Business round-up

Rwanda aims to increase pyrethrum production Due to the limited supply of pyrethrum on the world market, Rwanda is exploring how to increase production of the cash crop. Total world demand of refined extract is estimated at 400 metric tonnes while world supply is estimated at 100 metric tonnes. This means world- wide pyrethrum supply is less than 50 percent of the world demand. Currently, Rwanda produces only 5 percent (20 metric tonnes) of the world supply yet has a potential to expand its production up to 50 metric tonnes of the pyrethrum refined extract per annum. David Rwiyamirira, the General Manager SOPYRWA, said that the plant is currently operating far below (10 percent) its capacity. He added that while USA consumes 70 percent of the world production, Rwanda produces much less of the product making it impossible to meet the demands of the U.S market. Pyrethrum is a naturally occurring botanical insecticide. Not only is the product highly demanded world-wide but it also fetches high prices that could generate immense revenue for the economy. Last year, Pyrethrum sales of the refined extract amounted to USD 915,300 of the 209 metric tonnes of dry flower, with the company registering a margin of USD 152,550. For the next five years (2008-2013), SOPYRWA projects to earn USD 26.9 million from refined extract of pyrethrum. Jabana plant starts power generation with 20MW Government has developed a 20MW heavy fuels oil plant at Jabana, Kigali City. This move is expected to end rent of power from Aggreko generators. The new plant is expected to bring down power prices to half the current cost and improve efficiency. It comes at a time when government has been spending about USD1m (Rwf560m) on fuel per month on Aggreko generators that were installed to generate 15MW of thermal energy. Felix Gakuba, Project Manager of Urgent Electricity Rehabilitation project said that the project is expected to end the thermal energy regarded expensive to use and maintain. The Jabana project is the biggest plant in the country, and the second after the Nyabarongo power plant with 27MW yet to be constructed. The project was financed by the government in collaboration with the World Bank at a cost of €18 million (Rwf13.7billion) and installed by Wärtsilä, a Finland based company. Inflation lowers by 2.4 percent The annual inflation fell from 19.45 percent in February to 17.08 percent in March representing a 2.4 percent drop, according to the monthly consumer price index statement from National Institute of Statistics of Rwanda’s (NISR). François Kanimba, the Governor of the National Bank Rwanda (BNR) explained that the fall in inflation is a result of the stable fuel prices on the local market, which has led to the decline in prices of general commodities—thanks to increased food harvest in the country. The statement by the NISR says, in March the general consumer prices index was established at 184.3, only 1.18 percent higher than the previous month’s. “The underlying inflation (excluding fresh food and energy) dropped to 16.3 percent from 18.7 percent in February. The 17.8 percent headline inflation is the result of high prices of food and non-alcoholic beverages, health, furnishing, household equipment, housing, water, electricity, gas and other fuels.” The food and non-alcoholic beverages increased by 1.29 percent, health 3.19 percent, furnishing, household equipment and routine household maintenance 1.96 percent, while housing, water, Electricity, Gas and other fuels one percent. The statement attributed the increase of 1.29 percent in prices of food and non-alcoholic beverages to the increase of 4.33 percent and 1.51 percent of fish and vegetables indices respectively. EAC Common Market Protocol under judicial deliberation The 7th East African Community (EAC) Sectoral Council on Legal and Judicial Affairs continues to deliberate on the draft Common Market Protocol in Arusha, Tanzania despite failure to reach a consensus on three issues by partner states. The meeting addressing several legal and judicial issues in the draft document is paving way for the heads of state summit scheduled for next week in Arusha. This follows Tanzania’s persistent failure to agree with other states on issues concerning national identification, and the access and use of land for economic activities. All partner states also agreed to bracket the permanent residence Article 19, which lays a foundation on the conditions and length of residence of non-citizens among others. The Common Market that will allow free movement of goods, persons, labour, services and capital by 2010 is the second step in the integration process after the Customs Union. Rwanda-US trade slows Rwanda’s exports to the United States last year fell by 60 percent, a decrease that has largely been attributed to the surging global financial crisis. Trade between Rwanda and the US is facilitated by a framework called the US- Rwanda Trade and Investment Framework Agreement (TIFA) that was signed in 2006. The Private Sector Federation (PSF) says that the export revenue from the U.S reduced from of about Rwf5 billion in 2007 to Rwf2 billion in 2008 (Freight On Board). This was largely attributed to the financial crunch. Coffee exports were severely hit, falling from Rwf1.3 billion in 2007 to Rwf425 million in 2008. The total export volume to USA fell from 1,124,829 Kg in 2007 to only 329,195 Kg. Information from the Ministry of Trade and Industry (MINICOM) show that there was also a decline of exports to the U.S. in 2008 under the Africa, Growth and Opportunity Act (AGOA). Coffee exports reduced from USD 2.4 million in 2007 to USD 0.77 million in 2008 while ores and concentrates exports reduced from USD 4.6 million in 2007 to USD 1.7 million in 2008. Apart from falling commodity prices due to the financial crisis, supply-side constraints related to infrastructure, energy and transport that limit production also account for the decline in exports. Govt to acquire fruit juice processing plant In a bid to see the country’s horticulture products compete with others on the international markets, government is to acquire a fruit juice ‘concentrate’ plant. The plant is expected to be in place by the end of this year at a cost of USD 6.8m through public private partnership, following interests from some private operators. Production of passion fruits and pineapples is estimated at 31.329 metric tonnes and 25.492 respectively. It will process 20 percent of the total production by 2012. Peter Muvara, Chairman of the Rwanda Horticulture Development Authority (RHODA) is optimistic that after the plant is acquired passion fruit juice will compete favourably on international market. Survey by RHODA shows that less than 10 percent of horticulture products from Rwanda are processed. Ends