What should be done to elevate the “Made in Rwanda” sector

Locally made products on display during last year’s Made-in-Rwanda Expo. Emmanuel Kwizera.

This week, hundreds of Rwandans will flock the annual ‘Made in Rwanda’ trade fair to shop their favorite locally-made products and services.

It has become a tradition every year for Rwandans to attend such fairs and for local producers to showcase their products.

According to the Private Sector Federation, the chief organisers of the event, last year, the trade fair saw 450 exhibitors showcasing their locally produced products. That was an 80 per cent increased growth in its four-year history.

This year, more than 500 exhibitors are expected to showcase their products and services.

That has a genesis. In 2015, the Government embarked on a campaign that was aimed at promoting domestic consumption of Made in Rwanda products, with the intentions of stimulating the demand for domestic production.

That was expected to increase export volumes and revenues and ultimately help to offset the trade deficit, which had been rising significantly at the time.

At the same time, the Government laid out the ‘Domestic Market Recapturing Strategy’ to identify priority areas that would quickly contribute to Rwanda’s market recapturing. Those sectors were construction materials, light manufacturing and agro-processing.

In 2017, the Made in Rwanda policy was introduced, highlighting specific steps and actions through which the country would step up efforts aimed at promoting domestic production and consumption.

Today, there is a host of local producers racing to lure Rwandans to buy their products, while others are already exporting their products to regional and international markets.

Diane Mukasahaha, a businesswoman based in Kigali, points particularly to the increased entry of new businesses and new jobs being created as a result of the awareness about the need for producing locally.

“When you open a factory here you offer more jobs and produce at a competitive price than those who import. A person shipping 10 containers of cloths may create 5 jobs, but making those containers here could generate more than a hundred jobs,” she says.

Mukasahaha owns a garment factory behind DIKAM Fashion brand which specializes in design and production of children’s cloths and school uniforms. She currently works with 20 employees, but as we were speaking last week, she told me she was expecting to hire 60 more people next week as the demand was increasing.

“We are already at an advanced stage of negotiations with buyers in Congo and Gabon. This is why we want to hire more people,” she notes.

That, she believes, is what Made in Rwanda is about – basically allowing local producers to produce jobs and spark demand not just for the local market but regional and international markets.

Mukasahaha’s business is among other businesses in the garments sector that have formed a joint venture, Apparel Manufacturing Group, to embark on mass production for local and international market.

According to the businesswoman who’s also the company’s board chair, the group has already acquired 255 machines and hired 320 people with anticipation of producing 6,000 pieces of clothes per day.

According to Yvette Uwineza, the marketing manager at Africa Lubricant Manufacturing Company, previously Rwanda imported all lubricant products but their debut into the local market turned around the situation, thanks to the Government’s efforts to promote domestic manufacturing.

Africa Lubricant Manufacturing is the first and only Lubricants blending Factory in Rwanda, based at Prime Economic Zone. It started production in the country in late 2017.

“All the players in the lubricants business in Rwanda have been importing their products from various sources in Europe, South Africa, EAC Countries and UAE,” she says.

The challenges with importation, she adds, are associated with logistics and costs which she says at times create shortages in the market.

“With the government support on Made in Rwanda, lubricants are currently more affordable and available,” Uwineza notes, adding that local companies in various areas have received increased visibility of their locally made products which she attributed to the Made in Rwanda initiative.

That shows the uptake of local products is ostensibly gaining momentum.

Michel Sebera, the Permanent Secretary at the Ministry of Trade and Industry says the uptake of Made in Rwanda is taking a different shape.

“Rwandans are now embracing this initiative. They understand, more than ever, what it is about,” he says.

According to Sebera, when they started a few years ago, many people thought of Made in Rwanda as about cloths only.

That, he notes, is changing, indicating that locally produced products are diversified, highlighting other local products on the market like bicycles, motorcycles, foodstuff, and electronic products, to name a few. 

He argues that that understanding is reflected in the real numbers that highlight the journey since 2015. For instance, Rwanda’s exports in 2015/2016 generated $688.2 million and by 2018/2019 exports value had increased to more than $1 billon.

Believably, Made in Rwanda contributed to realizing that increased value.

However, imports value has equally been rising. In the same period, the value of imports grew from $1.9 billion to $2.1 billion, maintaining a trade deficit, which the country wants to offset.

Challenges

Businesses that produce locally think that there is a lot of challenges that ‘Made in Rwanda’ initiative could address, most of which Mukasahaha indicates that affect the production cost in the end.

“We want Government to consider us as investors. It’s easier for foreign investors to work here with a lot of incentives than we do,” she says, highlighting provision of industrial land and tax holidays as some of the incentives that foreigners get.

Producers of ‘Made in Rwanda’ only get tax exemption on importation of raw materials.

Working capital, high cost of transportation, energy and biased perception of locally made products, are other challenges that producers highlight as affecting their businesses.

According to Uwineza, importers of lubricants currently pay 37 per cent consumption tax on the Cost, Insurance and Freight (CIF), whereas locally produced products are charged 37 per cent on Selling Price.

“In this case it seems that local manufacturers are paying more on consumption tax compared to those importing,” she says.

The tax is payable when taxable locally manufactured products are cleared out of the factory for consumer use, and when taxable imported products are due for clearing at the customs under the customs system.

Lack of information about suppliers, which makes it hard for producers to get supply of raw materials timely, is another challenge. On the other hand, some say there is a lot of bureaucracy in obtaining certifications.

According to Theo Ntagengengwa, the spokesperson of the Private Sector Federation (PSF), businesses are advocating for relaxing of bureaucratic procedures that they go through and a creation of a bonded warehouse.

“Our business owners suggest establishment of one-stop centre through which they can get certification and clearance of their products. They also want a kind of bonded warehouse which could ease procurement of raw materials,” he notes.

editor@newtimesrwanda.com

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