As part of export promotion and diversification, Rwanda wants to more than double its flower exports by the end of the year, thanks to the country’s flagship project Gishari Flower Park project and Bellow flowers.
The Rwamagana District based flower park project plans to export flowers by the end of the year.
Emmanuel Hategeka, the permanent secretary at the Ministry of Trade and Industry, said the country is counting on this particular project to double exports to global markets including the European Union and other destinations worldwide.
This according Hategeka, will help keep the export sector competitive despite a fall in global commodity prices which has affected specifically Rwanda’s mining industry.
It means Rwanda will be able to generate more forex compensating for the losses made in the mining industry for example.
With support from the National Agricultural Export Development Board (NAEB), both the investors and exporters are working around the clock to ensure they seize opportunities in the flower sector.
The idea is to be able to increase flower production to at least 44,000 tonnes per annum that can generate export receipts of up to $140million by 2020
What Rwanda can do to achieve the target?
Industry experts believe the country has the potential to reach its targets only if the right infrastructure and incentives are put in place.
Shungo Harada, the Managing Director, Bloom Hills Rwanda, a Japanese flower export firm based in Musanze District says the need to introduce and venture into variety species is critical for a more competitive and profitable flower business.
The flower expert says, attracting new varieties of seeds and different kinds of flowers is critical for a profitable flower business.
“It is therefore important that the country begins to invest in niche varieties and research especially on different kinds of flowers as a key component towards making Rwanda’s flower industry successful,” Harada says. Harada advises that the country needs to put in place more cold rooms to encourage production and value addition.
He calls for strong public and private sector partnerships to boost investments in the flower industry.
This according to the expert will enhance competitiveness and profitability of the industry.
Maximizing production during winter season in Europe
According to Harada, famers and exporters should always take advantage of winter season in market destinations to maximize production and profits.
“This is when flowers attract good prices around the world,” he says adding that working through associations will help both farmers and exporters reduce the cost of production and maximize their profitability index.
Reducing flight and logistical costs
The experts argue that a reduction in flight and logistical transport costs will not only attract more investors but equally make the sector more competitive.
High airfreight costs have for sometime affected the sector’s competiveness.
Therefore addressing this challenge will translate into more profits, Harada said
His argument is shared by Vainney Kabera, the Managing Director of Freshpak Limited, who says addressing both the logistical and transport challenges has a multiplier impact on the sector.
“The cost of transporting exports to the market is still high; this affects the competitiveness of Rwandan goods,” he said.
Some airlines recently suspended cargo flights because of lack of enough cargo and high operational costs.
Among those that called off cargo flights include the Turkish airlines after exporters failed to meet capacity in terms of tonnage.
In a recent interview with The New Times in Istanbul, Samil Said Karakas, the Turkish Airlines vice-president for sub-Saharan Africa and sales department chief, said Cargo potential varies from country to country with some countries presenting huge demand for cargo flights services.
“As an airline we try to invest in markets where the return is high… However, the challenge is that in some countries, the cargo potential is sometimes not stable, calling for re-deployment of equipment to other routes. Therefore, if Kigali shows more potential, we will definitely deploy a cargo plane to the route,” he said. The minimum tonnage to attract airlines often range between 15 and 20 tonnes of cargo which Rwanda is currently not offering.
Exporters were recently advised to consolidate cargo to minimize on the costs.
There are currently more than 7 flights per week to Amsterdam, Brussels and Dubai in addition to flights to the region which include Kenya, South Africa, Ethiopia, Congo, Brazzaville, Libreville, DRC, Gabon, Tanzania, Nigeria and Benin that flower exporters can take advantage of to reach to different market destinations
The Ministry of Agriculture and Animal Resources (MINAGRI) recently entered into a partnership with Japanese companies to introduce new technologies in floriculture and boost flower production in Rwanda.
Tony Nsanganira, the State Minister for agriculture, says the partnership is part of the strategy to enable the government to achieve its target to earn $104 million annually from horticulture by 2018, up from the current $10 million.
Japanese companies including Toyota Motor Corporation, MIZUHO Information and Research Institutes among others are funding Bloom Hills Rwanda Ltd’s venture to grow flowers in Kinigi located in Musanze District.
Harada, said they intend to be growing 5 varieties of flowers on 70 ha with sales of $ 11 million per year in the next five years.
Nsanganira noted that this is a good move towards achieving the country’s target to boost export base. The second phase of the Economic Development and Poverty Reduction Strategy (EDPRS2) envisages that national exports should increase by 28% every year – and horticulture has been identified as the potential area that will help the country to achieve this target.
He added that the government already started growing flowers and horticulture in Gishari centre and few private investors have come on board in Rulindo District; noting that there are however huge investment opportunities for private sector since Rwanda’s horticulture industry is still underexploited.
Rwanda’s comparative advantage
Rwanda is arguably one of the best destinations in the region for floriculture development in terms of excellent Agro-climatical conditions, and good business environment.
The country plans to develop 650 ha of flowers by 2017 and appropriate sites have been earmarked according to NAEB. The initiative is part of the government’s strategy to increase the sector’s production as well as boost export volumes and revenue. It is also aimed at diversification of the export base.
NAEB is currently mapping land that is suitable for horticulture as it seeks more investors. The agency is targeting a total of 2,000 hectares that will be dedicated to export-oriented production by 2018.
Overall, the flower industry in Rwanda has been growing at a low rate of about 5 per cent over the past one or so years in terms of increased areas under flower production.
The country is equally putting in place initiatives to promote Made-In-Rwanda products abroad, and along with Coffee and Tea, NAEB is aiming at increasing the production of flowers, its awareness, and is seeking for more investors with sustainable market and capacities.
Floriculture was identified by government as a sector that could quickly improve export revenue. The flower sector was projected to bring in about $220 million (Rwf166.1 billion) by 2017, according to NAEB’s Rwanda Floriculture Development report for 2013. Therefore, the entry of more investors is a boost to the country’s export industry as government tries to find ways of reducing trade deficit.