Rwanda pumps money into its industries

Rwanda is investing $852,100 to revamp the operations of local industries as it seeks to boost its domestic production and competitiveness in the export market.

Turnaround plans focusing on increasing production in 25 industries including 15 small scale ones have been developed and are to be implemented this year.

Rwanda’s industrial sector is currently small, contributing on average about 15 per cent of Gross Domestic Product (GDP) while employing just four per cent or 170,000 people.

This figure is dismal when compared to the agricultural sector which employs over 80 per cent of the population.

However, with the turnaround investment, the government is targeting an annual increase of at least 12 per cent industrial growth in order to achieve 26 per cent GDP in the next eight years.

Last year, industrial production grew by 15 per cent led by construction, which increased by 22.3 per cent, mining and quarrying was at 15.5 per cent while manufacturing grew by 6.8 per cent.

“What has been missing is a strong partnership between the government and private promoters of SMEs particularly when it comes to mobilising them to produce raw materials.

We are now trying to establish mechanisms of co-ordination to enable them work together in order to reactivate the industries,” said Francois Kanimba, Rwanda’s Minister of Trade and Industry.

According to the Establishment Census 2011, SMEs operating in the private sector form 96.5 per cent (119,158) of businesses in Rwanda.

The turnaround exercise will also facilitate local firms to reposition themselves to face increasing competition as regional integration takes root.

Currently, very few Rwandan firms export to the rest of the region, and those that do are outdone by businesses in countries with larger and more sophisticated industrial sectors, particularly Kenya and Uganda.

The turnaround strategy will focus on increasing value addition in existing export sectors and developing new products to tap into unexploited markets particularly Democratic Republic of Congo, Burundi and Congo Brazzaville.

Central Bank statistics show that Rwanda is a net importer in the EAC, with its total trade volume — imports and exports — between 2006-2010 more than doubling from $278 million to $600 million.

While exports and services increased by 31.7 per cent last year, mainly driven by mining, tea and coffee, the trade deficit worsened by 33.9 per cent compared to 2010.

The country’s external current account deficit, including grants, worsened from $378 million in 2009, to $407 million in 2010, mainly due to trade imbalances and service deficits, according to statistics from the National Bank of Rwanda.