Working with exporters to enhance their export capacity – The Case of SOSOMA Industries Limited in Rwanda

May 20, 2019

Working with exporters to enhance their export capacity – The Case of SOSOMA Industries Limited in Rwanda

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1. BACKGROUND

The overarching goal of Rwanda’s Vision 2020 is to transform the country into a lower middle income economy by improving its competitiveness while ensuring unity and inclusive growth and development. Significant strides towards achieving this vision have been made especially regarding improvements in the country’s business environment and competitiveness. The African economic outlook 2014 indicted that the Rwandan government has priority to support export growth and diversification, bolster private sector development and leap-frog the various impediments that continue to hinder the contribution of the country’s private sector to national development. This in turn indicates that exporting quality and competitive products through market linkages by small- and medium-scale companies or enterprises in Rwanda enables them contribute to the national economic development of the country and export earnings in Rwanda increased by an estimated 33% in 2013. According to the global competitiveness report 2014-2015, Rwanda is ranked in 62nd position in the world, in Africa, 3rd position and number one in the East African Community which indicates that Rwanda has become even more competitive and that the business and investment environment of the country is improving.

Sosoma Industries Ltd in Rwanda, located about 4km from Kigali Airport is one of the companies that we future in this case study and was supported by the TMEA supported Traidlinks (Export Development) programme that worked with 16 export ready companies. The programme was implemented at an estimated budget of about US$ 1.4 million from 2013 to 2015.

2.THE ISSUE

Companies in Rwanda were facing challenges in the export markets, because they lacked skills and confidence to enter these markets and proper market information on product preference, information about their goods, including price and demand and therefore could not make informed decision when exporting. This also made it difficult for the companies to know if it was worthwhile entering the export markets. Sosoma Industries Ltd manufactures quality fortified corn soya, blend fortified super maize meal, roasted soya flour, red and white sorghum flours and other seasonal goods that are distributed throughout the Rwanda. Sosoma joined the TMEA Traidlinks programme for support as it looked to develop an innovation strategy to enter new markets in the EAC and also improve their export capacity. The TMEA Traidlinks supported programme interventions addressed these constraints that the companies were facing through the TMEA export promotion programme and good collaboration with the supported companies that improved their export capacity and created good export linkages in EAC and this also helped the supported companies to unleash their full export potential.

3. RESPONSE AND APPROACH

TradeMark East Africa (TMEA) programme aims to improve trade competitiveness in East Africa by reducing transport time/costs and improving the trade environment. It targets an increase in trade of 10% (above trend) by 2016, contributing to sustained economic growth and poverty reduction. TMEA was officially launched in February 2011 as a specialist not-for-profit agency to implement a programme to promote trade growth in East Africa. TMEA is currently funded by the UK, Belgium, Canada, Denmark, Finland, Netherlands, Sweden and USA. TMEA’s secured budget to date totals about £330 million (US$ 540 m). The programme is currently scheduled until December 2017 with the possibility of a new programming phase beyond that. 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.

Following the success of the pilot project, three programmes in Rwanda were developed namely:

  • MarketLinked Programme aimed at linking Rwandan potential exporters to the EAC market.
  • Export Adviser Initiative- to build 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- to provide direct technical support to new and existing exporters to identify and/or exploit export growth opportunities.

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 companies, local business consultants and the relevant private sector stakeholders.

3.2 Project goals

The overall objective of the programme was to enhance the export capacity of Rwanda and Burundi companies to increase export trade flows, thus contributing to national economic growth and ultimately, poverty reduction.

3.3 Project Innovations and Implementation

Sosoma narrated that “the TMEA Traidlinks supported programme helped us address fundamental issues of capacity and export process planning, including making better use of the skills gained from the programme and also how to identifying export bottlenecks and how to overcome them. The Export Development Programme team supported by TMEA worked with us over several months to develop our export action plan and also enhance our export capacity. This included mapping out areas we could look to prioritize, and giving clarity over the future direction of the business for the company in terms of exporting. We have also benefited from the workshops and export missions that the TMEA Traidlinks supported programme has been running. They really encouraged us to take a step back from the day-to-day working environment and look at things from a different angle in terms of strategic development of the export business,” said the Sosoma Sales and Marketing Manager.

3.4 Results achieved

Based on market survey findings that was done in 2013 by Sosoma, the business plan 2014-2018 projection forecasts that the TMEA Traidlinks programme support will contribute to an increase of turnover of 20% per year, from US$1.5 million to US$ 3.2 million. The programme was able to get very good political support from the Government of Rwanda through Rwanda Development Board that was hosting the TMEA Traidlinks Rwanda project.In set is a picture of some of the products that Sosoma is exporting.20150918_085340

The support we have received from TMEA has been fundamental to us and has improved our business turned over the past 2 years of working together and we are committed to growing bigger. This growth has created an additional 38 full-time posts, providing much-needed jobs for the surrounding rural community including 48% men and 52% women and employs. The programme has contributed to Sosoma products being made available in shops wide in Rwanda, and in foreign countries like Uganda, Burundi by building their export capacity, confidence and marketing skills. Success is perhaps best measured by the fact that we have been able to accommodate rapid growth and enhance our export capacity and skills. This, in turn, has allowed us to our changes to meet future customer demand,” the Sales and Marketing Manager said.

4. OPPORTUNITIES AND CHALLENGES

Sosoma Industries Ltd’s mission is to be a credible and regional reference business in agro-processing in the EAC and leader in food manufacturing and marketing, whose products by their quality and variety contribute to consumer pleasure and wellness. Over the past years, Sosoma has managed to foster a business culture focused on innovation and product differentiation mainly in agro-processing. Having markets in Rwanda, Burundi and Uganda and its innovative culture permeates production operations, sales and marketing as well as research and development. This has enabled the company to progressively expand and penetrate previously untapped market segments in the EAC which has been supported by TMEA closely working and coordinating the company. The challenges that Sosoma has met are considerable as it functions in a highly competitive manufacturing sector. Sosoma was one of the few companies in Rwanda with potential to export that was enhanced by the TMEA support. Like any other SMEs in a developing country, access to affordable finances was still a challenge to Sosoma.

4.1 Opportunities

As a result of the TMEA support, Rwanda has been able to incorporate the programme inventions into its Export Development Strategy which will make the programme skills and results sustainable beyond the programme life span. This will be a great opportunity for the manufacturers because they will be supported by the Rwanda government. The Revised 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 Export Growth Facility (EGF) with three separate windows for funding: 1) an investment catalyst fund to encourage export-focused investments, 2) a matching grant fund for medium-sized exporters to meet specific requirements in target markets and 3) an export guarantee facility to underwrite exports for up to 180 days, which Sosoma can access and utilize.

4.2 Lessons learned

Strong political drivers in the government institutions responsible for trade and exports are very critical and vital for the success and sustainability of the export development programme in Rwanda.

A suitable platform for discussing the progress of the programme implementation is essential for resolving and giving the programme direction to meet set targets. Constant consultations with key stakeholders and beneficiaries are important in order to synchronize programme activities and timing and a full sharing of information is absolutely necessary for effective utilization of resources and efforts.  Technical support to the programme supported companies is essential to achieving the planned objectives.

5. BENEFICIARY PROFILE

Sosoma Industries Ltd is a Rwandan Company established on 1st November 2008 and is located about 4km from Kigali Airport and deals in agro-processing. Sosoma is administered by a Board of Directors composed by five members elected for a term of three years. The company has three main departments that include: Production, Quality Control Department, Sales &Marketing Department and Administration & Finance Department.

Sosoma is one of Rwanda’s successful agro-processing companies, which employs 38 motivated permanent staff, 48% men and 52% women who make the staff majority. The company buys some of its raw materials like maize grains and soya beans from small scale farmers in Rwanda. With Sosoma’s positive attitude towards business and support from the TMEA, Sosoma believes that success is possible despite overwhelming odds and circumstances in business.

The company manufactures a range of products that include Sosoma 1, Sosoma 2, Sosoma 2 Fortified, Corn Soya and Super Maize Meal, Roasted Soya Flour, Red and White Sorghum Flours. The flours produced are mainly for porridge and are from grains of soya, sorghum, maize and wheat. 73% of products are certified with Standardization Mark (S-Mark) from Rwanda Standards Board. Sosoma   products are one the tools that Rwanda can use in eradicating extreme poverty and hunger, reducing child mortality and improving maternal health through consumption of the products. In set are some of the samples from Sosoma that were used for marketing during the market linkages.20150918_085317

Sosoma noted that the meet-the-buyer events and mission that were supported by the TMEA programme successfully supported business engagements with potential buyers and distributors of their products; in addition, mentoring Sosoma was a source of learning and development which enhanced their export capacity and enterprise skills. With the skills and capacity enhanced in exporting, Sosoma believes they can perform better in the export markets by competing more effectively, cultivate more loyal customers and spotting better export opportunities. They consider that their future success depends on the ability to reach out to both new and existing customers, current and future distributors.

6. CONCLUSION

Sosoma Industries Ltd is an innovative company with a team committed to growing the export business and continually looking for ways of improving business operations.  Therefore, with the export capacity built by the TMEA programme, Sosoma has the potential to meet the local needs and export requirements and also have potential to create employment opportunities.

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