Cimerwa calls for control of cement imports as competition tightens

In august last year, Cimerwa launched a state-of-art plant to boost cement production and serve local regional markets. With the $170 million (approx Rwf126.7 billion) plant in Muganza Sector, Rusizi District, Rwanda’s sole cement producer’s production capacity would raise to 600,000 tonnes a year, up from 100,000 previously, the company said at the launch of the factory. This would be enough to satisfy the growing demand of cement locally, which currently stands at about 450,000, with the surplus targeted for the export market in the region, especially Burundi and the DR Congo. Immediately, after the new plant started production, the management went a step further and reduced the prices of the various types of cement to attract clientele in the highly competitive regional market. Cimerwa reduced the factory price by Rwf1,200 per 50kg bag of cement to Rwf7,300 from Rwf8,500. This targeted customers buying in bulk (more than 700 bags of cement or about 30,000 tonnes). For exporters, the firm slashed the price by almost $7 to $205 per tonne, down from $212 a tonne during an earlier short promotional period. On the market, Cimerwas cement goes for Rwf9,400 per 50kg bag of cement while the retail price for Hima cement is Rwf9,500 per 50kg bag of cement. There are other cement brands like Kilimanjaro Cement that costs Rwf10,800 per 50kg bag of cement. According to Busisiwe Legodi, the Cimerwa chief executive officer, the initiatives aimed at encouraging Rwandans to buy locally-produced cement to enhance its competitiveness in the market that has a high presence of cement brands from the region. However, with despite all these customer-friendly initiatives, the cement-maker is finding difficulty to sell its products, the increasing demand for cement by the local construction and real estate sectors notwithstanding. In addition, Rwanda’s cement imports reduced to $82.7 million in 2015 from $85.6 million in 2014, according to the central bank. The low consumption of locally manufactured cement, has understandably caused uneasiness among factory management, which is now calling on the government to intervene with measures that will boost consumption of locally-made cement. “The Rwanda construction sector has continued to register growth, with the most activity taking place in residential construction. This market, which primarily uses general purpose cement, is also the biggest segment which would ordinarily attract many players. We recognise that while the regional market is large enough for everybody, as local company, and as Rwanda consumers, we all have a duty to contribute to the economy by consuming locally-produced goods and services in order to reduce Rwanda’s import bill and build the local businesses,” Legodi noted. This is the only way we can create a domino effect that will generate additional jobs and expand the economy, she added. Legodi, said that the made-in-Rwanda call has come at a right time as it reassures Rwandans, particularly those who want to purchase construction materials, that most of these are now produced locally at affordable prices. In an earlier interview with the Operations Manager who is based at the factory, the firm is looking to set up selling points in various towns and cities across the region to reduce middlemen, a move he says could help cut further Cimerwa cement prices and make it more competitive. They are also planning to start dealing directly with contractors (where necessary) to enhance their market share. “We want to want to encourage Rwandans that they always focus on quality. Since construction is a relatively expensive investment, it is important for contractors to use quality products to deliver the finest results and durable projects,” Legodi adds. According to Francois Kanimba, the Minister for Trade and Industry, balancing the country’s trade has become a serious issue and a threat to the economic stability. “We need to think deep and understand why our people are not consuming locally produced products despite our efforts to promote “Made-in-Rwanda products. We have to put in place systems that will address some of the structural constraints that may be hindering consumption of our products,” Kanimba noted. Alternatively Kanimba says, improving on the export value chains is a plus towards reducing the country’s trade deficit. Rwanda’s exports to Burundi decreased by 6.7 per cent in value compared to one per cent in 2014, with the central bank attributing the decline to suspension of cement exports to Burundi last year by Cimerwa because of the tense situation in the country. Benjamin Gasamagera, the Rwanda Private Sector Federation (PSF) chairman, says Cimerwa’s problem could be a result of marketing strategies employed by the firm. He notes that the way companies advertise their products goes a long way in attracting customers. He advises companies to design appropriate marketing tools for their products, and use right channels to remain competitive. Dealers speak out Alfred Sibomana, a cement dealer in Nyabugongo, says most customers prefer imported cement, which they think is of better quality compared to that produced locally. “It is the question of perception and mindset as consumers often believe that imported products, including building materials like cement, are of high quality compared to locally-produced ones,” Sibomana says. business@newtimes.co.rw

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Cimerwa calls for control of cement imports as competition tightens