By MOSES K. GAHIGI

More by this Author

The Rwandan government is looking for new investors to buy its stake in the struggling cement maker Cimerwa after the majority shareholder, South Africa’s Pretoria Portland Cement (PPC) Group, failed to make a bid last month.

The South African firm was considering buying the 49 per cent government stake when it was put on the market earlier in the year.

Cimerwa said PPC Group was doing a share valuation before it could make an offer. But it never bid and the government has given up.

Minister of Trade and Industry Soraya Hakuziyaremye said Kigali is now looking for new investors.

“We gave priority to PPC and allowed them time to make the bid, but the time we gave them elapsed without them getting back to us,” she said.

The pressure to sell the government’s stake in the country’s biggest and oldest cement maker started in March when President Paul Kagame expressed frustration about the company’s persistent poor performance.

The government set July 5 as the deadline for interested investors to bid for its stake, but no bid has come through.

The government, through the Rwanda Development Board, is looking for private investors.

The government has a 16.54 per cent stake in the cement maker, while PPC has 51 per cent. Other shareholders are the Rwanda Social Security Board, which has 7,115,303 shares (20.24 per cent), Rwanda Investment Group with 4,027,530 shares (11.45 per cent), and Sonarwa Group with 268,502 shares (0.76 per cent).

Cimerwa had a chance to exert its dominance and expand its market share in the country’s cement market, especially at this time when imports from Uganda have been halted due to the ongoing political impasse between Kigali and Kampala, which escalated into border closure.

However, production deficits continued to plague the company, forcing the country to rely on cement imports from Tanzania and other East African states.
Cimerwa has continued to operate below its production capacity of 600,000 tonnes, amid increased cement demand attributed to big infrastructure projects like the Bugesera Airport, the recently completed Kigali arena, and the construction of secondary cities.

Production

In 2018, it produced only 364,864 tonnes of cement —less than 60 per cent of the total demand. Rwanda was forced to import more than 318,800 tonnes of cement to meet the demand of 640,455 tonnes.

When PPC bought the majority stake in Cimerwa in 2012, the firm hoped to turn its fortunes around, but this has not happened, while cement demand has kept growing over the years.

Cimerwa prices have also remained high, and imports from the region from the likes of Hima Cement and Tororo Cement from Uganda as well as Twiga and Simba from Tanzania, which are cheaper and offer higher volumes, have progressively eaten into the cement maker’s market share.

Besides Cimerwa, the government is banking on Prime Cement, a plant under construction in Musanze in northern Rwanda, to boost domestic efforts to meet local demand.