Rwanda woos Egyptian bottle packaging firm

Monday September 11 2017

Manufacturers in the country incur high costs

Manufacturers in the country incur high costs due to importing bottles. PHOTO | FILE | NMG 

By RODRIGUES RWIRAHIRA
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Rwanda’s Private Sector Federation (PSF) is negotiating with an Egyptian company to help beverages makers and alcohol distillers to get affordable packaging material.

This comes after players in the liquor manufacturing industry complained about input taxes charged for imported packaging material mostly from China, Kenya and South Africa.

While many are still struggling to increase production to satisfy market demand, some believe the ongoing “Made in Rwanda” campaign would be more effective if packaging materials were made in the country.

Claudine Kabayiza from the Chamber of Industry and Manufacturers, told Rwanda Today that negotiations with an Egyptian bottling company, whose name remains undisclosed, started two weeks ago and were expected to continue last week.

“We are engaging an Egyptian company to see whether it can set up a factory in the country or export bottles to Rwanda at a low cost,” she said.

Ms Kabayiza said that local manufacturers are being urged to find ways of recycling used bottles, although they would need to improve their quality in order to meet the requirements of the Rwanda Standard Board.

While some distillers in co-operatives are fined internal taxes and have been packaging most of their drinks in plastic bottles those seeking to improve the quality of their products are forced to import expensive packaging material.

An example is 1000 hills distillers in Kigali City, a two year-old whisky factory that has invested more than $2 million so far. The distiller complained about the high cost of importing bottles for its whisky.

Hurdles

Stephan Knoef, who is the founder and chief executive of 1000 hills distillers, said their product is selling despite the packaging hurdles. The distiller sources 90 per cent of its production material from the country.

“The only thing we import is bottles because they are not available in the country. It’s a challenge because we import from china and Kenya and it is expensive,” he said.

Adding that although procuring packaging materials from Kenya is less costly compared with those imported from China, companies are required to buy huge volumes of bottles to get tax waivers.

The country charges excise duty of 70 per cent of the product’s price, VAT of 18 per cent and income tax of 30 per cent. These costs are transferred to the consumer.

1000 hills distillers has been trying to compete with other whisky producers, especially those from Scotland, Uganda, Kenya and South Africa.

The Made in Rwanda campaign was launched in 2014 as a way to market Rwandan-made products.

The campaign has been trying to increase the buying of locally-made products by raising awareness, enhancing quality standards and providing branding and packaging.