Can construction industry lead the way in reducing import bill?

Government says it is committed to reducing the big import bill through increasing locally made products, especially construction materials. Through a five-year strategy running from 2015 through 2020, the Ministry of Trade and Industry seeks to work closely with different stakeholders to significantly reduce the bill, which stands at four-to-one, in comparison with exports. A study carried out last year indicated that construction materials constituted 10 per cent of the country’s total imports. It recommended the use of traditional and new domestic products such as clay products, domestic timber, straw board panels for mid-range houses, as well as facilitating further production of sand and stone materials, among others. The Permanent Secretary in the Ministry of Trade and Industry, Emmanuel Hategeka, said the study findings are in line with government’s target to reduce the import bill by 18 per cent over the next five years. For example, the estimated current domestic demand for cement in Rwanda stands at 500,000 tonnes per annum of which 99 per cent is imported from the other EAC countries. Demand is projected to increase to 650,000 tonnes by 2016, the reason why Rwanda is targeting over 770,000 tonnes production capacity by the same year, to satisfy the growing demand, he said. Experts say population growth will activate large demand for housing in the coming decades. A 2013 national census 2012 shows that 102,000 new households are created every year and this may increase to 184,000 households by 2027. Factories’ momentum Hategeka said there is need to increase production by supporting the private sector. Three firms; Cimerwa, Kigali Cement Company (KCC) and Great Lakes Cement Company are the major cement producers in the country. Recently, Busi Legodi, the CEO of Cimerwa, said the plant will increase production capacity to 600, 000 tonnes per year from 100,000 tonnes by the 2nd quarter of 2015. He said the move will help meet domestic and regional demand for cement. With the complete (100 per cent) acquisition of Kigali Cement Company by Kenya’s Athi River Mining (ARM) Limited, plans are underway to increase production with further investments. Lambert Ngenzi, the Kigali Cement Company (KCC) marketing officer, said their target is to produce 400 tonnes per day from the current 150 tonnes. “Machines are being installed to boost capacity. We use both local and imported raw materials but we plan to have a plant that produces raw materials once we have increased our cement production capacity,” he said. KCC currently imports clinker, gypsum and packaging materials from Kenya. However, it is currently seeking solutions domestically by identifying limestone deposits in Rwanda to manufacture clinker, one of the main ingredients in cement production. Great Lakes Cement Company has a production capacity of 70 tonnes per day but it is currently operating at only 15 per cent, according to sources from the Ministry of Trade and Industry. Steel materials Most of steel raw materials are imported according to Denis Mukooli, the production manager of Master Steel Factory based in Gatenga, Kicukiro District. The study indicates that in 2013, 94,000 tonnes of steel and iron products were imported while the domestic production was 30,000 tonnes of products like metal accessories, reinforced steel bars, metal rolled sheets, metal fabrication, metal and nails. The existing domestic companies include Tolirwa, Afrifoam/Simaco, Uprotur, Master Steel, SteelRwa, Simaco, Ufametal, Safintra, and Imana Steel. Most of them intend to expand production. For example, Master Steel has planned a massive investment to significantly expand production capacity as well as start manufacturing new products, according to Mukooli. “Our production capacity now stands at 3,000 metric tonnes per month but by June, we intend to increase our capacity to 8,000 metric tonnes per month,” he said. He, however, conceded that there was still shortage of raw materials because steel requires iron ore that is not easily obtainable locally. However, the study recommends fostering local production of substitutes for steel based construction materials such as clay tiles for roofing or wooden frames instead of steel frames. As part of the Domestic Market Recapturing Strategy, the Ministry of Trade and Industry has embarked on a campaign dubbed; ‘Made in Rwanda’ which encourages production and consumption of locally made products. Statistics from the National Bank of Rwanda show that trade deficit widened by 14.9 per cent from $1,053.83 million in the first eight months of 2013 to $1,211.24 million in the same period of 2014. This was attributed to the increase in imports which increased by 11.1 per cent in value and 1.3 per cent in volume compared to exports which slightly increased by only 0.8 per cent during the same period.

News

Can construction industry lead the way in reducing import bill?