Industrial Master Plan for the Agro-Processing Subsector (2014 - 2020)

1.1 Background of the study 1

1.2 Study Methodology 1

1.3 An overview of the study 2

1.4 Key findings and recommendations 3 1.5 Implementation of chain development strategies – Pilot projects 6 2 Introduction 8

2.1 Background 8

2.2 Challenge 8

2.3 Purpose of the Agro-processing Masterplan 9

2.4 Approach of the Agro-processing Masterplan 9

2.5 Methodology for Agro-processing Masterplan Development 10 2.6 Justification for agro-processing Master plan for Rwanda 10 3 Overview of Rwanda’s Agro-Processing Subsector 12

3.1 Political 12

3.2 Economic 13

3.3 Social 13

3.4 Technology and Innovation 14

3.5 Environment and Climate Change 15 4 Rwanda’s Agro-Processing Institutional Environment 16

4.1 Policies Relevant to Agro-processing in Rwanda 16

4.2 Government Strategies to Promote Agro-processing in Rwanda 18 5 Mapping of Agro-processing Resources 21

5.1 Mapping of Rwanda’s Agricultural Resources 22 5.2 Rwanda’s District Resource (Industries) Agro-Processing Mapping 27

5.3 Rwanda’s Agro-Processing Subsector Priorities 29 6 Agro-processing Value Chain Analysis 32

6.1 Sourcing of Inputs and Supplies 32

6.2 Production Capacities and Technology 33

6.3 End-Markets and Trade 36

6.4 Value Chain Governance 46

6.5 Sustainable Production and Energy Use 46

6.6 Value Chain Finance 47 7 2014 – 2020 Strategic Direction 49

7.1 The Vision for Rwanda’s Agro-Processing Subsector 50

7.2 The Mission and Strategic Pillars for Rwanda’s Agro-Processing Subsector 50

7.3 Purpose of the Master Plan 50

7.4 Objectives of the Masterplan 50

7.5 Strategic Pillars 50 8 Implementation of Chain Development Strategies – Pilot Projects 56

8.1 Project 1 – Staple Foods 56

8.2 Project 2- Fruits and Vegetables 61

8.3 Project 3- Dairy Industry 65

8.4 Fish and Fishery Products 70

8.5 Project 5- Policy Reform 75

8.6 Institutional Capacity Development for agro-processing in Rwanda 80 9 Implementation Plan 83 10 Monitoring and Evaluation Framework 96 11 Annexure 97

11.1 Rwanda’s EDPRS 2 (2013 – 2018) 97

11.2 Rwanda’s National Industrial Policy (2011) 97

11.3 Rwanda’s Crop Intensification Program (CIP) 97 11.4 Top 5 Largest Agro-Processing Industries by Turnover as at 2011 98 11.5 Phases of Rwanda’s Industrial Development from 1995 to 2012 98

11.6 Prioritization Matrix 99

11.7 Standards and Technical Requirements 104 Figure 2: Graphical Illustration of the Challenges Facing Rwanda’s Agro-Processing Subsector .......... 9 Figure 3: Rwanda’s Agribusiness Value Chain ...................................................................................... 21 Figure 4: Total Cross Border Trade in CIP Agricultural Commodities, 2009-2012 ................................ 37 Figure 5: Trade Flows of CIP Agricultural Commodities, 2009–2012 (MT) ........................................... 38 Figure 6: Rwanda’s Agro-Processing Subsector Strategy at a Glance ................................................. 49 Figure 8: Phases of Rwanda’s Industrial Development from 1995 to 2012 ......................................... 98 Table 1: Agro-Processing Subsector Related Policies .......................................................................... 17 Table 2: Agro-Processing Subsector Related Strategies ...................................................................... 19 Table 3: Production of Major Cash Crops (in Tons) ............................................................................... 25 Table 4: Forestry and Agro-Forestry Statistics ...................................................................................... 26 Table 5: Rwanda Livestock Production by Type ('000 head) ................................................................ 27 Table 6: Agricultural Resources in Each District ................................................................................... 28 Table 7: Development Goals informing Value Chain Selection ............................................................. 30 Table 7: Main Challenges in Sourcing of Raw Materials Supplies and Technology .............................. 33 Table 8: Rwanda’s Industrial Cluster (Parks) Agro-Processing Resource Mapping .............................. 34 Table 9: Implementation Plan................................................................................................................ 83 Table 10: Top 5 Largest Agro-Processing Industries by Turnover as at 2011 ...................................... 98 Table 11: Technical Regulations (Compulsory Standards) .................................................................. 104 1 Executive Summary

1.1 Background of the study MINICOM engaged KPMG to conduct a comprehensive mapping of the industrial resource base for the agro-processing sub-sector and carry out prefeasibility studies for the development of resource based industries. The master plan aims at improving industrial production and address the human resource scarcity problem in the selected industrial subsectors. It also identifies ways of creating an enabling environment for the private sector, improve the competitiveness of the agro-processing subsector and build consensus among all stakeholders around a plan to improve the industrial sector in general. More specifically, the assignment entailed the following: ■ Assessment of Rwanda’s districts with regards to the agro-processing sub-sector. The master plan detail opportunities in different districts, map up the industrial zones in each district and propose the type of industries that need to be promoted according to inputs availability and possible linkages, as well as indicate the requisite infrastructure development plan, and this has been done in consultation with relevant stakeholders. ■ Provides a database, which will be updated depending on the changes which may occur, and will contribute to the development of the industrial sector in Rwanda by showing all potential areas for the agro-processing subsector where industrial activities throughout the country may be carried out

1.2 Study Methodology The practical methodology employed by KPMG Rwanda Limited, hereafter referred to as “KPMG”, was based on our global master plan development best practices and was customized to suit MINICOM’s specific needs. We developed the Master plan in six main phases as summarized below; Phase 1: Project Initiation and preparatory work Phase 2: Review of Agro-processing Industrial Subsector “As-Is” Environment (Situational Analysis)  Desktop Review i. Gathered relevant documents for review ii. Developed review framework and parameters iii. Identified necessary improvements to the policy and Institutional contexts iv. Developed draft framework for institutional analysis and private sector development  Institutional Analysis i. Mapping and description of institutional structure ii. Assessed performance of the relevant Institutions iii. Identified necessary improvements to the institutional environment and arrangements iv. Develop an implementation plan for the proposed institutional changes  Value Chain Analysis (VCA) v. Mapped the actors, with emphasis on the private sector vi. Identified market related constraints at each stage of the chains vii. Identified marketing options and responses to market requirements and quality standards viii. Description of governance and linkages structures ix. Assessed resource productivity and environmental performance 1 x. Analysed options for development, innovation and upgrading xi. Analysed actual and future income distribution Phase 3: Development of a draft Master Plan Phase 4: Draft Master Plan validation workshop Phase 5: Development of the final Master Plan Phase 6: Master Plan finalisation and presentation to stakeholders

1.3 An overview of the study Rwanda’s Vision 2020 seeks to transform the nation fundamentally into a middle-income country by the year 2020. This requires achieving an annual per capita income (GDP per capita) of US$ 900 (US$ 630 in 2013), a poverty rate of 30% (44.9% in 2012) and an average life expectancy of 55 years (64 years in 2013). Rwanda has had an average per capita growth of around 8% for the last decade, but given that the rate of population has increased by 2.7%, this growth rate would need to be accelerated further to achieve sustained poverty reduction in order to achieve its vision. Currently, the economic growth remains driven by the agriculture sector. The diversification of the Rwanda’s economy into various sectors possible is essential for attaining vision 2020 goals. The industrial sector is contributing around 15% of GDP. For Rwanda to reach Vision 2020 target, it requires among others the share of industry to increase to 20% of GDP. Achieving this significant transformation requires a dynamic and innovative industrial sector in Rwanda. Industrial policy approved in 2011 indicate potential industrial subsectors that are to be focused on for quick development of industrial sector in Rwanda; these are agro-processing, construction materials, pharmaceuticals, chemical products, biodegradable packaging and high tech industries. With a strong private sector and a well-managed public - private sector partnership, Rwanda will be able to achieve an industrial growth needed to become a middle-income country. In recognition of this, the Government of Rwanda found necessary to develop Industrial Master Plan for the Agro- industrial sub-sector. In the recent years, Rwanda has developed and implemented several legislations and policies to create an enabling environment for investment, improve the business environment and reduce the cost of doing business in Rwanda. As a result, in Sub-Saharan Africa, Rwanda is currently ranked second easiest country to do business. Key planning documents of the government have identified the agro-processing industry as one of the key drivers to transforming Rwanda’s economy. Rwanda’s Vision 2020 and the EPDRS 2 identify agriculture and agro processing industry as key drivers for the country’s growth. Transforming agriculture into a productive high value sector through supporting manufacturing was identified as a key driver for this growth. The vision is also embedded in key policy documents and strategies such as the National Industrialisation Policies that focuses on ensuring a competitive and advanced services sector envisaged to produce over $1.5 billion of exports by 2020 while increasing the number of off farm jobs. Rwanda also has availability of a large workforce in the rural areas and labour costs remain very low. This provides availability of unskilled labour for simple factory jobs. Currently, the country’s GDP is driven predominantly by the agriculture sector. The national Agricultural Policy was issued in 2004 with the objective of improving food security and the nutritional status of the population, and increasing income levels of the rural households. The agricultural policy focuses on promoting "intensification" to increase productivity through the application of more advanced technologies. The main aim of the Agricultural Policy 2004 2 of MINAGRI is to increase animal production, modernize farming, reduce poverty, ensure food security and have surplus for the market. The diversification of the Rwanda’s economy into various sectors possible is essential for attaining vision 2020 goals. Small and Medium Enterprise (SME) Policy (2010) The SME policy has a vision to create a critical mass of viable and dynamic SMEs significantly contributing to the national economic development and a mission to stimulate growth of sustainable SMEs through enhanced business support service provision, access to finance and the creation of a conducive legal and institutional framework. The purpose of the SME Policy is to foster job creation and an increase in the tax and export base through the promotion of competitive new and existing SMEs mainly in value added sectors.

1.4 Key findings and recommendations Agro-processing subsector, a subset of the country’s entire agribusiness sector where raw agricultural materials, originating from agriculture, livestock, forestry and fisheries are transformed into finished and semi-finished agricultural products, has the potential to produce goods which can then be sold to both local and international consumers. As a developing country with large rural communities, Rwanda suffers from inadequate access to agro-processed food and low employment levels in regards to the agro-processing sub- sector. The many problems of poverty, low productivity, inadequate infrastructure and poorly integrated markets faced by the country are exacerbated by an underdeveloped agro- processing sub-sector. Inadequate attention to the agro-processing sector in the past in Rwanda has put both the producers and the consumers at a disadvantage through underutilisation of resources, wastage and low quality products. Although Rwanda is endowed with animal and plant resources, the country experiences a limited supply of land as compared to its neighbours and competitors. An analysis of Rwanda’s agricultural resources is a crucial step in strategically investing in the agro-processing subsector. With a strong private sector and a well-managed public - private sector partnership, Rwanda will be able to achieve an industrial growth needed to become a middle-income country. In recognition of this, the Government of Rwanda found it necessary to develop an industrial master plan for the agro-processing sub-sector. Rwanda’s agro-processing subsector strategic direction for 2014 – 2020 focuses on production of high quality agro-processing products. In order to achieve this, the country will focus on specialisation by district/province (industrial clusters), by trade destination and by industry. The key to achieving this level of specialisation lies in analysing Rwanda’s agricultural resources and prioritising them based on Rwanda’s Vision 2020. In addition, controlled experimentation through use of pilot projects in order to continuously innovate and adapt Rwanda’s agro-processing subsector to changes in its environment remain necessary. The agro-processing subsector in Rwanda needs to undergo a structural transformation to focus on high quality agro-processing products. This will create jobs hence income generation and to ensure food security that is so badly needed by the country’s growing population. Rwanda’s agro-processing subsector will focus on high quality agro-processing products taking into account the limited supply of land, which limits volumes of agro- processing products which can be produced. The pace of change in the entire agribusiness value chain around the world is accelerating rapidly. If Rwanda is to benefit from these changes, the agro-processing industry needs to undergo a structural transformation. In fact, in terms of the transformation of the economy, structural change in farming and agro- processing are tightly interrelated and cannot be analysed independently of one another. A transformation of the entire agribusiness sector involves increasing the productivity of activities at each stage of the different agriculture-based value chains, while simultaneously 3 improving coordination among those stages. Improved vertical coordination is critical to achieving timely flow of productivity-enhancing inputs to farmers and of quality agricultural raw materials to the agro-processing industry. At the same time, production must be closely aligned with the rapidly evolving demands of consumers. Growth of vibrant agro-processing industries is essential to offer employment for a large number of smallholder farmers who are unlikely to farm their way out of poverty. In order to carry out its mission thereby achieving its vision, Rwanda’s agro-processing subsector Master plan is based on eight strategic pillars: 1) Boosting agricultural productivity 2) Upgrading agro-industrial value chains 3) Enhancing Capacity for market access 4) Strengthening technological efforts and innovative capabilities 5) Promoting effective and innovative financing 6) Promoting private sector participation 7) Improving infrastructure and access to energy 8) Developing Institutional Capacities Rwanda agro-processing sector will focus on increasing agricultural productivity and reverse the current perennial low productivity in subsistence farming (low yields/output). The drivers for addressing low agricultural productivity include the following: promoting use of fertilizers, agricultural machinery, water & irrigation, reducing post-harvest losses, and addressing impact of climate change. The transformation of agricultural raw materials into industrial products depends on the capacity of entrepreneurs in Rwanda to supply global, regional and local value chains with products matching specific standards, volume and packaging requirements, at particular times, and under strict logistics and time to market demands placed by buyers. New opportunities for upgrading into value added production and/or processing of agricultural products have emerged, though in some value chains such as tea, coffee and horticulture, actors are under pressure from competition in other developing regions of the world and from increasing demands or decreasing prices applied by retailers and processors in developed countries. Successful upgrading in value chains depends not only on a business-friendly operating environment for private sector players but also on specific opportunities that may be linked to a particular product or product form, to the emergence of particular technologies, to changes in international trade rules, or to the emergence of niche markets. Such windows of opportunity are often time bound: first-mover advantage is important, and abrupt changes in price and/or quality demands mean that rewards may be limited in time. Restructuring within value chains will also quickly reverse any previous gains, while advantages secured by some stakeholders will entail losses for others. This entails an agro-processing master plan built upon a flexible structure involving the private sector, industry associations, regulators and civil society actors. Despite agriculture’s importance to the economy of Rwanda, the country’s progress in diversifying from bulk agricultural exports towards processed, higher-value and quality- differentiated products has not been good enough. Rwanda’s ability to meet the growth and poverty reduction targets under Vision 2020 and the EDPRS will depend largely on exploiting the emerging opportunities in domestic, regional and international markets for processed and higher-value agro-industrial products. Diversification towards these market dynamic products has not been fully exploited in the past, but the challenges are not 4 insurmountable. Better policies can help to eliminate or attenuate the challenges that have been identified. At the national level, policies to reduce supply-side constraints and improve business environment and incentive structure for agribusiness must be at the centre of growth and trade promotion strategies. Promoting agricultural productivity and productive capacities depends on the country’s ability to invest in production technology and promote relevant innovations. Strengthening such capacity calls for technological advancement and skills development. This will in turn help in adding value to commodities and building comparative advantage. New learning and innovation platforms involving regional integration and increasing funding for science, technology and innovation are necessary ingredients for catching up. However, this must be done in the framework of public private partnership and by linking research to agro- processing sub-sector. In order for the agro-processing subsector development to act as the engine of economic growth for Rwanda, the sector requires capital. However, investment levels are frequently suboptimal, partly because the sector is perceived as risky and yielding unattractive returns. Traditional and innovative sources of financing that have impact at the enterprise level, and mobilization of large-scale resources, will constitute one of the key pillars for agribusiness development in Rwanda, particularly in the agro-processing industry. As with any business, all forms of finance for entire agribusiness value chain will be either in the form of equity or debt, or a blend of both. Additionally, innovative financing primarily through the SACCO movement will play crucial in the development of agro-processing industries that fall within the SMEs category. The private sector has emerged as an increasingly important element in stimulating economic growth in developing countries, in response to opportunities for investment and business innovation, created by globalization and technological advances. Consequently, private sector development (PSD) has become a major focus of strategies for economic diversification and transformation, broadly endorsed by multilateral and regional development institutions, donor agencies and governments to foster economic development. Rwanda’s agro-processing subsector will focus on enhancing the management of firms responsible for the supply and transformation of agro-processing products from primary commodities to consumables, to meet consumers’ requirements in terms of quantity and price. The aim of this objective is to match demand and supply with minimal effort and thus gain competitive advantages over competitors in crucial activities along the agribusiness value chain. Enhanced supply chain management will also focus on customer relationship management in order to better understand and meet the needs of Rwanda’s agro-processing subsector customers. Infrastructure plays a key role to a country’s economic activities. Such infrastructure includes energy, mostly electricity generation and distribution; water, waste and sanitation management and transport infrastructure such as roads, railways and airports. This infrastructure shapes the possibilities for what can be produced within a country and in the long-run it is therefore intimately linked to investment and growth. Below are the initiatives for infrastructural development. The relevant infrastructure for agro-industrial development includes energy, transport and water supply. They are considered vital social capital and because of their broad availability, it is expected that the Government of Rwanda should provide such infrastructure from its national income or foreign direct investment to accelerate industrial development and improve standards of living. In the recent past, information technology (IT), telephones, and internet facilities have also been considered as essential aspects of infrastructure required for agro-industrial development. 5 Policy interventions and Institutional capacity development Strong, well-functioning institutions are central to sustaining agro-industrial growth. The need for policy to target microeconomic foundations within the context of a sound macroeconomic strategy and the pivotal role of institutions are the platform for modern-day agenda for policy action. In this regard, five levels of policy level interventions are necessary: (1) Improving trade logistics- infrastructure, transport, energy, water and ICTs supported by reforms to make doing business more efficient at lower transaction costs; (2) Further enhancement of microeconomic business environment; (3) Enabling measures to foster the upgrading of agro-industrial clusters; (4) Targeted science, technology and training policies towards stronger focus on skill development and better organisational capability, especially on-the-job, in-house skills development rather than national level education strategies; and (5) Supporting the strengthening of institutions that will develop and implement policies. Institution capacity development encompasses a range of initiatives cutting across leadership, systems, structures, skills, resources, strategy and incentives. There needs to be a structure in place to manage the capacity development process, which requires a defined process, analysis tools, appropriate delegation of authority and resources. There have been efforts to develop capacity within agro-processing related institutions in the recent years with some successful projects and steady growth. However, institutional challenges still remain which will be addressed through a comprehensive approach to both capacity development and institutional coordination. Below are the initiatives. It is expected that implementation of Rwanda’s Agro-processing Masterplan will bring positive outcomes to the country’s efforts. The income at each level of selected agricultural value chains and different groups of actors (small, medium, large) are expected to increase, mainly through product development and diversification and other value added activities. Positive impacts are expected in food security and poverty reduction through reduction of post-harvest losses and by job creation. Employment will be created at each level of the chain with growth over time. Increased Participation of women and other rural communities in general in activities will be fostered at each level of the value chain. Rural and farm areas will be opened up agribusiness and job employment opportunities while boosting resilience and a reduction of vulnerability to social shocks.

1.5 Implementation of chain development strategies – Pilot projects Below are some of the pilot projects that have been proposed and emphasised by the Master plan. These projects have been broken down into specific activities and divided into short, medium and long term. 1. Building Competitiveness of the Staple Foods for Trade and Development The main objective of the project is to upgrade the staple foods value chain in Rwanda. More specifically, the project aims at  Boosting productivity of the staple foods value chain through increased domestic and foreign direct investments in staple foods production and processing processes  Exploiting national, regional and international demand for staple foods products through competitiveness and compliance with market access requirements 2. Building Competitiveness of the Fruit and Vegetable Sector for Increased Trade and Development The main objective of the project is to upgrade the fruit and vegetable value chain in Rwanda. More specifically, the project aims at 6  Boosting productivity of the fruit and vegetable value chain through increased domestic and foreign direct investments in fruit and vegetable production and processing processes  Exploiting national, regional and international demand for fruit and vegetable preparations through increased competitiveness and compliance with market access requirements 3. Building Competitiveness of the Dairy Industry for Increased Trade and Development The main objective of the project is to upgrade the milk value chain in Rwanda. More specifically, the project aims at  Boosting productivity of the milk value chain through increased domestic and foreign direct investments in milk production and processing processes  Exploiting national, regional and international demand for milk and milk products increased competitiveness and compliance with market access requirements 4. Building Competitiveness of the Fisheries Sector for Trade and Development The main objective of the project is to upgrade the fish value chain in Rwanda. More specifically, the project aims at  Boosting productivity of the fish value chain through increased domestic and foreign direct investments in fish production and processing processes  Exploiting national, regional and international demand for fish and fishery products through increased access to markets 5. Rationalisation of Rwanda’s Agro-processing Policies for Improved Productivity and Competitiveness The main objective of the project is to update the policy and regulatory frameworks affecting production, processing and marketing of Rwanda’s agro-industry products. More specifically, the project aims at  Improve agro-processing and trade logistics- infrastructure, transport, energy, water and ICTs supported by reforms to make doing business more efficient at lower transaction costs;  Further enhance microeconomic business environment  Create enabling measures to foster the upgrading of agro-industrial clusters;  Strengthen technology centres through targeted science, technology and training 6. Strengthening Rwanda’s Agro-processing Institutions that will implement Policies for Increased Productivity and Competitiveness The main objective of the project is to upgrade agro-industry value chains in Rwanda as a path out of poverty. More specifically, the project aims at  Updating the policy and regulatory frameworks affecting production, processing and marketing of agro-industry products.  Boosting productivity of agro-industry value chains in Rwanda through increased domestic and foreign direct investments in fruit and vegetable production and processing processes  Exploiting national, regional and international demand for Rwanda’s agro-industry products through increased access to markets 7 2 Introduction

2.1 Background The Republic of Rwanda is endowed with abundant agricultural resources and significant labour force offering a viable basis for development of agro-based industries. Agro-industries provide employment for local population and generate value added for rural areas which usually face pervasive problems of food insecurity, poverty, malnutrition, low productivity and poorly integrated markets. Not much attention has usually been given to the value chain through which agricultural commodities and products reach final consumers within the country and abroad. A clear trend exists towards diets that include more animal products such as fish, meat and dairy products, which in turn increases demand for feed grains and oil crops, as bio-energy production feedstock. Agro-processing is defined as a set of techno-economic (manufacturing) activities carried out for conservation and handling of agricultural produce in order to make it usable as food, feed, fibre, fuel or industrial raw material. Hence, the scope of the agro-processing sub- sector encompasses all operations from the stage of harvest till the material reaches the end users in the desired form, packaging, quantity, quality and price. Agro-processing converts agricultural products into the much needed consumer goods such as foodstuff, textiles, leather products, wooden articles and composite products. At the same time, international competitiveness admits only safe, quality and reliable products with consistent supply, which calls for well-organised, knowledge-based, environmentally sound product development, production technology and quality assurance systems. Inadequate attention to the agro-processing sector in the past both globally and in Rwanda has put both the producers and the consumers at a disadvantage through underutilisation of resources, wastage and low quality products. The diversification of the Rwandan economy into various sectors is essential for attaining Vision 2020 goals with the industrial sector contributing around 15% of GDP. The industrial policy approved in 2011 indicates potential industrial subsectors to be focused on for quick development of the industrial sector in Rwanda; these are Agro-processing, Construction material, Pharmaceuticals, Chemical products, Biodegradable packaging and High-tech industries. With a strong private sector and a well-managed public - private sector partnership, Rwanda will be able to achieve an industrial growth needed to become a middle-income country. In recognition of this, the Government of Rwanda found it necessary to develop an industrial master plan for the agro-processing sub-sector.

2.2 Challenge As a developing country with large rural communities, Rwanda suffers from inadequate access to agro-processed food and low employment levels in regards to the agro-processing sub-sector. The many problems of poverty, low productivity, inadequate infrastructure and poorly integrated markets faced by the country are exacerbated by an underdeveloped agro- processing sub-sector. The problem is worsened further by the dependence on outdated and inefficient technologies leading to poor productivity and slow economic growth. Moreover, although agriculture-based industrial products account for more than half of Rwanda’s exports, less than 30% of those exports involve processed goods compared to 98% in the developed world. The challenges facing Rwanda’s agro-processing subsector are summarised in the figure 2 below: 8 Figure 2: Graphical Illustration of the Challenges Facing Rwanda’s Agro-Processing Subsector

2.3 Purpose of the Agro-processing Masterplan The agro-processing master plan aims to achieve the following objectives: 1) Strengthen supply side productive capacities through improved agricultural productivity. 2) Promote investments in the agro-processing subsector which are necessary for reducing post-harvest losses and for value addition. 3) To develop policies and support services necessary for market access for Rwanda’s agro- industry products

2.4 Approach of the Agro-processing Masterplan To realise these objectives, the agro-processing subsector in Rwanda needs to undergo a structural transformation to focus on high quality agro-processing products. This will create jobs hence income generation and to ensure food security that is so badly needed by the country’s growing population. Rwanda’s agro-processing subsector will focus on high quality agro-processing products taking into account the limited supply of land, which limits volumes of agro-processing products, which can be produced. Growth of vibrant agro- processing industries is essential to offer employment for a large number of smallholder farmers who are unlikely to farm their way out of poverty. In this regard, strategies to implement Rwanda’s agro-processing subsector masterplan are based on eight strategic pillars: 1) Boosting agricultural productivity 2) Upgrading agro-industrial value chains 3) Enhancing Capacity for market access 4) Strengthening technological efforts and innovative capabilities 5) Promoting effective and innovative financing 9 6) Promoting private sector participation 7) Improving infrastructure and access to energy and 8) Policy reforms and Institutional capacities for agro-processing developed They have been classified indicating timelines and the organizations responsible for their implementation.

2.5 Methodology for Agro-processing Masterplan Development Rwanda’s agro-processing subsector master plan was developed through a consultative process with the subsector’s stakeholders from both the public and private sectors. It analyses and prioritises the following: 1) Rwanda's district resources (industries) mapping. 2) Rwanda's industrial clusters' (parks) agro-processing resources (industries) mapping. 3) Rwanda's priority target markets with regards to agro-processing. 4) Rwanda's priority agro-processing industries. 5) Rwanda's pilot projects with regards to the agro-processing subsector.

2.6 Justification for agro-processing Master plan for Rwanda The prospects for continued demand for value-added food and agricultural products through agro-processing constitute an incentive for increased attention to agro-industries development within the context of economic growth, food security and poverty fighting strategies. With their forward and backward linkages, agro-industries have high multiplier effects in terms of job creation and value addition. However, the potential that agriculture contributes to development in Rwanda has not been fully utilized. Agriculture provides three pathways out of poverty: Firstly, focus should be directed at building competitiveness particularly where agricultural production is dominated primarily by smallholders. It is necessary to implement programmes for boosting agricultural productivity and quality improvement for key agro- processing sectors. Secondly, as with many developing countries, Rwanda is endowed with a wealth of agricultural resources and cheap labor. Promoting agro-processing industries will open up the rural labor markets and generate diverse agro-products and services for income generation. The country should increase investments in the agro-processing subsector which are necessary for reducing post-harvest losses through agro-processing and value addition. Thirdly, as Rwanda’s agricultural sector is dominated by smallholder producers, the country should develop policies and strategies for commercialization of smallholder farming and access to domestic, regional and global markets. Programmes to assist smallholder producers in skills development, adoption of modern technologies, good agricultural practices (GAP) and implementation of sanitary and phytosanitary (SPS) standards necessary to produce safe agro-processed products should be implemented. Accelerated growth of agro-industries may also pose a risk in terms of equity, sustainability and inclusiveness. Although agro-industries have the potential to provide a reliable and stable outlet to agricultural products, the need to ensure competitiveness favours farmers with larger quantities and better quality of products. Where there is unbalanced market power in agro-food chains, value addition and capture through agro-processing can be concentrated among a few chain participants to the detriment of others. There is need, 10 therefore, for the country to develop agro-processing policies and strategies that, while promoting agro-processing, take into account issues of competitiveness, equity and inclusiveness. 11 3 Overview of Rwanda’s Agro-Processing Subsector Rwanda’s industrial sector of which the agro-processing subsector is a part of, has gone through three distinct phases: In the 1960s, in the immediate aftermath of independence, the country’s policies were relatively open, hampered by simmering social conflicts and weak integration. Between 1973 and 1994, the period was characterised by import- substitution. After 1995, there was rapid regional integration based on an improving investment climate that is still ongoing today. The breaks between these periods are marked crises and dips in the levels of new firm creation in the industrial sector, namely in the early 1970s, following ethnic violence in Burundi and the military takeover by Juvenal Habyarimana in 1973, and during the 1994 genocide crisis. Rwanda’s industrial sector was severely damaged during the period between 1990 and 1994. It has gone from reconstruction to renewed growth and from a state-driven system to greater liberalization & privatization. These economic policies have contributed to three main phases in the development of Rwanda’s industrial sector since 1994: Phase 1 – the reconstruction effort (1994–2004): The decade from 1995 to 2004 was a period focused on recovery and reconstruction, with the key characteristics being the initial restoration of production capacity and the entry of a limited number of new firms. Phase 2 – acceleration of the privatization of state enterprises in the manufacturing and agribusiness sectors (2005–12). Due to the state of the economy in the immediate aftermath of the genocide and the complications involved in the process, the implementation of the 1996 Privatization and Public Investment Law only gathered traction after 2005. It has played a key role in attracting private investment and large players – both domestic and foreign – to the industrial sector. Phase 3 – growth, consolidation and entry into the East African Community (EAC) (2006– 12). Towards the end of the decade, new business creation and investment in growth took over from reconstruction as the main driver of growth in Rwanda’s industrial sector. The factors affecting Rwanda’s agro-processing subsector are highlighted below;

3.1 Political Rwanda has achieved impressive development progress since the 1994 genocide and civil war. It is now consolidating gains in social development and accelerating growth while ensuring that they are broadly shared to mitigate risks to eroding the country’s hard-won political and social stability. The country’s long term development goals are embedded in Vision 2020. The vision is to transform Rwanda from a low income agriculture based economy to a knowledge based service oriented economy by 2020. A medium term strategy, the Economic Development and Poverty Reduction Strategy 2 (EDPRS 2), has been developed to support the achievement of the long term goals as stated in Vision 2020. The EDPRS 2 covers the period 2013 – 2018 with its highest priority being growth acceleration and poverty reduction through its four thematic areas: economic transformation, rural development, productivity and youth employment and accountable governance. The EDPRS 2 aims to achieve the following goals by 2018: Increasing GDP per capita to $1,000; Reducing the poverty rate to below 30%; and Reducing extreme poverty rate to below 9% An underlying macroeconomic assumption is to accelerate annual GDP growth to 10% over the period 2013-2018. The last decade has seen enormous successes including high 12 growth, rapid poverty reduction and reduced inequality. As per a World Bank report, between 2001 and 2012, real GDP growth averaged 8.1% per annum. The poverty rate dropped from 59% in 2001 to 45% in 2011 while inequality reduced from 0.52 in 2005 to 0.49 in 2011.

3.2 Economic Rwanda's economy is heavily based on agriculture, subsistence farming in particular, which makes a significant contribution to GDP. Main crops include coffee, tea, pyrethrum, bananas, beans, sorghum and potatoes. Because of its subsistence nature, agriculture in Rwanda is domestic-market oriented and most agricultural products are consumed domestically. Agriculture remains a source of livelihood to the vast majority of the population. As a landlocked country with rather poor infrastructure, including road conditions, Rwanda's trading costs are high. Two traditional cash crops, tea and coffee account for 80% of agriculture exports. On the other hand, although agriculture employs a high percentage of the labour force, some food products must be imported to meet domestic demand: imports of wheat, maize and rice accounted for 20-36% of domestic consumption. The fishing subsector is small and fish production is low. Fishing is conducted on 17 inland lakes, using nets and sailboats. Reducing the country’s dependency on foreign aid (40% of the current budget) through a mobilization of domestic resources is critical. The country remains vulnerable to fluctuations in aid flows. Starting in mid-2012, Rwanda experienced a sudden and sharp decline in aid. Through appropriate fiscal and monetary policies, high growth and stability prevailed throughout 2012 (economic growth was 7.3 percent and inflation below 6 percent). However, starting mid-2013, Rwanda experienced lagged impact of foreign aid shortfall, causing economic growth to decelerate to 4.6 percent. The government has successfully increased the domestic revenues to GDP ratio in the past several years, but the level is still far below the regional average. The Rwandan economy grew by 6.8% in 2012/13 compared to the previous fiscal year, with industry growing at 11.3% and services growing by 7.7%. Industry has been the highest growth sector since 2010/11, with services the largest sector at 45% of GDP. Gross investment was 22.9% of GDP in 2012, with private investment accounting for 10.2%. A quarter of private investment ($160m) came through foreign direct investment (FDI). Investment registered by Rwanda Development Board (RDB) has been increasing substantially over the last few years. In 2012/13, registered investment amounted to $1.9 billion, meaning 67 per cent higher than in the 2012 calendar year. The industrial sector comprises 16% of national GDP, with construction accounting for more than half of this. Aggregated turnover grew by 11% in 2012 in the sampled industrial firms (RIS 2012), with average capacity utilization of 65%. Capacity underutilization was considered particularly problematic for firms in manufactured consumer goods, construction materials and construction services. Average labour productivity for the sampled firms rose 6.7% in 2012.

3.3 Social The population of Rwanda has grown at an average population growth rate of 2.6% annually from 2002 to 2012 reaching a total resident population of 10,537,222 people as of August 15th 2012, this is a 29.6% increase from 2002. The population growth rate was highest in the Eastern Province (4.3%) and lowest in the Northern Province (1.0%), with a national average sex ratio of 93 males for every 100 females, with Kigali city having more males than females compared to other districts where the sex ratios vary between 86-99. At the provincial level, the Eastern Province has the highest population of about 2,600,814 people, 13 followed closely by the Southern Province and the Western Province with 2,594,428 and 2,476,943 people respectively, whilst Kigali City, with 1,135,428 people, has the lowest population. The density of the rural population is projected to increase over time but at a slower pace than the urban population, according to the World Bank and UN statistics, 18.1% of the total population live in the urban areas and the larger 81.9% reside in the rural areas. The Rwandan population density has increased from 321 persons per sq.km in 2002 to 416 in 2012 at national level; the highest in the East African Region and quite high compared with other countries globally. With the exception of Kigali City whose density exceeds a thousand people per sq.km, the highest densely populated province is the Northern Province with 528 persons per sq.km, whilst the province with the lowest density is the Eastern Province with 275 persons per sq.km. The Rwandan working age population has increased consistently over time. However, the pace of the increase in the active population between 2002 and 2012 was almost the same as that of the working-age population (16+) with an economic activity rate of 85%. The annual growth of the population aged 16 years and above was 3.0% while the one for the active population was 2.9%. The gap between the working-age population and active population, which represents the inactive population, was broadening with the time which may be explained by the increasing number of students in secondary schools and universities.

3.4 Technology and Innovation Rwanda was named the East Africa’s number one Information Communication and Technology (ICT) nation by the United Nations Conference on Trade and Development (UNCTAD) and with the massive development in its ICT infrastructure, Rwanda will become a regional ICT hub soon. The Rwandan capital city, Kigali joined the ranks of “digital cities” such as Bangkok and Taipei, among others, launching free wireless Internet in specific areas around the city in September 2013 under the “Smart Kigali” initiative. Under this initiative, free broadband Wi-Fi Internet is accessible in public places that include commercial buildings, hotels, restaurants, bus stations, airport, in public transport. ICT is a central engine to driving Rwanda’s transformation to a knowledge based economy, with the Government of Rwanda (GoR) investing more in ICT. The country’s current ICT sector budget is on par with nations of the Organization of Economic Cooperation and Development (OECD), a grouping of 30 rich nations, at 1.6 percent, far above the African average. Rwanda continues to be one of the fastest growing African countries in ICT and there are several avenues for growth for the ICT sector from e-commerce and e-services, mobile technologies, applications development and automation to becoming a regional centre for the training of top quality ICT professionals and research. Launching programmes in scientific research and education, technological innovation, and telecommunications distribution, Vision 2020 aimed to produce “highly-skilled scientists and technicians to satisfy the needs of the national economy” that would be integrated into the larger framework of economic and social development for the greater Rwandan population. MTN Rwanda, Airtel and TIGO are the leading mobile network providers with a network coverage accounts for 99.79% of the country and the current subscriber base is at 63.5% (6,689,158 subscribers December 2013). The improvement in mobile phone and fibre optic networks as well as computer usage and internet access has enabled both international public and private firms to enhance development in the country. Rwanda has benefited from ICT-based investments by lucrative international players such as Microsoft, Nokia, and Terracom. Rwanda’s internet penetration grew from less than 1% in 2000 to 13% at the end of December 2013. In additional to existing ICT infrastructure as well as access network 14 rollout program, investment in a 4G LTE network is expected to increase penetration to at least 95% by end of 2016.

3.5 Environment and Climate Change Rwanda is highly dependent on natural resources and agriculture. Given its very small land holdings, insufficient investments in soil & water conservation and Rwanda’s topography, soil and nutrient erosion has been a constraint to agricultural growth and a pressing environmental problem that also affects downstream countries. Climate change is likely to add to existing pressures including erosion through more intense rains, since Rwanda is strongly reliant on rain-fed agriculture for rural livelihoods and exports of tea and coffee. As a leader in environment and climate change awareness, Rwanda has become a natural centre for green investments. Rwanda has taken important steps at a high level to recognize the importance of the environment and climate change. The adoption of the National Green Growth and Climate Change Adaptation Strategy highlighted the centre stage this issue has taken up by the GoR. With the changing international environment giving more recognition of climate change as a global issue, Rwanda stands to gain by moving rapidly and quickly to ensure sustainability of interventions through environment mainstreaming, ecosystem protection and rehabilitation as well as tapping into the growing international pool of green investments. Environment and climate change issues to a great degree have been integrated in key planning documents including the EDPRS 2, Vision 2020 and the Millennium Development Goals. On environmental performance, progress has been rather slow but reassuring. At the policy and strategy level, protection of environment and sustainable natural resources management is one of the three crosscutting areas in Vision 2020. In the EDPRS 2, environment is both a pillar and a crosscutting issue. The seventh Millennium Development Goal focuses specifically on the environment and ensuring sustainability for the future. This encompasses:  Sustainable development to reverse environmental resource loss; reduction of the amount and rate of biodiversity loss by 2010  An increase in the population with access to safe drinking water and basic sanitation facilities by half and significantly improving the lives of at least 100 million slum residents by 2020 Considerable efforts continue to be applied including promotion of tree planting and construction and rehabilitation of anti-erosion structures on steep slopes. There are also efforts in the conservation of biodiversity through strengthened protected area management. The GoR also incorporates a ‘green economy’ approach to economic transformation, targeting to reduce economic costs and benefiting future generations through exploiting new ‘green’ economic opportunities. Significant resources are allocated to a number of high impact interventions in priority sectors. 15 4 Rwanda’s Agro-Processing Institutional Environment

4.1 Policies Relevant to Agro-processing in Rwanda The Vision 2020 is Rwanda’s development blueprint. It contains Rwanda's long-term development goals and aims to transform Rwanda from a low-income agriculture-based economy to a knowledge-based, service-oriented economy by 2020. Rwanda’s Vision 2020 seeks to transform the nation fundamentally into a middle-income country by the year 2020. This requires achieving an annual per capita income (GDP per capita) of US$ 900 (US$ 630 in 2013), a poverty rate of 30% (44.9% in 2012) and an average life expectancy of 55 years (64 years in 2013). Rwanda has had an average per capita growth of around 8% for the last decade, but given that the rate of population has increased by 2.7%, this growth rate would need to be accelerated further in order to achieve sustained poverty reduction. The Vision 2020 identifies agriculture and agro processing industry as key drivers for the country’s growth. Transforming agriculture into a productive high value sector through supporting manufacturing was identified as a key driver for this growth. The vision is also embedded in key policy documents and strategies such as the National Industrialisation Policies that focuses on ensuring a competitive and advanced services sector envisaged to produce over $1.5 billion of exports by 2020 while increasing the number of off farm jobs. Rwanda also has availability of a large workforce in the rural areas and labour costs remain very low. This provides availability of unskilled labour for simple factory jobs. Currently, the country’s GDP is driven predominantly by the agriculture sector. The national Agricultural Policy was issued in 2004 with the objective of improving food security and the nutritional status of the population, and increasing income levels of the rural households. The agricultural policy focuses on promoting "intensification" to increase productivity through the application of more advanced technologies. The main aim of the Agricultural Policy 2004 of MINAGRI is to increase animal production, modernize farming, reduce poverty, ensure food security and have surplus for the market. The diversification of the Rwanda’s economy into various sectors possible is essential for attaining vision 2020 goals. The industrial sector currently contributes around 15% of GDP. For Rwanda to reach Vision 2020 target, it requires among others the share of industry to increase to 20% of GDP. This will oblige the industrial sector to outstrip services and agriculture by recording at least 14% growth annually. Achieving this significant transformation requires a dynamic and innovative industrial sector in Rwanda. In April 2011, the Industrial Policy (2011) was launched, under which the Government proposes to improve infrastructure to facilitate the development of the manufacturing sector. Key among the strategic issues is to allocate land for manufacturing industries, such as industrial parks and special economic zones (SEZs) and agro-processing parks, and connecting farms with agro-processing hubs. The Industrial Policy identified ten clusters, mostly manufacturing industries as priority industries for the short, medium and long term. The short-term priorities focus mainly on agro-processing for pyrethrum, dairy, vegetable oil, soaps and detergents; textiles (including silk) and leather. Small and Medium Enterprise (SME) Policy (2010) The SME policy has a vision to create a critical mass of viable and dynamic SMEs significantly contributing to the national economic development and a mission to stimulate growth of sustainable SMEs through enhanced business support service provision, access to finance and the creation of a conducive legal and institutional framework. The purpose of the SME Policy is to foster job creation and an 16 increase in the tax and export base through the promotion of competitive new and existing SMEs mainly in value added sectors. Rwanda is in the process of finalising draft law on competition and consumer protection. At the same time, steps are underway at the EAC and COMESA levels, to put in place common competition regimes. Currently, competition is regulated under Law No. 15 of 28 January 2001 Concerning the Organization of Internal Trade. Trade must follow the principles of competitiveness and free market, and prices of goods and services must be regulated by free market competition. Table below summarises various Government Policy Documents that support agro- processing in Rwanda: Table 1: Agro-Processing Subsector Related Policies Policy Goals The Vision 2020 The Vision 2020 defines Rwanda's long-term development goals and aims to transform Rwanda from a low-income agriculture-based economy to a knowledge-based, service-oriented economy by 2020. The National The main aim of the Agricultural Policy 2004 of MINAGRI is to increase animal Agricultural Policy production, modernize farming, reduce poverty, ensure food security and have (2004) surplus for the market. National Industrial In April 2011, the Industrial Policy (2011) was launched, under which the Policy (2011) Government proposes to improve infrastructure to facilitate the development of the manufacturing sector. Key among the strategic issues is to allocate land for manufacturing industries, such as industrial parks and special economic zones (SEZs) and agro-processing parks, and connecting farms with agro- processing hubs. The Industrial Policy identified ten clusters, mostly manufacturing industries as priority industries for the short, medium and long term. The short-term priorities focus mainly on agro-processing for pyrethrum, dairy, vegetable oil, soaps and detergents; textiles (including silk) and leather. The National Trade The Trade Policy document sets out five objectives: increased productivity and Policy (2010) diversified sustainable productive capacities for trading nationally, regionally, and internationally; enhanced participation of importers and exporters of goods and services in regional and international trade, taking advantage of trade opportunities; increasing investment, including foreign direct investment, in production of competitive goods and services for the export market; increased human resources skills in trade and development through training and retraining in private and public institutions; and strengthened science, technology, and innovation policies, strategies, and institutions including intellectual property laws, in support of industrial development and creative knowledge-based industries. Small and Medium The SME policy has a vision to create a critical mass of viable and dynamic Enterprise (SME) SMEs significantly contributing to the national economic development and a Policy (2010) mission to stimulate growth of sustainable SMEs through enhanced business support service provision, access to finance and the creation of a conducive legal and institutional framework. The purpose of the SME Policy is to foster job creation and an increase in the tax and export base through the promotion of competitive new and existing SMEs mainly in value added sectors. Competition and Rwanda is in the process of finalising draft law on competition and consumer Consumer protection. At the same time, steps are underway at the EAC and COMESA Protection Policy levels, to put in place common competition regimes. Currently, competition is (2008) regulated under Law No. 15 of 28 January 2001 Concerning the Organization of Internal Trade. Trade must follow the principles of competitiveness and free 17 Policy Goals market, and prices of goods and services must be regulated by free market competition.

4.2 Government Strategies to Promote Agro-processing in Rwanda The Economic Development and Poverty Reduction Strategy (EDPRS) is a medium-term strategy towards attainment of the long-term Rwanda Vision 2020 objectives. The priority areas identified under the EDPRS1 (which ran from 2008-2012) were: poverty and vulnerability reduction; institutional capacity building and social capital formation; sustainable management of the natural environment; good governance and enhanced efficiency and accountability of the public sector; enhanced performance of the private sector, focusing on ICT; economic infrastructure development: (transport, energy, water, and ICT); and rural development and agricultural transformation. Following the issuance of the National Agricultural Policy in 2004, Rwanda adopted the Strategy for Transformation of Agriculture (2009). The Strategy seeks to transform agriculture into a modern, professionally operated and market-oriented system. Through the Strategy, the Government is to promote professionalism, specialization, innovation, and public-private partnerships in the transformation process. Various programmes have been implemented with the aim of improving food security, income levels, and agricultural productivity. The Government implemented such programmes as the One Cow per Poor Family Programme (GIRINKA), the Crop Intensification Programme (CIP), and the Land Husbandry, Water Harvesting and Hillside Irrigation (LWH) Programme. As a result, according to the authorities, agriculture grew at an annual average rate of 5% between 2006 and 2012 and agricultural productivity has increased. In addition, Rwanda has coined Agriculture Mechanization Strategy 1 & 2. The 1st strategy formulated by the Government of Rwanda aims that 25% of farm operations will be mechanized by 2017, allowing one in every four Rwandan farmers to either own and/or hire mechanization services in their farm. Enabling access to the various farm mechanization options, development of technical ability and knowledge on farm machineries and implements, and improved agro-processing through mechanization will serve as the key drivers in this transformation. Through a 2nd Strategy, the Government seeks to transform farming into a productive, high value, market oriented sector by modernizing 50% of its agriculture by 2020, and thereby improve livelihoods of rural population, achieve food security and increase exports of agricultural products as reflected in the millennium development goals (MDG) and New Partnership for Africa’s Development. The Ministry of Trade and Industry's Strategic Plan (2008-2012) is now outdated and should be replaced. The Strategic Plan covers five key components: (i) to increase the value of existing exports; (ii) to diversify the export base, particularly in manufacturing and services; (iii) to promote and facilitate all Rwandan traders; (iv) to increase investment which drives growth and job creation; and (v) to provide an environment for the private sector that facilitates its growth. The Government has tried to integrate in its trade policy other key trade-related issues and strategies developed by other ministries with a view to ensuring coherence in trade policy. In October 2012, Rwanda launched the National Cross-Border Trade Strategy (2012-2017), which supports Rwanda’s exports to neighbouring countries- Burundi, Democratic Republic of Congo (DRC), Tanzania and Uganda. It focuses on both formal and informal trade in agricultural and manufactured goods as well as re-exports. The strategy has a strong gender 18 component with interventions to support informal trade and elaborates interventions to support large firms in Rwanda to benefit from markets in neighbouring countries. For agro- products, the benefits of cross-border trade can be achieved by addressing the non-tariff barriers (NTBs) which are limiting Rwanda’s cross border trade. The EAC, for example, has identified the following NTBs as major obstacles to regional trade: poor port infrastructure; police roadblocks and excessive weighbridges; non-harmonised technical regulations; sanitary and phytosanitary measures; and poor application of rules of origin, among others. Table 2 below summarises different government strategies supporting Rwanda’s agro- processing sector. Table 2: Agro-Processing Subsector Related Strategies Strategy Focus The Economic The goal of the EDPRS2 focuses on the following 5 priority areas: 1) Development and Increasing the domestic interconnectivity of the Rwandan economy through Poverty Reduction investments in hard and soft infrastructure; 2) Increasing the external Strategy (EDPRS) 1 connectivity of Rwanda’s economy and boosting exports; 3) Transforming &2 the private sector by increasing investment in priority sectors; 4) Transforming the economic geography of Rwanda by facilitating and managing urbanisation for increased growth countrywide; and 5) Pursuing a ‘green economy’ approach to economic transformation. On agro-processing, the EDPRS2 seeks to increase the external connectivity of Rwanda’s economy and boost exports through strengthening export promotion, while investing in soft and hard sector-specific infrastructure to accelerate growth in the commodity and tourism sectors, and facilitating the increasing export orientation of firms in Rwanda’s manufacturing and agro-processing sectors. MINICOM The Ministry of Trade and Industry's Strategic Plan (2008-2012) is now Strategic Plan outdated and should be replaced. The Strategic Plan covers five key (2008-2012) components: (i) to increase the value of existing exports; (ii) to diversify the export base, particularly in manufacturing and services; (iii) to promote and facilitate all Rwandan traders; (iv) to increase investment which drives growth and job creation; and (v) to provide an environment for the private sector that facilitates its growth. Strategy for Following the issuance of the National Agricultural Policy in 2004, Rwanda Transformation of adopted a strategy to transform agriculture into a modern, professionally Agriculture (2009) operated and market-oriented system. Through the Strategy, the Government is to promote professionalism, specialization, innovation, and public-private partnerships in the transformation process. Cross-Border Trade The National Cross-Border Trade Strategy (2012-2017) aims at supporting Strategy (2012) Rwanda’s exports to neighbouring countries- Burundi, Democratic Republic of Congo (DRC), Tanzania and Uganda. It focuses on both formal and informal trade in agricultural and manufactured goods as well as re-exports. The strategy has a strong gender component with interventions to support informal trade and elaborates interventions to support large firms in Rwanda to benefit from markets in neighbouring countries. For agro-products, the benefits of cross-border trade can be achieved by addressing the non-tariff barriers (NTBs) which are limiting Rwanda’s cross border trade. Rwanda The 1st strategy formulated by the Government of Rwanda aims that 25% of Agriculture farm operations will be mechanized by 2017, allowing one in every 4 Mechanization Rwandan farmers to either own and/or hire mechanization services in their Strategy 1 & 2 farm. Through the 2nd Strategy, the Government seeks to transform farming into a productive, high value, market oriented sector by modernizing 50% of its agriculture by 2020, and thereby improve livelihoods of rural population, achieve food security and increase exports of agricultural products as 19 Strategy Focus reflected in the millennium development goals (MDG) and New Partnership for Africa’s Development. 20 5 Mapping of Agro-processing Resources Agro-processing subsector is a subset of the country’s entire agribusiness sector where raw agricultural materials, originating from agriculture, livestock, forestry and fisheries are transformed into finished and semi-finished agricultural products, which are then sold to both local and international consumers. Taking into account the critical part the rest of the agribusiness sector value chain components play in the agro- processing subsector, an analysis of the entire agribusiness value chain is necessary. Rwanda’s agribusiness value chain is illustrated in figure 3 below: Input Suppliers – Seeds, Fertilizer, Crop Protection, Animal Health & Nutrition, Crop Insurance & Food Ingredients Institutional Environment– Primary Agricultural Producers – Animal & Plant Resources Policies, Strategies, Standards, regulations and government support services Micro & Small Scale Medium Scale Producers Large Scale Producers Flow of Goods, Products and Producers Flow of Orders, Consumer Community Collection Centers/Traders/SACCOs Institutional Arrangements in Government Information Preferences and Information -Ministries, Regulatory Institutions Agro-Processors Wholesalers Value chain support services from NGOs, Other Development Partners & private sector - Funds, Agro-Resources, training, support services National Retailers Exporters Local Consumers Foreign Consumers Figure 3: Rwanda’s Agribusiness Value Chain 21

5.1 Mapping of Rwanda’s Agricultural Resources Rwanda’s ambitious agro-processing subsector strategic direction for 2014 – 2020 focuses on production of high quality agro-processing products. In order to achieve this, the country will focus on specialisation by district/province (industrial clusters), by trade destination and by industry. The key to achieving this level of specialisation lies in analysing Rwanda’s agricultural resources and prioritising them based on Rwanda’s Vision 2020. In addition, controlled experimentation through use of pilot projects in order to continuously innovate and adapt Rwanda’s agro-processing subsector to changes in its environment remain necessary. Although Rwanda is endowed with animal and plant resources, the country experiences a limited supply of land as compared to its neighbours and competitors. An analysis of Rwanda’s agricultural resources is a crucial step in strategically investing in the agro-processing subsector. Rwanda’s plant-based agricultural resources are distributed across the country determined by the following factors: suitable climate, suitable soils, availability of market and competitiveness. Rwanda’s plant resources include food crops, traditional export crops, horticultural crops and forestry & agro-forestry products. Animal resources include livestock, fish & fish products, poultry, swine and sheep & goats. This section will cover an analysis of livestock and fish & fish products taking into account their strategic importance concerning resources available. Food Crops Ensuring food security of the population is a key aim of Rwanda's agricultural policy. Food crops constitute 84% of agricultural GDP, and 67% of the cultivable land, reflecting the subsistence nature of agriculture in Rwanda. Since the launch of the National Agricultural Policy in 2004, the cultivable area has increased by 2%, while food crop output has achieved average growth of 7% per year, reflecting improved productivity, through the implementation of various programmes. Food imports have been increasing along with food crop production. The increased food imports is related to a shift in food consumption patterns where richer urban households increasingly consume imported food products, such as rice and sugar, while rural subsistence households continue to consume traditional staples, such as cassava and bananas.

5.1.1.1 Maize Ten years ago, maize was not a significant crop in Rwanda, but MINAGRI statistics show that production has increased substantially during the last five years. This growth is because of increased emphasis placed by MINAGRI on maize as a Crop Intensification Program (CIP) crop that can underpin national food security. To encourage production, new varieties have been introduced, a subsidized inputs program has been implemented and cultivation patterns have been shifted from mixed cropping to consolidated monoculture. While Rwanda remains a net importer of maize, this assessment suggests that there is some potential to develop the export market for maize meal and to achieve further import substitution for maize itself.

5.1.1.2 Beans Beans are a key staple of the Rwandan diet, and the bean crop is the largest of all the agricultural commodities produced in the country. While official price and trade data classifies all beans in a single category, three genera of beans are grown in the country i.e. ordinary beans, climbing beans and soya beans. 22 Traditionally, beans were grown as a staple crop to ensure household food security. Strategies of staggered and mixed sowings of beans, and the use of local landraces, are common mechanisms to reduce the risk of interrupted rainfall or disease. However, these practices also reduce the commercial utilization of the crop, and may explain why it has been difficult to develop commercial markets and common nomenclatures for the different strains and mixtures of beans. Nevertheless, the assessment of cross-border markets (particularly those in Uganda) suggests that exports of beans can increase substantially if issues of marketing are successfully addressed.

5.1.1.3 Irish Potatoes Irish potatoes are the second most important staple in Rwanda. As per the National Institute of Statistics of Rwanda, Third Integrated Household Living Conditions Survey (EICV3), 2011 data indicates that they constitute 7.6% of all food purchases, and 8.3% of all food consumption. The country produces a number of different potato varieties, some of which are recognized throughout the region. These vary in taste and cooking characteristics as well as their adaptation to specific soil types. The variety Chinije is particularly prized for its taste and chipping characteristics. This assessment suggests that while further market development is possible in Burundi and the DRC, greater possibilities exist in both Tanzania and Uganda if the utilization of existing return haulage capacity is to be improved.

5.1.1.4 Cassava Cassava has always been a significant staple crop in Rwanda, but only recently has attention been focused on its increased production. MINAGRI statistics show that production has increased substantially since 2008. This increase has been driven by an increased emphasis on cassava as a CIP crop that can contribute to both human and animal feed requirements. To encourage production, milling capacity has been enhanced, new extension services developed, and the use of crop inputs has been encouraged. Nevertheless, although cassava is a resilient crop to grow, it can be subject to a number of post-harvest problems, including cyanogenesis, rapid physiological degeneration, and both bacterial and fungal decay. These issues limit the tradability of raw and even milled cassava, which must be properly processed soon after harvest if it is to be sold in an international market. For these reasons, cross border trade in cassava currently represents only a very small proportion of local production and consumption. Nevertheless, the prices of cassava and cassava flour in neighbouring countries, especially Burundi, suggest that increased exports might be commercially feasible if these constraints could be overcome.

5.1.1.5 Wheat As a CIP crop, Rwanda’s wheat yields have doubled since 2008, although the domestic market has remained small. A Rwanda Agricultural Board (RAB) program has been ongoing since 2008, with the goal of introducing new varieties and increasing the use of inputs. However, the market has been constrained by the genetic makeup of Rwandan wheat. With low protein levels (approximately 9%) and poor protein quality, Rwandan wheat is unsuitable as bread wheat. Instead, it is used for making chapatis, biscuits, porridge, or for blending with higher quality wheat. As a result, the two large commercial wheat mills in Rwanda cannot use the domestic production at all, and are obliged to import grain from abroad (primarily from Russia, currently).

5.1.1.6 Rice Rice is a relatively new crop to Rwanda, having been introduced only in the last 60 years. Nevertheless, rice is widely consumed and considerable volumes are imported from neighbouring countries and from Asia. 23 As a CIP crop, the Government of Rwanda (GoR) has supported rice production. The GoR has administered the construction of community-based irrigation systems in the valley floors, is continuing to introduce new varieties suitable to the soils and climate of the country and installing mills in many of the main production districts. Traditional Export Crops

5.1.1.7 Coffee Coffee is Rwanda's traditional export product. About 400,000 farmers (20% grouped into cooperatives) grow coffee in an area of about 35,000 ha. With 80% of the country's 11.7 million population engaged in agriculture, this means coffee growers account for about 4% of the agricultural population. These coffee growers are generally smallholders with small, scattered farms. NAEB analysis, based on the 2009 National Coffee Survey, showed that the minimum economically viable individual coffee plot size is 0.25 ha, although 90% of coffee farmers (work 33,000 ha) have less than 0.25 ha each. Fully washing would enable producers to sell their coffee as high grade Arabica, at higher prices. The Government has been trying to increase farmers’ income by helping farmers to participate in the whole value chain, including production, processing, and export. Currently farmers sell their coffee cherries to coffee-washing stations owned either by cooperatives or by private investors. The target is to have at least 80% (from 20%) of coffee farmers grouped into cooperatives, and all coffee cooperatives owning a coffee washing station. Rwanda's National Coffee Strategy 2009-2012, issued in December 2008, aimed at producing 33,000 tonnes of coffee by 2012, with 19,000 tonnes (58%) fully washed. Under the strategy, revenue from coffee exports is to reach US$115 million. In 2012, coffee production was 16,000 tonnes, with 4,400 tonnes fully washed, and total export revenue was US$74 million. The coffee sector needs urgent reorganisation and upgrading. One continuing concern is that farmers are producing less high-quality coffee, partly because few are able to implement good farming practices, and partly because the prices paid to farmers do not provide sufficient incentive for them to focus on quality. At the beginning of the coffee- harvesting season, the NAEB, the sector regulator under the Ministry of Agriculture and Animal Resources (MINAGRI), sets minimum prices for washing stations to purchase cherries. In some areas, prices paid by washing stations to farmers do not reflect the quality of cherries, and thus farmers do not concentrate on quality; washing station personnel may also need additional training to ensure they consistently identify higher quality beans.

5.1.1.8 Tea Since its introduction in the 1960s, tea has been one of Rwanda's strongest export sectors. In accordance with Law No. 39/2010 of 25 November 2010 establishing the National Agricultural Export Development Board (NAEB), NAEB is responsible for overseeing the functioning of the tea industry through policy guidance and tea certification. Tea is cultivated mainly on large plantations owned and managed by about 11 factories that process green tea into black tea. Almost a third of the tea produced in Rwanda is grown on industrial estates belonging to private investors and the remainder produced by small-scale private growers. Tea certification and quality control by the NAEB includes controlling conformity of all grades produced and commercialized. After harvesting, tea leaves are sold to factories. Some 99% of tea produced in Rwanda is transported to Mombasa market for export through auction or direct sales, and only 1% is for local sale. The 2008 Rwanda Tea Strategy identified the need to improve yields and quality, through better fertilizer application, plucking and pruning training, and improved transportation, as well as long-term efforts to consolidate land plots. It also identified the need for increased investment in factories, both in terms of expanding factory capacity to process green 24 leaves, and in terms of processing new tea types to ensure product diversification. The strategy emphasized the need to improve marketing of teas by targeting specific channels for high-end markets. Privatization of tea plantations and factories was concluded with the privatization of the two remaining tea factories in April 2012. According to the authorities, the tea sector is attracting investors that can bring in new technologies and provide access to established distribution chains. Several private firms are moving to higher value and organic teas.

5.1.1.9 Pyrethrum Pyrethrum is one of the important cash crops in Rwanda grown mainly in Musanze, Burera and Nyabihu Districts. Mainly smallholder producers, providing them with employment and income opportunities, grow the crop. Smallholder producers in Rwanda have succeeded in growing pyrethrum for several reasons. The pyrethrum plant thrives at high altitudes and in volcanic soil, and there regions in Rwanda with good combinations of altitude, rainfall and soil conditions. Additionally, the people living in many of these areas grow the crop to supplement subsistence farming. The cash earned from pyrethrum funds school uniforms, books, supplies and other essentials. Rwanda has made great strides to rebuild its pyrethrum production capacity. Currently, SOPYRWA contracts growers to cultivate in excess of 1500 metric tonnes of pyrethrum flowers a year. The product is extracted and refined in SOPYRWA’s processing plant and formulated to exacting conditions to be exported for manufacturing of pyrethrum-based products for the world market. In 2012, pyrethrum exports earned Rwanda US$ 7.3 million. In Rwanda pyrethrum is used to produce refined pale extracts (used for aerosols and liquid insecticides), crude oleo resin (used in mosquito coils formulation) and pyrethrum marc (filler material for powder insecticides). Plans are underway to produce aerosols, crop protection and public health insecticides for local consumption. The total production of major cash crops (in Tons) is highlighted in table 3 below: Table 3: Production of Major Cash Crops (in Tons) Crop 2005 2006 2007 2008 2009 2010 Coffee 17,414 22,223 14,683 20,724 16,000 19,312 Tea 16,458 16,976 20,474 19,965 20,535 22,248 Sugar 58,665 58,011 97,010 63,001 100,663 115,304 cane Total 92,537 97,210 132,167 103,690 137,198 156,864 Source: United Nations Food and Agriculture Organization (FAO) Horticultural Crops The horticulture subsector includes fruits, vegetables, nuts, flowers and ornamentals. It has been developing rapidly, and the Government considers that Rwanda has competitive advantage in the horticulture sector. The Government wishes to encourage the long-term development of this sector, through land consolidation, as well as the use of agricultural extension agents. The Government considers that this subsector can develop through value addition and diversification, such as focusing on organic and value-added products including juices and dried fruits/chillies. Production of horticulture crops is mostly by small-scale growers, making it difficult to produce large volumes with the necessary quality standards, or to meet the SPS requirements of the international market. Key constraints also include lack of adequate land to achieve economies of scale, and lack of knowledge on crop cultivation and fertilizer and pest management, export procedures and requirements, and the low ratio of agronomists to farmers. 25 Forestry and Agro-Forestry Products The forestry sector plays a key role in supporting the livelihood of all Rwandans; it provides most of the energy consumed by the majority of the population, prevents soil erosion, protects water, and supplies ecological services. Currently, national forests cover a total of 553,098 ha, or 21% of the country (natural forest: 8% and man-made forests: 13%). Man- made forest is composed of forest plantations (one third), and the other forest resources (two thirds). While natural forests are protected, man-made forests provide wood for fuel, building materials, and raw material for furniture. Forests contribute around 80% of total energy needs (wood fuel, 57%; and charcoal, 23%). The forestry sector is regulated by the Ministry of Natural Resources (MINIRENA). The first national forestry policy was put in place in 2004. Since then, the gap between wood supply and demand has continued to widen. The forestry and agro-forestry products statistics are detailed in table 4 below: Table 4: Forestry and Agro-Forestry Statistics Year 1960 1970 1980 1990 2000 2002 2007 2008 2009 Natural forest areas 634 592 514 451 221 221 221 221 221 ('000 ha) Man-made forest 24.5 27.2 80 247 282 113 125 145 153 areas ('000 ha) Sustained yield ('000 368 407 1,200 3,713 2,261 902 1,021 1,159 1,228 m3) Needs ('000 m3) 2,695 3,763 4,832 7,158 8,247 8,979 9,900 10,467 10,781 Balance ('000 m3) - - - - - - - -9,308 -9,553 2,327 3,366 3,632 3,445 5,987 6,719 7,879 Source: National Forestry Policy, MINIRENA (2010) Both the Vision 2020 and the EDPRS set objectives for the forestry sector to play a bigger role in the economy, and increase national forest cover. In 2010, MINIRENA issued Rwanda’s second National Forestry Policy, aimed at ensuring that the present forest cover is maintained, well managed and increased to 30% of the total area of the country in 2020, by creating an average of 23,700 ha of forests every year from 2010. Due to the high population density (387 habitants/km2 in 2009), there is strong competition for land between forestry, agriculture, and other activities. Against this background, the Government proposes to achieve its objectives through: encouraging private-sector investment in forestry to reduce poverty, create employment and improve livelihoods, through sustainable use, conservation, and management of forests and trees; contributing to sustainable land use through soil, water, and biodiversity conservation, and tree planting; and promoting farm forestry to produce timber, wood fuel and other forest products. Livestock The livestock subsector contributes both to food security and to income generation, since it remains an important source of milk, meat, and other animal products. There is increasing demand in livestock and for livestock products and the industry face various constraints: the use of animals with poor genetic potential, inadequate feeding, animal pests and diseases, and poor management and hence low farm-level productivity. To overcome these hurdles, the Government has launched several programmes, such as the cattle-breeding research programme, the animal nutrition programme, and the small-ruminant breeding programme. Rwanda produces about 160 million litres of fresh milk, of which, 48% is produced under traditional or extensive grazing systems. 39% of milk produced is consumed on-farm. Poor infrastructure, especially road networks between production areas and the market are a major constraint for milk producers. Dairy farmers depend largely on bicycle transport. Consequently, 35% of the raw milk is spoilt before reaching the market or 26 being processed, due to prolonged exposure to the sun and being shaken on the corrugated pathways. Rwanda livestock production by type (in ‘000) is highlighted in table 5 below: Table 5: Rwanda Livestock Production by Type ('000 head) Year 2005 2006 2007 2008 2009 2010 Cattle 1,040 1,059 1,147 1,295 1,219 1,335 Sheep 580 584 704 718 743 799 Goats 1,464 1,659 2,238 2,520 2,735 2,971 Pigs 391 427 571 587 602 706 Rabbits 474 469 423 451 790 8,447 Poultry 2,075 1,913 1,868 2,218 2,848 4,081 Source: United Nations Food and Agriculture Organization (FAO) Livestock production is highly dependent on the availability of water, which is greatly affected by the seasons. During Rwanda's rainy season, there is abundant green grass and drinking water, while during the dry season, animals have to trek several kilometres in search of water, leading to loss of production and productivity. Average milk production falls by as much as 60% during the dry season. The Government is considering projects to conserve rainwater for use during the dry periods. In the areas where there is limited value addition to a product such as meat basic meat products, improved quality can be targeted as a strategy for growth. The Rwanda Agricultural and Livestock Inspection and Certification Services (RALIS) aims to promote international trade in high-quality commodities while trying to avoid the introduction of pests and diseases into the country. Currently, animals from nearby countries are banned from entering Rwanda, due to diseases like foot-and-mouth disease. The authorities indicate that under the One-Cow-Per-Poor-Family (Girinka) Programme, the Rwanda Agriculture Board (RAB) sends veterinary physicians to the animal exporting countries to take samples for analysis before the animals are imported. Fish and Fishery Products The fishing subsector is small and fish production is low. Fishing is conducted on 17 inland lakes, using nets and sail boats. Fish farmers are grouped into cooperatives that manage either lakes or fish ponds. The Rwanda Agriculture Board (RAB) oversees the industry. According to MINAGRI the national fish production in 2012 was estimated at 19334 tons of which capture fisheries contributed 18,928.6 tons and aquaculture 414.6 tons. Rwanda is a net importer of fish from neighboring Uganda and Tanzania. However, Rwanda re-exports most of the imported fish to DRC. In general, fishing in Rwanda is artisanal and characterized by smallholder fishers and farmers. To improve productivity, it is necessary to organize the smallholders in cooperatives.

5.2 Rwanda’s District Resource (Industries) Agro-Processing Mapping In general, Rwanda’s agricultural resources are spread out across different districts. District resource mapping identifies the agricultural resources in each district that support the agro- processing subsector. The table below highlights the agricultural resources in each district. This is based on the data that was provided by MINICOM’s district RSME facilitators in the various Rwanda’s districts. The focus of the masterplan will be on the agro-processing subsector priority areas are based on Rwanda’s current resources, market availability and value of the products. Rwanda’s district resource mapping identifies the agricultural resources in each district that support the agro-processing subsector. 27 Prioritization Matrix Rwanda’s agro-processing subsector industrial resource mapping strategy’s primary purpose is allocation and focus on the most suitable (optimal) agro-processing resources and markets to fulfil both the supply and demand requirements. The strategy constitutes the following key elements: 1) Rwanda’s district resources (industries) mapping 2) Rwanda’s industrial clusters’ (parks) agro-processing resources (industries) mapping 3) Rwanda’s priority target markets with regard to agro-processing. 4) Rwanda’s priority agro-processing industries In developing of the industrial resource mapping strategy, the elements mentioned above, and the following criteria were used: Resources (raw materials, skills and infrastructure) currently available in Rwanda; Rwanda’s existing/current trading partners; Existing regulatory environment such as VAT in Rwanda and its trading partners; Africa and other high growth countries across the globe with large consumer bases in relation to Rwanda’s agro-processing industry; Africa and other high growth countries across the globe that have significant agro-processing resources as compared to Rwanda’s agro-processing industry. High level business cases have been developed to accompany the national resource (industries) mapping, industrial cluster (parks) resource mapping and the district resources (industries) mapping. At a high level, an evaluation of Rwanda’s national agro-processing resources (industries) was based on existing market potential (business cases) guided by the steps highlighted below: 1) Definition of the market segment (target market) 2) Definition of the geographic boundaries of the market 3) Definition of the market size 4) Current and trending trade status The table below highlights the agricultural resources in each district. This is based on the data that was provided by MINICOM’s district RSME facilitators in the various Rwanda’s districts. Table 6 below highlights the agricultural resources in each district: Table 6: Agricultural Resources in Each District Province District Resources East Bugesera Beans, Sorghum, Sweet potatoes, Bananas, Peanuts, Cassava, Soy beans, Potatoes, Yams Gatsibo Rice, Coffee, Cattle, Cassava, Maize, Honey Kayonza Cattle, Banana, Potatoes, Cassava, Rice Kirehe Rice, Coffee, Maize, Beans, Sorghum, Pineapple, Cattle, Fish, Goats, Poultry, Swine Ngoma Bananas, Pineapples, Rice, Maize, Cassava, Beans, Fish, Coffee Nyagatare Maize, Beans, Cassava, Potatoes, Sorghum, Rice, Banana, Pineaaple, Passion fruit, Vegetables Rwamagana Maize, Rice, Banana, Pineapples, Cassava, Potatoes, Soybeans, Cattle, Papyrus Kigali Gasabo Beans, Avocado, Sugar canes, Papaya, Coffee, Sunflower, Rice, Maize, Cattle, Goats & sheep, Swine, Rabbits, Poultry 28 Province District Resources Kicukiro Banana, Passion fruit, Poultry, Mushrooms Nyarugenge Maize, Beans, Cassava, Banana, Mushrooms, Coffee, Sugarcane, Cattle, Poultry, Goats, Swine North Burera Potato, Beans, Wheat, Maize, Cattle, Fish, Banana Gakenke Coffee, Maize, Beans, Wheat, Cassava, Banana, Pineapple, Passion fruits, Potatoes, Cattle, Goats, Pigs, Sheep, Rabbits, Honey, Fish Gicumbi Beans, Potatoes, Maize, Wheat, Banana, Cattle, Goats, Pigs, Poultry Musanze Potato, Beans, Wheat, Maize, Cattle, Fish, Banana Rulindo Banana, Potatoes, Beans, Wheat, Maize, Fish South Gisagara Cattle, Poultry, Maize, Cassava, Beans, Coffee, Banana Avocados Huye Fish, Goat, Cattle, Cassava, Maize, Coffee, Beans, Rice Kamonyi Beans, Rice, Maize, Cattle, Poultry, Fish, Pigs Muhanga Cattle, Poultry, Swine, Cassava, Maize, Coffee Nyamagabe Tea, Coffee, Potatoes, Wheat, Swine Nyanza Cassava, Maize, Coffee, Rice, Banana, Beans, Sorghum, Cattle, Fish Nyaruguru Tea, Wheat, Maize, Coffee, Potatoes, Beans, Cattle, Banana Ruhango Cattle, Goats & sheep, Pigs, Rabbits, Poultry, Cassava, Beans, Maize, Rice, Beans, Potatoes, Sorghum, Coffee, West Karongi Banana, Potatoes, Tea, Maize, Beans, Cassava, Banana, Coffee Ngororero Beans, Cassava, Maize, Wheat, Potatoes, Coffee, Cattle, Poultry, Goats, Banana Nyabihu Potatoes, Maize, Tea, Coffee, Cattle, Banana, Cassava Nyamasheke Coffee, Tea, Maize, Banana, Beans, Rice, Cassava, Cattle, Goats, Swine, Fish Rubavu Fish, Meat, Beans, Potatoes, Maize, Cassava, Banana Rusizi Rice, Cassava, Wheat, Banana, Coffee, Tea, Maize Rutsiro Coffee, Tea, Maize, Cassava, Potatoes, Tomatoes, Cattle, Goats, Poultry, Fish

5.3 Rwanda’s Agro-Processing Subsector Priorities Agro-industry Value Chain Selection The government has declared the agro-processing subsector a priority to achieving economic and development goals of Rwanda and key to reducing poverty. This has led to the creation of an enabling environment for investment and growth in the sector. The 29 existing regulatory and institutional frameworks are strong creating a good foundation for the sector’s growth. Considering Rwanda’s agricultural resource base, the government through the Ministry of Trade and Industry (MINICOM) has identified agro-processing subsector as a key driver of industrialisation. Developing competitive agro-processing subsector is crucial for generating employment and income opportunities for the people of Rwanda. Rwanda currently has an active agro-processing subsector. However, the full potential of the subsector as an engine for economic development is yet to be realized. A review of the agro-processing policies and strategies reveals diverse development goals that have to be addressed through agro- processing. Table 7: Development Goals informing Value Chain Selection Development Goal Relevant Policies Agro-Industry Relevant Value and Strategies Chains/ Priorities 1 Reduction of poverty in Vision 2020, EDPRS transform Rwanda from a low- general income agriculture-based economy to a knowledge- based, service-oriented economy by 2020 2 Income generation and Agricultural Policy and to increase animal production, employment creation Strategy modernize farming, reduce poverty, ensure food security and have surplus for the market 3 Promotion of economic Industrial Policy, Priority Value Chains: growth through the Competition and Pyrethrum; Dairy; Vegetable oil; creation of competitive Consumer Protection Soaps and detergents; Textiles industries and businesses Policy (including silk); and Leather in certain regions and/or sectors of the economy 4 Development of productive National Trade Policy, Stimulate growth of firms, especially small-to- National SME Policy, sustainable SMEs through medium sized, and their National Cross-Border enhanced business support involvement/inclusion in Strategy, service provision, access to local and global value finance and the creation of chains conducive legal and institutional frameworks. In addition to the above goals, it is necessary that the agro-processing subsector remains sustainable through Promotion of cleaner production and better environmental performance including the application of standards for increased environmental sustainability. With a variety of agricultural value chains to consider, the country will concentrate on developing value chains with potential for growth and competitiveness, job and income creation, impact on beneficiaries, and contribution to other development objectives such as conflict mitigation, women empowerment, food security or natural resource management. The selection process followed a clear analytical process of the agro-processing subsector. Estimating the market potential will allow Rwanda to present possible markets for investors who wish to produce for the local market and/or the export market. Generally, the market potential is the highest estimated net revenue that the investors can realise from a specific market segment. Considering diversity in animal and plant-based resources, the Agro- processing Subsector Masterplan prioritises the following agro-industry value chains: 30  Staple Foods  Fruits & Vegetables  Fish and fishery products  Milk and Milk Products While tea and coffee remain an important traditional export sectors which provide high economic performance compared to other industrial crops, the agro-processing masterplan focuses on diversification of the industrial product base. In this regard, there is direct emphasis on new non-traditional agro-industry sectors as listed above. However, some high potential products such as fats and oils will require a gradual approach in development because of the technological and raw material supply gaps that currently exist. Emphasis will be on developing pilot community processing units while promoting foreign direct investments in this area. 31 6 Agro-processing Value Chain Analysis

6.1 Sourcing of Inputs and Supplies The primary products used for agro-processing in Rwanda are of ordinary nature and produced locally by smallholder producers in within the country. Some supplies (e.g. wheat) are imported by private sector operators for large scale processing because the local supply capacities are either too little or inconsistent with processing demands in terms of quality and regular availability. The main suppliers of agricultural raw materials are smallholder producers, organised in cooperatives. Fish farmers, for example are grouped into cooperatives to manage their fishponds and coffee farmers sell their cherries through cooperatives. However, agricultural production capacities remain low due to limited land holdings and the cost of supplies is expensive due to high farm production cost. In addition, smallholder production systems are still largely subsistent in nature, with low business acumen by farmers. Contractual arrangements for inputs and supplies are important because they assure the availability of materials for production and determine the size of inventory that needs to be kept. However, contractual arrangements between smallholder producers/suppliers and the agro-processors in Rwanda are underdeveloped, and in majority of cases missing. In this way, the agro-processors have limited control over the quality and volumes of supplies they receive from the suppliers. On the hand, smallholder producers are at risk of price volatility and possibly being locked out of the supply-chain because they do not have enforceable supplier contracts. Logistics, which involves managing interactions with input providers and optimal organization of transport and use of supplies, can provide value to buyers and sellers by making a product available for purchase at the right time (time utility) at the right place (place utility). In Rwanda, logistics are arranged by agro-processors themselves. However, owing to poor road infrastructure on farms, producers bring their produce to collection centres owned by their cooperatives. Transport costs are particularly high due to poor rural road quality, high vehicle costs and high fuel prices. The infrastructure and transport facilities in Rwanda are generally poor. Roads account for 90% of transport in the country. With the exception of the paved national roads, the majority of roads are in a bad condition, especially the feeder roads. Because of the mountainous terrain and associated rainfall erosion, the maintenance cost of the road network is twice as high as that of most sub-Saharan countries. The majority of road investment is focused on already-paved national roads, while neglecting district feeder roads. Rwanda is 1,740 km from the Port of Mombasa and 1,480 km from Dar-es-Salaam. There are significant difficulties and costs in transporting imported raw material supplies. Transport costs are further exacerbated by unequal flows on the trading route; many vehicles bringing goods to Rwanda have no goods to take back to Kenya and Tanzania, which increases overall costs. In addition, with various NTBs in the EAC region, there are many costs associated with procedures, compliance to standards and unnecessary delays at ports of entry/clearance. High transport costs therefore remain a major constraint faced by businesses in Rwanda. The MINICOM Investor Perception Index 2010 found that only 22 per cent of industrial firms ranked the cost of transport services as low or very low. Transport costs are further exacerbated by the quality of roads. Furthermore, the majority of investments geared towards the road network are focused on national roads, which are often times already paved. As a result, district feeder roads are often neglected by investment programmes, 32 thereby causing extra costs for agricultural suppliers to markets and to industrial buyers. While poor quality of roads can increase the costs for businesses, particularly traders, high vehicle operating costs are also a problem. The 2005 DTIS report quoted a domestic freight rate of $0.20 per ton/km, which is more than twice the rate for international transportation. The supply chains are currently poorly organised, and often private sector has to source and transport the raw material supplies for processing. The main challenges in sourcing for raw materials supplies and technology are highlighted in table 7 below: Table 7: Main Challenges in Sourcing of Raw Materials Supplies and Technology Priority Products Challenge Processing/ Management Processed Fruits Available period of a material is Very costly packaging materials & Vegetables commonly short with wide relative to material costs, poor annual fluctuation. processing skill may erode export competitiveness Tea Low quality, low yield of Majority exported as semi- products, smallholders raw material difficulty in establishing Rwandan opposition to machine-cutting brand Coffee Highly variable quality among Majority exported as semi- products, producers difficulty in manufacturing finished ones Rapid decline of material supply Dairy Products & Meat-cattle herds are expanding Slaughtering and processing are not Meats but dairy herds level off. satisfactory for export quality Still epizootic problem continues Hides and Skins Low quality due to hurts over the Domestic processing is affected by skin surface aggressive exports of raw hide Leather Enough raw materials but mostly Processing requires dear inputs of salted and exported foreign origin Fish and fishery Resources are depleting Hygiene management poor for both products aquaculture and capture fish. Minimal Aquaculture promising but processing save for smoking problem of fish feed Untreated wastes heap up Cereals, Feeds Domestic materials are Many small millers are competing but procurable but it takes time to processing machines are cheap collect large amount at a time

6.2 Production Capacities and Technology The capacity of firms in the value chain relates to their endowment of physical installations, machines, equipment and space for production and their ability to extend those in the short run. Production capacity of agro-processing firms in Rwanda is variable depending on level of investment and subsector. In general the installed capacities of large firms in dairy or cereals is underutilised due to insufficient or irregular supplies. Considering that the government is implementing measures to promote supply capacities, the production capacity of various plants may be well utilised. However, if several investors will get involved, the problem of underutilised capacities may persist. 33 Agro-processing Capacities Rwanda presently has one special economic zone (SEZ) in Kigali and four industrial parks have been identified each per province. These initiatives aim at making it easier for investors to get land and other services such as infrastructure and energy among others, which will greatly reduce their investment costs. The zones are: 1. Kigali special economic zone 2. Bugesera industrial park 3. Huye industrial park 4. Rusizi industrial park 5. Nyabihu industrial park Based on the resources currently available in the districts and as per the national industrial policy, specific agro-processing industries have been allocated to the SEZ. Additionally, pilot animal/crop resources have been identified in the SEZ and all the industrial parks taking into account their high value in the global market. The pilot projects if successful will be duplicated in other industrial parks. The mapping of the agro-processing industries per SEZ and industrial parks is highlighted in the table 8 below: Table 8: Rwanda’s Industrial Cluster (Parks) Agro-Processing Resource Mapping SEZ and Industrial Park Agro-Processing Industry Kigali special economic zone Bugesera industrial park Rice processing industry Fish processing industry Sorghum processing industry Huye industrial park Coffee processing industry Rice processing industry Cattle related processing industry Swine related processing industry Poultry related processing industry Rusizi industrial park Fish processing industry Coffee processing industry Tea processing industry Cattle related processing industry Wheat processing industry Nyabihu industrial park Sorghum processing industry Wheat procesing industry Pyrethrum processing industry Fish processing industry Agro-processing industries Cassava processing industry that will be present in the Banana processing industry SEZ and all the industrial parks Maize processing industry Pulses related processing industry Potatoes related processing industry 34 SEZ and Industrial Park Agro-Processing Industry Nuts processing industry Yam processing industry Pineapple processing industry Passion fruits processing industry Production Technologies Agro-processing achieves two main functions in the value chain. Firstly, it transforms perishable products into forms that have a longer shelf life. Secondly, it provides opportunity for producing diverse value added products targeting different markets. The technologies for agro-processing are diverse and sometimes sophisticated. For cereals, products are derived either from the processing of grain through one or more mechanical or chemical operations, or from the processing of flour, meal or starch. Each cereal product is listed after the cereal from which it is derived. Many products can be developed from cereals through agro- processing technologies. The main objective of fruit and vegetable processing is to supply wholesome, safe, nutritious and acceptable food to consumers throughout the year. Fruit and vegetable processing can replace imported products like squash, yams, tomato sauces, pickles, etc., besides earning foreign exchange by exporting finished or semi-processed products. Processing can also develop diverse value added products. Practically any fruit and vegetable can be processed, but some important factors that determine whether it is worthwhile are the demand for a particular fruit or vegetable in the processed form; the quality of the raw material, i.e. whether it can withstand processing; regular supplies of the raw material. Milk processing allows the preservation of milk for days, weeks or months and helps to reduce food-borne illness. Processing of dairy products gives small-scale dairy producers higher cash incomes than selling raw milk and offers better opportunities to reach regional and urban markets. Milk processing can also help to deal with seasonal fluctuations in milk supply. The transformation of raw milk into processed milk and products can benefit entire communities by generating off-farm jobs in milk collection, transportation, processing and marketing. Fish is an extremely perishable food, and so most fish become inedible within twelve hours at tropical temperatures. Spoilage begins as soon as the fish dies, and processing should therefore be done quickly to prevent the growth of spoilage bacteria. Fish is a low acid food and is therefore very susceptible to the growth of food poisoning bacteria. This is another reason why it should be processed quickly. Some methods of preservation cause changes to the flavour and texture of the fish, which result in a range of different products. These include cooking (for example, boiling or frying); lowering the moisture content (by salting, smoking and drying collectively known as curing) and lowering the pH (by fermentation). Production technologies used affects both the characteristics of the end-product and the costs of the production process. A product can be technology-intensive, meaning it is produced with the help of many technological devices, or it can be basic using less sophisticated methods of production. In Rwanda, existing firms generally use modern cost technologies requiring skills. The challenge is the limited level of expertise in Rwanda to operate sophisticated technologies in plants. A number of investors are currently using 35 skilled labour from neighbouring countries, which is generally expensive compared to local technologists. The government has conducted a skills utilisation assessment and is currently addressing the skills and gaps through training and development of technology centres. Strides have been made in the area of education in recent years, with the share of students of secondary school age enrolled moving from 7% to 14% from 2001 to 2008. However, this is still very low when compared internationally, as is the share enrolled in higher education. The Rwanda skills survey for the manufacturing sector, conducted by RDB identified that there is need for concerted, coordinated and comprehensive effort to enhance skills development for the sector. The overall technical skills gap identified is 7,568 labour units; existing employees also require training in soft skills.

6.3 End-Markets and Trade1 Rwanda’s Trade Flows Rwanda operates an open economy, with trade representing almost one-third of gross domestic product. Rwanda’s main trading partners are the EAC (inclusive of DRC) and the European Union (EU). Rwanda’s traditional export sectors include coffee, tea and minerals. According to official Rwandan trade statistics, total cross-border trade exports in 2011 were $88 million, accounting for 23 % of total exports. Of this amount, $35 million was traded formally and $53 million was traded informally. Cross-border imports over the same period were $260 million, with $258 million traded formally. Rwanda is thus running a substantial formal trade deficit, but an informal trade surplus. Informal cross-border exports are predominately-agricultural produce (40%) and livestock (26%). The overall trade deficit results in a substantial volume of empty haulage capacity exiting in Rwanda, equivalent to at least 3,500 MT per day. Figure 4 below summarises total Cross-Border Trade in agro commodities for the year 2009-2012. 1 Rwanda Cross-Border Agricultural Trade Analysis, USAID (2013) 36 Figure 4: Total Cross Border Trade in CIP Agricultural Commodities, 2009-2012 Source: National Bank of Rwanda; Rwanda Revenue Authority; UN Comtrade The DRC is Rwanda’s largest regional export market, with both formal and informal exports accounting for the majority of Rwanda’s cross-border exports. The markets at Goma and Bukavu in the DRC represent vast markets for Rwandan agriculture, with a combined regional population of over 1.8 million. Integration with the East African Community (EAC) also provides Rwanda with a ready market for agricultural trade, although this presents challenges as well as opportunities. Rwanda, Burundi, and Uganda are all part of the EAC. Among the steps taken to lower barriers to cross-border trade, a common external tariff (CET) introduced in 2009 removed virtually all internal tariffs. Additionally, simplified trade regimes introduced through the EAC and the Common Market for Eastern and Southern Africa (COMESA) to support small-scale traders, including a minimum threshold of $2,000 for customs duties, simplified rules of origin, trade information desks, and special processes and formalities. The highlights of Rwanda’s cross border trade are illustrated in Figure 5 below: 37 Figure 5: Trade Flows of CIP Agricultural Commodities, 2009–2012 (MT) Source: National Bank of Rwanda; Rwanda Revenue Authority; UN Comtrade In summary: Rwanda’s International Trade: Rwanda is a member country of the World Trade Organisation (WTO) and has been active in the negotiations under the Doha Development Agenda. In the negotiations on trade facilitation, it is one of the proponents of the proposals on freedom of transit (TN/TF/W/133 and TN/TF/W/39). In the agriculture negotiations, Rwanda is seeking improved market access and the reduction of trade-distorting subsidies and tariff peaks, and elimination of tariff escalation. It has also called for duty-free-quota-free treatment for all exports from LDCs. In the Non-Agriculture Market Access (NAMA) negotiations, Rwanda is looking for the reduction of non-tariff barriers. In services negotiations, it supports the LDCs Services waiver. Rwanda has also called for technical assistance and capacity building through the Enhanced Integrated Framework and Aid for Trade. Regional Trade: Rwanda is one of the five EAC partner states having acceded to the EAC Treaty on 18 June 2007. Rwanda became a full member of the Community on 1 July 2007. Rwanda began implementing EAC Customs Union in July 2009 and the Common Market in July 2010. It is also a member of the Common Market for Eastern and Southern Africa (COMESA), and initialled an interim Economic Partnership Agreement with the EU under the East African Community in November 2007. Rwanda is also a member of the Economic Community of the Great Lakes Countries (CEPGL). Rwanda's Priority Target Markets for Agro-Processed Products Rwanda’s priority target markets are those countries that Rwanda’s agro-processing subsector will export to / trade with, inclusive of supply to the local market. The priority target markets are based on the following Criteria: Rwanda’s resources; Rwanda’s current trade partners; Africa and other high growth and high value agro-processing industries/products across the globe; Africa and other high growth countries with regards to population, GDP and imports across the globe; Market potential (value in U$ of what the target market agro-processing related imports from the rest of the world exclusive of agro- processing related imports from Rwanda). In this regard, the following countries, in order of priority, were identified as Rwanda’s potential priority target markets in agro-processing exports: 38

6.3.1.1 Democratic Republic of Congo (DRC) The Democratic Republic of Congo is heavily dependent on exports from other countries, Rwanda being a key trading partner. Aside from mining, DRC’s economy is largely a mixture of subsistence hunting and agriculture, an industrial sector based largely on petroleum extraction & support services, and government spending. At the end of 2012, the value of all Rwandan exports to DRC was US$ 165 million (agro-processing export value was US$ 84 million) while the value total imports to DRC was US$ 11.7 billion. The key elements that make DRC a target market are:  Market potential of US$ 1.794 billion with regard to agro-processing related imports as at the end of year 2012  Expected population increase to 81.3 million by 2020 from 67.5 million in 2013  Expected increase in GDP to US$ 115.7 billion by 2020 from US$ 24.2 billion in 2013.  Less stringent trade barriers  Low transport costs compared to Rwanda’s other trading partners (apart from Burundi)  Low agro-processing production capacity in DRC The key imports from Rwanda to DRC are:  Cereals and their respective milling products  Animal and vegetable fats and oils  Tobacco and manufactured tobacco substitutes.  Coffee and tea

6.3.1.2 Burundi There is minimal industry in Burundi except in the processing of agricultural exports. This industry is however still underdeveloped thus necessitating the need for agro-processing imports. As at the end of 2012 the value of all Rwandan exports to Burundi was US$ 13.3 million (agro-processing export value was US$ 3.9 million) while the value of total imports to Burundi from the world was US$ 1 billion. The key elements that make Burundi a target market are:  Market potential of US$ 303 million with regard to agro-processing related products as at the end of year 2012  Low agro-processing production capacity in Burundi  Expected population increase to 12.6 million by 2020 from 10.2 million in 2013  Expected increase in GDP of US$ 6.1 billion by 2020 from US$ 3.6 billion in 2013  Lowest transport costs compared to all Rwanda’s trading partners  Ease of EAC common market access The key imports from Rwanda to Burundi are:  Cereals and their respective milling products  Beverages and spirits  Edible vegetables and roots & tubers  Dairy products, eggs and honey 39

6.3.1.3 Uganda The Ugandan economy is poised for strong growth over the next few years. A combination of heavy public investment in infrastructure, surging foreign investment into the nascent oil sector and a buoyant consumer segment will see the economy grow by an average of 7.1% annually between 2014 and 2020. As at the end of 2012 the value of all Rwandan exports to Uganda was US$ 64.4 million (agro-processing exports value was US$ 51.6 million) while the value of total imports to Uganda from the world was US$ 6 billion. Uganda as a target market is characterised by the following key elements:  Market potential of US$ 846.7 million with regards to agro-processing related products as at the end of year 2012  Expected population increase to 47.1 million by 2020 from 33.9 million in 2013  The value of goods and services imported by Uganda are expected to increase to US$ 17 billion by 2020 from US$ 8 billion in 2013  Expected increase in GDP to US$ 57.7 billion by 2020 from US$ 22.9 billion in 2013  Low transport costs  Ease of EAC common market access The key imports from Rwanda to Uganda are:  Coffee and tea  Raw skins and hides  Cereals and their respective milling products  Edible vegetables, roots and tubers

6.3.1.4 Tanzania Tanzania has largely completed its transition to a liberalized market economy, though the government still retains presence in sectors such as telecommunications, banking, energy, and mining. As at the end of 2012 the value of all Rwandan exports to Uganda was US$ 164.7 million (agro-processing exports value was US$ 33.2 million) while the value of total imports to Tanzania from the world was US$ 11.7 billion. Tanzania as a target market is characterised by the following key elements:  Market potential of US$ 1.2 billion with regards to agro-processing related products as at the end of year 2012  Expected population increase to 60.4 million by 2020 from 49.3 million in 2013  The value of goods and services imported by Tanzania are expected to increase to US$ 26.3 billion by 2020 from US$ 13.5 billion in 2013  Expected increase in GDP to US$ 70.1 billion by 2020 from US$ 33.6 billion in 2013  Low transport costs  Ease of EAC common market access The key imports from Rwanda to Tanzania are:  Coffee and tea  Cereals and their respective milling products  Raw skins and hides  Beverages and spirits 40

6.3.1.5 Kenya Kenya maintains a liberalised external trade system. Its economy is market-based with a few state-owned infrastructure enterprises. The country is generally perceived as Eastern and central Africa's hub for Financial, Communication and Transportation services. As at the end of 2012 the value of all Rwandan exports to Kenya was US$ 94.8 million (agro- processing exports value was US$ 84.3 million) while the value of total imports to Kenya from the world was US$ 15.1 billion. Kenya as a target market is characterised by the following key elements:  Market potential of US$ 1.8 billion with regards to agro-processing related products as at the end of year 2012  Expected population increase to 52.9 million by 2020 from 44.4 million in 2013  The value of goods and services imported by Kenya are expected to increase to US$ 30.2 billion by 2020 from US$ 18.8 billion in 2013  Expected GDP increase to US$ 102.4 billion by 2020 from US$ 43.5 billion in 2013  Ease of EAC common market access The key imports from Rwanda to Kenya are: Coffee and tea Raw hides and skins Residue and wastes of the agro-processing industry Cereals and their respective milling products

6.3.1.6 South Sudan The economy of South Sudan is one of the world's most underdeveloped. South Sudan has little existing infrastructure, which has resulted in a dependence on other countries for products and services. Her primary economic activity is mining of oil. South Sudan as a target market is characterised by the following key elements:  Low agro-processing production capacity in South Sudan  Expected population increase to 13.9 million by 2020 from 11.3 million in 2013  Expected increase in GDP to US$ 35.6 billion by 2020 from US$ 13.1 billion in 2013  South Sudan is in the process of being integrated into the EAC leading to ease of market access The key imports from Rwanda to South Sudan are:  Dairy products and honey  Edible vegetables, roots & tubers

6.3.1.7 South Africa South Africa is ranked as an upper-middle income economy by the World Bank, and is considered to be a newly industrialised country. Its economy is the second largest in Africa, and the 28th-largest in the world. At the end of 2012 the value of all Rwandan exports to South Africa was US$ 700 thousand (agro-processing exports value was US$ 40 thousand) while the value of total imports to South Africa from the world was US$ 101.6 billion. South Africa as a target market is characterised by the following key elements:  Market potential of US$ 7.1 billion with regards to agro-processing related products as at the end of year 2012  Expected population increase to 55.1 million by 2020 from 52.8 million in 2013 41  The value of goods and services imported by South Africa are expected to increase to US$ 250.1 billion by 2020 from US$ 119.1 billion in 2013  Expected increase in GDP to US$ 747.6 billion by 2020 from US$ 350.8 billion in 2013  Lower transport costs as compared to the European Union (EU), Asia, America, Middle East and Oceania The key imports from Rwanda to South Africa are:  Vegetables and fruits  Dairy products eggs and honey  Sugars and sugar confectionary

6.3.1.8 United States of America (USA) The USA is a developed country and has the world's largest national economy, with an estimated GDP in 2013 of $16.8 trillion – 23% of global nominal GDP and 19% at purchasing-power parity. The economy is fuelled by an abundance of natural resources and the world's highest worker productivity, with per capita GDP being the World's eighth- highest in 2013. As at the end of 2012 the value of all Rwandan exports to USA was US$ 6.3 million (agro-processing exports value was US$ 5.6 million) while the value of total imports to USA from the world was US$ 2.3 trillion. USA as a target market is characterised by the following key elements:  Market potential of US$ 141.1 billion with regards to agro-processing related products as at the end of year 2012  Presence of the AGOA treaty which provides preferential treatments for some of Africa’s exports (primarily agro-processed exports) to USA  Higher trade barriers for other EAC countries (as at end of 2013, importation for some products from Kenya, Uganda and Tanzania is banned)  Expected population increase to 338.0 million by 2020 from 320.1 million in 2013  The value of goods and services imported by USA are expected to increase to US$ 250.1 billion by 2020 from US$ 119.1 billion in 2013  Expected increase in GDP to US$ 22.9 trillion by 2020 from US$ 16.8 trillion in 2013 The key imports from Rwanda to USA are: Vegetables and fruits

6.3.1.9 Belgium Rwanda has close ties with Belgium due to Rwanda’s former status as a Belgian colony. Belgium’s location at the heart of a highly industrialized region helped make it the world's largest trading nation. The economy is characterized by a highly productive work force, high GNP and high exports per capita. Belgium's main imports are raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals, foodstuffs, transportation equipment, and oil products. As at the end of 2012 the value of all Rwandan exports to Belgium was US$ 3.6 million (agro-processing exports value was US$ 484 thousand) while the value of total imports to Belgium from the world was US$ 437.9 billion. Belgium as a target market is characterised by the following key elements:  Market potential of US$ 40.5 million with regards to agro-processing related products as at the end of year 2012  Close ties as the former coloniser of Rwanda 42  Expected increase in population to 11.4 million by 2020 from 11.1 million in 2013  The value of goods and services imported by Belgium are expected to increase to US$ 525.9 billion by 2020 from US$ 433.7 billion in 2013  Expected increase in GDP to US$ 567.5 billion by 2020 from US$ 503.4 billion in 2013 The key imports from Rwanda to Belgium are:  Coffee and tea  Pulses  Vegetables and fruits  Cereals and their respective milling products

6.3.1.10 France France is a member of the G8 group of leading industrialised countries and is ranked as the World's seventh largest & the EU's second largest economy by purchasing power parity. Having 39 of the 500 biggest companies in the world in 2010, France ranks fourth in the Fortune Global 500, ahead of Germany and the UK. As at the end of 2012 the value of all Rwandan exports to France was US$ 2.9 million (agro-processing exports value was US$ 91 thousand) while the value of total imports to France from the world was US$ 663.3 billion. France as a target market is characterised by the following key elements:  Market potential of US$ 63.9 million with regards to agro-processing related products as at the end of year 2012  Expected increase in population to 11.4 million by 2020 from 11.1 million in 2013  The value of goods and services imported by France are expected to increase to US$ 894.9 billion by 2020 from US$ 629.5 billion in 2013  Expected increase in GDP to US$ 3.2 trillion billion by 2020 from US$ 2.8 trillion in 2013 The key imports from Rwanda to France are:  Edible vegetables and fruits  Coffee and tea

6.3.1.11 United Kingdom (UK) The UK has the sixth-largest economy in the world and the third largest in Europe after Germany and France. In the UK, agriculture is intensive and highly mechanised, producing about 60% of its food needs. As at the end of 2012 the value of all Rwandan exports to the UK was US$ 2.5 million (agro-processing exports value was US$ 219 thousand) while the value of total imports to UK from the world was US$ 689.1 billion. The UK as a target market is characterised by the following key elements:  Market potential of US$ 66.4 million with regard to agro-processing related products as at the end of year 2012  Expected population increase to 65.6 million by 2020 from 63.1 million in 2013  The value of goods and services imported by the UK are expected to increase to US$ 1.2 trillion by 2020 from US$ 826.3 billion in 2013  Expected GDP increase to US$ 4.0 trillion billion by 2020 from US$ 2.5 trillion in 2013 The key imports from Rwanda to France are: 43  Coffee and tea  Edible vegetables and fruits

6.3.1.12 Switzerland Switzerland has a stable, prosperous and high-tech economy. It has the world's nineteenth largest economy by nominal GDP and the thirty-sixth largest by purchasing power parity. As at the end of 2012 the value of all Rwandan exports to Switzerland was US$ 7.6 million (agro-processing exports value was US$ 2.6 million) while the value of total imports to Switzerland from the world was US$ 200.5 million. Switzerland as a target market is characterised by the following key elements:  Market potential of US$ 14.1 million with regard to agro-processing related products as at the end of year 2012  Expected population increase to 8.6 million by 2020 from 8.6 million in 2013  The value of goods and services imported by Switzerland are expected to increase to US$ 345.8 billion by 2020 from US$ 271.1 billion in 2013  Expected GDP increase to US$ 707.9 billion by 2020 from US$ 655.7 billion in 2013 The key imports from Rwanda to Switzerland are:  Coffee and tea  Edible vegetables and fruits

6.3.1.13 China As at the end of 2013, China has the world's second-largest economy in terms of nominal GDP. Since economic liberalization began in 1978, China has been among the world's fastest-growing economies, relying largely on investment- and export-led growth. As at the end of 2012 the value of all Rwandan exports to China was US$ 3.3 million (agro-processing exports value was US$ 677 thousand) while the value of total imports to China from the world was US$ 2.4 trillion. China as a target market is characterised by the following key elements:  Market potential of US$ 133.1 million with regard to agro-processing related products as at the end of year 2012  China’s population size is expected to increase to 1.4 billion by 2020 from 1.4 billion in 2013  The value of goods and services imported by Switzerland are expected to increase to US$ 345.8 billion by 2020 from US$ 271.1 billion in 2013  Expected GDP increase to US$ 16.5 trillion by 2020 from US$ 9.1 trillion in 2013 The key imports from Rwanda to China are:  Coffee and tea

6.3.1.14 India With 1.2 billion people and the world’s fourth-largest economy, India’s recent growth and development has been one of the most significant achievements of our times. Over the six and half decades since independence, the country has brought about a landmark agricultural revolution that has transformed the nation from chronic dependence on grain imports into a global agricultural powerhouse that is now a net exporter of food. As at the end of 2012 the value of all Rwandan exports to India was US$ 246 thousand (agro-processing exports value was US$ 0) while the value of total imports to India from the world was US$ 488 million. India as a target market is characterised by the following key elements: 44  Market potential of US$ 18.6 million with regard to agro-processing related products as at the end of year 2012  India’s population size is expected to increase to 1.4 billion by 2020 from 1.3 billion in 2013  The value of goods and services imported by India are expected to increase to US$ 1.5 trillion by 2020 from US$ 626.7 billion in 2013  Expected GDP increase to US$ 3.8 trillion by 2020 from US$ 1.8 trillion in 2013 The key imports from Rwanda to India are:  Coffee and tea. Trade Standards Today, markets change fast and competition is everywhere. If firms want to benefit from value addition and stay in business, they must ensure their products and services reach end- markets and meet standards as well as end-buyer and consumer demands. The Rwanda Bureau of Standards (RBS) was established in 2002 as the National Standards Body (NSB). The Law Establishing the Rwanda Bureau of Standards (Law No. 03/2002 of 19 January 2002) regulates standards, quality testing, certification, and metrology. In addition, the Rwanda Quality Policy passed by the Cabinet in 2010, guides standardization activities. The Rwanda Bureau of Standards (RBS) is responsible for promoting standards, quality management and metrology activities, and ensuring that they are properly applied. Notices on standards and technical regulations adopted by the RBS are published in the Official Gazette. Since 2002, the RBS has published 780 national standards, voluntary. The RBS is also making efforts towards harmonizing Rwandan standards with EAC and COMESA standards; currently, 528 are EAC harmonized, and 304 are harmonized with COMESA standards. The procedure to develop standards was revised in 2008 to "mirror international best practices". Standards are developed through RBS technical committees (TCs), which are made up of representatives from both the public and private sectors. Technical regulations in agro-processing may be developed and administered by the ministries (responsible for agriculture, industry environment, health and trade), and a number of regulatory bodies. In accordance with RBS Instruction No. 02/2005, Rwanda has 67 technical regulations (compulsory standards), covering food, mineral water, drinking water, alcoholic beverages, liquor, grains, coffee, tea and milk. Export Expansion and Import Opportunities In summary, based on an analysis of the Rwanda’s trade with regard to agro-processing related products, the following export expansion and import opportunities have been identified as;  Maize – The potential to increase Rwanda’s maize exports is limited, but increased import substitution is possible. This will likely be more cost-effectively achieved through improved post-harvest handling and storage than through increased production.  Beans – Rwandan beans can be produced at a price that is competitive in neighbouring markets, especially in Uganda. The main constraint to increased export trade lies in the cost of accumulating a marketable volume of beans of consistent quality. Increased exports will be possible if the transaction costs between the farm- gate and exporter can be reduced. 45  Potatoes – Rwandan potatoes can be produced at a price that is competitive in neighbouring markets. The main constraint to increased export trade appears to lie in the development of efficient trade networks into Uganda and Tanzania and to take advantage in particular of the substantial haulage capacity that is returning empty through Kampala and Mwanza.  Cassava – The potential to increase exports of cassava out of Rwanda is limited by the perishability of the product. Nevertheless, marginal increases in import substitution are possible. Given the dramatic increase in productivity that has been achieved to date, it now appears reasonable to look for further gains from improved post-harvest handling and processing, especially the drying of fresh cassava and the production of garri.  Rice – Though Rwanda is unlikely to be able to develop a substantial export market for rice, there is scope to increase the degree of import substitution. However, since the productive area for rice is inherently limited and yields are already high, reduced imports would result mainly from reduced post-harvest losses in Rwanda itself.  Milk – Rwanda produces a surplus of milk, which appears likely to grow as increases in demand lags behind increasing supply. Irrespective of cost, Rwandan UHT milk 7 and cheese have established and receptive markets in the DRC, Burundi, and Uganda. There is an advantage to be gained from developing brand awareness of Rwandan dairy products. There is also a need to strengthen the supply chains in Rwanda and neighbouring countries to ensure the consistency of supply.

6.4 Value Chain Governance Firms of a certain size and market share can influence the conditions under which business partners in the value chain operate. For example, such lead firms can set product specifications for suppliers, even detailed product blueprints prescribing the production process and the application of certain technological, environmental or labour standards, and how much is to be produced, including scheduling and logistics. The dominant actor could be an end-buyer or retailer in which case one would talk about a buyer-driven value chain. In other cases, a manufacturer or a supplier of primary materials “drives” the value chain, making it a supplier-driven value chain. However, there are also value chains where many firms operate in parallel and no dominant player exists. As mentioned earlier, Rwanda’s agro-processing sector is at a nascent stage of development with minimal actor domination. There are some dominant players such as in tea, coffee, pyrethrum, maize, wheat and dairy value chains. While domestic industries may drive the chains at home, Rwanda’s linkage to dominant transnational corporations (TNCs) is minimal.

6.5 Sustainable Production and Energy Use In general all agro-processing activities use a certain amount of materials. This does not necessarily mean that these materials are used efficiently. Often, in fact, the final product contains only a low percentage of the original raw materials and the rest is waste. Important materials include biomass (animal feed, food and forestry). However, most agro-processing requires energy for transformation of raw materials to finished products. There are several challenges with regard to energy use. Firstly, electricity is not available in many rural areas where agricultural production takes place, requiring that agro-processing activities be located away from source of raw materials. Even where there is electricity, the supply is rather erratic and occasioned by frequent power-cuts. Existing agro-processing plants have to either use standby diesel engines or stop their production frequently. 46 Challenges to rapid industrialization in Rwanda are mainly linked to serious inadequacy of national energy supplies. Electricity has been identified as the biggest challenge to the growth and performance in Rwanda (NSIR 2006). Most of the agro-processing industries including tea processing and coffee washing stations use fuel wood as a source of energy. Rwandans also use a lot of wood for fuel wood. Estimates from 1992, the last year for which figures are available put the amount at 3,510 million kg of wood fuel (Chemonics International Inc. 2008). Most of this wood is consumed by homes, though large quantities are also consumed by a variety of commercial users, such as tea factories. This poses issues of land degradation through accelerated erosion with adverse environmental and agricultural productivity impacts. Biomass, such as wood, charcoal and peat accounts for 85% of Rwanda‘s energy supply. The remaining share of energy is from petroleum (11%), and electricity (3%). Rwanda has an installed 95.24 Megawatts (MW) of electricity capacity, whereas the available capacity currently stands at 84.85 MW. The country has low per capita electricity consumption relative to the East Africa Community: only 13% of the population has access to electricity, and there are reported power outages. Electricity generation cost is high and the feed in tariff of power is high with 112 RWF/kWh for households and RWF 102/kWh for industries, despite the Government subsidizing the utility. Rwanda‘s electricity cost at $0.24/Kwh is at least double that of its neighbours. The 2008 Business Investment Climate Survey found that 64% of businesses surveyed cited access and cost of electricity as a major constraint. Rwanda has a per capita energy consumption of 20-kilowatt hours (kWh). This is very low compared to other LDCs, with just over 50 kWh in Tanzania and Uganda, and a 112 kWh average for all LDCs and 125 kWh per capita for Kenya. Energy costs are double that of EAC partner states and poses a severe competitive disadvantage for Rwandan business.

6.6 Value Chain Finance Under Banking Law in 2007 and the Law on the Organization of Banking in 2008, National Bank of Rwanda (NBR) is now the sole regulator and supervisor of the financial sector, except for securities markets. Rwanda has nine commercial banks; one development bank, which merged with the mortgage financing bank in 2011; three microfinance banks (Urwego Opportunity Bank, UNGUKA Bank Ltd., and AGASEKE Bank Ltd.); and one cooperative bank (Zigama CSS). Rwanda Development Bank is wholly owned by the Government, and four commercial banks are wholly foreign-owned (Kenya Commercial Bank, Equity Bank (Kenya), FINA Bank (Kenya), and ECOBANK (Togo)). Rwanda‘s financial sector provides a significant constraint, particularly to the MSME sector. The savings rate is amongst the lowest in the world. The low level of private savings is generally attributed to low real deposit rates combined with poor outreach of banking services. According to the 2008 Finscope Financial Access Study in Rwanda, more than half of the Rwandan adult population (52%) manage their lives without using any kind of financial product (formal or informal). More than half (54%) of the 47% of Rwandan adults who do use financial products, use informal products. Of those who are using formal financial products, most (67%) are using formal bank products. Bank usage is dominated by the Union des Banques Populaires du Rwanda (UBPR). Excluding UBPR, only 1% of the adult population use commercial bank products. Just over half a million adults in Rwanda are banked. Rwandans cite saving (69% of ―banked adults) and getting access to credit (52%) as the main reasons for having bank accounts. While the Doing Business indicators show that Rwanda has made remarkable progress in terms of registering property, accessing to credit, and protecting investors, there is still room for improvement in sub-areas such as the number of days to register property (55 in Rwanda vs. the OECD average of 25), the development of credit registries (which until recently 47 existed in much of sub-Saharan Africa, but not Rwanda), and in shareholders‘ rights to sue officers and company directors for misconduct (Rwanda lags both in Sub-Saharan Africa and the OECD). This impacts the long-term investment and financing levels in the country, and will need to be addressed to unlock financing in Rwanda‘s private sector. The 2010 Investor Perception Index Report found access and cost of finance to be the single most problematic issue for both domestic and foreign investors in Rwanda. Over two- thirds of businesses queried in the Private Sector Federation‘s 2008 Business Investment Climate Survey, cited finance as a major challenge. Lack of collateral is ranked as the biggest challenge, but there are additional constraints including high interest rates, lack of detailed business plans, lack of information and a lack of understanding by banks. Rwanda has been establishing savings and credit cooperatives (SACCOs) to increase access to financial services in rural areas. For crop production, the Government adopted a fertilizer voucher system for some farmers under the Crop Intensification Programme. Dealers deliver fertilizer to farmers at a predetermined price, and obtain the subsidy from the microfinance institutions. Farmers wishing to take loans are advised to work in cooperatives to minimise risk. Investors in agro-processing take loans at commercial banks at market rates. 48 7 2014 – 2020 Strategic Direction Agriculture and industry have traditionally been viewed as two separate sectors both in terms of their characteristics and in terms of their role in economic growth. Agriculture has been considered the hallmark in the first stage of development, while the degree of industrialization has been taken to be the most relevant indicator of a country’s progress along the development path. Moreover, proper strategy for growth has often been conceived as one of a more or less gradual shift from agriculture to industry, with the onus on agriculture to finance the shift in the first stage. The GoR has identified the agro –processing sector as one of the key drivers to decrease poverty levels in the country and promote economic development. The GoR is committed to develop the agro-processing sector. The National Industrial Policy developed in 2011, identifies diversification of the Rwandan economy into new sectors of activity as essential to meeting the goals of Vision 2020. The vision for the industrial sector is to have “competitive and advanced services sector producing over $1.5 billion of exports by 2020, while increasing the number of off farm jobs.” Rwanda being a small country with limited access to raw materials for agro- processing production, has identified improved quality of goods rather than strive to produce quantity as the strategy for Rwandan processed goods. Figure 6 below is an illustration of Rwanda’s agro-processing subsector overall strategy. Figure 6: Rwanda’s Agro-Processing Subsector Strategy at a Glance 49

7.1 The Vision for Rwanda’s Agro-Processing Subsector “A vibrant economy driven by value-added agriculture in line with Vision 2020”

7.2 The Mission and Strategic Pillars for Rwanda’s Agro- Processing Subsector “To create and facilitate development of high quality products by strengthening the entire agribusiness value chain”

7.3 Purpose of the Master Plan The purpose of this masterplan is to develop a sustainable agro-processing subsector in Rwanda that will enhance economic growth and reduce poverty through job and income creation in line with Rwanda’s Vision 2020.

7.4 Objectives of the Masterplan The agro-processing master plan aims to achieve the following: 1) To strengthen supply side productive capacities through improved agricultural productivity. 2) To promote investments in the agro-processing subsector which are necessary for reducing post-harvest losses and for value addition. 3) To develop policies and support services necessary for market access for Rwanda’s agro-industry products

7.5 Strategic Pillars The agro-processing subsector in Rwanda needs to undergo a structural transformation to focus on high quality agro-processing products. This will create jobs hence income generation and to ensure food security that is so badly needed by the country’s growing population. Rwanda’s agro-processing subsector will focus on high quality agro-processing products taking into account the limited supply of land, which limits volumes of agro- processing products which can be produced. The pace of change in the entire agribusiness value chain around the world is accelerating rapidly. If Rwanda is to benefit from these changes, the agro-processing industry needs to undergo a structural transformation. In fact, in terms of the transformation of the economy, structural change in farming and agro-processing are tightly interrelated and cannot be analysed independently of one another. A transformation of the entire agribusiness sector involves increasing the productivity of activities at each stage of the different agriculture-based value chains, while simultaneously improving coordination among those stages. Improved vertical coordination is critical to achieving timely flow of productivity-enhancing inputs to farmers and of quality agricultural raw materials to the agro-processing industry. At the same time, production must be closely aligned with the rapidly evolving demands of consumers. Transformation of the agribusiness sector is inextricably linked. Growth of vibrant agro- processing industries is essential to offer employment for a large number of smallholder farmers who are unlikely to farm their way out of poverty. In order to carry out its mission thereby achieving its vision, Rwanda’s agro-processing subsector is based on eight strategic pillars: 50 1) Boosting agricultural productivity 2) Upgrading agro-industrial value chains 3) Enhancing Capacity for market access 4) Strengthening technological efforts and innovative capabilities 5) Promoting effective and innovative financing 6) Promoting private sector participation 7) Improving infrastructure and access to energy 8) Developing Institutional Capacities Boosting Agricultural Productivity Rwanda is endowed with a wealth of diverse plant and animal-based agricultural resources on which to build the country’s agro-industries across different districts. Although Rwanda is a small country with an area of 26,336 km2, the total arable land is about 1.4 million hectares, which is 52% of the total surface area of the country. However, the actual area cultivated has exceeded 1.6 million ha in recent years. Another 0.47 million ha is under permanent pasture, so well over 70 per cent of the country’s total land surface is exploited for agriculture. Rwanda has about 165,000 ha of marshlands of which 93,754 ha (57%) have been cultivated. However, only 5,000 ha have been developed and can be cultivated throughout the year while the rest are arbitrarily cultivated by peasants grouped in organizations or by cooperatives without any technical skills. In addition, Rwanda’s temperate, climate and plentiful rain and sunshine, and its slopes make it perfect for growing a number of crops including tea and coffee. However, agricultural production capacities remain low due to limited land holdings and the cost of supplies is expensive due to high farm production cost. In addition, smallholder production systems are still largely subsistent in nature, with low business acumen by farmers. Rwanda agro-processing sector will focus on increasing agricultural productivity and reverse the current perennial low productivity in subsistence farming (low yields/output). The drivers for addressing low agricultural productivity include the following: promoting use of fertilizers, agricultural machinery, water & irrigation, reducing post-harvest losses, and addressing impact of climate change. Upgrading Value Chains The transformation of agricultural raw materials into industrial products depends on the capacity of entrepreneurs in Rwanda to supply global, regional and local value chains with products matching specific standards, volume and packaging requirements, at particular times, and under strict logistics and time to market demands placed by buyers. While spot transactions are still common in value chains, catering for local and national consumption over the past two decades have become driven by retailers and branded manufacturers/processors in developed countries and also by regional and local actors, such as retail groups. New opportunities for upgrading into value added production and/or processing of agricultural products have emerged, though in some value chains such as tea, coffee and horticulture, actors are under pressure from competition in other developing regions of the world and from increasing demands or decreasing prices applied by retailers and processors in developed countries. 51 Successful upgrading in value chains depends not only on a business-friendly operating environment for private sector players but also on specific opportunities that may be linked to a particular product or product form, to the emergence of particular technologies, to changes in international trade rules, or to the emergence of niche markets. Such windows of opportunity are often time bound: first-mover advantage is important, and abrupt changes in price and/or quality demands mean that rewards may be limited in time. Restructuring within value chains will also quickly reverse any previous gains, while advantages secured by some stakeholders will entail losses for others. This entails an agro-processing master plan built upon a flexible structure involving the private sector, industry associations, regulators and civil society actors. The main goal of Rwanda’s Vision 2020 is to transform the country into a middle-income economy by improving the country’s competitiveness as well as ensuring unity and comprehensive growth and development. The following initiatives will warrant improved agro-processing investment climate with a view to mobilizing and increasing FDI flows into Rwanda and enhancing their impact on the local economy. Enhancing Capacity to Exploit Regional and International Demand Despite agriculture’s importance to Rwanda economy, the country’s progress in diversifying from bulk agricultural exports towards processed, higher-value and quality-differentiated products has not been good enough. Low-value primary commodities still account for a significant proportion of total exports. Yet profound changes in domestic, regional and international markets are creating new opportunities for trade in value added agricultural products and for agribusiness. These changes, driven by rising incomes, faster urbanization, trade liberalization, foreign and domestic investment and technological advances are increasing demand for high-value commodities, processed foods and agro-industrial products. In general, trade growth increases with technology intensity. But the bulk of Rwanda’s trade growth in recent years has been driven by commodity exports, especially oil, with little evidence that the continent’s exporters are moving upmarket into more high-technology activities. While long-term projections suggest that global growth in demand for agricultural products will be weaker than what was experienced before the 2008 economic downturn, World Bank forecasts suggest that three quarters of global demand for food between now and 2030 will emanate from developing countries (World Bank 2009). This implies that regional and domestic markets in developing countries, in addition to global markets, will continue to offer growing opportunities for Rwanda’s food and agro-processing products. Rwanda’s ability to meet the growth and poverty reduction targets under Vision 2020 and the EDPRS will depend largely on exploiting the emerging opportunities in domestic, regional and international markets for processed and higher-value agro-industrial products. Diversification towards these market dynamic products has not been fully exploited in the past, but the challenges are not insurmountable. Better policies can help to eliminate or attenuate the challenges that have been identified. At the national level, policies to reduce supply-side constraints and improve business environment and incentive structure for agribusiness must be at the centre of growth and trade promotion strategies. 52 Strengthening Technological efforts & Innovation capabilities Promoting agricultural productivity and productive capacities depends on the country’s ability to invest in production technology and promote relevant innovations. Strengthening such capacity calls for technological advancement and skills development. This will in turn help in adding value to commodities and building comparative advantage. New learning and innovation platforms involving regional integration and increasing funding for science, technology and innovation are necessary ingredients for catching up. However, this must be done in the framework of public private partnership and by linking research to agro- processing sub-sector. Promoting Effective and Innovative Financing In order for the agro-processing subsector development to act as the engine of economic growth for Rwanda, the sector requires capital. However, investment levels are frequently suboptimal, partly because the sector is perceived as risky and yielding unattractive returns. Traditional and innovative sources of financing that have impact at the enterprise level, and mobilization of large-scale resources, will constitute one of the key pillars for agribusiness development in Rwanda, particularly in the agro-processing industry. As with any business, all forms of finance for entire agribusiness value chain will be either in the form of equity or debt, or a blend of both. Additionally, innovative financing primarily through the SACCO movement will play crucial in the development of agro-processing industries that fall within the SMEs category. Ultimately, the onus of increasing investment and facilitating financing of agro-processing in Rwanda lies with policymakers, by making the sector more attractive and sustainably profitable. Micro-level financing tools and innovative models play a great role, but the policy environment and large-scale resource mechanisms, such as umbrella funding that aligns public and private sector activities, are important. An important point to remember in building public-private partnership mechanisms for agribusiness development, particularly in the agro-processing subsector, is that such mechanisms work best where the private sector is left to do what it does best, and the public sector plays a facilitative role. Promoting Private Sector Participation The private sector has emerged as an increasingly important element in stimulating economic growth in developing countries, in response to opportunities for investment and business innovation, created by globalization and technological advances. Consequently, private sector development (PSD) has become a major focus of strategies for economic diversification and transformation, broadly endorsed by multilateral and regional development institutions, donor agencies and governments to foster economic development. In Asia, for example, private enterprises are playing a crucial role in transforming fast-growing economies with significant employment creation and poverty reduction benefits. Rwanda’s agro-processing subsector will focus on enhancing the management of firms responsible for the supply and transformation of agro-processing products from primary commodities to consumables, to meet consumers’ requirements in terms of quantity and price. The aim of this objective is to match demand and supply with minimal effort and thus gain competitive advantages over competitors in crucial activities along the agribusiness value chain. Enhanced supply chain management will also focus on customer relationship management in order to better understand and meet the needs of Rwanda’s agro- processing subsector customers. 53 Increased volatility, complexity and scrutiny of Rwanda’s agribusiness value chain to which the agro-processing subsector belongs have necessitated greater collaboration between private and public sector (Public Private Partnerships – PPPs). These PPPs have the following key advantages: PPPs provide greater visibility and foresight along the agro- processing value chain; PPPs affords greater influence for both the public and private sectors with regards to key components of the agro-processing value chain such as quality standards,; and PPPs provide greater access to new skills & resources and promote innovation. Improving Infrastructure and Access to Energy Infrastructure enhances the competitiveness of an economy and generates a business environment that is conducive to agro-industrial growth and development. Good infrastructure efficiently connects agro- industrial firms to their customers at the market end and suppliers from the production end and enable the use of modern production technologies. The level of infrastructure development greatly influences trade flows, costs, and competitiveness. Access to reliable and appropriate infrastructure is an essential enabler in the agribusiness value chain. On the other hand, deficiencies in infrastructure create barriers to productive opportunities and increase costs for all levels (small, medium or large-scale) and types of agro-industrial firms. Infrastructure plays a key role to a country’s economic activities. Such infrastructure includes energy, mostly electricity generation and distribution; water, waste and sanitation management and transport infrastructure such as roads, railways and airports. This infrastructure shapes the possibilities for what can be produced within a country and in the long-run it is therefore intimately linked to investment and growth. Below are the initiatives for infrastructural development. The relevant infrastructure for agro-industrial development includes energy, transport and water supply. They are considered vital social capital and because of their broad availability, it is expected that Government of Rwanda should provide such infrastructure from its national income or foreign direct investment to accelerate industrial development and improve standards of living. In the recent past, information technology (IT), telephones, and internet facilities have also been considered as essential aspects of infrastructure required for agro-industrial development. However, it is more realistic to expect different impacts from the different types of infrastructure investments, and under different investment circumstances, because the size of opportunity costs varies according to the types of infrastructure engaged and circumstances concerned, such as geography, economic and institutional development stage. Infrastructure requirements also vary depending on the market orientation of the agro-industry. For export-oriented agribusinesses, cold storage and refrigerated transport facilities, railroads and ports are crucial. Institutional Capacity Development for agro-processing in Rwanda Strong, well-functioning institutions are central to sustaining agro-industrial growth. The need for policy to target microeconomic foundations within the context of a sound macroeconomic strategy and the pivotal role of institutions are the platform for modern-day agenda for policy action. In this regard, five levels of policy level interventions are necessary: 1) Improving trade logistics- infrastructure, transport, energy, water and ICTs supported by reforms to make doing business more efficient at lower transaction costs 2) Further enhancement of microeconomic business environment 54 3) Enabling measures to foster the upgrading of agro-industrial clusters 4) Targeted science, technology and training policies towards stronger focus on skill development and better organisational capability, especially on-the-job, in-house skills development rather than national level education strategies 5) Supporting the strengthening of institutions that will develop and implement policies Institution capacity development encompasses a range of initiatives cutting across leadership, systems, structures, skills, resources, strategy and incentives. There needs to be a structure in place to manage the capacity development process, which requires a defined process, analysis tools, appropriate delegation of authority and resources. There have been efforts to develop capacity within agro-processing related institutions in the recent years with some successful projects and steady growth. However, institutional challenges still remain which will be addressed through a comprehensive approach to both capacity development and institutional coordination. Below are the initiatives. Human capital and skills are a key driver of economic development and the achievement of major strategic objectives. Human capital skills development is paramount to achieving the overall goal of economic development. Science, technology and innovation is a key aspect of the human resource capabilities that must be looked at in harmony. Lack of skilled labour is caused by few prevailing Technical and Vocational Education and Training (TVET) schools in the country, and lack of skills building initiatives such as thorough on-job-training. Public institutional efforts to increase capacity and skills are mainly offered to the public employees without giving much attention to local community’s capacity and skills. Highlighted below are the initiatives that will strengthen human Capacities for Technology and Innovation. 55 8 Implementation of Chain Development Strategies – Pilot Projects

8.1 Project 1 – Staple Foods Project Name: Building Competitiveness of the Staple Foods for Trade and Development Implementing Agencies: MINICOM Collaborating Agencies: MINAGRI, MINECOFIN, MINAFFET, RAB, RBS, RDB, NAEB, PSF Implementing Period: 2014-2020 Introduction Ensuring food security of the population is a key aim of Rwanda's agricultural policy. Food crops constitute 84% of agricultural GDP, and 67% of the cultivable land, reflecting the subsistence nature of agriculture in Rwanda. Since the launch of the National Agricultural Policy in 2004, the cultivable area has increased by 2%, while food crop output has achieved average growth of 7% per year, reflecting improved productivity, through the implementation of various programmes. Food imports have been increasing along with food crop production. The increased food imports is related to a shift in food consumption patterns where richer urban households increasingly consume imported food products, such as rice and sugar, while rural subsistence households continue to consume traditional staples, such as cassava and bananas. Maize production has increased substantially during the last five years. This growth is because of increased emphasis placed by MINAGRI on maize as a Crop Intensification Program (CIP) crop that can underpin national food security. To encourage production, new varieties have been introduced, a subsidized inputs program has been implemented and cultivation patterns have been shifted from mixed cropping to consolidated monoculture. While Rwanda remains a net importer of maize, this assessment suggests that there is some potential to develop the export market for maize meal and to achieve further import substitution for maize itself. Beans are a key staple of the Rwandan diet, and the bean crop is the largest of all the agricultural commodities produced in the country. Traditionally, beans were grown as a staple crop to ensure household food security. Strategies of staggered and mixed sowings of beans, and the use of local landraces, are common mechanisms to reduce the risk of interrupted rainfall or disease. However, these practices also reduce the commercial utilization of the crop, and may explain why it has been difficult to develop commercial markets and common nomenclatures for the different strains and mixtures of beans. Nevertheless, the assessment of cross-border markets (particularly those in Uganda) suggests that exports of beans can increase substantially if issues of marketing are successfully addressed. Irish potatoes are the second most important staple in Rwanda. As per the National Institute of Statistics of Rwanda, they constitute 7.6% of all food purchases, and 8.3% of all food consumption. The country produces a number of different potato varieties, some of which are recognized throughout the region. These vary in taste and cooking characteristics as well as their adaptation to specific soil types. This assessment suggests that while further market development is possible in Burundi and the DRC, greater possibilities exist in both Tanzania and Uganda if the utilization of existing return haulage capacity is to be improved. Cassava has always been a significant staple crop in Rwanda, but only recently has attention been focused on its increased production. MINAGRI statistics show that production has increased substantially since 2008. This increase has been driven by an increased emphasis 56 on cassava as a CIP crop that can contribute to both human and animal feed requirements. To encourage production, milling capacity has been enhanced, new extension services developed, and the use of crop inputs has been encouraged. Nevertheless, although cassava is a resilient crop to grow, it can be subject to a number of post-harvest problems, including cyanogenesis, rapid physiological degeneration, and both bacterial and fungal decay. These issues limit the tradability of raw and even milled cassava, which must be properly processed soon after harvest if it is to be sold in an international market. For these reasons, cross border trade in cassava currently represents only a very small proportion of local production and consumption. Nevertheless, the prices of cassava and cassava flour in neighbouring countries, especially Burundi, suggest that increased exports might be commercially feasible if these constraints could be overcome. Rwanda’s wheat yields have doubled since 2008, although the domestic market has remained small. A Rwanda Agricultural Board (RAB) program has been ongoing since 2008, with the goal of introducing new varieties and increasing the use of inputs. However, the market has been constrained by the genetic makeup of Rwandan wheat. With low protein levels (approximately 9%) and poor protein quality, Rwandan wheat is unsuitable as bread wheat. Instead, it is used for making chapatis, biscuits, porridge, or for blending with higher quality wheat. As a result, the two large commercial wheat mills in Rwanda cannot use the domestic production at all, and are obliged to import grain from abroad (primarily from Russia, currently). Rice is a relatively new crop to Rwanda, having been introduced only in the last 60 years. Nevertheless, rice is widely consumed and considerable volumes are imported from neighbouring countries and from Asia. As a CIP crop, the Government of Rwanda (GoR) has supported rice production. The GoR has administered the construction of community-based irrigation systems in the valley floors, is continuing to introduce new varieties suitable to the soils and climate of the country and installing mills in many of the main production districts. Many products can be developed from cereals through agro-processing technologies. Current status of trade in cereals and staple food products is summarised below: Current Value International HS Possible Agro-products (USD) of exports Product Code from Rwanda Maize (corn) '1005 2,507 Rice '1006 12,248 Buckwheat, millet and canary seed '1008 7 Wheat or meslin flour '1101 13,225 Maize Flour '1102 8,597 Cereal grouts, meal and pellets '1103 1,600 Cereal grain, worked post hulling, excluding rice '1104 53 Flour, meal and flakes of potatoes '1105 1 Flour and meal of vegetables, roots and tubers or fruits '1106 495 Starches; inulin '1108 168 Wheat gluten, whether or not dried '1109 1 Malt extract; food preparations of flour, meal, starch or malt '1901 86 extract Pasta & couscous '1902 194 Breakfast cereals & cereal bars '1904 7 57 Bread, biscuits, wafers, cakes and pastries '1905 3,582 Project Purpose The main objective of the project is to upgrade the staple foods value chain in Rwanda. More specifically, the project aims at  Boosting productivity of the staple foods value chain through increased domestic and foreign direct investments in staple foods production and processing processes  Exploiting national, regional and international demand for staple foods products through competitiveness and compliance with market access requirements Beneficiaries/ Target Groups The project targets staple foods producers and both large and small-scale staple foods processors and regulatory agencies along the staple foods value chain. Approach/Strategy On the one hand the project will focus on reviewing and updating of the policy and institutional frameworks in Rwanda to provide an enhancing environment to the performance of the staple foods industry. MINICOM will play the overall coordination role to bring together various governmental ministries and agencies responsible for research and development, policy review, development of standards and technical regulations, quality assurance, metrology and testing. On the other hand the project will foster backward and forward linkages along the staple foods value chain through public-private partnerships in order to boost overall productivity and competitiveness of the staple foods value chain. As a priority, the project will strengthen supply side capacities through improved production skills and value added technologies while implementing quality, safety, environmental and social standards. The project will also focus on building clusters and linkages at all levels of production, processing and marketing of staple foods. Anticipated Results Impacts The project is expected to increase growth and competitiveness of the staple foods industry, create jobs and incomes for the local population thereby improving rural livelihoods. Moreover, increased production, processing, sale and consumption of staple foods will contribute to the Rwanda’s development objectives such integration of into global value chains, women empowerment, food security and natural resource management. Outcomes The project is expected to boost productivity and competitiveness of the staple foods value chain in Rwanda Expected Outputs  Productivity of staple foods in Rwanda is improved  Access of staple foods products to domestic, regional and global markets increased Major Activities Output 1.1 Productivity of the staple foods industry in Rwanda is improved Activity 1.1.1 : Strengthen Supply side productive capacities Sub-activities Establish and /or strengthen smallholder producer MINAGRI, RAB, PSF cooperatives 58 Facilitate dialogue and contractual arrangements MINAGRI, RAB, PSF between producer cooperatives and buyers of their products Develop and implement training programme of MINAGRI, RAB, PSF production, handling and marketing of staple foods Conduct risk assessments and develop industry MINAGRI, RAB, PSF production and marketing guides/ codes of practice based on risk profiles Implement use of improved production MINAGRI, RAB, PSF technologies and inputs MINAGRI, PSF Establish facilities for hygienic handling of products MINAGRI, PSF Develop public-private partnerships for supply- chain management and traceability system Activity 1.1.2 : Strengthen Agro-processing capacities Collaborating institutions Sub-activities Pilot Community Processing Centres for small- MINICOM, scale staple foods processing in selected regions MINAGRI, RAB, RBS, PSF Develop and implement training and skills MINICOM, development for staple foods processing MINAGRI, RAB, RBS, PSF Strengthen product design, technology, upgrading MINICOM, and quality control through development of MINAGRI, RAB, industrial processing guides. RBS, PSF Provide access to acceptable recognized forms of MINICOM, RBS, packaging at competitive prices RDB, PSF Facilitate acquisition of finance and equity funds MINICOM, by domestic processors. MINECOFIN, RDB, RAB, PSF Promote investments foreign direct investments MINICOM, in industrial processing of staple foods MINECOFIN, RDB, RBS, RAB, PSF Foster SME networks and subcontracting and MINICOM, RDB, partnership exchanges between SMEs and large RBS, RAB, PSF firms Develop a detailed database and investment MINICOM, RDB, PSF monitoring platform for agro-processors in Rwanda Conduct public-private programmes on industrial MINICOM, RDB, processing and business excellence through RBS, PSF annual award schemes. 59 Access of staple foods products to domestic, regional and global Output 1.2 markets increased Activity 1.2.1 : Build capacity to comply with product quality and safety Collaborating standards and other requirements for market access institutions Sub-activities Develop awareness programmes on standards and MINICOM, requirements for market access MINAGRI, RAB, RBS, PSF Establish a programme for training of trainers in MINICOM, standards and other TBT/SPS market access MINAGRI, RAB, requirements RBS, PSF Establish and/or strengthen public-private platforms MINICOM, to discuss industry-wide issues, particularly on MINAGRI, RAB, competitiveness of the industry and market access RBS, NAEB, PSF challenges Support pilot staple foods-processing plants to RBS, RAB, PSF compliance with relevant standards as well as packaging and labelling requirements Activity 1.2.2: Provide export promotion services Sub-activities Establish trade information centre and/or strengthen MINICOM, NAEB, national TBT/SPS enquiry points to provide relevant PSF trade information. MINICOM, NAEB, Establish SME clusters for staple foods traders and PSF implement a code of practice on trade of staple foods MINICOM, NAEB, Establish export consortium for exporters of staple PSF foods products Link domestic SME clusters and export consortium MINICOM, NAEB, to global supply chains (specific trading blocs) PSF where Rwanda has competitive advantage. Leverage on existing relationships with other MINICOM, NAEB, countries to build the country (Made in Rwanda) MINEAC, brand. MINAFFET, PSF Develop strong relationships with end markets and MINICOM, NAEB, invest in best practice processing technologies and MINEAC, methods. MINAFFET, PSF 60

8.2 Project 2- Fruits and Vegetables Project Name: Building Competitiveness of the Fruit and Vegetable Sector for Increased Trade and Development Implementing Agencies: MINICOM Collaborating Agencies: MINAGRI, MINECOFIN, MINAFFET, RAB, RBS, RDB, NAEB, PSF Implementing Period: 2014-2020 The horticulture subsector includes fruits, vegetables, nuts, flowers and ornamentals. It has been developing rapidly, and the Government considers that Rwanda has competitive advantage in the horticulture sector. The Government considers that this subsector can develop through value addition and diversification, such as focusing on organic and value- added products including juices and dried fruits/chillies. Production of horticulture crops is mostly by small-scale growers, making it difficult to produce large volumes with the necessary quality standards, or to meet the SPS requirements of the international market. Key constraints also include lack of adequate land to achieve economies of scale, and lack of knowledge on crop cultivation and fertilizer and pest management, export procedures and requirements, and the low ratio of agronomists to farmers. Fruit and vegetable production is a major economic activity in Rwanda. Both established and planned fruit and vegetable processing can solve a very clearly identified development problem. This is that due to insufficient demand, weak infrastructure, poor transportation and perishable nature of fruits and vegetables, the grower sustains substantial losses. During the post-harvest glut, the loss is considerable and often some of the produce has to be fed to animals or allowed to rot. Fruit and vegetable processing can replace imported products like squash, yams, tomato sauces, pickles, etc., besides earning foreign exchange by exporting finished or semi-processed products. Processing can also develop diverse value added products. Practically any fruit and vegetable can be processed, but some important factors that determine whether it is worthwhile are the demand for a particular fruit or vegetable in the processed form; the quality of the raw material, i.e. whether it can withstand processing; regular supplies of the raw material. For Rwanda, the aim will be to strengthen and broaden the existing processing capacities and product diversity of products produced and traded by the country. Current status of exports of fruits and vegetable products is shown below: Current Value International HS Possible Agro-products (USD) of exports Product Code from Rwanda Cucumbers, gherkins and onions preserved by vinegar '2001 1 Tomatoes prepared or preserved '2002 18 Mushrooms & truffles, prepared or preserved '2003 0 Prepared or preserved vegetables (incl. frozen) '2004 1 Prepared or preserved vegetables (excl. frozen) '2005 7 Sugar preserved fruits and nuts '2006 0 Jams, fruit jellies & marmalades '2007 0 Preserved fruits '2008 24 Fruit & vegetable juices, unfermented '2009 732 61 Project Purpose The main objective of the project is to upgrade the fruit and vegetable value chain in Rwanda. More specifically, the project aims at  Boosting productivity of the fruit and vegetable value chain through increased domestic and foreign direct investments in fruit and vegetable production and processing processes  Exploiting national, regional and international demand for fruit and vegetable preparations through increased competitiveness and compliance with market access requirements Beneficiaries/ Target Groups The project targets fruit and vegetable producers and both large and small-scale fruit and vegetable processors and regulatory agencies along the fruit and vegetable value chain. Approach/Strategy On the one hand the project will focus on reviewing and updating of the policy and institutional frameworks in Rwanda to provide an enhancing environment to the performance of the fruit and vegetable industry. MINICOM will play the overall coordination role to bring together various governmental ministries and agencies responsible for research and development, policy review, development of standards and technical regulations, quality assurance, metrology and testing. On the other hand the project will foster backward and forward linkages along the fruit and vegetable value chain through public-private partnerships in order to boost overall productivity and competitiveness of the fruit and vegetable value chain. To operate a fruit and vegetable processing centre efficiently it is of utmost importance to pre-organise growth, collection and transport of suitable raw material, on either the nucleus farm basis or using out growers. As a priority, the project will strengthen supply side capacities through improved production skills and value added technologies while implementing quality, safety, environmental and social standards. The project will also focus on building clusters and linkages at all levels of production, processing and marketing of fish. Anticipated Results Impacts The project is expected to increase growth and competitiveness of the fisheries industry, create jobs and incomes for the local population thereby improving rural livelihoods. Moreover, increased production, processing, sale and consumption of fruit and vegetable will contribute to the Rwanda’s development objectives such integration of into global value chains, women empowerment, food security and natural resource management. Outcomes The project is expected to boost productivity and competitiveness of the fruit and vegetable value chain in Rwanda Expected Outputs  Productivity of the fruit and vegetable industry in Rwanda is improved  Access of fruit and vegetable preparations to domestic, regional and global markets increased  Supply of wholesome, safe, nutritious and acceptable food to consumers is available throughout the year. 62 Major Activities Output 1.1 Productivity of the fruit and vegetable industry in Rwanda is improved Activity 1.1.1 : Strengthen Supply side productive capacities Sub-activities Establish and /or strengthen smallholder producer MINAGRI, RAB, cooperatives PSF Facilitate dialogue and contractual arrangements MINAGRI, RAB, between producer cooperatives and buyers of their PSF products Develop and implement training programme of MINAGRI, RAB, production, handling and marketing of fish PSF Conduct risk assessments and develop industry MINAGRI, RAB, production and marketing guides/ codes of practice PSF based on risk profiles Implement use of improved production technologies MINAGRI, RAB, and inputs PSF MINAGRI, PSF Establish facilities for hygienic handling of products MINAGRI, PSF Develop public-private partnerships for supply-chain management and traceability system Activity 1.1.2 : Strengthen Agro-processing capacities Collaborating institutions Sub-activities Pilot Community Processing Centres for small-scale MINICOM, fruit and vegetable processing in selected regions MINAGRI, RAB, RBS, PSF Develop and implement training and skills MINICOM, development for fruit and vegetable processing MINAGRI, RAB, RBS, PSF Strengthen product design, technology, upgrading MINICOM, and quality control through development of industrial MINAGRI, RAB, processing guides. RBS, PSF Provide access to acceptable recognized forms of MINICOM, RBS, packaging at competitive prices RDB, PSF Facilitate acquisition of finance and equity funds by MINICOM, domestic processors. MINECOFIN, RDB, RAB, PSF Promote investments foreign direct investments in MINICOM, industrial processing of fruits and vegetables MINECOFIN, RDB, RBS, RAB, PSF Foster SME networks and subcontracting and MINICOM, RDB, partnership exchanges between SMEs and large RBS, RAB, PSF firms 63 Develop a detailed database and investment MINICOM, RDB, monitoring platform for agro-processors in Rwanda PSF Conduct public-private programmes on industrial MINICOM, RDB, processing and business excellence through annual RBS, PSF award schemes. Access of fruit and vegetable preparations to domestic, regional and Output 1.2 global markets increased Activity 1.2.1 : Build capacity to comply with product quality and safety Collaborating standards and other requirements for market access institutions Sub-activities Develop awareness programmes on standards and MINICOM, requirements for market access MINAGRI, RAB, RBS, PSF Establish a programme for training of trainers in MINICOM, standards and other TBT/SPS market access MINAGRI, RAB, requirements RBS, PSF Establish and/or strengthen public-private platforms MINICOM, to discuss industry-wide issues, particularly on MINAGRI, RAB, competitiveness of the industry and market access RBS, NAEB, PSF challenges Support pilot fish-processing plants to compliance RBS, RAB, PSF with relevant standards as well as packaging and labelling requirements Activity 1.2.2: Provide export promotion services Sub-activities Establish trade information centre and/or strengthen MINICOM, NAEB, national TBT/SPS enquiry points to provide relevant PSF trade information. MINICOM, NAEB, Establish SME clusters for fruit and vegetable PSF traders and implement a code of practice on fruit and vegetable trade MINICOM, NAEB, Establish export consortium for exporters of fruit PSF and vegetable preparations Link domestic SME clusters and export consortium MINICOM, NAEB, to global supply chains (specific trading blocs) PSF where Rwanda has competitive advantage. Leverage on existing relationships with other MINICOM, NAEB, countries to build the country (Made in Rwanda) MINEAC, brand. MINAFFET, PSF Develop strong relationships with end markets and MINICOM, NAEB, invest in best practice processing technologies and MINEAC, methods. MINAFFET, PSF 64

8.3 Project 3- Dairy Industry Project Name: Building Competitiveness of the Dairy Industry for Increased Trade and Development Implementing Agencies: MINICOM Collaborating Agencies: MINAGRI, MINECOFIN, MINAFFET, RAB, RBS, RDB, NAEB, PSF Implementing Period: 2014-2020 Introduction The livestock subsector in Rwanda contributes both to food security and to income generation, since it remains an important source of milk, meat, and other animal products. Livestock production is highly dependent on the availability of water, which is greatly affected by the seasons. During rainy season, there is abundant green grass and drinking water, while during the dry season, animals have to trek several kilometres in search of water, leading to loss of production and productivity. Average milk production falls by as much as 60% during the dry season. Rwanda produces about 160 million litres of fresh milk, of which, 48% is produced under traditional or extensive grazing systems. 39% of milk produced is consumed on-farm. Poor infrastructure, especially road networks between production areas and the market are a major constraint for milk producers. Dairy farmers depend largely on bicycle transport. Consequently, 35% of the raw milk is spoilt before reaching the market or being processed, due to prolonged exposure to the sun and being shaken on the corrugated pathways. Milk is a valuable nutritious food that has a short shelf life and requires careful handling. Milk is highly perishable because it is an excellent medium for growth of microorganisms, particularly bacterial pathogens, which can cause spoilage and diseases in consumers. Milk processing allows the preservation of milk for days, weeks or months and helps to reduce food-borne illness. Processing of dairy products gives small-scale dairy producers higher cash incomes than selling raw milk and offers better opportunities to reach regional and urban markets. Milk processing can also help to deal with seasonal fluctuations in milk supply. The transformation of raw milk into processed milk and products can benefit entire communities by generating off-farm jobs in milk collection, transportation, processing and marketing. Current state of trade in milk and milk products is summarised below: Current Value International HS Possible Agro-products (USD) of exports Product Code from Rwanda Milk and cream, not concentrated nor sweetened '0401 235 Milk and cream, concentrated or sweetened '0402 23,610 Buttermilk and yogurt '0403 383 Whey and natural milk products '0404 4 Butter and other fats and oils derived from milk '0405 0 Cheese and curd '0406 0 65 Project Purpose The main objective of the project is to upgrade the milk value chain in Rwanda. More specifically, the project aims at  Boosting productivity of the milk value chain through increased domestic and foreign direct investments in milk production and processing processes  Exploiting national, regional and international demand for milk and milk products increased competitiveness and compliance with market access requirements Beneficiaries/ Target Groups The project targets milk producers and both large and small-scale milk processors and regulatory agencies along the milk value chain. Approach/Strategy On the one hand the project will focus on reviewing and updating of the policy and institutional frameworks in Rwanda to provide an enhancing environment to the performance of the dairy industry. MINICOM will play the overall coordination role to bring together various governmental ministries and agencies responsible for research and development, policy review, development of standards and technical regulations, quality assurance, metrology and testing. On the other hand the project will foster backward and forward linkages along the milk value chain through public-private partnerships in order to boost overall productivity and competitiveness of the milk value chain. As a priority, the project will strengthen supply side capacities through improved production skills and value added technologies while implementing quality, safety, environmental and social standards. The project will also focus on building clusters and linkages at all levels of production, processing and marketing of milk. Anticipated Results Impacts The project is expected to increase growth and competitiveness of the dairy industry, create jobs and incomes for the local population thereby improving rural livelihoods. Moreover, increased production, processing, sale and consumption of milk will contribute to the Rwanda’s development objectives such integration of into global value chains, women empowerment, food security and natural resource management. Outcomes The project is expected to boost productivity and competitiveness of the milk value chain in Rwanda Expected Outputs  Productivity of the dairy industry in Rwanda is improved  Access of milk and milk products to domestic, regional and global markets increased Major Activities Output 1 Productivity of the dairy industry in Rwanda is improved Activity 1.1: Strengthen Supply side productive capacities Sub-activities Establish and /or strengthen smallholder producer MINAGRI, RAB, cooperatives PSF 66 Facilitate dialogue and contractual arrangements MINAGRI, RAB, between producer cooperatives and buyers of their PSF products Develop and implement training programme of MINAGRI, RAB, production, handling and marketing of milk and milk PSF products. Conduct risk assessments and develop industry MINAGRI, RAB, production and marketing guides/ codes of practice PSF based on risk profiles Implement use of improved production technologies MINAGRI, RAB, and inputs PSF MINAGRI, PSF Establish facilities for hygienic handling of products MINAGRI, PSF Develop public-private partnerships for supply-chain management and traceability system 67 Output 2 Dairy value Chain in Rwanda is improved Activity 2 .1: Strengthen Agro-processing capacities Collaborating institutions Sub-activities Pilot Community Processing Centres for small-scale MINICOM, milk processing in selected regions MINAGRI, RAB, RBS, PSF Develop and implement training and skills MINICOM, development for milk processing MINAGRI, RAB, RBS, PSF Strengthen product design, technology, upgrading MINICOM, and quality control through development of industrial MINAGRI, RAB, processing guides. RBS, PSF Provide access to acceptable recognized forms of MINICOM, RBS, packaging at competitive prices RDB, PSF Facilitate acquisition of finance and equity funds by MINICOM, domestic processors. MINECOFIN, RDB, RAB, PSF Promote investments foreign direct investments in MINICOM, industrial processing of milk MINECOFIN, RDB, RBS, RAB, PSF Foster SME networks and subcontracting and MINICOM, RDB, partnership exchanges between SMEs and large RBS, RAB, PSF firms Develop a detailed database and investment MINICOM, RDB, monitoring platform for agro-processors in Rwanda PSF Conduct public-private programmes on industrial MINICOM, RDB, processing and business excellence through annual RBS, PSF award schemes. Access of milk and milk products to domestic, regional and global Output 3 markets increased Activity 3.1 : Build capacity to comply with product quality and safety Collaborating standards and other requirements for market access institutions Sub-activities Develop awareness programmes on standards and MINICOM, requirements for market access MINAGRI, RAB, RBS, PSF Establish a programme for training of trainers in MINICOM, standards and other TBT/SPS market access MINAGRI, RAB, requirements RBS, PSF 68 Establish and/or strengthen public-private platforms MINICOM, to discuss industry-wide issues, particularly on MINAGRI, RAB, competitiveness of the industry and market access RBS, NAEB, PSF challenges Support pilot milk-processing plants to compliance RBS, RAB, PSF with relevant standards as well as packaging and labelling requirements Activity 3.2: Provide export promotion services Sub-activities Establish trade information centre and/or strengthen MINICOM, NAEB, national TBT/SPS enquiry points to provide relevant PSF trade information. MINICOM, NAEB, Establish SME clusters for milk traders and PSF implement a code of practice on trade in milk and milk products MINICOM, NAEB, Establish export consortium for exporters of milk PSF and milk products Link domestic SME clusters and export consortium MINICOM, NAEB, to global supply chains (specific trading blocs) PSF where Rwanda has competitive advantage. Leverage on existing relationships with other MINICOM, NAEB, countries to build the country (Made in Rwanda) MINEAC, brand. MINAFFET, PSF Develop strong relationships with end markets and MINICOM, NAEB, invest in best practice processing technologies and MINEAC, methods. MINAFFET, PSF 69

8.4 Fish and Fishery Products Project Name: Building Competitiveness of the Fisheries Sector for Trade and Development Implementing Agencies: MINICOM Collaborating Agencies: MINAGRI, MINECOFIN, MINAFFET, RAB, RBS, RDB, NAEB, PSF Implementing Period: 2014-2020 Introduction Fish provides a good source of high quality protein and contains many vitamins and minerals. They are classified as either white, oily or shellfish. Oily fish, because of its high fat content, contains a range of fat-soluble vitamins (A, D, E and K) and essential fatty acids, all of which are vital for the healthy functioning of the body. However, fish is an extremely perishable food, and so most fish become inedible within twelve hours at tropical temperatures. Spoilage begins as soon as the fish dies, and processing should therefore be done quickly to prevent the growth of spoilage bacteria. Fish is a low acid food and is therefore very susceptible to the growth of food poisoning bacteria. This is another reason why it should be processed quickly. Some methods of preservation cause changes to the flavour and texture of the fish, which result in a range of different products. These include cooking (for example, boiling or frying); lowering the moisture content (by salting, smoking and drying collectively known as curing) and lowering the pH (by fermentation). The fishing subsector in Rwanda is small and fish production is low. Fishing is conducted on 17 inland lakes, using nets and sail boats. Fish farmers are grouped into cooperatives that manage either lakes or fish ponds. The Rwanda Agriculture Board (RAB) oversees the industry. According to MINAGRI the national fish production in 2012 was estimated at 19334 tons of which capture fisheries contributed 18,928.6 tons and aquaculture 414.6 tons. Rwanda is a net importer of fish from neighboring Uganda and Tanzania. However, Rwanda re-exports most of the imported fish to DRC. In general, fishing in Rwanda is artisanal and characterized by smallholder fishers and farmers. To improve productivity, it is necessary to organize the smallholders in cooperatives. Current level of trade in fish and fishery products is shown below: Current Value International HS (USD) of Possible Agro-products Product Code exports from Rwanda Fish, fresh, whole '0302 2 Fish, frozen, whole '0303 0 Fish fillets and pieces, fresh, chilled or frozen '0304 0 Fish, cured or smoked and fish meal fit for human '0305 140 consumption Crustaceans '0306 1 Molluscs '0307 29 Extracts & juices of meat, fish, crustaceans & molluscs '1603 238 Prepared/preserved fish & caviar '1604 1,189 Crustaceans & molluscs, prepared/preserved '1605 0 70 Project Purpose The main objective of the project is to upgrade the fish value chain in Rwanda. More specifically, the project aims at  Boosting productivity of the fish value chain through increased domestic and foreign direct investments in fish production and processing processes  Exploiting national, regional and international demand for fish and fishery products through increased access to markets Beneficiaries/ Target Groups  The project targets fish producers and both large and small-scale fish processors and regulatory agencies along the fish value chain. Approach/Strategy On the one hand the project will focus on reviewing and updating of the policy and institutional frameworks in Rwanda to provide an enhancing environment to the performance of the fish industry. MINICOM will play the overall coordination role to bring together various governmental ministries and agencies responsible for research and development, policy review, development of standards and technical regulations, quality assurance, metrology and testing. On the other hand the project will foster backward and forward linkages along the fish value chain through public-private partnerships in order to boost overall productivity and competitiveness of the fish value chain. As a priority, the project will strengthen supply side capacities through improved production skills and value added technologies while implementing quality, safety, environmental and social standards. The project will also focus on building clusters and linkages at all levels of production, processing and marketing of fish. Anticipated Results Impacts The project is expected to increase growth and competitiveness of the fisheries industry, create jobs and incomes for the local population thereby improving rural livelihoods. Moreover, increased production, processing, sale and consumption of fish will contribute to the Rwanda’s development objectives such integration of into global value chains, women empowerment, food security and natural resource management. Outcomes The project is expected to boost productivity and competitiveness of the fish value chain in Rwanda Expected Outputs  Productivity of the fish industry in Rwanda is improved  Access of fish and fishery products to domestic, regional and global markets increased Major Activities Output 1 Productivity of the fish industry in Rwanda is improved Activity 1.1: Strengthen Supply side productive capacities Sub-activities Establish and /or strengthen smallholder producer MINAGRI, RAB, cooperatives PSF 71 Facilitate dialogue and contractual arrangements MINAGRI, RAB, between producer cooperatives and buyers of their PSF products Develop and implement training programme of MINAGRI, RAB, production, handling and marketing of fish PSF Conduct risk assessments and develop industry MINAGRI, RAB, production and marketing guides/ codes of practice PSF based on risk profiles Implement use of improved production technologies MINAGRI, RAB, and inputs PSF MINAGRI, PSF Establish facilities for hygienic handling of products MINAGRI, PSF Develop public-private partnerships for supply-chain management and traceability system 72 Output 2 Fish Value Chain in Rwanda is improved Activity 2.1: Strengthen Agro-processing capacities Collaborating institutions Sub-activities Pilot Community Processing Centres for small-scale MINICOM, fish processing in selected regions MINAGRI, RAB, RBS, PSF Develop and implement training and skills MINICOM, development for fish processing MINAGRI, RAB, RBS, PSF Strengthen product design, technology, upgrading MINICOM, and quality control through development of industrial MINAGRI, RAB, processing guides. RBS, PSF Provide access to acceptable recognized forms of MINICOM, RBS, packaging at competitive prices RDB, PSF Facilitate acquisition of finance and equity funds by MINICOM, domestic processors. MINECOFIN, RDB, RAB, PSF Promote investments foreign direct investments in MINICOM, industrial processing of fish MINECOFIN, RDB, RBS, RAB, PSF Foster SME networks and subcontracting and MINICOM, RDB, partnership exchanges between SMEs and large RBS, RAB, PSF firms Develop a detailed database and investment MINICOM, RDB, monitoring platform for agro-processors in Rwanda PSF Conduct public-private programmes on industrial MINICOM, RDB, processing and business excellence through annual RBS, PSF award schemes. Access of fish and fishery products to domestic, regional and global Output 3 markets increased Activity 3.1 : Build capacity to comply with product quality and safety Collaborating standards and other requirements for market access institutions Sub-activities Develop awareness programmes on standards and MINICOM, requirements for market access MINAGRI, RAB, RBS, PSF Establish a programme for training of trainers in MINICOM, standards and other TBT/SPS market access MINAGRI, RAB, requirements RBS, PSF 73 Establish and/or strengthen public-private platforms MINICOM, to discuss industry-wide issues, particularly on MINAGRI, RAB, competitiveness of the industry and market access RBS, NAEB, PSF challenges Support pilot fish-processing plants to compliance RBS, RAB, PSF with relevant standards as well as packaging and labelling requirements Activity 3.2: Provide export promotion services Sub-activities Establish trade information centre and/or strengthen MINICOM, NAEB, national TBT/SPS enquiry points to provide relevant PSF trade information. MINICOM, NAEB, Establish SME clusters for fish traders and PSF implement a code of practice on fish trade MINICOM, NAEB, Establish export consortium for exporters of fish PSF and fishery products Link domestic SME clusters and export consortium MINICOM, NAEB, to global supply chains (specific trading blocs) PSF where Rwanda has competitive advantage. Leverage on existing relationships with other MINICOM, NAEB, countries to build the country (Made in Rwanda) MINEAC, brand. MINAFFET, PSF Develop strong relationships with end markets and MINICOM, NAEB, invest in best practice processing technologies and MINEAC, methods. MINAFFET, PSF 74

8.5 Project 5- Policy Reform Project Name: Rationalisation of Rwanda’s Agro-processing Policies for Improved Productivity and Competitiveness Implementing Agencies: MINICOM Collaborating Agencies: MINAGRI, MINECOFIN, MINAFFET, RAB, RBS, RDB, NAEB, PSF Implementing Period: 2014-2020 Introduction The Government of Rwanda has a strong interest and a key role in regulating and facilitating the development of the private sector. At the same time, the government has a key role in ensuring that economic growth provides opportunities for the poor to engage in productive activities. In this context, the public sector has a crucial role to promote a policy and institutional environment that enables the private sector to flourish and become an effective driver of sustainable and inclusive growth. To increase the impact of private sector development on poverty reduction MINICOM will support the efforts to improve the business environment and lay the policy and institutional foundations for the development of a vibrant private sector, as well as promoting domestic entrepreneurship and in particular development of the entrepreneurial skills of disadvantaged groups. Furthermore it is essential to link domestic enterprises to international investment and technology flows, and facilitate access to resources and support services that small and medium enterprises (SMEs) require to become more competitive. Innovation, entrepreneurship and competition are important sources of productivity growth that, with appropriate policy and incentive structures, can bring about pro-poor market outcomes in the form of more sustainable jobs and incomes as well as affordable goods and services. The Vision 2020 is Rwanda’s overall development blueprint. It contains Rwanda's long-term development goals and aims to transform Rwanda from a low-income agriculture-based economy to a knowledge-based, service-oriented economy by 2020. Rwanda’s Vision 2020 seeks to transform the nation fundamentally into a middle-income country by the year 2020. This requires achieving an annual per capita income (GDP per capita) of US$ 900 (US$ 630 in 2013), a poverty rate of 30% (44.9% in 2012) and an average life expectancy of 55 years (64 years in 2013). Rwanda has had an average per capita growth of around 8% for the last decade, but given that the rate of population has increased by 2.7%, this growth rate would need to be accelerated further in order to achieve sustained poverty reduction. The Economic Development and Poverty Reduction Strategy (EDPRS) is a medium-term strategy towards attainment of the long-term Rwanda Vision 2020 objectives. The priority areas identified under the EDPRS1 (which ran from 2008-2012) were: poverty and vulnerability reduction; institutional capacity building and social capital formation; sustainable management of the natural environment; good governance and enhanced efficiency and accountability of the public sector; enhanced performance of the private sector, focusing on ICT; economic infrastructure development: (transport, energy, water, and ICT); and rural development and agricultural transformation. Overall, the policy and institutional environment for agro-processing in Rwanda does exist, but has not effectively stimulated or supported development of agro-processing sub-sector. There is a complexity of factors underpinning growth in agro-processing and there is no unique policy formula. A new industrial policy dialogue has emerged in the wake of the global economic and financial crisis of 2008, focusing on revisiting industrial policy in the post-Washington consensus period. A new policy focus is needed on green and clean industry growth within the framework of a resource-efficient and low-carbon growth trajectory. 75 Project Purpose The main objective of the project is to update the policy and regulatory frameworks affecting production, processing and marketing of Rwanda’s agro-industry products. More specifically, the project aims at  Improve agro-processing and trade logistics- infrastructure, transport, energy, water and ICTs supported by reforms to make doing business more efficient at lower transaction costs;  Further enhance microeconomic business environment  Create enabling measures to foster the upgrading of agro-industrial clusters;  Strengthen technology centres through targeted science, technology and training Beneficiaries/ Target Groups The project targets Rwanda’s agro-industry and regulatory agencies along the agro-industry value chains. Approach/Strategy The main focus of this project is to foster partnerships and platforms that will lead to policy reform in agro-processing. The project will strengthen technological efforts and innovation capabilities through technological advancement and skills development. This will in turn help in adding value to commodities and building comparative advantage. The project will also develop policies to promote traditional and innovative sources of financing that have impact to agro-processing at the enterprise level. Understanding the important role private sector plays as an engine for industrial development, policies that will focus on enhancing the management of firms responsible for the supply and transformation of agro-processing products will be developed. This will help to match demand and supply with minimal effort and thus gain competitive advantages over competitors in crucial activities agro-processing. Good infrastructure efficiently connects agro- industrial firms to their customers at the market end and suppliers from the production end and enable the use of modern production technologies. The project will foster partnerships across government private sector and donors to enable access to reliable and appropriate infrastructure which is essential for agro- processing. Anticipated Results Impacts The project is expected to increase growth and competitiveness of the agro-processing sub- sector, create jobs and incomes for the local population thereby improving rural livelihoods. Moreover, increased production, processing, sale and consumption of agro-industry products will contribute to Rwanda’s development objectives, including integration into global value chains, women empowerment, food security and natural resource management. Outcomes The project is expected to boost productivity and competitiveness of the agro-processing sub-sector in Rwanda Expected Outputs  Technology and Innovation capabilities strengthened  Improved access to effective and innovative financing 76  Public –private partnerships in agro-processing stimulated  Improved agro-processing and trade logistics with regard to infrastructure, transport, energy, water and ICTs supported by reforms to make doing business more efficient at lower transaction costs  Institutions that will develop and implement policies strengthened Major Activities Output 4 Technology and Innovation capabilities strengthened Activity 4.1 : Review Industrial Masterplan to include innovation Collaborating capabilities and technologies for value added institutions Sub-activities 4.1.1 Incorporate science technology innovation MINICOM, (STI) inputs systematically into production and MINAGRI marketing along the agro-industrial value chain

4.1.2 Integrate STI agenda into public policy and MINICOM, private sector management MINAGRI

4.1.3 Conduct technical and market feasibility MINICOM, studies to identify the right agro-processing MINAGRI technology required.

4.1.4 Invest in skills that are needed to identify, MINICOM, acquire and operate modern technology. MINAGRI, MINEDUC Activity 4.2: Develop comprehensive STI strategy for linking research to private sector in agro-processing MINICOM, Sub-activities 4.2.1 Develop a comprehensive Science MINAGRI, Technology Innovation (STI) -based rehabilitation MINEDUC, programme for agro-industries. RBS, RAB

4.2.2 Assess human capabilities that are needed MINICOM, for the local and national STI infrastructure. MINAGRI, MINEDUC, RBS, RAB

4.2.3 Implement a human resources development MINICOM, projects especially for the food processing MINAGRI, industry and the high-value agriculture export MINEDUC, sector. RBS, RAB

4.2.4 Rally donor assistance /technical assistance MINECOFIN, towards strengthening STI capacities and MINICOM, RDB developing STI infrastructure 77 Output 5 Access to effective and innovative financing improved Activity 5.1 : Establish/Facilitate pooled funding for agro-processing Collaborating sub-sector that uses public funding to leverage resources from the institutions private sector Sub-activities 5.1.1 Review investment policies to create a MINECOFIN, dedicated revolving wealth sovereign fund for MINICOM agro-processing

5.1.2 Develop appropriate banking models and MINECOFIN, regulations including risk mitigation through MINICOM insurance and reinsurance schemes. Activity 5.2: Create enabling environment for local resource accumulation and investment Sub-activities 5.2.1 Actively engage diaspora for local MINECOFIN, investments in agro-processing MINICOM

5.2.2 Expand collateralisation for agro-processing MINECOFIN, and encourage leasing MINICOM

5.2.3 Encourage external financing in agro- MINECOFIN, processing through large lead firms. MINICOM Output 6 Public –private partnerships in agro-processing stimulated Activity 6.1 : Create competitiveness through private enterprise Collaborating development institutions Sub-activities 6.1.1 Support small scale agro-processors establish MINICOM, industrial clusters for entrepreneurship development MINAGRI, RAB

6.1.2 Conduct bankable feasibility studies for MINICOM, appropriate priority agro-industries RDB, MINECOFIN

6.1.3 Provide relevant business and advisory services MINICOM, to SMEs in agro-processing RAB, RBS Activity 6.2: Create enabling environment for private sector participation in agro-processing Sub-activities 6.2.1 Review policies, strategies for agro-processing MINICOM, in Rwanda MINAGRI,

6.2.2 Review incentive and regulatory frameworks for MINICOM, private sector participation in agro-processing in MINAGRI, Rwanda RBS, RAB, RDB 78

6.2.3 Create secure and supportive environment for MINICOM, private investments in agro-processing RDB Output 7 Infrastructure and access to affordable energy improved Activity 7.1 : Establish strategic investments in transport infrastructure Collaborating and transit corridors institutions Sub-activities 7.1.1 Improve quality of the road network, both in MININFRA, rural and urban areas, especially the feeder roads MINICOM that link the farms.

7.1.2 Encourage efficient supply chain MINICOM, management for agro-processing, particularly in MININFRA sourcing inputs and supplies, and in transportation of agro-products to markets

7.1.3 Accelerate regional integration in MINICOM, infrastructure and energy MININFRA, MINEAC Activity 7.2: Enhance access to energy for productive use Sub-activities 7.2.1 In the short term, lower power tariffs for MININFRA, agro-processing companies in order to reduce the MINICOM, cost of production for the manufacturers. RDB

7.2.2 Partner with private sector players, within MINICOM, the framework of Public Private Partnerships MININFRA, (PPPs) to help in the energy infrastructure PSF development including design, build, financing, maintenance and its operation.

7.2.3 Encourage private sector players to invest in MINICOM, alternative (renewable) sources of energy. MININFRA, RDB, PSF Activity 7.3 Introduce Green Certification schemes in agro-processing for sustainable production Sub-activity 7.3.1 Introducing energy-saving and renewable MINICOM, PSF energy technologies for sustainability

7.3.2 Encourage use of cleaner technologies and MINICOM, PSF processes for minimizing waste and utilizing by- products from agro-processing. 79

8.6 Institutional Capacity Development for agro-processing in Rwanda Project Name: Strengthening Rwanda’s Agro-processing Institutions that will implement Policies for Increased Productivity and Competitiveness Implementing Agencies: MINICOM Collaborating Agencies: MINAGRI, MINECOFIN, MINAFFET, RAB, RBS, RDB, NAEB, PSF Implementing Period: 2014-2020 Introduction Strong, well-functioning institutions are central to sustaining agro-industrial growth. The need for policy to target microeconomic foundations within the context of a sound macroeconomic strategy and the pivotal role of institutions are the platform for modern-day agenda for policy action. Institution capacity development encompasses a range of initiatives cutting across leadership, systems, structures, skills, resources, strategy and incentives. There needs to be a structure in place to manage the capacity development process, which requires a defined process, analysis tools, appropriate delegation of authority and resources. There have been efforts to develop capacity within agro-processing related institutions in the recent years with some successful projects and steady growth. However, institutional challenges still remain which will be addressed through a comprehensive approach to both capacity development and institutional coordination. Human capital and skills are a key driver of economic development and the achievement of major strategic objectives. Human capital skills development is paramount to achieving the overall goal of economic development. Science, technology and innovation is a key aspect of the human resource capabilities that must be looked at in harmony. Lack of skilled labour is caused by few prevailing Technical and Vocational Education and Training (TVET) schools in the country, and lack of skills building initiatives such as thorough on-job-training. Public institutional efforts to increase capacity and skills are mainly offered to the public employees without giving much attention to local community’s capacity and skills. Highlighted below are the initiatives that will strengthen human Capacities for Technology and Innovation. Project Purpose The main objective of the project is to upgrade agro-industry value chains in Rwanda as a path out of poverty. More specifically, the project aims at  Updating the policy and regulatory frameworks affecting production, processing and marketing of agro-industry products.  Boosting productivity of agro-industry value chains in Rwanda through increased domestic and foreign direct investments in fruit and vegetable production and processing processes  Exploiting national, regional and international demand for Rwanda’s agro-industry products through increased access to markets Beneficiaries/ Target Groups The project targets Rwanda’s agro-industry and regulatory agencies along the agro-industry value chains. 80 Approach/Strategy The project will address policy issues at five levels: (1) Improving trade logistics- infrastructure, transport, energy, water and ICTs supported by reforms to make doing business more efficient at lower transaction costs; (2) Further enhancement of microeconomic business environment (3) Enabling measures to foster the upgrading of agro-industrial clusters; (4) Targeted science, technology and training policies towards stronger focus on skill development and better organisational capability, especially on-the- job, in-house skills development rather than national level education strategies; and (5) Supporting the strengthening of institutions that will develop and implement policies. Impacts The project is expected to increase growth and competitiveness of the agro-processing sub- sector, create jobs and incomes for the local population thereby improving rural livelihoods. Moreover, increased production, processing, sale and consumption of agro-industry products will contribute to Rwanda’s development objectives, including integration into global value chains, women empowerment, food security and natural resource management. Outcomes The project is expected to boost productivity and competitiveness of the agro-processing sub-sector in Rwanda Expected Outputs  Productivity of the agro-processing sub-sector in Rwanda is improved  Access of agro-industry to domestic, regional and global markets increased Major Activities Output 8 Institutional capacities for agro-processing developed Activity 8.1 : Create favourable institutional environment for agro- Collaborating processing in Rwanda institutions Sub-activities 8.1.1 Review policies and strategies for skills and MINEDUC, human MINICOM, MINAGRI

8.1.2 Encourage efficient supply chain management MINICOM, for agro-processing, particularly in sourcing inputs PSF, and supplies, and in transportation of agro-products MINAGRI to markets Activity 8.2: Build capacities of public sector organisations/agencies for effective service delivery to the agro-industry in Rwanda Sub-activities 8.2.1 Establish Integrated Polytechnic Regional MINEDUC, Technical Centres (IPRC) MINICOM

8.2.2 Establish mechanism for capturing, monitoring MINICOM, and updating short, medium and long term skills MINEDUC 81 available and requirements according to current and forecasted demand

8.2.3 Implement relevant training programmes for MINICOM, technical and business support personnel from MINEDUC relevant national institutions Activity 8.3 : Create regional and global networks to tap existing institutional capacities to support agro-processing in Rwanda Sub-activity 8.3.1 Establish strong partnership arrangements MINEAC, with universities and industrial research and MINAFFET, development institutions in the region for skills MINICOM, development MINEDUC

8.3.2 Develop and implement programme for MINEAC, industrial study tours and attachment programmes MINAFFET, with agro-processing centres of excellence in the MINICOM, region and/or other countries MINEDUC, Activity 8.4 : Strengthen local networks for private sector participation in skills development Sub-activity 8.4.1 Strengthen networking activities between MINICOM, universities and private sector players and engage MINEDUC, them in lectures, company presentations and career PSF fairs and industrial attachment/internship programmes.

8.4.2 Promote industry involvement by inviting MINICOM, private sector representatives to lectures, company MINEDUC, presentations and career fairs, during which PSF employers can explain their recruitment needs both to students and the academic staff. Activity 8.5 : Strengthen conformity assessment infrastructure relevant to agro-processing Sub-activities 8.5.1 Strengthen the requisite legal and regulatory MINICOM, framework for conformity. RBS, RAB

8.5.2 Establish recognized standards, accreditation, MINICOM, certification and inspection schemes relevant to RBS, RAB agro-processing.

8.5.3 Strengthen national institutions to provide MINICOM, internationally recognized and harmonized RBS, RAB conformity assessment services in agro-processing.

8.5.4 Upgrade RBS laboratories to provide relevant MINICOM, testing and calibration in agro-processing. RBS 82 9 Implementation Plan The implementation plan below highlights how the various initiatives will be rolled out, clearly setting the timelines and the people / institutions responsible for each initiative. Successful implementation of the initiatives strongly depends on development of strong working relationships and a shared commitment to collaboration and acting with integrity between the various stakeholders. Fostering a culture of collegiality, where there is a clear and a common understanding of the outcomes sought is also very essential for successful implementation of these initiatives. Table 9: Implementation Plan Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) 1. Increased 1.Strengthen supply Develop market oriented Facilitate contract agricultural side productive production systems such as farming MINAGRI, productivity capacities contract farming, farming as RAB business Increase use of farm inputs such as Continue fertiliser and pesticides and animal promoting use of MINAGRI, feeds farm inputs RAB Increase use of new technologies Avail common including agricultural mechanisation facilities for use by MINAGRI, and improved germplasm to boost producers e.g. RAB production tractors for hire 2.Foster forward and Establish networks and linkages Establish/ backward linkages with relevant ministries and strengthen MINAGRI, between agricultural agencies on the supply side to sectoral platforms RAB production and agro- intensify crop and livestock for priority value processing production systems chains 83 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) Implement commercial agriculture Provide specific capacity building programmes training on farm- MINICOM , including training for farmers and productivity and MINAGRI, agricultural officers market oriented RAB, agriculture 2. Upgraded 1.Strengthen Agro- Upgrade industrial structures and Establish and/or priority value processing capacities mechanisms for value addition. strengthen agro- MINICOM, chains, in processing within RDB, RBS particular the industrial parks dairy, fruits Strengthen product design, Provide common and technology, upgrading and quality manufacturing MINICOM, vegetables, control. facilities for agro- RBS, cereals processing at the MINAGRI industrial parks Improve business efficiency and Provide business performance, especially quality support services, MINICOM, management. including ICT, RDB accounting, marketing, etc for each industrial park 2.Set up/ upgrade Conduct techno-economic Conduct feasibility District Community assessments for establishment of studies for small- MINAGRI, Processing Centres community processing centres. scale agro- MINICOM, processing plants RAB based on resource maps 84 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) Provide necessary physical and Assist to design technological infrastructure to and establish MINECOFIN, develop agro-processing community MINICOM community centre. centres Establish common manufacturing Based on resource facilities at each community maps, provide MINICOM, processing centre. technical and RDB, RCA financial support to manage community power centres Promote product development and Provide training diversification from each and relevant MINICOM, community processing centre. technologies for RDB developing agro- processed products 3.Promote Foreign Carry out deliberate promotion to Develop strategy Direct Investment to attract investments in agro- for promoting RDB, leverage domestic in processing and value added investments in MINICOM agro-processing for agro-processing growth Introduce SME subcontracting and Facilitate partnership exchanges between contractual MINICOM, SMEs and large firms. engagements MINAGRI between firms at all stages of the value chains 85 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) Provide access to acceptable Support recognized forms of packaging at investments in MINICOM, competitive prices packaging for RBS, RDB agro-industry products Develop links between domestic Support the agro-processors and finance and establishment of MINICOM, equity funds. business/ MINECOFIN, investments RDB partnerships Develop a detailed database and Assist in providing investment monitoring platform for business support MINICOM, agro-processors in Rwanda and linkages for RDB, ICT actors in agro- industry 3. Exploited 1.Build capacity to Provide advice on food safety Provide training/ demand for comply with product requirements, HACCP, TBT/SPS awareness on RBS, domestic, quality and safety requirements, ISO 9001/14001 relevant market MINICOM regional, standards and other access international requirements for requirements Rwanda’s market access Support agro-processors to Develop agro-industry compliance with packaging and guidelines for RBS, RAB products labelling requirements packaging and labelling requirements 86 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) 2.Provide export Introduce export support services Organise trade- promotion services and trade information services. fairs for target MINICOM, markets and NAEB products Link to global supply chains and Establish export export consortia and cluster consortia for MINICOM, development. competitiveness NAEB Leverage on existing relationships Develop the with other countries to build the ‘Made in Rwanda’ MINICOM, country brand. Additionally, public brand NAEB, funded sector level marketing MINEAC, campaigns need to be conducted to MINAFFET build brand. Develop strong relationships with Support selected end markets and invest in best sectors to develop MINICOM, practice agro-processing methods new marketing NAEB, and market access MINEAC, programmes MINAFFET 4. Strengthened 1.Develop innovation Incorporate science technology Finalise and Technology capabilities and innovation (STI) inputs Implement STI MINICOM, and technologies for value systematically into production and strategy MINAGRI Innovation added marketing along the agro-industrial capabilities value chain Integrate STI agenda into public Mainstream policy and private sector pertinent STI MINICOM, management issues in MINAGRI 87 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) Rwanda’sindustrial policy Conduct technical and market Develop diverse feasibility studies to identify the business models MINICOM, right agro-processing technology and bankable MINAGRI required. projects in agro- processing Invest in skills that are needed to Encourage and identify, acquire and operate promote MINICOM, modern technology. investments in MINAGRI, modern MINEDUC processing technologies 2.Link research to Develop a comprehensive Science Roll out STI MINICOM, private sector in agro- Technology Innovation (STI) -based policies and MINAGRI, processing rehabilitation programme for agro- strategies MINEDUC, industries. RBS, RAB Assess human capabilities that are Document skills needed for the local and national available and MINICOM, STI infrastructure. develop strategies MINAGRI, as necessary MINEDUC, RBS, RAB Implement a human resources Depict the technologies development projects especially for used in the chain and MINICOM, evaluate their the food processing industry and appropriateness in view MINAGRI, of chain development 88 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) the high-value agriculture export MINEDUC, sector. RBS, RAB Rally donor assistance /technical Analyse and categorize assistance towards strengthening firms as to their existing MINECOFIN, and utilized production STI capacities and developing STI and processing MINICOM, infrastructure. capacity RDB 5. Improved 1.Facilitate pooled Create a dedicated wealth Specify to what extent access to funding for agro- sovereign fund for agro-processing investors can financing MINECOFIN, businesses in the effective and processing sub-sector various segments of the MINICOM innovative that uses public chain and in the value chain as a whole financing funding to leverage Develop appropriate banking Facilitate loaning resources from the models and regulations including support with local MINECOFIN, private sector risk mitigation through insurance banking MINICOM and reinsurance schemes. 2.Create enabling Leverage diaspora for local Understand the environment for local investments in agro-processing economic and MINECOFIN, social conditions that resource accumulation constrain MINICOM and investment access to finance Expand collateralisation and Establish a picture of encourage leasing existing funding sources MINECOFIN, and current funding practice in the MINICOM value chain Encourage external financing in agro-processing through large lead MINECOFIN, firms. MINICOM 89 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) 6. Stimulated 1.Create Support small scale agro- Reveal basic information public – competitiveness processors establish industrial on MINICOM, perceptions about risks private through private clusters for entrepreneurship that MINAGRI, partnerships enterprise development investors should take RAB into in agro- development consideration in financial processing analyses Conduct bankable feasibility studies Commission for appropriate priority agro- feasibility studies MINICOM, industries and development RDB, of bankable MINECOFIN models Provide relevant business and Set up business advisory services to SMEs in agro- advisory services MINICOM, processing for agro-process in RAB, RBS Rwanda 2.Create enabling Review policies, strategies for agro- Revisit agro- environment for processing in Rwanda processing MINICOM, private sector Rwanda policies MINAGRI, participation in agro- and harmonise processing them Review incentive and regulatory Develop an award frameworks for private sector scheme for high MINICOM, participation in agro-processing in performers in MINAGRI, Rwanda different sectors RBS, RAB, RDB 90 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) Create secure and supportive Support the environment for private establishment of MINICOM, investments in agro-processing value chain RDB councils at national 7. Improved 1.Establish strategic Improve quality of the road Collaborate with infrastructure investments in network, both in rural and urban other Government MININFRA, and access to transport areas, especially the feeder roads ministries s MINICOM affordable infrastructure and that link the farms. responsible for energy transit corridors infrastructure development Encourage efficient supply chain Consider providing management for agro-processing, transportation for MINICOM, particularly in sourcing inputs and produce from MININFRA supplies, and in transportation of cooperaives agro-products to markets Accelerate regional integration in Articulate the infrastructure and energy need for sufficient MINICOM, energy for MININFRA, production and MINEAC present it to regional forums 2.Enhance access to In the short term, lower power Collaborate with energy for productive tariffs for agro-processing relevant ministry MININFRA, use companies in order to reduce the MINICOM, cost of production for the RDB manufacturers. 91 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) Partner with private sector players, Collaborate with within the framework of Public relevant ministry MINICOM, Private Partnerships (PPPs) to help MININFRA, in the energy infrastructure PSF development including design, build, financing, maintenance and its operation. Encourage private sector players to Engage private invest in alternative (renewable) sector in each MINICOM, sources of energy. step of production MININFRA, and agro- RDB, PSF processing 3.Introduce Green Introducing energy-saving and Gradually Certification schemes renewable energy technologies for mainstream MINICOM, in agro-processing for sustainability cleaner production PSF sustainable production technologies Encourage use of cleaner Gradually technologies and processes for mainstream MINICOM, minimizing waste and utilizing by- cleaner production PSF products from agro-processing. technologies 8. Policy reform 1.Create favourable Review policies and strategies for Organise high and institutional skills and human level policy MINEDUC, Institutional environment for agro- makers meetings MINICOM, capacities for processing in Rwanda on policy diakogu MINAGRI 92 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) agro- Encourage efficient supply chain Encourage private processing management for agro-processing, sector to invest in MINICOM, particularly in sourcing inputs and efficient supply PSF, supplies, and in transportation of chain MINAGRI agro-products to markets management systems 2.Build capacities of Establish Integrated Polytechnic Set up Integrated public sector Regional Technical Centres (IPRC) Polytechnic MINEDUC, organisations/agencies Regional Technical MINICOM for effective service Centres structures delivery to the agro- and equip them industry in Rwanda Establish mechanism for capturing, Develop database monitoring and updating short, of experts MINICOM, medium and long term skills MINEDUC available and requirements according to current and forecasted demand Implement relevant training Develop and programmes for technical and implement training MINICOM, business support personnel from programe MINEDUC relevant national institutions 3.Create regional and Establish strategic global networks to tap Establish strong partnership partners MINEAC, existing institutional arrangements with universities MINAFFET, capacities to support and industrial research and MINICOM, development institutions in the MINEDUC region for skills development 93 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) agro-processing in Promote industrial Rwanda Develop and implement attachments and MINEAC, programme for industrial study study tours MINAFFET, tours and attachment MINICOM, programmes with agro-processing MINEDUC, centres of excellence in the region and/or other countries 4.Strengthen local Develop and build networks for private Strengthen networking activities capacity of MINICOM, sector participation in between universities and private networks between MINEDUC, skills development sector players and engage them research PSF in lectures, company institutions and presentations and career fairs and agro-processing industrial attachment/internship programmes. Invite private Promote industry involvement by sector to provide MINICOM, inviting private sector teaching /lectures MINEDUC, representatives to lectures, PSF company presentations and career fairs, during which employers can explain their recruitment needs both to students and the academic staff. 5.Strengthen conformity Review policies assessment Strengthen the requisite legal and and laws on MINICOM, regulatory framework for domestication of RBS, RAB conformity. 94 Outcome / Strategic Initiative Activities Actions Responsibility Period Measure Short Medium Long term Term term (Oct (Jun Jun 2018 2014- 2015- - May May May 2020 2015) 2018) infrastructure relevant relevant standards to agro-processing for agro- processing Support Establish recognized standards, development and MINICOM, accreditation, and certification and implementation of RBS, RAB inspection schemes relevant to relenat standards agro-processing. for agro- processing Upgrade Strengthen national institutions to laboratory MINICOM, provide internationally recognized equipment and RBS, RAB and harmonized conformity human skills for assessment services in agro- risk based testing, processing. inspections and certification Training of Upgrade RBS laboratories to personnel; MINICOM, provide relevant testing and Purchase of RBS calibration in agro-processing. precision testing equipment for various food safety and environmental risks 95 10 Monitoring and Evaluation Framework Monitoring and evaluation framework, hereinafter referred as M&E Framework, is a critical component of any implementation plan of a strategy or master plan document. The purpose of the M&E framework is to measure the extent to which planned activities and targeted outputs are being achieved. Through M&E, MINICOM will be able to identify where the sector is and intends to be and how to get there and evaluate achievement of desired targets within the plan period. The master plan has set goals that have to be achieved by 2020. The strategies or initiatives to achieve these goals must be implemented in an orderly and coordinated manner. Consequently, a comprehensive M&E framework must be put in place to provide the requisite feedback in the sourcing and utilization of the resources towards successful implementation. The information generated is then objectively used for critically reviewing the success of respective programs. As the master plan is a document that cuts across various ministries. Two groups should be formed to both support implementation and monitor progress. In summary MINICOM will adopt the following: An M&E committee (internal to MINICOM) will be formed to continually monitor the progress of the strategic plan. This committee will meet once a month to monitor the progress of the agro-processing sector. Additionally, the M&E committee will update the industrial master plan for the agro-processing subsector. An agro-processing subsector working group, that brings together key stakeholders from both the public and private sector and across all government ministries with an impact on the agro-processing master plan, such as the RAB, MINIAGRI, MININFRA, MINECOFIN, RDB, NAEB, RBS etc. The working group will meet once every quarter discuss matters affecting the agro-processing subsector. Appoint departmental heads to champion the implementation plan. The internal M&E Committee will report to the subsector working group on quarterly basis on the progress made towards achieving the planned objectives. Annual reviews of the master plan are to be made by the M&E committee together with the agro-processing subsector working group so that the changes found necessary through the constant monitoring and evaluation mechanism are brought on board. The objectives and initiatives should be cascaded to all the departments/business units concerned detailing the key activities required by the departments to be implemented. Departmental plans should then be rolled every year and level of achievement of the goals documented. This will be guided by the agreed key performance indicators for each initiative. 96 11 Annexure

11.1 Rwanda’s EDPRS 2 (2013 – 2018) EDPRS 2 targets an average of 11.5% annual economic growth in order to restructure the economy towards more services and industry as Rwanda moves towards middle income country status. The main targets relate to: Strategic infrastructure investment for exports. Increased private sector financing for increased exports coverage of imports. Urbanisation and green economy approach for sustainability. The 5 priority areas that will spearhead the EDPRS 2 are: Increase the domestic interconnectivity of the Rwandan economy. Increase the external connectivity of Rwanda’s economy and boosting exports. Transform the private sector by increasing investment in priority sectors. Transform the economic geography of Rwanda by facilitating urbanisation and promoting secondary cities. Pursue a ‘green economy’ approach to economic transformation.

11.2 Rwanda’s National Industrial Policy (2011) Vision: “Competitive industrial and advanced services sectors producing over $1.5 billion of exports by 2020, while increasing the number of off farm jobs.” Objectives: Increase domestic production for local consumption. Improve Rwanda’s export competitiveness. Create an enabling environment for Rwanda’s industrialization.

11.3 Rwanda’s Crop Intensification Program (CIP) The Crop Intensification Program (CIP) was launched in September 2007, as a pilot program with the main goals of increasing agricultural productivity in high-potential food crops and ensuring food security and self-sufficiency. Key statistics are: Funded by: Government of Rwanda. Budget: RWF 9,092,287,371. Timeline: Started in 2007 – on going. Coverage: All districts. The main activities are:  Land use consolidation  Improved seed and fertilizers use  Proximity extension service by proximity service providers  Agricultural product marketing  Change in farmer’s behaviours  Promote agro-inputs dealer’s network  Stimulate reliable, private-sector input and output markets: through fertilizer electronic auctions.  Food sufficiency and sovereignty of Rwanda. 97

11.4 Top 5 Largest Agro-Processing Industries by Turnover as at 2011 Table 10: Top 5 Largest Agro-Processing Industries by Turnover as at 2011 Company Year Incorporated Main Product Reported Turnover (2010 – 11) Bralirwa 1963 Beer and soft drinks US$130–135m Pembe Flour Mills 2007 Wheat flour US$25–30m Bakhresa Grain Mills 2009 Wheat flour US$20–25m Rwanda Mountain 2006 Black and green tea US$14–16m Tea Rwacof 1997 Coffee US$12–15m Source: Understanding Rwanda’s Agribusiness and Manufacturing Sectors (2013)

11.5 Phases of Rwanda’s Industrial Development from 1995 to 2012 Figure 8: Phases of Rwanda’s Industrial Development from 1995 to 2012 Phase 1: Reconstruction. Phase 2: Rapid privatization. Phase 3: Growth, consolidation and entry into the EAC. 98

11.6 Prioritization Matrix Importing Countries for Agro- Processing Related Product Exported by Rwanda and Total Imported from the Worldin US$ '000, 2012 Source: International Trade Center Products Tanzania Congo Kenya Importe Importe Importe Importe Importe Importe Differenc Differen Differen d from d from d from d from d from d from e ce ce World Rwanda World Rwanda World Rwanda World 5,248,07 5,138,94 15,191,4 15,096,7 164,773 109,125 94,760 TOTAL IMPORTS (164,773) 1 6 89 29 Live animals 2 1,567 1,565 1 3,821 3,820 - 2,704 2,704 Meat and edible meat offal - 6,477 6,477 - 99 99 - 4,559 4,559 Fish, crustaceans, molluscs, aquatic invertebrates nes 7 6,091 6,084 - 7,677 7,677 - 30,960 30,960 Dairy products, eggs, honey, edible animal product nes 1 16,273 16,272 30 5,426 5,396 - 34,911 34,911 Products of animal origin, nes - 194 194 - 31 31 - 1,122 1,122 Live trees, plants, bulbs, roots, cut flowers etc - 1,882 1,882 - 1,151 1,151 - 9,025 9,025 Edible vegetables and certain roots and tubers 172 4,328 4,156 46 4,298 4,252 - 74,471 74,471 99 Edible fruit, nuts, peel of citrus fruit, melons 1 4,377 4,376 6 2,120 2,114 - 44,902 44,902 Coffee, tea, mate and spices 29,281 1,280 (28,001) 116 1,818 1,702 83,596 195,181 111,585 Cereals 421 471,666 471,245 1,193 68,634 67,441 - 548,127 548,127 Milling products, malt, starches, inulin, wheat gluten 2,334 37,618 35,284 445 13,171 12,726 20 59,251 59,231 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 1 61,328 61,327 65 9,781 9,716 - 31,758 31,758 Lac, gums, resins, vegetable saps and extracts nes - 1,031 1,031 - 1,090 1,090 - 2,876 2,876 Vegetable plaiting materials, vegetable products nes - 70 70 - 229 229 - 582 582 Animal, vegetable fats and oils, cleavage products, etc - 297,957 297,957 2,746 72,780 70,034 - 237,527 237,527 Meat, fish and seafood food preparations nes - 1,552 1,552 2 591 589 - 6,490 6,490 Sugars and sugar confectionery - 183,787 183,787 5 49,058 49,053 - 203,313 203,313 Cocoa and cocoa preparations - 2,744 2,744 - 284 284 - 10,207 10,207 Cereal, flour, starch, milk preparations and products - 12,856 12,856 139 6,607 6,468 - 67,323 67,323 Vegetable, fruit, nut, etc food preparations - 8,060 8,060 6 7,886 7,880 - 24,357 24,357 Miscellaneous edible preparations - 16,936 16,936 27 12,573 12,546 1 54,372 54,371 Beverages, spirits and vinegar 38 70,018 69,980 7 11,427 11,420 - 62,983 62,983 Residues, wastes of food industry, animal fodder - 6,087 6,087 5 889 884 75 70,531 70,456 100 Tobacco and manufactured tobacco substitutes - 19,042 19,042 328 4,488 4,160 - 31,312 31,312 Articles of leather, animal gut, harness, travel goods - 10,887 10,887 2 13,245 13,243 - 65,109 65,109 Raw hides and skins (other than furskins) and leather 934 102 (832) 25 84 59 643 4,064 3,421 Importing Countries for Agro- Processing Related Product Exported by Rwanda and Total Imported from the Worldin US$ '000, 2012 Source: International Trade Center Products Uganda Sudan Burundi Imported Imported Imported Imported Imported Imported from from from from Differenc from from Differenc Difference World Rwanda World Rwanda World e Rwanda World e TOTAL IMPORTS 68,354 6,044,147 5,975,793 17,073 7,381,455 7,364,382 13,336 1,003,121 989,785 Live animals 12 2,494 2,482 - 47,571 47,571 102 2,414 2,312 Meat and edible meat offal - 1,846 1,846 - 11,535 11,535 - 23 23 Fish, crustaceans, molluscs, aquatic invertebrates nes - 1,834 1,834 - 1,757 1,757 5 2,056 2,051 Dairy products, eggs, honey, edible animal product nes 1 5,194 5,193 17 106,058 106,041 70 2,571 2,501 Products of animal origin, nes - 511 511 - 273 273 - 184 184 101 Live trees, plants, bulbs, roots, cut flowers etc - 1,586 1,586 - 235 235 - 10 10 Edible vegetables and certain roots and tubers 966 3,481 2,515 8 108,696 108,688 970 2,709 1,739 Edible fruit, nuts, peel of citrus fruit, melons 61 3,535 3,474 - 29,046 29,046 - 57 57 Coffee, tea, mate and spices 41,841 4,198 (37,643) - 122,398 122,398 - 104 104 Cereals 18 276,999 276,981 - 684,248 684,248 1,486 50,495 49,009 Milling products, malt, starches, inulin, wheat gluten 199 11,593 11,394 - 51,755 51,755 89 49,043 48,954 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes - 6,877 6,877 - 23,208 23,208 - 148,367 148,367 Lac, gums, resins, vegetable saps and extracts nes - 401 401 - 6,420 6,420 - 1,675 1,675 Vegetable plaiting materials, vegetable products nes - 194 194 - 1,165 1,165 - - - Animal, vegetable fats and oils, cleavage products, etc - 250,172 250,172 - 68,384 68,384 62 14,919 14,857 Meat, fish and seafood food preparations nes - 2,943 2,943 - 8,514 8,514 - 194 194 Sugars and sugar confectionery 4 160,823 160,819 - 438,263 438,263 7 13,824 13,817 Cocoa and cocoa preparations - 2,677 2,677 - 8,133 8,133 - 206 206 Cereal, flour, starch, milk preparations and products - 24,616 24,616 - 34,562 34,562 80 2,231 2,151 Vegetable, fruit, nut, etc food preparations 206 8,569 8,363 - 40,649 40,649 62 2,240 2,178 Miscellaneous edible preparations 19 27,524 27,505 - 69,327 69,327 27 2,614 2,587 102 Beverages, spirits and vinegar 129 75,394 75,265 - 50,675 50,675 958 7,246 6,288 Residues, wastes of food industry, animal fodder 146 2,267 2,121 - 29,441 29,441 2 248 246 Tobacco and manufactured tobacco substitutes - 11,258 11,258 - 14,045 14,045 - 3,165 3,165 Articles of leather, animal gut, harness, travel goods - 9,820 9,820 - 50,668 50,668 - 393 393 Raw hides and skins (other than fur skins) and leather 8,019 1,527 (6,492) - 923 923 - 6 6 103

11.7 Standards and Technical Requirements Table 11: Technical Regulations (Compulsory Standards) Reference number Title RS CODEX STAN 1- General standard for the labelling of pre-packaged food 1985 RS CODEX STAN General standard for the labelling of food additives when sold as such 107-1981 RS CODEX STAN General standard for the labelling of and claims for pre-packaged food for 146-1985 special dietary uses RS CAC/GL 1-1979 General guidelines on claims RS CAC/GL 2-1985 Guidelines on nutrition labelling RS CAC/GL 23-1997 Guidelines for use of nutrition claims RS CAC/RCP 1-1969 Code of practice for food hygiene RS 1: 2003 Specification for natural mineral water Specification for packaged/bottled drinking water (other than packaged RS 2:2003 natural mineral water) RS 4:2004 Specification for neutral spirit for manufacture of alcoholic beverages RS 5:2004 Specification for gins RS 6:2004 Specification for brandy RS 7:2004 Specification for whisky RS 8:2004 Specification for rum RS 9:2004 Specification for vodka RS 10:2004 Specification for still table wines RS 11:2004 Specification for sparkling wines RS 12:2004 Specification for fortified wines RS 16: 2004 Standard specification for beer RS 17:2004 Specification for carbonated and non-carbonated beverages RS 18:2004 Specification for glucose based energy drinks RS 19:2004 Specification for fruit based soft drinks part 1 and 2 RS 20:2004 Specification for cereal based alcoholic beverages Specification for passion fruit juice preserved exclusively by physical RS 21:2004 means RS 22:2004 Specification for mango juice preserved exclusively by physical means RS 24:2004 Specification for sorghum grains RS 25:2004 Specification for maize grains RS 26:2004 Specification for wheat grains RS 27:2004 Specification for milled rice RS 28:2004 Specification for whole maize meal RS 29:2004 Specification for edible maize starch RS 30:2004 Specification for sorghum flour RS 31:2004 Specification for whole wheat flour RS 37:2004 Specification for black tea RS 39:2004 Specification for roasted coffee beans and roasted ground coffee RS 40:2004 Specification for instant (soluble) coffee RS 41:2004 Specification for unprocessed whole milk RS 42:2004 Specification for pasteurised liquid milk RS 43:2004 Specification for fermented (cultured) milk RS 44:2004 Specification for UHT milk RS 45:2004 Specification for milk powder and cream powder RS CODEX STAN Standard specification for edible oils and fats 19-1981 104 Reference number Title RS CODEX STAN Standard for named animal fats 211-199 RS 50-1: 2004 Cement, part 1: composition, specification and conformity criteria RS 51: 2004 Specification for aggregate from natural resources for use in concrete RS 53: 2004 Specification for concrete RS 54: 2004 Specification for sausage, part 1 RS 55: 2004 Specification for canned corned beef RS 57:2005 Specification for dressed poultry RS 58:2005 Specification for fresh tomato source RS 60:2005 Specification for yoghurt RS 61: 2005 Specification for cheese RS 62:2005 Specification for butter RS 64:2005 Specification for toothpaste RS 65:2005 Specification for cosmetic cream, lotions and gels for skin care RS 67: 2005 Specification for canned fish in tomato sauce, part 1 RS 68:2005 Specification for soya bean RS 69:2005 Specification for processed cereals based food for infants and children RS 70:2005 Specification for breakfast cereals flaked cereals RS 71: 2005 Specification for bread RS ISO 10470: 2004 Green coffee defect reference chart RS IEC 60086-1: Primary batteries part 1: general 2000-11 RS IEC 60086-2: Primary batteries part 2: physical and electrical specifications 2001-10 RS 56: 2005 Code of practice for handling, processing, and distribution of fish RS 59:2005 Specification for fin fish RS CAC/RCP Ante-mortem and post-mortem inspection of slaughter animals and ante- 41:1993 mortem and post-mortem judgement of slaughter animals and meat Source: RBS Instruction No. 02/2005 Declaring Compulsory Rwanda Standards. 105 Contact us John Ndunyu KPMG Rwanda Limited Partner – Country Leader T +250 788 302 272 E jndunyu@kpmg.com Jimmy Masinde KPMG East Africa Director – Head of Management Consulting T +254 709 576295 E jmasinde@kpmg.co.ke Seth Kasera KPMG East Africa Senior Advisor – Management Consulting T +254 709576365 E skasera@kpmg.co.ke www.kpmg.com/eastafrica © 2014 KPMG Rwanda Limited, a Rwandan Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. 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