Empowering Rwanda Manufacturers and Promoting Export Growth

August 20, 2019

Empowering Rwanda Manufacturers and Promoting Export Growth

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BACKGROUND

Improving the export market access and linkages of firms to export is a critical focus of many businesses in the EAC. Private enterprises in the EAC face a wide range of challenges that make trading across borders difficult and reduce the competitiveness of firms.  However, when there are reduced challenges in exporting this provides an opportunity for firms to increase profit and then re-invest to increase sales, turnover and productivity. Additionally, it increases the competitiveness of domestic firms, at least in the long run, as they become more exposed to dynamic and growing markets. With time this creates an enabling trade regime that helps increase the volume of imports and exports and subsequently contributes to economic growth and poverty reduction. The TMEA Traidlinks supported (Export Development) programme worked with 16  Rwandan companies so as to link them to the markets outside Rwanda. The core business of these companies was agro-processing and manufacturing. One of the successful companies that were supported by the programme was G-Mart Limited who are located in Rwanda-Kigali. The programme was implemented in partnership with, Rwanda Development Board, Kigali Independent University and the relevant private sector stakeholders and the overall programme budget was estimated at about US$ 1.4million from 2013 to 2015.

This case study profiles G-Mart Limited, a company that was supported by the programme. G-Mart manufactures chalk and was originally selling locally only in Rwanda but started exporting as a result of the TMEA programme intervention.

ISSUE ADDRESSED

Export promotion programmes is one of the interventions aimed at improving the EAC economic growth and development reality that is expected to translate into better standard of living and also reduce the poverty levels amongst the people of East Africa. In Rwanda, there are few local consultants available to provide quality hands on technical support to new or growing exporters at a price companies can afford and most companies have limited capacity to expand output to meet significant export demand; companies lack marketing materials and suffer from poor and unattractive packaging including lack of Bar Codes; many companies do not have the appropriate product quality certifications and are weak internal in terms of staff (sales, marketing and export planning and logistics) and finance (cash flow management. The TMEA Traidlinks supported programme interventions came in to develop and transform the Rwanda and Burundi economy through export promotion and to meet its development goals of developing a competitive private sector with the capacity to export value-added products to EAC markets and beyond.

THE RESPONSE AND APPROACH

In 2012, TMEA contracted Traidlinks, an Irish funded NGO with wide experience in the Region and based in Kampala to run a pilot project to help 10 selected Rwandan companies enter the Ugandan market. The Market Linked pilot worked through the Rwanda Development Board (RDB) – the national export promotion agency by providing training, hands on tailored support to companies to penetrate the Ugandan market including market research, sales missions, and sales follow up. TMEA’s support to RDB was meant to achieve increased exports using four approaches; 1. Market linkages to support enterprise post Traidlinks 2. Provision of a market linkages advisor to support the National Export Strategy implementation. 3. Export development fund; 4. Value chain development

3.1 Key stakeholders

The key stakeholders that were involved in the programme implementation in Rwanda included, TMEA, Rwanda Development Board, Kigali Independent University and Export-ready private sector members.

3.2 Project goals
The overall objective of the programme is to enhance the export capacity of Rwanda and Burundi companies to increase trade flows, thus contributing to economic growth and ultimately, poverty reduction. The specific objectives are to:

  • Improve capacity of exporters in Rwanda and Burundi;
  • Improve the export support networks in EAC;
  • Enhance capacity of local service providers to provide support to Rwandan exporters;
  • Create of an EAC Trade network for exporters;
  • Increasing the export trade values

3.3 Project Innovations and Implementation
To combat the challenges in Rwanda and Burundi and transfer skills and knowledge, the project innovation involved the development of productive capacities, improving exports promotion and marketing strategies including provision of business development services to enhance the knowledge of markets requirements and trends by producers and exporters as well as establishing a more supportive business environment were considered as critical steps to growing exports to the region and beyond. In addition, three programme components in Rwanda were developed namely:

  • Marketlinked Programme which aimed at linking Rwandan potential exporters to the EAC market;
  • Export Adviser Initiative which built the capacity and competency of the qualified Rwandan local business consultants to support exporters in preparing and executing their export business plans;
  • Export Capacity Programme that provided direct support technical support to new and existing exporters to identify and/or exploit export growth opportunities.

3.4 Results achieved

Due to the good level of ownership by the programme beneficiaries, working relationships between all involved parties, and cooperation with TMEA, the project has been able to achieve good results. The exporters are increasingly using the skills gained from the programme and even the programme interventions and procedures have been streamlined within Rwanda National Export Strategy. 13 companies out of the 16 supported companies are able to export outside Rwanda as a result of the programme intervention which is increasing the export values and hence contributing to US$ 15.7 million in the export values to the EAC and US$ 2.3 million DRC. Export Advisors were trained, 9 candidates qualified for award of certificates as export advisers. The export adviser helped the exporting companies to identify export markets and also penetrate the markets. The programme has supported confidence and capacity building in RDB, API and the supported companies regarding export process and procedure and has made them more skilled and confident in export markets.

3.5 Factors of success and Failures

The success of the programme is dependent on the high level of ownership of the beneficiaries which is demonstrated by TMEA closely working and coordinating the programme in partnership with Traidlinks. This good coordination ensured that the transfer of knowledge works smoothly and is particularly efficient in strengthening capacities. Also the good institutional relationship that exists between RDB and API officers and Traidlinks is also important key for the programme success and due to its independence, expertise and neutrality, Traidlinks is accepted by most of the programme beneficiaries. However, identifying motivated committed companies that had the potential to export was not easy because the number of export-ready companies was few and also access to affordable finances was a challenge to the supported companies.

OPPORTUNITIES AND CHALLENGES

Rwanda has incorporated the programme inventions into its Export Development Strategy which will make the programme skills and results sustainable beyond the programme life span. The Rwanda National Export strategy (NES) has an Export Growth Facility and the export finance component of the NES is designed as a single fund.  The supported companies that are ready can position themselves to enjoy the benefits of this facility.

4.1 Lessons learned

The following lessons have been learned: Working with companies that are export-ready and are motivated and wiling to export helps companies penetrate markets and make good sale hence leading to business growth.

Working with the Government agencies responsible for promoting export in the country helps the programme to be relevant to the country and also be able to operate without difficult from the government authorities. There is a need to provide financial support to programme supported companies if they are to be sustainable.

BENEFICIARY PROFILE

Ms. Jessie Kalisa Umutoni is the proprietor and managing director of G-Mart Limited, a company that manufactures and packages chalk which is mainly used in schools. G-Mart started in 2010 with about US$ 33,330 from her savings and her husband, as well as a loan from Zigama CSS bank and is located in Ndera, Gasabo District in Kigali.  According to Jessie, it was not easy to start the business although it had always been her dream. When Jessie quit her job to start G-Mart she had three projects in mind: A toilet paper factory, a recycling factory and a chalk factory. But because of her love for education, she settled with the idea of starting a chalk factory. She was raised in a family of teachers where chalk was a common item and she ventured into chalk making in her adult life. She says it was through chalk that she managed to make it in life because she has a good attitude towards doing business and learning new ideas that help her improve on her production skills, marketing and quality of chalk that she produces. So she went to China for training and returned to train her team in production and also established a team for packaging finished products.

Jessie really appreciates the support that TMEA has provided to them through the programme that now she is able to export to wider markets in the EAC and even her business skills, capacity and confidence has been enhanced. She also believes that “G-Mart market access is not enough but the products needs to be competitive, high quality meeting the relevant standards, well priced, well packaged and well marketed to the users”.

“The mindset of Rwandans need to change if Rwanda is to move forward,” she said and lamented: “Many people here don’t believe that a fellow Rwandan can manufacture something like chalk, and of high quality.” And that was out of first-hand experience. Even though she is the first person to open a chalk factory in Rwanda, and despite the demand for the product, running the business has not been without challenges. Banks, for example, find it difficult to believe that a woman can start a factory and be able to run it well. Most of the banks Jessie approached for financing expressed doubt that a woman could actually make chalk or find a market for her products. She said, “We are fully aware that we have to be competitive in the market. We ensure that best quality and personalized services are our basis of successful”.

The story behind producing chalk is the availability of good quality raw materials with unique properties which makes G-Mart the only Rwanda Company that produces all kinds and shapes of chalk. “ I learned about how to export, marketing and maintain export markets ,” explains Jessie “ I learned a lot from the programme and that helped us improve on quality and especially business planning because when you plan better, you sell more. ”  Today G-Mart chalk is ahead of its competitors when it comes to quality and competitive prices.

Prior to project intervention, G-mart was not aware of the export potential of her product (Chalk) in the regions. However, in 2013 and 2014 G-Mart Limited was able to create market links in Uganda and Burundi; thanks go to TMEA for its intervention and support that enabled this happen and her successes in the export markets is attributed to TMEA. She was able to export 2,388 cartons to Burundi and 300 cartons to Uganda as a result of the programme intervention. G-Mart Limited says she earns good money from exporting chalk to Uganda and business is promising. In addition she recently landed a big contract with UNICEF and also with the Ministry of Education in Rwanda, and a Uganda-based supply distributor with stores in Uganda which will increase her income and also create employment opportunities. In the world of stiff business competition, where quality products and competitive prices have become a critical hurdle to the survival of small scale manufactures in developing countries, Jessie’s success is encouraging. It shows that with the right support, training and mindset, small-scale manufacturers can adjust their practices and systems to overcome the challenge in the export markets.

CONCLUSION

Export Development is an important foundation for trade helping poor countries with many SMEs to find access to new markets and to increase trade flows within the region and beyond. The programme has been able to contribute to increased trade in the region and has also had impact on the beneficiaries by building their capacity and confidence to be able to export. The key to this has been the close partnership between RDB, API, Traidlinks and TMEA that are closely related in terms of their roles and their professional understanding and approach, thus facilitating knowledge transfer and capacity development.

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