Mauritian Investors to Construct Sugar Factory
The Government has given investors from Mauritius the green light to set up a sugar processing factory in the country.
The agreement will see the investors construct a factory with capacity to produce 100,000 tonnes of sugar per year.
According to the Government, this will help realise efforts for the economy to be self-reliant in terms of sugar production by 2020.
The current sugar production in the country is at 10,000 tonnes per year, yet the annual sugar demand is expected to reach 160,000 tonnes by 2020, according to projections from the Ministry of Trade and Industry.
In an exclusive interview with The New Times, last week, Trade and Industry minister François Kanimba said, on average, Rwanda imports 80,000 tonnes of sugar per year against an annual demand of 90,000 tonnes annually.
The new plant is part of a major multi-purpose project that is expected to cost between $250 million and $300 million, according to the minister's estimates.
Kanimba said, in 2011, based on the economic growth prospects, they realised that Rwandans will need about 160,000 tonnes of sugar per year in 2020.
"We realised that if nothing is done by 2020, Rwanda will need about $150 million per year to offset sugar imports," he said.
Kanima said such a scenario informed the Government decision to look for alternative means to establish another sugar factory, but also increase the production capacity of the existing Kabuye Sugar Works to be able to meet sugar demand in the country.
The new factory, which will be set up in Eastern Province, is part of a bigger project that will have a factory making ethanol, an alcoholic based clean and renewable fuel produced through fermenting sugarcane juice and molasses, the minister said.
Molasses is a by-product of sugarcane and is used in production of crude gin.
The same project will in the long run see the establishment of a third plant that will be generating 25 megawatts of energy from bagasse, a sugarcane residue.
Although the minister noted that the exact investment for the three projects is still being refined, he said the entire project is estimated to cost between $200 million and $300 million.
He said the sugarcane plantations to supply the new factory will be in Ndego and Kabare sectors of Kayonza District and Nasho Sector in Kirehe District in Eastern Province.
The minister said the setting up of the factory is in line with efforts to reduce the trade deficit by looking for items that can be produced locally in a bid to bridge trade deficit.
According to estimates by the minister, the country will need at least $150 million (about Rwf120bn) annually to import sugar by 2020.
To fill the void left by Kabuye Sugar Works, the country currently imports sugar from the region, Sudan and other distant countries like Brazil and India.
Kanimba said the envisaged project was a demanding one that will need at least 10,000 hectares of land on which to grow sugarcane that will enable the plant to produce the required 100,000 metric tonnes annually.
He said the investors have requested to be given at least 8,000 hectares of land for sugarcane plantation, adding that the land and farmers have been identified.
The minister said the project will start in this financial year, but noted that it will require about six years for the factory to start producing sugar.
The project requires a lot of money in expropriation for land where sugarcane will be grown, and the Government has to build houses for the people who will be evacuated as well as look for ways for the concerned people to get land to grow crops for their food security assurance.
"The project will cost a lot of money, but it is a worthwhile investment," said Kanimba.
Boosting Kabuye plant
Meanwhile, Kanimba said there is plan to reclaim the Nyabarongo marshland so that 2,000 hectares of land are added to the current sugarcane acreage, but the plant also plans to work with farmers in Bugesera District on fields near the lake that can be irrigated and used for sugarcane cultivation.
He said Kabuye has a target to increase production from the current 10,000 to 20,000 tonnes of sugar by 2018 and 50,000 tonnes in 2024.
"If the Kabuye programme gets implemented and the second factory that plans to produce 100,000 tonnes [per year], it seems to lead to Rwanda's self-sufficiency in sugar around 2020," Kanimba said.
As per the National Industrial Policy 2011, the industrial sector contributed 15 per cent of GDP in 2010, less than half the size of the services and agricultural sectors and some how short of Vision 2020's target of 26 per cent.
Speaking to The New Times, Private Sector Federation chief executive Stephen Ruzibiza welcomed the envisaged project, saying it will facilitate job creation as well as bridge the existing gap in sugar production and reduce the import bill.
Amb. George William Kayonga, the National Agriculture Exports Development Board, chief executive, said the import bill will only be reduced by producing more exports but also ensuring increase of capacity to produce what is produced domestically, where possible.
"The way to reducing imports bill is increasing local capacity," he said, adding that the main benefit from the new sugar factory is to narrow the sugar import bill.
Kayonga said having a strong sugar industry in the country could benefit other food processing industries through linkages and the products along the value addition made thanks to that sugar, can be expected in the region and elsewhere.