Government is set to remove imported packaging materials from the list of tax-exempted goods in a bid to ease competition against local manufacturers, the Minister for Trade and Industry told Parliament yesterday.
Vincent Munyeshyaka announced this while appearing before MPs in a plenary session where he had been summoned to respond to several questions raised in a report by the parliamentary Standing Committee on Budget and Patrimony.
Munyeshyaka admitted that there had been complaints about the cost of imported packaging materials which were cheaper than those locally made because of tax incentives but promised that soon, that issue would be fixed.
“We are considering asking the Government to remove packaging products from the list of imports whose taxes have been waived so that we give an opportunity to the locally made ones. We will discuss that this year and we will continue to encourage industries to invest in packaging materials,” he said.
Almost ten years since the Government banned polythene bags over environmental concerns, only a handful of investors ventured into manufacturing alternative packaging materials such as sacks, boxes, paper bags, and plastics.
The gap left all the needs for packaging sourced from abroad, especially China and Kenya, with flour sacks, generic grocery bags, and others used in commodity retail constituting the bigger portion of the imports.
Munyeshyaka said that, initially, the capacity of local factories to make packaging materials was still very low but, today, local manufacturers of these products were happy to be selling to other industries and local retailers.
“Initially, we had factories which were not even ten years old, all trying to recoup their investment and, in turn, the prices of their products were high. The good news right now is that their products are now locally bought. This is an area that is just starting up and as the market grows, the prices will also continue going down,” he said.
There are currently 12 factories specialising in that and of these, nine manufacture sacks for products like maize flour, rice, beans and others manufacture paper bags and boxes.
According to a 2013 feasibility study, Rwanda imported paper packaging products worth $27.6 million in 2012.
It imported $538,000 in non-corrugated folding cartons from abroad in 2012, with 90 per cent from Uganda. The items are used for everything from soap, and tea to cigarettes.
Corrugated boxes in Rwanda were imported at a cost of $15.6 million in 2012.
Despite its ban on polythene bags and plastics, Rwanda spent $9.7 million on imports of some type of polythene packaging in 2015 for products without alternative packaging material yet. The polythene is later recycled.
Munyeshaka was also questioned on factories that manufacture food and drinks only for them to be taken off the market because they do not meet minimum standards yet they have already been consumed by the locals.
“I would like to make it clear that when it comes to quality standards, there is nothing like a temporary permit. Instead, what sometimes happens is that some manufacturers or cooperatives are given permits and they start breaking the law by manufacturing what they were not authorised to. What we offer is a permit called Standardisation Mark (S-Mark) and even before we issue that one, there are requirements that must be fulfilled,” he explained.
The MPs were also interested in knowing why farmers were sensitised to concentrate on growing Irish potatoes which are now rotting due to poor sales.
“It came to our attention that there are directives that were not being followed and, as a result, traders have been taking advantage of farmers and the whole chain of demand and sale was broken down as a result. We have fixed most of it and we continue to discuss with the stakeholders on the best way forward,” he said.
MP Théogène Munyangeyo called for farmers’ issues to be taken seriously, pointing out that they were not getting their work’s worth.
“It’s time to wear gumboots and go to the field and see the efforts that these farmers put in their farms and what they go through during the whole process. What they are getting is so little compared to their hard work,” he said.
MP Jeanne Henriette Mukabikino criticised projects that are studied in Kigali when the beneficiaries are in rural areas, saying that in the end, they were not practical.
“For instance, there is a carrot washing project that has never been of any use to its beneficiaries. There is need to take the entire process to the targeted area because the practicability of a project is only possible when you have been there,” she said.