The Rwandan government is planning to establish a fund that will address industrial underutilization in a bid to boost manufacturing output, according to the Minister of Trade and Industry.

Prudence Sebahizi said this on Thursday, March 27, as he met members of the National Consultative Forum of Political Organisations (NFPO). Representatives of political parties noted the challenge that most of 2,300 factories in the country operated at less than 50 per cent of their capacity.

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He said the establishment of a dedicated fund to help self-employed people and businesses access loans at lower interest rates was being considered among other measures to address the issue.

"Currently, interest rates range between 15 per cent and 18 per cent. Those who can access them at lower rates are mostly involved in construction or trade, but the industrial sector is often left out,” Sebahizi said.

"We want to create a fund, working in collaboration with development banks, so that they can offer long-term loans, up to 10 years at interest rates of 14 per cent or even below 10 per cent.”

However, he said, for this to work, the government will need to encourage the commercial banks to support the initiative, as development banks would not handle it alone.

Madina Ndangiza, an MP and Secretary General of Ideal Democratic Party (PDI), pointed to specific challenges facing factories, including the inadequate electricity supply.

"The prices of Made-in-Rwanda products are still higher than those of imports,” she added.

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The Minister pointed out the issue of raw material shortages, which many factories face.

"One of the challenges our factories encounter is the lack of locally sourced raw materials. We want to push for more local production,” he explained.

"For instance, we are working on establishing a tannery that will allow us to stop importing raw materials for the leather industry. Producers of construction materials will also be able to source raw materials locally.”

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The minister noted that although the number of textile factories is increasing, most still rely on imported raw materials.

"We are exploring ways to set up at least one factory to produce fabric locally.”

He said that the government was considering way to revive the cotton farming in Rwanda. Silk farming still exists in some rural areas, but more investment was needed for it to contribute substantially to the textile industry.

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Electricty costs

Sebahizi acknowledged that electricity supplied by private micro-power plants is often expensive, and since the government is their primary customer, this drives up costs.

He reassured that the situation will improve as more affordable electricity is imported from the neighbouring countries.

"Currently, the government covers 50 per cent of the electricity costs for factories. Even though electricity is expensive, factories are still benefiting from this subsidy,” Sebahizi said.

High cost of Made-in-Rwanda products

On the issue of high costs for Made-in-Rwanda products, Sebahizi explained that this is largely due to the scarcity of raw materials and low production levels.

"As productivity increases, costs will go down,” he assured.

He also mentioned that the government is considering having local clothing manufacturers sign contracts with schools to supply uniforms, which would give them a large market.

"If they can produce in larger quantities, we expect prices to decrease,” he added.

Valens Muhakwa, Vice President of Social Democratic Party (PSD), raised concerns, focusing on the welfare of factory employees.

He asked what steps were being taken to improve salaries and address issues such as overtime work. Muhakwa also touched on the need for enough skilled workers in the country, suggesting that some vital skills needed for industrial growth were not being provided domestically.

"When we engage with investors, we make sure to discuss the minimum salary requirements to prevent them from underpaying workers and relying on cheap labour," explained the minister.

"The government then monitors how workers are treated in these industries to ensure they are properly cared for."

Sebahizi acknowledged that capacity remains a challenge but added that new factories in Rwanda are part of capacity-building programmes.

"These programmes not only focus on employing Rwandans but also on training them. In cases where skilled Rwandans are not available, some factories employ foreign workers.”

"There are internship programmes aimed at equipping our youth with the necessary skills to work in the factories being set up in the country," he added.