-
ment system and an IT department that maintains the server and manages
customized software for the payroll, sales and inventory systems. Sulfo is
currently in talks to migrate to a fully integrated ERP system by 2013.
As a result of 50 years of operations and franchising agreements, ­Sulfo
has developed stringent processes for quality control, managed by sev-
eral food safety experts and microbiologists. This is reinforced by the
­quality-control standards required as part of their ISO certifications for
quality management and food safety management systems.

Resources
Sulfo provides employment to over 700 Rwandan workers, 16 Indian
expatriates, three Kenyans and four Ugandans. Given the large scale of
operations, Sulfo has four main manufacturing sites in the city of Kigali.
Soaps, drinking water and confectionery are produced at the Rue de Lac
Ihema plant; cosmetics, plastics and detergent are produced at the Rue de
Marche factory, while carton, tin and casserole production is located in
the ­Gikondo Industrial Area, which is also where the raw material depot
and the LGP filling plant are.
Sulfo was one of the first companies in Rwanda to achieve ISO certifi-
cation. All its facilities are certified for the ISO 9001:2008 quality manage-
ment system. Sulfo is the first drinking water manufacturing company in
the whole of Africa to obtain ISO 22000:2005, which certifies their food
safety management systems.
In terms of new product development, Sulfo is further diversifying into
a range of herbal products, such as herbal soaps, lotions and jelly, and is
now looking at Kenya and Tanzania as potential destination markets.

9.12  Trust Industries

Manufacturer of cleaning and paper products.
Year established 2008
Latest annual turnover (2010–11) US$1–2m
Number of employees (FTE) 50
Main business activity Chemical cleaning and paper products
Export markets N/A
OTHER LIGHT MANUFACTURING 221

Company Origins
Trust Industries Ltd. was established in 2008 by Mr Claver Mugabo. The
company’s business comprises manufacturing, supplying and exporting
paper products, liquid detergents and cosmetics.
Prior to establishing Trust Industries, Mr Claver Mugabo established
and ran a cleaning services company called TrustCo Rwanda Sarl (estab-
lished in 2000) that provided cleaning services to a number of major cli-
ents such as banks, government agencies and other large institutions. The
considerable cost of importing cleaning products motivated Mr Mugabo
to manufacture his own cleaning products.
In 2008, Mr Mugabo secured a loan to buy machinery and raw ma-
terials and, working from a garage, began production. Initial products in-
cluded cleaning detergents such as hand wash, dishwashing liquid, bleach
and glass cleaners. Given the success of their cleaning services and prod-
ucts division, the company started a paper products division in 2009 to
meet market demand. This division now manufactures toilet paper, pocket
tissues, serviettes, kitchen towels and facial tissues. Trust Industries is now
considered a total solutions provider in the hygiene sector.
To consolidate the paper products unit, in 2010 Trust Industries bought
Socobico, a paper product company that started in 1975. Socobico had run
into financial problems and its failure to pay back loans saw it auctioned
off to Trust Industries Ltd. for about US$0.5m. Currently, Trust Industries
has two main shareholders, Mr Claver Mugabo, who holds the majority
share, and an additional partner, Mrs Chantal Mugabo. Trust Industries
Ltd is one of Rwanda’s largest manufacturers of paper products, alongside
Suku Paper Works, with annual turnover of US$1–2m (2010) and approx-
imately 50 full-time employees.

Products
Trust Industries has two main divisions, which produce over 50 different
products, including cleaning products such as detergents, hand wash, body
lotion, bleach, floor cleaner, tile cleaner, disinfectant and glass cleaner.
These products are sold under the brand name Clear. The paper products
division produces toilet paper, serviettes, kitchen and hand towels, med-
ical towels, facial tissues and hand tissues. These products are sold under
several different brands including Clear, Meditowel and Wonder Fresh.
Trust Industries plans to introduce shower gels, washing powder, bar
soap, bleach powder, as well as a variety of glass-cleaning products and
cosmetics by the end of 2012. Also by this year they will begin produc-
ing plastic jerry cans and other containers. No new paper products are
planned but the company is currently conducting a feasibility study for a
paper mill in Bugesera /Ntarama.
222 CHAPTER 9

The raw materials for the company’s cleaning products are imported
from Kenya, Uganda, Dubai and China. This includes chemicals such as
sulphuric acid, SLS2 and caustic soda. The only inputs sourced locally from
Rwanda are salt and water. The sourcing strategy has changed in recent
years and the company is increasingly importing from Kenya, Dubai and
Switzerland (due to price and quality factors), and less from Uganda. For
the paper products, the company imports recycled paper materials from
Kenya, Uganda and Dubai and has established suppliers in each of these
markets. Similarly, Trust Industries also imports some of its plastic pack-
aging from China.

Systems
The acquisition of Socobico in 2010 meant that Trust Industries Ltd. could
consolidate its dominance in the paper products industry in Rwanda. It
also allowed the company to leverage the skills and expertise of Socobico
in its design and manufacturing process.
Trust Industries Ltd. is currently operating at 75% capacity, which is
hampered only due to a shortage of raw materials and the lead time re-
quired to import raw materials. It takes the company about three months
to import from China, two months from Dubai and about two weeks from
Uganda. The company initially imported its machinery from Italy but has
recently purchased machinery from China and Uganda.
The company has four exclusive distributors that service Kigali and the
other provinces. It also conducts direct sales, both retail and wholesale,
from the factory premises, where it has a showroom. A majority of its cli-
ents are drawn from TrustCo’s client base and include universities, hospi-
tals, ministries, restaurants, private companies and supermarkets.
The competitive landscape in chemical products is limited to Sulfo
Industries and imported products from companies such as the Ugandan
Mukwano Industries. In paper products, Trust Industries Ltd. vies with
Suku Paper products (SUPA). Trust Industries Ltd does not currently ex-
port but plans to set up distributorships in Burundi and eastern DRC.

Resources
The company currently operates a plant near the city centre of Kigali but
plans to move to a bigger site in Bugesera by the end of the year to expand
production space. In terms of human capital resources, following the ab-
sorption of staff from Socobico, Trust Industries Ltd employs 50 full-time
staff. Technical positions such as chemical production, accounting and
sales are managed by experienced personnel.

2 
Sodium lauryl sulphate.
OTHER LIGHT MANUFACTURING 223

9.13  Utexrwa
The country’s only textile manufacturer.
Year established 1984
Latest annual turnover (2010–11) US$5–6m
Number of employees (FTE) 600
Main business activity Textiles
Export markets N/A

Company Origins
Utexrwa is a green manufacturer of an extensive line of garments and
made-ups from cotton, synthetic and blended fabrics, and was the first
textile manufacturer in Rwanda. Mr Kishor Jobanputra, a Ugandan Asian,
whose family has extensive business interests in Uganda in the textile and
paper products business, started the company in 1984. Mr Jobanputra
started his career as a trader dealing in a variety of goods including hard-
ware items, groceries and textiles. Through his trading business, he built
an understanding of the local textile business and commenced a small op-
eration that focused on spinning, weaving and the garment process and
was later developed into a vertically integrated textile operation that is to-
day known as Utexrwa.
The family’s operations in the textiles sector in Uganda commenced
when, in 1996, the Jobanputra family acquired the former Ugandan gov-
ernment parastatal, then known as Nyanza Textile Industries Limited
(NYTIL), which later changed to Southern Range Nyanza Limited (SRNL).
This Ugandan sister company has now developed to be four to five times
larger than Utexrwa with the expert knowledge of the industry that the
management brings. The family also has other considerable business
interests in real estate in most EAC countries, Europe and the Middle
East, a hotel chain in Belgium and a logistics company headquartered in
­Mombasa.
Despite the vast market experience Utexrwa has been facing difficult
times during the past few years. A need to undergo corporate restructur-
ing at both the management and investment level was identified as the
correct way to move the company forward. The board of directors over-
hauled the senior management, in particular, placing an experienced tex-
tile technologist into the position of general manager to oversee the plant
operations. This, along with US$1.35m of capital investment, helped to
revive the plant, settling supplier payments, unpaid workers salaries and
improving the availability of raw materials.
Utexrwa currently runs at 40% capacity, producing about 12,000 metres
of fabric per year, and has a turnover of US$5–6m (2011).
224 CHAPTER 9

Products
Utexrwa started out manufacturing kitenge cloth (a traditional African
garment similar to a sarong) but has developed over the years and now
offers two main product lines, finished garments and finished fabrics.
The mass production of finished garments includes items such as secur-
ity uniforms, industrial workwear, institutional garments, medical uni-
forms, hotel and restaurant clothing, infant garments, home furnishings,
eco-friendly cotton bags and malaria nets. The finished fabrics include 30
different cotton, synthetic and blended finished fabrics.
Utexrwa is currently working in collaboration with MINAGRI on a
sericulture project, which should lead to commercial production of silk
within two years. Rwanda’s silk sector is currently in its infancy with the
country trying to establish mulberry farms, silk rearing and cocoon pro-
duction activities. At the time of writing, over 33 cooperatives had been
formed and about 300 hectares of mulberry had been planted. Utexrwa
has initiated silk production, starting from silk reeling to finished prod-
ucts. The company currently has sufficient production capacity for almost
a container load of silk products every month, with the first output of
silk pyjamas recently being shipped to Canada. However, issues with the
supply chain for cocoons limits production. The company believes that, if
successful, the project could lead to a significant new revenue stream and
create considerable export opportunities.

Systems
Mr Jobanputra is the chairman of the company and brings his vast years
of experience in managing manufacturing firms from Uganda. In 2010,
Utexrwa underwent a significant management and technical overhaul,
which resulted in new board members and a capital injection to improve
production. An experienced textile technologist was recently brought in as
a general manager to improve operations. The general manager oversees
the finance, spinning, weaving, processing and garment departments.
Due to the vast array of finished products that Utexrwa produces, a
large network of suppliers is essential to ensure that goods are produced
on time and to the desired standard. Utexrwa originally dealt only with
cotton products but gradually moved to polyester and viscose materials to
align itself with the main textile industry. The cotton raw materials are im-
ported from Uganda, Burundi and Tanzania. Sourcing from East Africa
lowers costs considerably relative to importing from outside of Africa. For
polyester and viscose, the company uses a variety of suppliers from Indo-
nesia, Taiwan, China and India. This range of suppliers helps to limit the
company’s exposure to a shortage of supply and should also contribute to
lower prices of raw materials relative to the competition.
OTHER LIGHT MANUFACTURING 225

The raw materials are then processed using an extensive array of ma-
chines depending on the type of final product that is required. Although
not technically complex, the final products are quite labour intensive to
produce. Utexrwa recently invested US$120,000 in a new fabric-dyeing
machine that improves the dyeing and printing quality of the plant and
simultaneously reduces water and energy costs. This has also helped to
reduce labour costs as it is fully automated and only requires one worker.
Quality-control checks are undertaken by a special unit in the packing
department on all final products.
Utexrwa’s main customers are the Ministry of Defence (both army and
police) and schools, both of which have long-standing contracts with the
company for workwear and uniforms. These are established contracts that
Utexrwa has been servicing for many years. The company believes that,
with the brand being so well established in Rwanda, there is no need for
any additional advertising to introduce new customers.
Although Utexrwa is the largest textile manufacturer in Rwanda, simi-
larly to many other companies, the company faces increasing competition
from cheaper imports from China, as well as from products from other
EAC countries. Utexrwa noted that due to these cheaper imports, the fac-
tory is operating only at 40% capacity. The company does not currently
export any of its products due to the high costs related to exporting, which
would make them uncompetitive relative to Chinese imports in other
markets. However, the company is considering plans to export some of its
silk products to Canada.
Utexrwa is ISO 9001-2001 certified and their products are also certified
by RBS. The company has used SAP since 2004 for financial and inventory
management.

Resources
Utexrwa currently employs over 600 workers in its factories. The overall
production process is very labour intensive, with 80% of activities requir-
ing manual labour. Highly skilled workers are required primarily in the
process and garment departments. Six expatriates hold senior manage-
ment positions. The company undertakes regular internal training of its
employees, including using experts from India and Kenya. In addition, site
visits to other plants are often organized to demonstrate good manufac-
turing processes and gain experience from these businesses.
Utexrwa currently has one large plant and a warehouse facility in Kigali.
Appendix

Appendix 1: Summary of Profiled Companies

Latest
reported
turnover
Sector   Company name Year (2010–11) Employees
Coffee Business Center (CBC) 2002 US$13–14m 26
Kivu Arabica Coffee Company
2005 US$3–4m 17
 (KCC)
Coffee

Rwacof 1996 US$12–15m 45

Rwanda Trading Company (RTC) 2009 US$8–9m 75
Rwashoscco 2005 US$3–4m 41
Rwanda Mountain Tea (RMT) 2006 US$15–16 155
Tea

Sorwathé
1975 US$7–8m 521
  (Société Rwandaise de Thé)
Bakhresa Grain Milling 2010 US$21–22 100
Staple crops

Pembe Flour Mills 2007 US$28–29 40

ICM Rwanda Agribusiness 2005 US$11–15m 160
Minimex 2002 US$4–5m 80
Kabuye Sugar Works 1997 US$10–11m 550
Premier Tobacco Company
2000 US$2–3m 129
Horticulture and
specialty plants

 (PTC)
Shekina Enterprises 2008 <US$1m 41
Horizon Sopyrwa
1972 US$5–8m 72
  (Société de Pyrethre au Rwanda)
Sorwatom 1996 <US$1m 32
228 APPENDIX

Latest
reported
turnover
Sector   Company name Year (2010–11) Employees
1959/ US$132–
Bralirwa 528
1963 133m
Dairy and beverages

Brasserie de Mille Collines 2009 US$10–11m 75–80

Inyange Industries 1997 US$7–8m 195
Laiterie de Nyanza
1937 <US$1m 60
  (Agro-Processing Industries)
Enterprise Urwibutso
1993 US$3–4m ~200
  (Sina Gérard)
Ameki Color 1982 US$6–7m 380
Cimerwa 1996 US$19–21m 262
Kigali Cement Company 2007 US$1–2m 29
Construction materials

Ruliba Clays 1988 US$1–2m 210

Safintra 2007 US$11–12m 40
Simaco/Afrifoam 2003 US$2–3m 85
SteelRwa 2011 US$8–9m 240
Tolirwa
1979 US$6–7m 110
  (Tôlerie Industrielle du Rwanda)
Ufametal 2001 US$8–9m 25
Uprotur 1987 US$2–3m 90
Anik Industries 1986 US$1–2m 30
Aqua-San Rwanda 2003 US$1–2m 25
Kigali Steel & Aluminium Works 2001 US$1–2m 20
Other light manufacturing

Manumetal 1967 US$2–3m 70

Mutara Enterprises 1995 US$3–4m 85
Roto Ltd. 2001 US$3–4m 60
Rwanda Foam 1983 US$3–4m 80
Société Rwandaise de Chaussures
1999 US$2–3m 100
 (SRC)
Suku Paper Works/Safari Center 2003 US$5–6m 50
Sulfo Industries 1962 US$14–15m 700
Trust Industries 2008 US$1–2m 50
Utexrwa 1984 US$5–6m 600
APPENDIX 229

Appendix 2: Agribusiness and Manufacturing

Firm Creation (1962–2011)

Year
No.   Company name established
 1 Sulfo Industries 1962
 2 Mulindi Tea 1962
 3 Bralirwa 1963
 4 Rwandex 1964
 5 Rwanda Paints 1964
 6 Amagerwa 1965
 7 Manumetal 1967
 8 Sirwa ~1967
 9 Shagasha 1968
10 Rizerie de Bugarama 1968
11 Sucrerie Rwandaise 1968
12 Konfigi 1968
13 Laiterie du Rwanda 1969
14 Pfunda Tea 1972
15 Usinex, then Opyrwa 1972
16 Sebulikoro 1973
17 Rwandexco 1973
18 Gisakura 1975
19 Bandag 1976
20 Bata ~1976
21 Gatagara ~1977
22 Mera ~1978
23 Cement company (name unknown) ~1979
24 Opyrwa 1976
25 Soap company (name unknown) ~1979
26 Bandag 1976
27 Kitabi 1977
28 Ovibar 1977
29 Papeteries du Rwanda 1978
30 Sonatubes 1978
31 Mironko Plastics 1978
230 APPENDIX

Year
No.   Company name established
32 Rizerie de Rwamagana 1978
33 Rubaya 1979
34 Tolirwa 1979
35 Sonafruits 1979
36 Tabarwanda 1979
37 Nyabihu 1980
38 Cuphmetra 1980
39 Usine d’Allumettes 1980
40 Mata Tea 1981
41 PPCT 1981
42 Sobolirwa 1981
43 Cookirwa 1981
44 Sakirwa 1981
45 CODERVAM 1982
46 Ramco 1982
47 Ameki Meubles 1982
48 Gisovu 1983
49 Rwakina 1983
50 Rwanda Foam 1983
51 Somirex 1983
52 Cimerwa 1984
53 Sofar 1984
54 Chillington 1984
55 Oxyrwa 1984
56 Shiramaka 1984
57 Utexrwa 1984
58 Sodeparal ~1984
59 Ecomirwa ~1985
60 Rwanda Furniture Works ~1986
61 Harjit Singh ETC ~1987
62 Prometal 1985
63 Laiterie de Rubirizi 1985
64 Byumba Flour Mill ~1985
APPENDIX 231

Year
No.   Company name established
65 Petrolgaz 1985
66 Socobico 1985
67 Sorwathé 1975
68 Sorwatom 1986
69 Anik Industries 1986
70 Uprotur 1987
71 Maisserie de Mukamira 1987
72 Briqueterie Rwandaise Ruliba (Ruliba Clays) 1988
73 Guttanit Rwanda 1988
74 Laiterie de Gishwati 1988
75 Sopar 1988
76 Société Rwandaise de Batteries 1988
77 Ameki Color 1989
78 Urwibutso 1993
79 Mutara Enterprises 1995
80 Caferwa 1995
81 Rwacof 1996
82 Cimerwa 1996
83 Inyange Industries 1997
84 Kabuye Sugar Works 1997
85 Saban Sarl 1998
86 Shema Fruits 1998
87 Simaco 1999
88 SRC 1999
89 Afrifoam 1999
90 Roto Tanks 2000
91 Kigali Steel & Aluminium Works (KSAW) 2000
92 Electromax 2000
93 Agro Coffee Industries 2000
94 Rubirizi Dairy 2000
95 Ufametal 2001
96 Coffee Business Center 2002
97 Premier Tobacco Company 2002
232 APPENDIX

Year
No.   Company name established
98 Minimex 2002
99 Rwanda Plastic Industries 2002
100 Aqua-San Rwanda 2003
101 Adma International 2003
102 Suku Paper Works 2003
103 Rubaya-Nyabihu Tea Factory 2004
104 Kivu Arabica Coffee Company (KCC) 2005
105 Rwashoscco 2005
106 ICM Rwanda Agribusiness 2005
107 Master Steel 2005
108 Rwanda Leather Industries 2005
109 Ikirezi Natural Products 2005
110 Rwanda Mountain Tea 2006
111 Uprofoam 2006
112 Kigali Cement Company 2007
113 Pembe Flour 2007
114 Safintra 2007
115 Shekina Enterprise 2008
116 Trust Industries 2008
117 Nshikili Tea Factory 2008
118 Sonafi 2008
119 Sosoma Industries 2008
120 Rwanda Trading Company (RTC) 2009
121 Bakhresa 2009
122 Savannah Dairy 2009
123 Kitabi Tea 2009
124 Brasserie de Mille Collines 2010
125 SteelRwa 2011
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 Understanding Rwanda’s Agribusiness and Manufacturing Sectors   Gathani and Stoelinga
This book comes after the 50th anniversary of Rwanda’s Independence
and provides the first ever comprehensive overview of firms in the
country’s agribusiness and manufacturing sectors. Understanding
Rwanda’s Agribusiness and Manufacturing Sectors puts these sectors
into context historically, explaining how decisions and initiatives
going back to the 1930s have contributed to determining the shape Understanding
and composition of agribusiness and manufacturing in Rwanda
today. These sectors, more than any others, have followed the ups Rwanda’s
and downs of Rwanda’s history. The book also provides an in-depth Agribusiness and
analysis of agribusiness and manufacturing in Rwanda today, with
a focus on understanding the origins, evolution and capabilities of Manufacturing
firms, and how these capabilities came to be. This overview, or Sectors
“Enterprise Mapping”, gives the reader a detailed understanding of
the ownership structures, products, systems, resources and exports
of leading firms in Rwanda’s agribusiness and manufacturing sectors
today. Finally, this book individually profiles forty-three of Rwanda’s
largest manufacturing and agribusiness firms.

This book is targeted at policymakers, academics, businesspeople,

and prospective investors interested in gaining a better understanding
of Rwanda’s industrial sector.

Sachin Gathani and

Dimitri Stoelinga

With a Foreword by François Kanimba, Minister of Trade and

Industry, and an Introduction by Professor Måns Söderbom