The high cost of fuel is hurting the country’s fragile textiles industry, Patel Ritesh, the chief finance officer at Utexirwa, the sole textile firm in Rwanda, has said.
Textlies use oil to generate steam energy for colour filing in fabrics.
Ritesh said that because of high electricity tariffs the factory was also looking to generate energy from waste products to cut costs.
“We are setting up a waste power plant that will cost about Rwf200m to generate enough power to run machines,” Ritesh said in an interview with Business Times.
He said the move was necessary because it was becoming increasingly costly to import heavy oil to run the machines.
“Using waste products like coffee husks can help us reduce on the operational costs given the fact that 90 per cent of our raw materials are imported,” Ritesh said.
To make matters worse, the sector also relies on cotton imported from Uganda, Tanzania and Burundi, yet Rwanda has rich soils to support cotton growing, he argued.
“We import over 300 tonnes of cotton every year. This money could benefit Rwandans if we were buying the lint locally,” he noted.
According to last year’s gross domestic product figures, the textile industry stagnated at minus one per cent and experts say it could drop further if imported second-hand clothes are not controlled.
According to Eusebe Muhikira, the head of the trade and manufacturing department at the Rwanda Development Board (RDB), potential investors in the textile sector fear the high cost of production.
He said compared with countries like China, India, Singapore and Bangladesh, producting fabrics in Rwanda was expensive due to lack of raw materials and expertise.
“Our small textile companies cannot compete with the rest of the world because of lack of financial capacity to invest heavily in this sector and low production capacity. The high cost of production is discouraging investors,” Muhikira noted.
He said though the government was wooing foreign investors, he warned stakeholders that the process might take longer.
“Remember, most of these investors are already targeting some other areas where they think it’s cheaper and more profitable to do business. Therefore, convincing them to come and invest here might not be that easy.”
Last week, Chantal Umuraza, the executive director of the Chamber of Industry, told The New Times that importation of cheap goods was suffocating local industries.
“It’s difficult to penetrate European markets which leaves the domestic market as the only option. Unfortunately, customers prefer imported goods to locally made products,” Umuraza said.
A kilogramme of cotton costs about Rwf1,200, while a kilo of silk is at about Rwf1,900, according to Ritesh. He said if the country focused on producing silk fabrics, it would help the textile industry compete favourably.
“We have dropped from producing 100 million metres of cotton fabric in 2010 to about 24 million metres per year because of these challenges,” Ritesh pointed out. He noted that despite a high cost of producing a silk fabric (Rwf3,000) when compared to cotton, which costs about Rwf560 per metre, it is advisable to focus on silk production because it has high demand and value.
Last year, Utexirwa exported 480kg of silk to Canada, but has been unable to ship more due to the high cost of production, Ritesh said.