Early this year, the Common Market for Eastern and Southern Africa (COMESA) unveiled a new project seeking to link local producers with buyers across the country and the region.
The project under COMESA Business Council sought to revitalise Rwandan markets by encouraging corporate firms to buy most of their supplies locally.
The pilot project, which is being implemented in six countries, including Rwanda, Zambia, Uganda, Kenya, Ethiopia and Malawi, mainly focuses on producers and suppliers of fruits and vegetables, dairy and dairy products, apiculture and cassava.
Local producers had hoped the initiative would open more markets for their products. However, most suppliers lack consistency, and are not efficient to meet the required demand and ensure quality of products.
These challenges have conspired against local suppliers for long, forcing international brands to source similar products from outside the country. However, with more intervention from the COMESA Business Council, these issues should be history, propelling the local SME sector to competitiveness.
Phase two launched
As the roll out of the second phase kicks off, these shortcomings need to be addressed to ensure farmers and suppliers benefit fully from the initiative. Since its inception in February, 76 Rwandan SMEs have been trained in product handling to ensure quality.
“To date, the project has provided training on the international food safety management system known as HACCP standards to about 480 SMEs in the six countries,” the COMESA Business Council chief executive officer, Sandra Uwera said at the launch last week.
Uwera said the council has entered into partnerships with a number of key buyers within the region, including the Taj Pamodzi Hotel and the Protea Hotel in Zambia; Kigali Serena Hotel, Inyange Industries and Bralirwa in Rwanda; Protea Hotel and Speke Group in Uganda. Others are Sarova Group of Hotels in Kenya; and the Protea Royals Hotel in Malawi. The aim is to facilitate market linkages between local small enterprises and multinational companies in the COMESA region. These market linkages and partnerships are essential to promote intra-regional trade and open new markets for stakeholders in the food and beverages, hospitality and tourism sectors to create jobs and spur development in the bloc.
“COMESA global trade increased by 6 per cent, from $290 billion in 2013 to $307 billion the following year.
However, the percentage of intra-COMESA trade to total COMESA trade has risen marginally from 5 per cent in 2005 to 7 per cent in 2014. The need for structured mechanisms to promote local sourcing and encourage intra-regional trade cannot be over emphasise,” Uwera told Business Times, emphasised the need for quality, saying it crucial to sustainable partnerships.
The project has helped build capacity of suppliers in six countries, including Rwanda, in food safety management systems and standards, and provided a platform for market linkages.
Uwera said the project focuses on strengthening the participation of SMEs in value chains at all levels on the continent. She said a training programme on the global food safety management systems, Hazard Analysis and Critical Control Points (HACCP), is being implemented for SMEs to improve and guarantee quality. HACCP is a management system for food safety, where analyses and control of biological, chemical and physical hazards are carried out from raw material production, procurement and handling, to manufacturing, distribution and consumption.
COMESA Business Council and the Private Sector Federation (PSF) have organised a buyer-seller meeting, which brought together eight key corporate buyers in Rwanda. Local SMEs also showcased their products during a mini-exhibition organised by the council in Kigali.
Uwera said the activities were aimed at promoting common interests, and discussing mechanisms to address challenges, like low volumes, poor delivery, and sub-standard products and services.
“That’s why big companies still prefer to source from consistent suppliers from outside the country because they have a long standing reputation for quality and timely delivery of products and services. So, since, time, quality, cost and risk control define the reputation of companies, many large enterprises are hesitant to build relationships with smaller, local enterprises,” she said.
“Therefore, this project is essential as it will help address these challenges and make local suppliers more competitive.”
Suppliers speak out
Claudette Niyitegeka, a supplier of horticulture produce, said the initiative will help suppliers understand the market and its requirements, and hence open more business opportunities for local SMEs.
The SME sector makes up 98 per cent of all businesses and provides 41 per cent of all private sector employment. Over 80 per cent of Rwandans are engaged in agriculture production. In order to take advantage of the rapid economic growth being experienced in Rwanda, SMEs need to develop skills of staff and improve their production capacity.
The COMESA region constitutes a large market on the continent, with a population of over 480 million people and total trade of $307 billion recorded in 2014. Intra-COMESA trade represented $23 billion during the same year.
What buyers say
According to Peter Macharia, the in charge of supply and purchasing department at Nakumatt Supermarket, a regional retailer, most local suppliers struggle to meet the required quantities, their products are not certified for quality and are poorly packaged.
“They must ensure their products meet standards and are well-packaged to guarantee consumer trust and confidence,” Macharia said.
Jean Claude Bahati, a marketing expert, said increasing production is critical to convince big buyers.
“It is important for suppliers to work with farmers to ensure increased production, safety, and quality along the value chain,” he added.
Sohail Ghavri, the head of marketing and purchase at Airline Services & Logistics, said for local suppliers to penetrate the market, they must ensure they meet international food safety management system standards.
“Consistency in standards and volumes is still a challenge faced by many local suppliers,” he said.
Bralirwa’s Jouse Penaloza called on suppliers to forge long-term partnerships with established firms to boost logistical and technical capacity and be able to raise enough volumes and ensure quality along value chain.
The majority of big buyers interviewed by this newspaper say local producers and suppliers need to more than double their efforts if they are to convince corporate firms and retail chains, like Nakumatt to engage them.
This view could mean that the first phase of the project supported by the Investment Climate Facility for Africa USAID-IPAA in collaboration with the private sector and Ministry of Trade and Industry fell short of expectations. The project was launched in Rwanda in February.