Cimerwa, dealers lock horns

The government and the private sector have over the past year intensified campaigns aimed at encouraging Rwandans to consume locally-made products, as well as broadening the country’s exports base. However, it has emerged that some firms are struggling to make the cut due to competition from illegal dealers. Cimerwa, Rwanda’s sole cement producer, for instance has asked the government for protection, saying local dealers are exporting its cement illegally, affecting its key markets in the Democratic Republic of Congo and Burundi. Busisiwe Legodi, the Cimerwa chief executive officer, said the problem is made worse by the fact that some of the local dealers buy cement at subsidised prices for the Rwandan market, but sneak out the commodity in small quantities to the DR Congo and Burundi, making it hard for the cement manufacturer to sell. “Local bulk buyers get the cement at subsidised prices and sneak it out of the country to our target markets,” she said, adding that illegal cross-border trade remains a challenge, not only for Cimerwa, but all exporters in general. However, she was cagey when asked to mention the suspected dealers involved in smuggling cement to the DR Congo and Burundi or why the firm does not blacklist and stop selling to them the commodity. In august last year, Cimerwa launched a $170 million (about Rwf126.7 billion) new plant in Muganza sector, Rusizi District, increasing its production capacity to 600,000 tonnes a year from 100,000 previously. This is enough to satisfy the growing local demand that currently stands at about 450,000 tonnes of cement, driven by the increasing demand for cement by the local construction and real estate sectors. The surplus output is targeted for the export market in the region, especially Burundi and the DR Congo. The firm also cut factory prices to attract clientele in the highly competitive regional cement market. Cimerwa reduced the factory price for bulk buyers (more than 700 bags of cement or about 30,000 tonnes) by Rwf1,200 per 50kg bag of cement to Rwf7,300 from Rwf8,500. However, Busisiwe said retailers benefitting from low prices, but turn around and export to regional which has eaten into the firm’s export markets. “We we have raised the matter with the Rwanda Revenue Authority (RRA) customs department, but they yet to respond to our grievances,” she said. Commenting on the issues, Minister for Trade and Industry Francois Kanimba said they will engage the relevant government institutions and the private sector to find mechanisms of solving the problem. Pierre Celestin Twagirayezu, a cement dealer in Rusizi District, said the problem can be solved by enforcing strict border controls. Patrick Sibomana, another cement dealer, in Kicukiro, challenged the firm to categorise its customers to identify those that buy for export and retail to stop illegal trade. Rwanda’s cement imports reduced to $82.7 million in 2015 from $85.6 million in 2014, according to the central bank statistics. Low consumption of locally-made cement has in the past caused unease among factory management, which last year called on the government to intervene with protectionist measures to limit regional cement imports. The Cimerwa chief had then argued: “The Rwanda construction sector has continued to grow, with the most activity taking place in real estate industry. This market, which primarily uses general purpose cement, is also the biggest segment that 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 local goods and services to reduce the country’s import bill and build the local businesses.” This is the only way we can create additional jobs and expand the economy, she added. The firm was, however, advised by stakeholders to review marketing strategies instead of advocating for retrogressive policies.

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Cimerwa, dealers lock horns