GOVERNMENT OF RWANDA
MINISTRY OF AGRICULTURE AND ANIMAL RESOURCES (MINAGRI)
HORTICULTURE STRATEGY FOR RWANDA
- PREPARING FOR GROWTH -
SEPTEMBER 2006
MINISTRY OF AGRICULTURE AND ANIMAL RESOURCES (MINAGRI)
HORTICULTURE STRATEGY FOR RWANDA
Table of Contents
1.0 Executive Summary .............................................................. 3
2.0 Background.......................................................................... 5
2.1 Global Overview and Rwanda’s Opportunity .................................................................... 5
2. 2 Current Situation Overview .......................................................................................... 6
2.2.1
Overview of Rwanda Horticulture Assets ................................................................. 6
2.2.2
Status of Rwanda Horticulture Industry .................................................................. 7
2.2.3
Constraints ......................................................................................................... 7
2.2.3.1 Inputs ............................................................................................................... 8
2.2.3.2 Production ......................................................................................................... 8
2.2.3.3. Post harvest ..................................................................................................... 9
2.2.3.4. Processing ........................................................................................................ 9
2.2.3.5. Export .............................................................................................................. 9
3.0 Horticulture Industry Objectives ............................................ 10
3.1
3.2
3.3
Vision and Mission................................................................................................. 11
General Objectives ................................................................................................ 11
Specific Objectives ................................................................................................ 12
4.1
4.2
4.3
Strategic Choices .................................................................................................. 13
Strategic Approach ................................................................................................ 16
Strategic Positioning.............................................................................................. 18
5.1
5.2
Action Plan Overview ............................................................................................. 20
Action Plan Initiatives ............................................................................................ 20
6.1
6.2
Socio-Economic Impact ......................................................................................... 24
Implications of the Strategy as regards to land ......................................................... 25
7.2
Private Sector....................................................................................................... 26
Establishment of Rwanda Horticulture Development Authority (RHODA) ...................... 26
Emphasis on Coordination ...................................................................................... 27
4.0 Rwanda Horticulture Strategy ............................................... 12
5.0
6.0
7.0
7.1
7.3
7.4
Rwanda Horticulture’s Action Priorities & Finance packaging. . 20
Rwanda Horticulture’s development impact and implications .. 23
Implementation mechanism.............................................. 25
Institutional Framework ........................................................ 26
8.0
Conclusion ..................................................................... 27
Annexes.................................................................................. 29
2
1.0 Executive Summary
In its Vision 2020 plan, Rwanda set ambitious goals for its development. Between
2000 and 2020, the country would like to grow its per capita GDP from $250 to
$900, which implies that the overall economy needs to expand by over 600%.
Given its potential to contribute to Rwanda’s export diversification, horticulture has
been identified as a priority export sector.
Horticulture is a job-intensive and investment-attracting industry and this will
generate jobs to a large proportion of Rwandans and provide foreign currencies to
the country. Besides economic receipts and jobs, other horticulture related
benefits include improving people’s nutrition situation, creating a better image for
Rwanda, encouraging Private-Public Sector partnerships in horticulture-related
industries, and generating public awareness for the industry.
If Rwanda succeeds in developing a differentiated positioning, it can replicate
recent successes currently experienced by neighbouring countries. In East Africa,
horticulture is Kenya’s largest export industry, generating more than $400 million
in receipts, surpassing even coffee and tea.
In Uganda, horticulture exports in
2004 totaled $45 million. Ethiopia has managed to grow a horticulture industry
that generates more than $30 million in exports in just 4 years.
Rwanda can be the next success story in horticulture. Rwanda is blessed with the
natural climatic conditions necessary to win in horticulture: the right soils,
temperatures, rainfall, and sunshine, as well as an abundant and hard working
labour force.
As one Dutch flower investor from Kenya was recently quoted as
saying: “Rwanda is one of the last unexploited corners of Africa with the right
conditions for horticulture.”
3
As part of the Rwanda National Innovation and Competitiveness (RNIC) Program,
Rwanda Horticulture stakeholders originally set objectives at US$10m in export
receipts in 2010 by focusing on High Value Added Horticulture Products, with an
Emphasis on Quality”. However, the horticulture task force with inputs from an
enlarged forum of stakeholders, horticulture national steering committee and
Secretary Generals’ CIC reviewed the objectives and re set the target at US $ 21m
in export receipts by 2010 which cumulatively adds to US $ 51m. The review was
based on three aspects that were not previously considered including: on going
arrangements with Eastern Growers Association to start re-export of snow peas,
baby carrots and baby pineapples; considering exports of nuts and essential oils
such as geranium, patchouli and macadamia that were previously omitted because
horticulture was restricted to flowers, fruits and vegetables only; and the
restructuring of the ministry of agriculture and animal resources in which
implementation will done by autonomous authorities that is expected to change
events from business as usual.
Rwanda aims to achieve this vision by fostering investments in floriculture and a
carefully selected basket of fruit and vegetables.
The ministry believes that this is
an achievable target. If Ethiopians managed to raise US $ 30 m, why can Rwandan
fail to get US $ 21 m with even a better political climate?
Given its land size and structure, Rwanda must focus on quality and not the
quantity of its Horticulture products.
Three conditions are paramount to the
realization of Rwanda’s vision in Horticulture—create a production platform, attract
and sustain investment as well as to identify and access opportunities.
Coordination of public and private sector initiatives will be critical to attain the
objectives. As the industry is still in its infancy, efforts on the part of all the
stakeholders will be required for it to take off.
The present document gives an overview of the horticulture strategy development
and key factors that were taken into consideration when developing the strategy.
A separate document titled “Horticulture Action Plan, Full Version, May 2006” was
also developed and it gives full details about all the proposed programs, their
4
rationale, programs’ coordinating bodies, as well as required budgets to implement
those recommendations.
2.0 Background
2.1 Global Overview and Rwanda’s Opportunity
Horticulture (defined as fresh and ornamental flowers, fruits, vegetables and
shrubs) is the single largest traded industry in the world, with annual trade
generating around $57 billion1.
Sub-Saharan Africa contributes only 5% to this
trade. In East Africa Region, horticulture is Kenya’s largest export industry
generating more than $ 400 m surpassing even coffee and tea. Ugandan
horticulture exports totalled $ 60 m in 2005. Ethiopia has managed to grow a
horticulture industry that generates $30m annually in exports in just 4years.
This industry provides significant advantages to many developing countries around
the world.
For Rwanda, there are many benefits to be gained from focusing on horticulture:
Poverty alleviation: Horticulture is one of the most labor intensive industries,
with commercial flower farms employing up to 30 people per hectare, and fruit
and vegetables cultivation employing an average of 16 people per hectare. There
is scope within horticulture to alleviate rural poverty both via producer
participation in cash crop industries (production of flowers, fruits and vegetables)
as well as via on-farm employment in packhouses, as hired labor, and in value
added activities (processing and drying, for example).
Future estimates 2 about
the growth of employment in horticulture see almost 6,000 people involved in the
export-oriented industry by 2010.
Export diversification: Rwanda’s current need is to break away from traditional
crops such as coffee and tea and find a more diversified palate of export products.
Within horticulture, there is also scope for future diversification: it is a vast
1
2
2004 Figures
Horticulture Sector Objectives developed by horticulture working group.
5
industry with many different potential products and varieties of flowers, fruits and
vegetables.
Once the basics for the industry are in place, greater diversity of
products will be a natural evolution of the industry.
Export receipts: There exists potential for horticulture to become a sizeable
export contributor for Rwanda. Objectives set in place by the working group see
exports rising to more than $21 million by 20103.
Foreign Direct Investment: Horticulture, especially floriculture, has the potential
to provide Rwanda with a unique opportunity to increase foreign direct investment
(FDI).
In other countries in the region, the development of the horticulture
industry has been driven by foreign direct investment (specifically the Dutch and
British from Europe and other East African countries), bringing technical know-how
and market linkages while transferring knowledge to the local economy.
Horticulture can be very capital intensive, and conservative estimates of 80
hectares under floriculture cultivation could generate $18.5 million in FDI over the
next 5 years, a not inconsiderable sum.
2. 2 Current Situation Overview
Before discussing specific objectives and strategy, it is important to provide a
detailed overview of Rwanda’s horticulture potential, current situation, constraints
and opportunities.
2.2.1
Overview of Rwanda Horticulture Assets
With a blessed climate, fertile soils and an abundant, hardworking labor force, the
potential to develop a vibrant Horticulture4 industry in Rwanda certainly exists.
Rwanda is able to produce many exotic fruits and vegetables that are currently
sought out by the international community – passion fruit, apple bananas (desert
bananas), Japanese plums; Bird’s Eyes Chilies are just a few examples that are
3
4
See Page 10 for more details
In this strategy, Horticulture refers to floriculture, fruits and vegetables
6
interesting as high-value export crops. Many others also have the potential to be
grown in Rwanda’s fertile and diverse terrain. The details are indicated in table 2.
Because of the wide range of potential fruits & vegetables that can be grown in the
country, the future development of the industry will not just rely on fresh exports.
Interesting opportunities also exist with processed fruits & vegetables, such as
dried tropical fruit as a snack food for export to western markets as well as juices
for exporting regionally.
The fact that potential exists is undeniable; but equally undeniable is the fact that
little or nothing has been done as yet to develop the full potential of Rwanda’s
horticulture. Market fruits & vegetables should be contributing much more to the
economy and export receipts, as well as to the livelihood of rural farmers, than
they currently do.
2.2.2
Status of Rwanda Horticulture Industry
Currently the high value horticulture (HVH) industry remains in its infancy in
Rwanda: in 2005 less than $1 million in receipts were generated in exports. There
is currently one flower exporter, and one fruit exporter. Regional exports of fruits
and vegetables (non-HVH) are more significant in terms of volume, but not in
terms of receipts.
Trade within these markets remains poorly documented.
Domestically, statistics indicate that fruit and vegetable production (targeted for
domestic and regional markets) is around 960,000 tons5, and is growing due to
yield increases and a doubling in recent years of land under cultivation.
2.2.3
Constraints
With its natural advantages, the potential benefits and the recent success of
neighbouring countries in this industry, it makes sense to ask why horticulture in
Rwanda has not grown here as it has in other countries.
What is holding the
industry back?
The answer is explained by the concept of the LILI loop (“Limited Investment,
Limited Interest”).
As horticulture is an industry that requires significant
investments up front (from both the private sector and the public sector) the LILI
5
Figures from MINAGRI, including bananas that are consumed as fruits (apple bananas and cavendish)
7
loop serves as a mechanism to explain the continued under-development of the
industry:
Limited investment
from government /
donors, so limited
interest from
investors
A lack of
historical
tradition and low
awareness of
opportunities
lead to….
… Leads to an
undeveloped
industry that
does not tap
into its potential
Limited investment
from investors, so
limited interest from
government /
donors
Rwanda needs to break the cycle of the LILI Loop in order to ensure the take off of
the horticulture industry.
Simultaneous commitment and investment from both
the government and the private sector is needed to achieve this goal.
The
investments needed to break the cycle cover the entire production and export
chain.
An overview of the current constraints at each stage of the industry value chain
can be summarized as follows:
2.2.3.1 Inputs
-
Limited specialized extension services
-
Lack of access to financing
-
Limitation in seed quality control
-
Low use of fertilizers
-
Limited efforts allocated to Research & Development
2.2.3.2 Production
-
Choice of crops (selection, prices, risk)
-
Quality and quantity technical know-how as far as production is concerned
-
Land size and ownership
-
Limited capacity as for diseases control
8
-
Irrigation
-
Limited rural organization as for horticulture producers
2.2.3.3. Post Harvest
-
Crop handling know-how
-
Packaging
-
State of secondary rural roads
-
No established trading network
-
Absence of storage facilities
-
Post harvest technical knowledge
2.2.3.4. Processing
-
Limited raw material supply
-
Competition, ingredient and unfair import tariffs
-
Packaging
-
Market knowledge
-
Use of by-products
-
Product differentiation
-
Lack of skilled labor in processing units
-
Poor quality control during processing
2.2.3.5. Export
-
Absence of cold storage facilities at the airport
-
Discrepancy in certification standards between Rwanda and target markets
-
Cost of transport and reliability (air and land)
-
Inconsistence in supply frequency
-
Absence of adequate insurance products
-
Lack of market linkages
Along with these constraints outlined above, it is worth mentioning that there exist
institutional and coordination constraints over the whole value chain. There is
limited information sharing among all industry actors and stakeholders and this
prevents them from having a common understanding and a vision for the industry.
9
A strong strategy is needed to guide the actions and investments that will address
these constraints. A detailed analysis of the sector constraints is indicated below.
3.0 Horticulture Industry Objectives
In order to unleash Rwanda’s potential in terms of horticulture, well elaborated
objectives must be set to allow the industry to gain a competitive advantage and
achieve the country’s overall economic goals. After outlining its vision and mission,
this section will discuss the industry’s objectives in a nutshell.
10
3.1
Vision and Mission
The overarching vision of Rwanda’s Horticulture industry is to help diversify
Rwanda’s economy by tapping the industry’s potential.
In addition, as an
employment-intensive and high-value crop, Horticulture will help create wealth in
rural areas. To achieve this vision, Rwanda’s horticulture industry has a twofold
mission: (1) to foster the development of a competitive Horticulture industry and
(2) to create employment for rural communities.
3.2 General Objectives
The Rwanda’s horticulture strategy objectives are to position Rwanda as a new
player in the world’s horticulture arena by targeting specific niches where it can
have competitive advantages by earning premium receipts, thereby improving the
well being of the average citizen, especially horticulture producers.
In terms of receipts, Rwanda’s horticulture industry aims to generate cumulative
receipts of $ 51 million by the year 2010. To attain these targets, a number of
initiatives will have to be put in place. A summary of those initiatives will be
discussed later on in this document.
In conjunction with the Horticulture Workgroup (a group comprised of the
horticulture taskforce members, industry members drawn from the private, public,
civic and donor communities), the following targets were set for the future export
receipts of the industry6:
Rwanda Projected Horticulture Export receipts vs Investment 2006- 2010
2006
2007
2008
2009
2010
693600
229040
7500
196000
1755000
2689000
120000
686000
3057600
4525500
270000
1722000
3941280
5793000
480000
3220000
6540750
8340000
750000
4872000
Total Export Receipts
1126140
5250000
9575100
13434280
Total Investment
577600
2941020
2205765
1470510
Goverment
0
1545760
1159320
772880
Donor
577600
758760
569070
379380
Private
0
636500
477375
318250
*Other: Sauces, baby food, canned and frozen vegetables, etc.
20502750
Flowers and ornamentals
Fruits and Nuts
Vegetables and others*
Essential oils
735255
386440
189690
159125
Sector Objectives were set in collaboration with the working group, using benchmarking exercises, modeling and internal
constraint management
6
11
3.3 Specific Objectives
As in the case of general objectives, specific objectives are translated in the
general appropriate interventions. The specific objectives can be broken into
economic and social objectives:
Economic objectives
Among the economic objectives are the following

To increase foreign exchange earnings and government revenues through
exports of High Value Added Horticulture Products.

To generate employment in rural areas, promote technical know-how for
producers of horticulture crops.

To promote rural development through market driven production

To stimulate the development of the infrastructure, support institutions, and
linkages among the institutions related to Horticulture.
Social objectives
Among the social objectives are the following:

To promote producer organization through coops and associations

To create awareness within the public of the importance and potential of
horticulture

To provide and maintain a legal and regulatory framework according to
international norms and standards
4.0 Rwanda Horticulture Strategy
In order to achieve Rwanda’s ambitious goals for horticulture development, it is
essential to elaborate a new strategy for Rwandan horticulture. The strategy
involves undertaking core investments that are necessary to kick start the
industry. The strategy provides a comprehensive and clear vision for the future
development of the industry, and serves as a guide for the investments necessary
to achieve the goals. The strategy is based on cluster strategies that were
developed following the recommendations of the Horticulture Working Group and
they include the following:
12
4.1
Strategic Choices
The strategy is built around the following seven elements:
Different Approaches for Floriculture and Fruits & Vegetables
The definition of horticulture includes flowers as well as fruits and vegetables.
Floriculture for export represents significantly higher investments per hectare than
with other areas of horticulture, as well as requiring very high technical expertise.
The most likely scenario for the take off of this segment in Rwanda will be via the
attraction of established floriculture producers and exporters from Europe or from
the region. Rwanda will also need to support existing players in expansion plans
(e.g. Rwanda Flora).
This is the way the industry has developed in other
countries. Given this situation, floriculture production and marketing trends were
not studied in detail on the understanding that investors in this segment would
bring their own production knowledge and marketing linkages. Market research in
the floriculture sub-segment focused around investor attraction efforts: what does
Rwanda need to do in order to promote itself as an attractive floriculture
destination in the region?
The results of this analysis are reflected in the Action
Plan. By contrast, the Fruits & Vegetables work strongly focused on identifying the
best products and markets for the emergence of a domestically-dominated
industry.
Focus on a “basket” of products and segments
Horticulture is a vast industry with a multitude of potential products (different
flowers, fruits & vegetables) and different sub-segments (level of value addition
and processing). In order to succeed in a situation of limited resources, focus is
essential. The strategy therefore concentrates on a group of core sub-segments,
and within these sub-segments, concentrates around a limited number of different
products (varieties of fruits and vegetables). While it is anticipated that over time
with the evolution of the industry, the number of products and segments will grow,
for immediate entry the strategy focuses around products with proven potential for
Rwanda.
13
The sub-segments (encompassing the target markets) were selected after an
analysis of their potential for Rwanda, including: potential for investor attraction;
transaction costs; market attractiveness, and impact and potential for Rwanda.
The following four segments were selected: Fresh Organic Fruit to Europe;
Dried Organic Tropical Fruit to Europe and the United States; Dried Organic
Birds Eye Chilies to Europe and the United States; and Premium Juice for the
regional market7. Other horticultural crops such as geranium, macadamia nuts,
patchouli, etc. are being tested in Rwanda.
Although the strategy does not
preclude positive developments in these other crops, it nonetheless remains
focused around a core basket of crops with proven potential that will lead the
take-off of horticulture in Rwanda. Development of the organic segment will
require mapping of certain areas as strictly organic production zones and take
precaution to avoid chemicals from other areas affecting them.
Focus on High Value Added Products, with an Emphasis on Quality
Given the distance and cost of transport from Rwanda, as well as limited land
space, there is a need to identify those products and segments with the highest
return potential.
The focus of the strategy therefore was on HVH – High Value
Horticulture – products. HVH represents the most demanding market, as well as
the most lucrative one.
positioning.
The segments outlined above all conform to that
It is important to note here the definition of “value added” in
horticulture does not necessarily imply the transformation of a product, but can
involve processes geared at improving the intrinsic qualities
of the product.
Intl
markets
technology,
Guaranteed freshness – production
packaging
at
source,
market
knowledge
(distribution and customer); Customer knowledge (Size,
Regional
Markets
shape, and color engineered for consumer preferences);
Skilled
Domestic
markets
7
labor
&
technicians;
Organic
production
and
Domestic
Processing
See Appendix I for information on the selection criteria and an overview of the results
14
certification; Export certifications, and branding are all examples and elements of
value addition in horticulture. Premium roses and organic fruit are two examples
of value added in horticulture.
Given the limits to the potential scale of Rwandan horticulture, there is a need to
focus on quality as a winning strategy, rather than on volume or price.
Niche
markets that value quality were selected, and much research was conducted
around the meaning of “quality” for Rwandan horticulture: intrinsic product quality
such as taste, as well as appearance and certification issues.
The Action Plan
reflects the investments necessary to obtain this level of quality as required by
international markets.
HVH products are destined for the demanding international markets of Europe and
the United States. HVH products nonetheless sit atop a pyramid of secondary and
tertiary quality markets, which also need to be built concurrently for success. The
ability to win in the international premium markets naturally implies an ability to
win in the secondary and tertiary markets.
However arrangements will be made
to market the remaining proportion for domestic and regional market that may
involve transforming the products.
15
4.2
Strategic Approach
Importance of Investor Attraction
What should Rwanda do to attract investment in Horticulture?
Build a cold store at the airport
Being a new industry
4.3
with few players, the
Government investment in transport for
export
3.9
Government investment in production
basics and extension services
strategy
building
3.7
focused
the
on
enabling
environment necessary
Ensure large farms available to potential
investors
3.5
to
Establish quality standards for export
additional
private
3
Build a cold chain throughout the country
attract
sector
entrepreneurs into the
2.6
industry. Focus was on
Other*
both
1
0
1
2
3
4
* Other: Investment Financing; Fiscal Incentives
Source: OTF Regional Investors in Horticulture, November 2005, N=24
5
international
(especially
for
floriculture)
and
domestic (especially for
fruits & vegetables). The development of a conducive investment environment is
critical to the success of the proposed strategy.
The strategy recommends
creating an attractive investment promotion package, comprising fiscal, land,
financing and transport benefits. Regional models were studied for best practices
in this area, and it is recommended to follow the Ethiopian model: Ethiopia has
managed to attract more than 25 new international investors in horticulture over
the last 4 years by putting together an attractive investment package. This was
done by providing a 100% exemption on import custom duties for capital goods,
raw materials necessary for production and a five year tax holiday for income tax.
They also subsidized cargo rate where by it was only $1 / kg and developed
favorable financing schemes for the industry: loans for up to 70% of investment
project, interest rates as low as 7.5% per annum and a grace period on loan
repayment of up to 3 years. Already Rwanda offers considerable incentives as
indicated in investment code and customs law attached as annex IV and V.
16
Importance of the Production Platform
Given the newness of this industry for Rwanda, there is a pronounced lack of
horticulture production expertise and / or a culture of growing horticulture
products, both among entrepreneurs and among the rural population at large. A
strengthened
“horticulture
production
platform”,
focusing
around
effective
extension services, technical expertise, effective training programs and strong
rural organization, is a core element of the strategy.
The emphasis on the
production platform is necessary both to build the “bottom of the pyramid” as well
as to enable private sector investors to effectively receive support for their export
efforts.
Gradual Entry Strategy
Given the small anticipated volumes and learning curve necessary during the initial
years of the industry development, the strategy recommends Rwanda working
with the “first points of entry” along the distribution and marketing chains.
Linkages with regional actors for re-exports of certain products are recommended,
and importers and distributors are encouraged as partners in the entry process,
rather than attempting to go direct to retail. This gradual, “add on” approach can
also be used for product diversification: product lines will be expanded over time
based on known demand from established clients.
Clear Understanding of Customer and Investor Needs
For the chosen products and segments, a thorough understanding of the best
products, best markets and best distribution channels is essential.
Market
research was conducted for all four chosen sub-segments to understand these
issues, as well as identify the important service and product attributes necessary
to serve them.
Additional market research was also carried out to understand
investor needs – what does Rwanda need to offer interested investors to attract
them in horticulture?
Given the compressed land situation in Rwanda, and the small size of the actual
industry, minimum quantities and frequency of delivery were investigated. The
17
results were encouraging: for fresh organic exports to Europe, for example, 55%
of importers were content with a delivery of 1 ton per shipment, and for 53%
weekly is an acceptable delivery frequency.
For investment purposes, attention
was paid to the minimum amount of land necessary, as well as to airfreight
options. Again, the results were not discouraging, given the tightness of the land
situation in Rwanda: 50% considered 5 – 15 hectares an acceptable investment
minimum8. As discussed above, such land should be made available through clear
investment packages.
4.3
Strategic Positioning
Four surveys aimed at customers (primarily importers) of the target segments
(Fresh Exotics, Dried Chilies, Dried Fruit and Juice for the regional market)
were conducted by OTF Group between October 2005 and January 2006.
The
surveys collected a wealth of information regarding the importer profile, business
activities, interest in Rwanda, understanding of market trends in terms of products
and niches, organic trends, practical information for the exporter, etc. In addition,
two surveys were carried out to understand investors’ interest in Rwanda and the
necessary actions that Rwanda needs to put in place in order to effectively
promote investment in Horticulture.
The first survey was aimed at current
horticulture investors in the region (Kenya, Uganda, Ethiopia, and Tanzania)
(mostly floriculture). A smaller second survey was carried out aimed at domestic
investors in Horticulture and entrepreneurs who are looking to enter this industry.
Table 2: Results of the market research and the understanding of customers and
investors:
Segment
Fresh Fruit
Opportunity & Positioning for Rwanda
Exports of Organic passion fruit, baby bananas,
Challenges &
Considerations
Export
baby pineapples & others (tamarillos, gooseberries, compliance &
For more information on these and additional results, please see the following OTF Surveys: Exotic Fruit to Europe,
November 2005; Dried African Birds Eye Chilies, November 2005, Dried Tropical Fruit, November 2005; Regional
Horticulture Investors, November 2005; Juice for the Regional Market, February 2006.
8
18
etc) to exotic fruit importers in Europe (UK &
traceability
Germany) and re-exporters in the region, with a
Organic
focus on reliability, solid certification procedures
certification
and professional relationships with buyers.
Export quality
(packaging and
cold chain)
Exports of Organic & Fairtrade dried baby banana, Fairtrade
pineapple and papaya to Organic and Fairtrade
Dried Fruit
certification
dried fruit importers in Europe & North America,
Testing
built around a quality product (taste, sweetness
Production &
and moisture levels) and professional relationships Post Harvest
with buyers.
expertise
Organic
Exports of Organic Dried ABC to Organic Herb &
Dried
Chilies
certification
Spice Importers in Europe & North America, with a Testing
focus on quality, sound certification procedures and Production &
professional relationships with buyers.
Post Harvest
expertise
Export labeling,
Exports of passion fruit, pineapple and strawberry packaging and
Juice
syrups to supermarkets in Uganda and Kenya, with certification
a focus on quality of product and professional
relationships with buyers.
Supplier
communication
& investment
Exports of roses and summer flowers to demanding
Floriculture
export markets in Europe, Middle East and USA.
Floriculture driven by FDI, bringing in investors
with established product and market knowledge.
Investor
environment
Land availability
Transport
competitiveness
19
5.0 Rwanda Horticulture’s Action Priorities and Finance
packaging.
To achieve the ambitious Industry Objectives and experience the growth we
believe can happen over the next 5 years, a great deal of effort and investments
are needed. The Action and Investment Plan focuses on the core investments that
will generate the take off of the industry.
5.1
Action Plan Overview
The Action Plan is grouped around the following three imperatives for the industry:

Creating a Production Platform that aims at efforts to strengthen
horticulture production basics and rural organization.

Attracting and Sustaining Investment that proposes plans to attract new
investment and to create an enabling environment to support entrepreneurs
and investors once they have entered the industry.

Accessing & Identifying Export Markets geared to the improvement of
export infrastructure (export standards and transportation) as well as
resources to target the best niche markets.
5.2
Action Plan Initiatives
The action plan revolves at around three major areas that stakeholders
recommended as a pre-requisite to kick start the industry. These investment areas
include: joint public-private partnership in basic infrastructure development;
creating investment incentives and support farmers in product development
(production/protection /post harvest handling) including extension services,
training technicians, skills in transformation, support to market, input and finance
access initiatives,
etc. The investment in these priority areas is expected to
remove constraints to the industry hence attracting more investors. The details of
the action plan are indicated in annex III.
5.3 Finance Packaging
The
above
action
recommendations has
plan
which
was
developed
following
stakeholders
been costed and translated into $7,930,150 worth of
20
investment efforts over the next five years (Government $3,864,400 Donor
$2,474,500 and Private Sector $ 1,591,000). This includes investment attraction
($ 500,000), airfreight intervention ($2.3 million) and product chain development
($ 5,130,150). Investment attraction budget will support three critical activities:
incentive
packages
($300,000),
promotion
campaigns
($140,000)
and
establishment of a horticulture information database ($50,000). $2.3 million
support in airfreight will help fresh exporters access export market at competitive
freight costs. This amount will help bridge the gap between attractive freight costs
of $1.50/ kg and Rwanda’s higher costs of $2.20/kg.
As this strategy was
developed in consultation with private and donor community, figures indicated
under donors reflect either their willingness to support the initiatives or already
committed funds while the one under private include an amount expected to be
stimulated by public sector investment in horticulture.
The following chart provides a summary of key initiatives of the Action Plan,
highlighting key investments: A detailed action plan is indicated in annex III.
Target Area
Program
Estimated
(Recommendation
Budget
Breakdown Responsible
Govt:
Strengthen extension
services in horticulture,
centered around training
$350,000
$1,275,000
& demonstration farms
Donor:
$250,000
RHODA
Private:
$675,000
Create a
Production
Increase horticulture
Platform
technical expertise
$720,000
Govt:
$720,000
RHODA
Govt:
Increase ISAR’s capacity
in Horticulture
$310,000
$155,000
Donor:
ISAR
$155,000
Support organic
$281,250
Govt: NCRE & OCP
21
production
$150,000
Private:
$131,250
Donors:
Provide centralized post
harvest infrastructure in
$250,000
selected districts
$100,000
Private:
RHODA
$150,000
Govt:
Improve packaging
Attract and
Sustain
Investment
options for horticulture
$635,000
$35,000
Private:
RIEPA
$600,000
Establish a Short Term
Technical Assistance
Fund (STTAF) for
$500,000
Govt:
$500,000
RHODA
horticulture pioneers
Govt: $
Intervene in airfreight
costs and volumes
$2,258,800
1,129,400
Donor:
MINICOM
$1,129,400
Build the cold store at
Identify and
Access
Opportunities
the airport; ensure
$577,600
proper management
Configure Kigali Airport
as an effective
$250,000
horticulture hub
Develop marketing
activities and establish
linkages in region and
internationally
Donor:
RHODA
$577,600 (Coordinator)
Govt:
KCAA /
$250,000
RHODA
Govt:
$330,000
$295,000
RHODA /
Private:
RIEPA
$35,000
22
Increase efficiency of
phytosanitary processes
Support financing for
organic certification
$280,000
$262,500
Donor:
RADA
$280,000
Donor:
OCP (NCRE)
$262,500
RBS
Total Estimated Action Plan Budget: $7,930,150 over 5 years
Government: $3,864,400
Donors: $2,474,500
Private Sector: $1,591,000
Estimated cumulative export receipts to 2010: $51m
Estimated cumulative private sector investment in export industries:
$22,500,000
5.3.1 Horticulture Credit Line, Insurance and Equity investments.
As the costing of Action Plan covers supporting industry investments necessary for
the take off of the industry, but not the actual investment of commercial export
enterprises involved, the Interministerial Cabinet Council that included members of
private sector and bank representatives recommended that special horticulture
line be opened as incentives to investors in the industry. It was recommended that
means should be sought to offer insurance cover and equity investment in
horticulture.
6.0 Rwanda Horticulture’s development impact and
implications
Although the implementation of the various action initiatives outlined above will
require significant coordinated investments from both the Government, the Private
Sector and development partners, it is important to note that Rwanda could
generate more than $US 51 M in total receipts for
investments of $7M of over
23
2006-2010. In addition, the socio-economic impact in terms of employment and
investments will be very important.
6.1
Socio-Economic Impact
Employment: Estimates indicate total “employment” (including producers and onfarm employment) reaching about 5,800 in 5 years, with 4,700 from direct onfarm employment and / or direct cultivation, and another 1100 producer units
being affected9.
For both land and employment, the number is inclusive of all
levels of quality necessary to achieve export goals – for example the land required
to produce 100 tons was calculated, even though of that 100 tons only 30 tons
may be of export quality. However, horticulture for export is only a small part of
the overall industry and as the domestic and regional markets grow concurrently,
the total (all horticulture) land and employment numbers will be higher. Finally,
production for juice inputs are not captured in the overall land and employment
statistics as the industry sees the vast majority of this production continuing to be
for the domestic markets. Their inclusion would also push the numbers higher.
Investors: The floriculture results were built around the expansion of the current
exporter, Rwanda Flora, and the attraction of an additional 5 investors with an
average of 10 ha each10. To grow to 81 hectares from current 7, this implies a
new commercial investment in floriculture of $18.5 million. For private investment
in fruit & vegetable exports (organic and dried) an additional $4 million is needed,
for a combined $22.5 million in new investment in horticulture over the next 5
years.
Rwanda will only succeed in attracting such investments if appropriate
incentives are put in place. Such incentives will be discussed in the next section.
Adequately estimating the total number of producers involved is difficult as it is dependent on the average size of the land
being farmed – a model indicating an average land holding per smallholder involved of 0.1 ha would imply a very different
“employment / involvement” number than one using an average of 0.01 ha. For the purposes of the model, 0.1 ha was
used on the assumption that 1/3 of the land of an average smallholder (0.3 ha) involved in horticulture would be devoted to
these crops.
10
Market research indicates that land between 5 – 15 ha is considered a viable investment size by 40% of respondents. For
more information, see OTF Regional Horticulture Investors Survey, November 2005.
9
24
Nutritional aspect: Although this horticulture export strategy is basically export
oriented, it is worth mentioning that only 5 to 30% of the total production of fruits
and vegetables might have the highest value and highest quality to export to
European markets. The rest of the production being of medium and lowest value,
it can only be marketed for domestic sale or to processors. As the overall
production increases this will have a positive effect of raising local consumption,
and create new processing opportunities.
6.2
Implications of the Strategy as regards to land
Given the natural constraints of the Rwanda land situation, special attention was
paid to the amount of land necessary to achieve the export objectives outlined
above.
For floriculture, mostly driven by large scale private investment11,
approximately 81 hectares are needed.
For each additional sub-segment,
excluding the juice industry, between 50 – 70% of land was assumed to be under
direct commercial production (i.e. production closely linked with an entrepreneur
producer / exporter) and the rest was assumed to come from out grower
participation. 136 additional commercial hectares are needed for fruits and chilies,
and 650 hectares total from out grower (smallholder) schemes particularly for
passion fruits and baby bananas that are already being grown in Rwanda12. It is
important to note that these minimum land requirements (i.e., 867 ha total) are
very small compared to Rwanda’s arable land, and the existing studies on
Rwanda’s soils should be leveraged to avail the most suitable land for different
crops.
7.0 Implementation mechanism
The strategy will implemented by the RHODA, other institutions involved in
agriculture and rural development, private sector, and decentralized structures
such as districts, business development centres, Universities and ISAR. MINALOC
and RHODA will be instrumental in mobilization the farmers to increase production
of selected horticulture crops particularly because farmers need be guided on the
best horticulture crops among many that could be grown.
Assumption explained on page 10: “Different Approaches for Floriculture and Fruits & Vegetables”
The land needed for fruits and vegetables is larger than for floriculture, despite the larger size of the floriculture industry.
This is due to more intensive cultivation and higher returns per hectare for flowers.
11
12
25
7.1Institutional Framework
Nowhere
is
Horticulture.
public-private-partner
collaboration
more
important
than
in
The implementation of Horticulture programs requires close
collaboration between public and private sectors, financial institutions and/or
sponsors, and non-governmental organizations. The role of private sector in
horticulture is paramount.
Horticulture is a private sector driven industry and
everywhere the industry has succeeded private sector players have been at the
helm of the transformation.
On the side of the government, there is a need to create Horticulture Development
Agency that would be autonomous and exclusively be in charge of the industry’s
development. The mission of this Agency must be to support and encourage the
private sector in playing its role.
To have a vibrant horticulture industry, a
coordination platform will also have to be defined, where each actor will know
what he is required to do and be informed about what is happening in the industry
in general.
7.2
Private Sector
Rwanda Horticulture export private sector is still embryonic. Currently there exists
only one flower exporter and fresh fruits exporter who export on a regular basis.
There exist several initiatives in most cases supported by development NGOs but
fail to sustain. Lacks of technical know how, limited market knowledge and
linkages as well as inadequate financial offerings are the main causes that prevent
those initiatives to survive. In order to overcome these constraints, the
horticulture private sector will have to act together. Formation of associations as
forums to address segments’ specific problem will have to be supported.
7.3
Establishment of Rwanda Horticulture Development Authority
(RHODA)
Rwanda must establish the Rwanda Horticulture Development Authority whose role
will be to create the enabling environment for horticulture investors and
26
cooperatives to lead the development of the industry. This Agency should be
execution and private sector oriented, with a small qualified staff (not more than
2O). The Authority should be empowered to deliver results in Horticulture
production, protection, and marketing as well as coordinating the activities of all
government bodies involved in the success of this industry (RADA, MINAGRI,
ISAR, RBS, RIEPA, MINITERE) with a leading strong ownership of the strategy.
7.4
Emphasis on Coordination
As a new industry, alongside the recent changes within the government
(MINAGRI) and country in general (decentralization), coordination is essential.
The proposed Rwanda Horticulture Development Authority will have a key role to
play as central coordinator for the industry, liaising with other government bodies
involved in horticulture (RADA, MINAGRI, ISAR, RBS, and RIEPA) in order to
ensure a coordinated and effective approach.
8 Conclusion
It is crucial that the Government follows the principle of what Strategy means:
Informed choice and timely action. The informed choice has been spelled out
in the new horticulture strategy for Rwanda. It is now to act in a timely manner
on all issues that require immediate attention but also to lay out the fundaments
for a future highly competitive Rwanda horticulture industry. Apart from support
issues, the action plan does not encourage government investment in productive
commercial enterprises. The horticulture industry should be private sector driven
from the beginning.
The future Rwanda Horticulture Development Authority [RHODA] is the ideal chief
coordinator of the various other parties involved in Horticulture (RADA, ISAR, RBS,
MINETERE, RPSF, RIEPA, etc.).
RHODA will be acting as the working group
coordinator and will have to make sure that the working group stays focused in
implementing programs that are required for the industry to take off. Roles and
actions required for each stakeholder are clearly defined in the Horticulture Action
27
Plan, and RHODA will play a critical role by making sure that all the implementers
do not deviate from the right path.
28
Annexes
Annex I: Segment Selection Criteria Overview and Results
Annex II: Market Research Surveys Overview
Annex III: Overview of Programs – Horticulture Action Plan
Annex IV: Incentives offered by the customs law
Annex V: List of Horticulture Working Group Members
29
Annex I: Segment Selection Criteria Overview and Results
Juice /
Juice –
Fresh
Fresh
Juice,
Jam
Pulp &
exotics organics regional
Hi end
Concentr.
retail
Dried
Fruit
Dried
Veg
(Chilies)
Investor
Attraction
Level of investment
required







Prices and margins







Existing industry &
buyer relationships







Packaging







Velocity &
perishability







Transport







Growth rates and
size of market







Niche potential







Barriers to entry –
certification
standards







Supply necessary for
MINOPU







Potential for $2
million business







Level of
infrastructure
required







Total (from
number rankings)
57
64
60
55
54
66
74
Transaction Costs
Market
Attractiveness
Impact &
Feasibility
 = Advantage
 = Some advantage
 = No advantage
30
Annex II: Market Research Surveys – Findings overview
EXOTIC FRUIT EXPORTS – KEY TAKEAWAYS
Rwanda should focus on certain fruits: Plantation avocadoes, passion fruit, baby bananas and organic
pineapples & baby pineapples are the immediate fruits with the most potential.
Most importers carry most exotics: The best strategy is to build a relationship with an importer based on a
fruit where experience has been gained / is a known quantity, and then expand production and varieties in
direct response to the client demand.
Importers are interested, but only with certain pre-conditions: Exporters should not approach importers
until they have assured quality and quantity, and the right certifications
Supermarkets are the most important ultimate end market: Supermarkets are very demanding
customers, and the best first step is to work with importers (distributors and wholesalers) who can work with
the exporters to ensure supermarket compliance. With experience and the right volumes / packaging options,
Rwanda may eventually sell directly to supermarkets, but an intermediate first step is nonetheless advised.
Traceability is the number one issue: There is no getting around the importance of EUREPGAP.
Organic is a strong market but still small: Though niche of niche, the market for organic exotics is
nonetheless growing and Rwanda’s projected production still remains very small in the global context.
31
Annex II: Market Research Surveys – Findings overview
DRIED FRUITS – KEY TAKEAWAYS
Dried Tropical Fruit is a small and difficult market to enter: Quantities imported are small, but demand is
there
Dried baby banana and dried pineapple, (especially the smaller, sweeter varieties) are the two most
promising products for Rwanda. Dried Papaya and Dried Guava could also be interesting add-ons
Once in with the right quality, dried fruit can be a lucrative business: It is small and closed, difficult to
enter, but that can be seen as an advantage: buyer loyalty will be assured if quality and consistency can be
maintained
Fairtrade and Organic are very promising segments: as a “consumer” product, the right message and
packaging about equality and growth are very interesting; based on the sum of the feedback and weighing the
would recommend initial strategies in Fairtrade most promising
Individual companies are more important than geographic location: Because of the small sample size of
the survey, reflecting the small size of the industry, specific markets (apart from the two general large markets
of “North America” and “Europe” should not be targeted; rather, specific companies that are determined as most
interesting should be contacted directly
Testing and storage are two main concerns: These are absolutely critical to gaining importers trust, market
share and need to be addressed critically for the development of the industry. Testing and appropriate storage
are two issues
Professional outreach is absolutely important: A well developed introductory email, accompanied by the
possibility of samples, should generate significant interest
Linkages with other dried products are important, especially at the beginning: The current group of
dried chili entrepreneurs and associations should be sensitized to these opportunities
32
Annex II: Market Research Surveys – Findings overview
DRIED CHILIES – KEY TAKEAWAYS
Organic Bird Eye Chili is a small but attractive market: Quantities imported are small, but demand is
growing and 80% of current importers want to increase their quantities
This is a specialized, niche industry: It is small and closed, difficult to enter, but this also can be seen as an
advantage: buyer loyalty will be assured if quality and consistency can be maintained
Individual companies are more important than geographic location: Because of the small sample size of
the survey, reflecting the small size of the industry, specific markets (apart from the two general large markets
of “North America” and “Europe”) should not be targeted; rather, specific companies that carry organic BEC
and are looking to increase should be the primary target
Cleanliness and testing are huge concerns: Testing and appropriate storage are two issues.
These are absolutely critical to gaining importers trust and market share. They need to be addressed critically
for the development of the industry.
Professional outreach is absolutely important: A well developed introductory email, accompanied by the
possibility of samples should generate significant interest
Maximize off-shoot and dechet business: Consider for the long term, off markets for secondary quality
production, non-organic production, and extraction options: would Sopyrwa be interested in the extraction
market? Also, in the medium to long term, additional varieties should be considered at the demand of import
partners.
33
Annex II: Market Research Surveys – Findings overview
REGIONAL HORTICULTURE INVESTORS – KEY RECOMMENDATION TO THE GOVERNEMENT OF
RWANDA
Make investments in specific infrastructure:
“Start building greenhouses make them work and sell or rent them out. Develop with flower industry turn-key
projects. Aim for product which really do well in Rwanda”
“Organize freight logistics; ensure air space”
Ensure land availability:
“Organize freight, and make land available. It is one of the last unexploited corners of Africa as far as having
altitude (and therefore a temperate climate) that is not developed”
“First have a reliable and sensitized source of out growers, then a wider European market and daily out flights”
“Give land to horticulture investors”
“Assist in acquiring land”
Create attractive investment incentive packages:
“Create investment facilities / subsidies and loan programs like Ethiopia has done together with the World Bank”
“Get European aid like Ethiopia has from Dutch government to be able to start big enough”
“Hard to say, Ethiopia is getting support form EU, but I feel the government there is not too serious. The
Rwanda government has to get support from USA or European Union Countries, as these governments have
more chance of encouraging their "investors" to invest in your country”
“5-year import and profit tax reduction”
“Provide incentives to investors and guarantee security for investors' properties”
34
Annex III: Overview of Programs – Horticulture Action Plan
CREATE A PRODUCTION PLATFORM
Target Area
Programs
Estimated Costs
Channel efforts on priority crops
Encourage
and Support
Horticulture
Production
-*
Increase horticulture technical expertise
$720,000
Strengthen extension services in horticulture, centered around
training & demonstration farms
$1,275,000
RHODA
RADA
RHODA
Ensure horticulture seed quality control
$130,000
RADA / NSS
Support organic production
$281,250
NCRE / OCP
$310,000
ISAR
Increase R&D Increase ISAR’s capacity in Horticulture
in
Develop a Comprehensive Horticulture Information Database
Horticulture
$50,000
Organize horticulture cooperatives & producers associations
-
Support Rural
Organization
for
Inform producers groups about benefits of land consolidation
Horticulture
Crops
Register groups engaged in horticulture production for investor
linkages
Establish a Rwanda Horticulture Development Authority (RHODA)
Coordinate
activities
Responsible
NIS & RHODA
Coop Authority;
RHODA & BDS
Centers
$30,000
BDS Centers /
RHODA
$50,000
RHODA
TBD
RHODA Taskforce
Strengthen partnerships and collaboration between relevant
institutions
-
RHODA
Develop system for designating & implementing new priority crops
-
MINAGRI (NCRE)
Improve secondary & feeder road network
Improve
Rural
Ensure irrigation for Horticulture crops
Infrastructure Provide centralized post harvest infrastructure in selected districts
-
MININFRA
$50,000
MINAGRI
Total cost

$250,000
$
RHODA
3,146,250
No costing indicates an administration, coordination or advocacy role; in addition, some programs (e.g. improving the
secondary road network) are not costed directly for Horticulture
35
APPENDIX III:
Overview of Programs – Horticulture Action Plan
ATTRACT AND SUSTAIN INVESTMENT
Target Area
Develop
Targeted
Investment
Promotion
Strategy &
Activities
Ensure Land
Access &
Availability
Programs
Cost
Develop incentive packages for horticulture investors
-
RIEPA & RHODA
Create Horticulture Promotion Campaign aimed at FDI & domestic market
$140,000
RIEPA & RHODA
Conduct additional feasibility studies and business plans
$240,000
RIEPA
$ 100,000
RIEPA
Identify and prioritize areas for horticulture production: RIEPA Land Bank
Protect Organic Production Zones
-
Offer free land for qualified investors
$198,750
Develop an attractive financing package for horticulture investors
Establish horticulture specific financing tools – Production and Special
Ensure Access to Equipment Financing
Financing
Train banks and donors on horticulture industry specifics and opportunities
Publicize sources of funding & assistance currently available
Exonerate sugar, as a processing input, from import duties
Ensure Sound
Processing
Environment
Responsible
RHODA &
MINITERE
RIEPA
-
BRD
-
RHODA
$50,000
RHODA
$25,000
RHODA & BDS
-
MINICOM
Improve packaging options for horticulture
$635,000
RIEPA
Support Quality Control efforts for juice & jam processors
$125,000
RBS
Improve the electricity situation
-
Establish a Short Term Technical Assistance Fund (STTAF) for horticulture
Provide Technical pioneers
Assistance to
Develop relationships with technical assistance organizations and projects
Entrepreneurs
Include Horticulture priority crops in SPREAD project
$500,000
RHODA
-
RHODA
-
RHODA
Total cost $2,013,750
36
MINICOM
APPENDIX III:
Overview of Programs – Horticulture Action Plan
ACCESS AND IDENTIFY OPPORTUNTIES
Target Area
Programs
Cost
Position RHODA as the central horticulture marketing
coordinator
Improve
Develop a Rwanda Horticulture Brand
Market Linkages
Develop marketing activities and establish linkages in region and
in Horticulture
internationally (2)
Support High
Value Added
Horticulture
Products
-
RHODA
$70,000
RHODA
$330,000
RHODA &
RIEPA
Establish Market Access Centers (MACs)
$70,000
RIEPA
Support High Value Added Horticulture Products
$74,466
RHODA
Set up an Organic Center Point (OCP), including hiring an
organic expert
$75,000
NCRE
Sensitize actors and stakeholders about organic opportunities
$140,000 OCP (NCRE)
Support financing for organic certification
$262,500
Support emergence of organic associations & conduct diplomacy
in region
Build the cold store at the airport; ensure proper management
Ensure
Intervene in airfreight costs13
Transport
Competitiveness Configure Kigali Airport as an effective horticulture hub
Increase overland transport competitiveness
Increase RBS’ resources for horticulture export compliance
Develop Export
Increase efficiency of phytosanitary processes
Standards for
fresh, dried and Support for training for export standards and compliance
processed
Develop and disseminate a coordination plan for export
products
standards
13
Responsible
See following page for more detail on this important recommendation
37
OCP (NCRE)
& RBS
- OCP (NCRE)
$577,600
$2,258,802
$250,000
RHODA
(coordinator)
MINICOM
KCAA &
RHODA
-
RPSF
$177,500
RBS
$280,000
RADA
$225,000
RHODA
-
RHODA
Total Cost
$4,790,869
APPENDIX III:
Overview of Programs – Horticulture Action Plan
ACCESS AND IDENTIFY OPPORTUNTIES, cont.
Details of Recommendation:
Recommendation: 3.3.2 A – Intervene in Airfreight Costs – PRICE INTERVENTION
Rationale
The current cost of airfreight is high (approx. $2.20 to Europe), and an intervention (subsidy)
needs to be put in place to attract new investors and new cargo space. Once volume increases,
prices will decrease naturally, and the need for and the cost of the subsidy will also decrease. A
target price of $1.50 (initial subsidy of $0.70 / kg) would put Rwanda air freight costs between
Kenya’s and Ethiopia’s.
Program Outline
Implement a system of direct subsidies to eligible exporters on a per kilo basis – e.g. for every
proven kilo of horticulture produce exported, a rebate (reimbursement) is offered directly to the
exporter**.
Coordinating Body
MINICOM
Other actors
RHODA, RPSF, MAGERWA, air & cargo private sector, exporters, ORTPN
o
Implementation
Mechanism
o
o
Establish eligibility requirements for exporters to participate in the scheme – MINICOM,
RHODA & RPSF
Implement mechanism of direct rebates to exporters for horticulture perishables** – RHODA
& MAGERWA
Monitor program on a yearly basis – All stakeholders
Timeline
Immediate; Aim for program to be validated and operational by Q3 2006
Estimated Cost
$2,258,800 (4 ½ year total; based on Sector Objectives of tonnage at 32 tons / week by 2010 and
target price of $1.50 kg)
Funding Source
50% Government / 50% Donors
Considerations
The need for the subsidy should decline as cargo space increases and prices come down naturally.
The intervention needs to have an exit plan for it to remain competitive. If prices are not declining
at an attractive rate, the recommendation needs to be revisited.
** There is a question of legality around the issue of directly subsidizing airfreight. Creative
mechanisms and communication needs to be thought through in order to ensure the intervention
and the rebate mechanisms do not attract unwarranted negative publicity.
Success Metrics
Sector Objectives for Airfreight Tons achieved (2680 tons by 2010)
Summary of Analysis
: SUBSIDIZE EXPORTERS DIRECTLY
38
2006
330
TOTAL AIR TONS
Total tons affected by subsidy
(*)
83
Tons per week
2
Potential cost / kg (**)
2.20
Desired cost / kg
1.50
Subsidy per kilo
0.70
Total Hypothetical Subsidy
57837
Sum
$2,258,802.78
Subsidy cost - all exporters
$1.50
(*) Subsidy does not affect all of 2006
(**) Prices declining based on increasing volumes
2007
759
2008
1276
2009
1652
2010
2680
759
15
2.20
1.50
0.70
531136
1276
25
2.00
1.50
0.50
638111
1652
32
1.80
1.50
0.30
495670
2680
52
1.70
1.50
0.20
536049
Annex IV: Investment incentives (domestic taxes) offered by customs law.
1. Company Income tax 30%
2. Preferential income tax rate if any
RIEPA registered investors are eligible to the following reductions in corporate income tax rates
(pending conditions as stated below):
 2% reduction if company employs between 100 and 200 nationals
 5% reduction if company employs between 201 and 400 nationals.
 6% reduction if company employs between 400 and 900 nationals.
 7% reduction if company employs more than 900 nationals.
The reductions last for as long as one of the conditions above is fulfilled for six months
 in a taxable year and the category of employees are not those who pay tax at the zero
rate.
 3% reduction if company exports products or services between $3 million and $5 million.
 5% reduction if company exports products or services in excess of $5 million.
39
3. Maximum 5 years loses carried forward
4. RIEPA registered investors qualify for a 5% single flat fee that replaces import duties, VAT
and all other taxes in case of imported capital goods (plant, machinery, equipment) and raw
materials that are NOT subject to zero-rated import duties;
5. ALL investors (registered or not) qualify for VAT exemption on imported capital goods
(plant, machinery and equipment) that are subject to zero-rated imported duties.
6. The following sectors are exempted from VAT:
ICT, Health and Agriculture
7. Additional Information
• Currently the minimum capital investment to be eligible for a RIEPA certificate is
$250,000.
▪ 40% investment allowance (on all types of investments) is granted to RIEPA registered
investors only. It is taken during the first year of operations.
▪ The accelerated depreciation is increased to 50% in the first year for investments outside
of
Kigali and for investments in the priority sectors as defined by RIEPA law:
* ICT
* Tourism
* Industry
* Energy
* Re-export trade
* Agriculture and agro-processing
* Mining
* Research
* Infrastructure
40
* Education
• Declared and earlier agreed training and research costs can be deducted from taxable
Income.
TRADE FACILITATION MECHANISMS AND INCENTIVES UNDER THE CUSTOMS LAW
 Pre-Clearance:- The Current Law provides for lodging a declaration prior to the arrival of
the goods.
 Binding Tariff and Origin Information: Under the current law, the administration shall
be bound by information provided under tariff classification and origin. This provides
certainty in the business environment for the investors and trading community. The above
principle is a recommended practice under the Revised Kyoto Convention.
 The current law has introduced simplified customs procedures such as have a
Regional bond guarantee to cover transit procedures with the COMESA Region. Rwanda
ratified the bond guarantee scheme, which will facilitate transit procedures and
tremendously reduce transit costs.
 The use of the COMESA CD declaration has also reduced the bureaucracy and use of
several documents in clearance. This COMESA CD is used all over the COMESA region
making trade simple and familiar to all traders and investors within the region.
 Investors in Rwanda enjoy preferential tariff treatment under the COMESA Regional
trading bloc. Rwanda is the Free Trade Area which means that all members in the COMESA
Free Trade Area enjoy a zero tariff treatment on all goods originating or having a value
addition within the COMESA region.
41
 The current law provides for Customs procedures with an Economic Impact such as Export
Processing Zones, Free Trade Zones, Manufacture Under Bond, Inward and Out processing
etc Under these regimes, duty is not collected unless the goods are cleared for home use.
 The following goods are relieved from payment of duties, when imported by an investor:(1)
Industrial machinery and raw materials;
(2)
Movable personnel effects, including one vehicle for personnel use for the investor
and expatriate employees in the respective registered investor.
(3)
Office machinery and equipment for investors in the private educational field.
(4)
Hotel shuttles, refrigerated vehicles, means of transport for tourists, ambulances,
funeral vehicles, fire extinguisher, vehicles;
(5)
Private aircrafts for tourist transport;
(6)
Capital goods, equipment, drugs, agricultural inputs, fishery for investors in the
agricultural sector;
(7)
Hotel, tourist industry and amusement park equipment.
 Construction and finishing material imported by a registered investor shall benefit
from a flat rate of 5% CIF in lieu of all customs duties and taxes.
42
APPENDIX V: HORTICULTURE WORKING GROUP MEMBERS
Sector
BANKING
BANKING
BANKING
First Name
Athanase
L de Montfort
Renee
Last Name
NKUBITO
MUJYAMBERE
KAYITARE
BANKING
BANKING
BANKING
BANKING
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
Joe
Etienne
Germain
Olivier
Andrew
Emmanuel
Pierre
Donatille
Nils
NSANO
NTAGANDA
NGARAMBE
GAKUBA
NTEZIRYAYO
RWIGAMBA
MASOZERA
NIBAGWIRE
ZIRIMWABAGABO
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
Jean Calvin
Faustin
Alexis
Gabriel
Alphonse
Salum
Theonase
M Rose
Jean de Dieu
Bosco
Marthe
Emmanuel
Anthony
Odette
Jean de Dieu
Straton
Jarry
Evase
Alexander
KAYIRANGA
KINUMA
NKUNDAYEZU
NGENDABANGA
NYARUHILIRA
ROMBE
MUNANA
UMUHOZA
HAKIZIMANA
GASHAGAZA
MUKAMURERWA
MUNANA
PILE
NDAHIRO
KAREMERA
GISIGWA
GASASU
NSENGIMANA
KANYAMBO
Position
Marketing
Chef de Service Credits
Account Relationship
manager
Relationship Manager
Directeur des Credits
Chef de Service
Analyste de credit
Deputy Manager
Potential investor
DG
Consultant - expansion
project
DG
Deputy Manager
Deputy Manager
President
Consultant
Manager
DG
Secretaire
Production Manager
Directeur Administratif
Manager
Manager
DG
Director
43
Organization
BANQUES POPULAIRES
COGEBANQUE
BCR
BCR
BANCOR
COGEBANQUE
BANCOR
CONFIGI
COOVIBAR
DRIED FRUITS PROJECT
FLORIS
INYANGE
INYANGE
SOPYRWA
URWIBUTSO
ARPEF
COVEPAR
SHEMA FRUITS
SORWATOM
MADE SARL
SORWATOM
SULFO RWANDA
AJENI
APROJUF
BLUE SKY
CHILLI Business
CONFIGI
COODEBECYA
COOVIBAR
FRULEX
MADE SARL
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
BUSINESS
DONOR NGO
DONOR NGO
DONOR NGO
Jean Damascene
Pierre
Dominique
Jean Baptiste
Polycarpe
Beatrice
Leonard
Paul
Johan
A.S
H.
Vinod
Gerard
Pascal
Ephraim
Eugenie
Logan
Asma
Jean Pierre
Anne Solange
Jacques
Francois Xavier
Liz
Pierre Celestin
Anthe
NTAWUHIGIMANA
KALIMBA
MANIRAGUHA
BUTARE
GATETE
GAKUBA
BUSHAYIJA
MUVUNYI
VERBERCK
NATARAJAN
DHARMARAJAN
THARAMAMAL
SINA
FURAHA
KAMALI
MUSHIMIYIMANA
NDAHIRO
TWAHILI
MIRINDI
MUKAMUNANA
MUHUMUZA
RUSANGANWA
DRAKE
HABYARIMANA
VRIJLANDT
DONOR NGO
DONOR NGO
Laurent
Eddie
GASHUGI
Belleville Delaunay
Consultant
Business development
officer
Assistant representative
Charge de Programme
DONOR
DONOR
DONOR
DONOR
DONOR
DONOR
DONOR
Jean Bosco
Anne
James
Emmanuel
Tim
Nicolas
Maurice
SEMINEGA
TURNER
FOSTER
RUZIBIZA
MUZIRA
HITIMANA
WEINER
Biz Development Officer
Horticulture Specialist
Economist
Coordinator
Agribusiness specialist
Country Manager
Chief of party
NGO
NGO
NGO
NGO
NGO
NGO
NGO
Manager
Banana Business
Managing Director
Owner
CEO
CEO
PDG
Finance Manager
Ass General Manager
CEO
Owner
MADE SARL
Natural Fruit Company
PASSION GROUP
RUBILIZI DIARY
RWANDA FLORA
SONAFRUITS
SOPYRWA
SPECIAL FRUITS
SULFO RWANDA
SULFO RWANDA
SULFO RWANDA
URWIBUTSO
Chili business
Passion fruits producer
Chili business
Chili business
Potential investor
President
Directeur General
44
Passion fruit producer
AJENI
PLANTOR
WORLD BANK
ADAR
DUTCH EMBASSY
FAO
Delegation de l”Union
Europeene
ADAR
ADAR
MINECOFIN
SNV
USAID
WORLD RELIEF/ASNAAP
ADAR
DONOR
DONOR
DONOR
DONOR
DONOR
DONOR
DONOR
DONOR
DONOR
GVT
GVT
GVT
GVT
GVT
GVT
NGO
NGO
NGO
NGO
NGO
NGO
NGO
NGO
NGO
Capiton
Janvier
Henry
Ravi A.
Uwe
Alfred
Tim
Stephen
Robert
Angelique
Monica
Tembo
Charles
Pierre Claver
Olivier
DUSABUMUREMYI
GASASIRA
MUGAMBI
BALLACHANDRA
JUNG
MUTEBWA
SCHILLING
BASHAIJA
NYAMBAKA
INGABIRE
PARKER
MABURUKI
RUTAGYENGWA
GATWAZA
NDUHUNGIREHE
GVT
GVT
GVT
GVT
GVT
GVT
Theodore
Augustin
Fidele
Anastase
Innocent
Norbert
SEBIHAZA
MUTWARE
RUREMESHA
KIMONYO
MATABISHI
SENDEGE
GVT
GVT
GVT
GVT
GVT
GVT
GVT
GVT
GVT
GVT
GVT
GVT
Emmanuel
Ernest
Mable
Innocent
Daphrose
Augustin
David
Leon
Albert
Evariste
Protais
Justin
NSHIMIYIMANA
RUZINDAZA
TUSHABE
UWIMANA
GAHAKWA
HABIMANA
BUCAKARA
HAKIZAMUNGU
KABUTERA
NAMAHUNGU
MUSONI
NSENGIYUMVA
Agronimist
Coordinateur/ Kibuye
Marketing Advisor
Coordinateur Technique
Project Coordinator
Coordinator
Coordinator
Coordinator
Advisor
Assistant - Horticulture
Consultant
National Planner
Taskforce member
Director
Personal Assistant to
minister
Director- Community Dvpt
Coops Director
Director for Industry
Chairman
DAE
Directeur - Unite de
Production Agricole et
Proection des Vegetaux
Agronome - MASAKA
Planning Director
Taskforce member
Minister of State
DAEF
Phyto technician
Horticulture officer
Secretaire General
Minister
Minister of State
45
ADAR
MINAGRI / PDCRE
SNV
STABEX
GTZ
MINAGRI / PDCRE
PEARL
RSSP
SNV
MINAGRI
MINAGRI
MINECOFIN
RAAQ/ MINAGRI
MINAGRI
MINAGRI
MINALOC
MINICOM
MINICOM
RAAQ/ MINAGRI
Western Province
MINAGRI
Eastern Province
MINAGRI
MINICOM
RADA / MINAGRI
MINAGRI
Eastern Province
MINAGRI
MINAGRI
MINAGRI
MINAGRI
MINALOC
MINICOM
GVT
GVT
GVT
Manasseh
Vincent
Adelaide
NSHUTI
GATWABUYENGE
KAGWESAGE
GVT
GVT
GVT
GVT
GVT
GVT
GVT
GVT
GVT
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
OTHER
Francois
Jonathan
Marie Louise
Claudien
Annonee
Frederic
Belline
Raphael
Peter
Vincent
Evariste
Joseph
Daniel
Vincent
Eric
Francois
Peter
Aimable
Sylvere
Appolinaire
Svetlana
Emile
Innocent
Jeanne
KANIMBA
GATERA
INGABIRE
HABIMANA
KURADUSENGE
MUNYANSANGA
MUKASAKE
MPAYANA
MUVARA
NZAKIZWANIMANA
MPAYIMANA
GAFARANGA
RUKAZAMBUGA
SINDUHUNGA
KABAYIZA
NSENGIYUMVA
OTHER
OTHER
OTHER
PROJECT
PSTATE
PSTATE
PSTATE
Bernardin
Gaspard
Marie Rose
Charles
Janet
Esperance
Bob
KUBWIMANA
NDAGIJIMANA
BYUKUSENGE
BUCAGU
KANYAMBO
MUTUYIMANA
GATERA
Minister
Secretary General
Chef de service marche
financier
Governor
Head of Section
Directeur des Forets
Charge de l'industrie
Forrestier
Taskforce member
Taskforce member
Taskforce Chairman
Director - SME Organization
Secretaire Financier
Coordinator
Dean of Faculty - Agriculture
Secretaire Executif
Research Assistant
Secretaire Executif
NTUKANYAGWE
MUDENDELI
KAREGEYA
Charge de Programme
Imbaraga - Butare
President
Horticulture Specialist
DG
NDEJURU
NYAGAHUNGU
GAHAMANYI
Consultant
Marketing in Charge
Advisor
Vice president
Program Coordinator
Analyst
Charge d'unite
Head, Investment Promotion
46
MINECOFIN
MINITERRE
BNR
BNR
BNR
MINECOFIN
MINITERRE
MINICOM
MINITERE
Hoticulture Taskforce
Hoticulture Taskforce
Hoticulture Taskforce
CAPMER
IMBARAGA
IMBARAGA / RUHENGERI
NUR
IMBARARA/GISENYI
ISAR
ROPARWA
CAPMER
CAPMER
IMBARAGA BUTARE
IMBARAGA/RUHENGERI
ISAR
ISAR
ISAR
LUMIERE DE LA VIE,
ASBL
ROPARWA
DUTCH EMBASSY
PRODEV CONSULT
UNR/PEARL
BRD
BRD
RIEPA
PSTATE
PSTATE
PSTATE
Bernard
Prosper
Sylvie
ITANGISHAKA
NYIRUMURINGA
BAMBARA
PSTATE
Desire
KAMANZI
PSTATE
PSTATE
Williams
Louise
NKURUNZIZA
NKURUNZIZA
PSTATE
PSTATE
Sylvestre
Alexis
NSENGIYUMVA
RUZIBUKIRA
PSTATE
Brekmans Oscar
BAHIZI
PSTATE
Pierre Claver
UWIMANA
PSTATE
PSTATE
PSTATE
PSTATE
PSTATE
PSTATE
Robert
Bart
Josephine
Christine
Providence
Moses
BAYIGAMBA
GASANA
UMURERWA
KARANGWAYIRE
MAVUBI
TURYAZOOKA
PSTATE
Marc
CYUBAHIRO BAGABE
DG
Director - microfinance unit
Senior officer export
promotion
Director, Trade&investment
promotion
DG
Senior officer export
promotion (industry &
services)
Deputy DG export
Deputy DG Investment
promotion
Senior Officer Export
Promotion (Agri business)
Director for Exports
promotion
Chairman
Executive Secretary
Analyste/ agronome
Charge des exportations
Senior Agri Business Officer
Senior Research and
Development Officer
DG
47
BANQUES POPULAIRES
BRD
RIEPA
RIEPA
RIEPA
RIEPA
RIEPA
RIEPA
RIEPA
RIEPA
RPSF
RPSF
BRD
RIEPA
RIEPA
ISAR