National Agricultural Export Development Board (NAEB) Strategic Plan 2019-2024

1 Govt of Rwanda Law No. 13/2017 and public order 40/01 0f 24/01/2018. | Increasing Agri-export revenues 13 Figure 4: NAEB's mandate Since its establishment, NAEB has played a critical role in expanding Rwandan agricultural exports quality and revenue, contributing to Rwanda’s development. Rwanda has set an ambitious target to become a middle-income economy by 2035 and high-income status by 2050.2 To do so, agricultural exports is a key contributor among other sectors, with a goal to grow export revenues annually by at least 12%. Since its creation, NAEB has supported growth of exports revenue significantly, which doubled from 225 million USD in 2013-2014 to 516 million in 2017-2018, at a 22% compounded annual growth rate. These achievements were driven by NAEB’s strong leadership in implementing a series of reforms and investments in the agricultural exports to continue growing traditional export products (tea, coffee, Pyrethrum) and developing new emerging value chains such as horticulture, cereals, and animal products. Key achievements within these value chains are further detailed in the value chain performance section.

2 The World Bank and the Government of Rwanda, 2018, Future drivers of growth in Rwanda | Increasing Agri-export revenues 14 CONTEXT FOR THE 2019-2024 STRATEGY To deliver on its mandate, NAEB develops six-year strategic plans to guide its efforts towards expanding agriculture exports and to inform the best allocation of scarce resources to support exports growth. NAEB’s six-year strategic plans aim to provide guidance to ensure that scarce resources available are allocated to top priorities and provide a partnership framework for public and private sectors to work together to achieve mutually agreed objectives, leading to agricultural export development. For sustainability purposes, strategic plans also emphasize the contribution of the export sector to the overall economic and social development of the country in terms of foreign exchange earnings, employment creation, poverty eradication, regional development, gender equality, the inclusion of disadvantaged groups, and environmental sustainability. The 2019-2024 strategy builds on the success of NAEB to date and puts forth key interventions to achieve NAEB’s ambitions to achieve 1 billion in annual exports revenue by 2024. The 2019-2024 strategy builds on the learnings from the 2013-18 mid-term strategy to provide directions for the next six-years. For this six-year strategic plan, NAEB targets to reach 1 billion USD in annual agriculture export revenues by 2024, focusing on priority growth value chains, leveraging Rwanda’s positioning on key markets, and addressing key value chain needs to reach their growth potential. The current strategy outlines the strategic objectives for NAEB, focus value chains, and key programs and supporting interventions to achieve growth. This strategy was developed by Dalberg Advisors and the Sustainable Trade Initiative (IDH), in close collaboration with the National Agriculture Export Development Board’s Executive Team, Board of Directors, and broader stakeholders. | Increasing Agri-export revenues 15 I.1 EXPORTS PERFORMANCE AND OUTLOOK Rwanda’s agricultural exports experienced significant growth over the recent years at a compounded annual growth rate (CAGR) of 22% since 2013-2014 to reach 516 million USD in 2017- 2018, led by moderate growth in traditional exports (tea, coffee, and pyrethrum) and faster growth in emerging export crops. Rwanda predominantly exported traditional commodities such as tea, coffee, and pyrethrum to international markets, but new high potential export crops have emerged including horticulture, livestock, cereals, and other crops (essential oils, stevia, fish, etc.). Export of traditional commodities grew at a CAGR of 11% between 2013-2014 and 2017-2018 while emerging commodities export grew at a CAGR of 29% within the same period. Among the emerging export commodities, horticulture experienced the fastest growth due to the development of flower parks for export production, and emerging exporters of high-value horticulture crops targeting international markets. Cereals also grew more rapidly than others due to the introduction of local cereals processors to the country. Animal products were the largest export sector accounting for 24% of Rwanda’s total agriculture exports, however, grew at a slower rate. Tea remained a key traditional export commodity, its growth mainly driven by the construction of six new tea processing factories in the country. The coffee sector, despite remaining an important cash crop in Rwanda, experienced slower growth in recent years. In efforts to improve productivity and quality, NAEB and other sector stakeholders have expanded the number of coffees washing stations across the country and provided technical trainings to farmers. Figure 5: Rwanda agriculture export value, past trends Despite great achievements in overall exports goals, there were shortcomings in value-chain specific objectives from the previous NAEB 2013 – 2018 strategy. Key learnings from the previous strategy inform the 2019-2024 strategy formulation. Under NAEB’s leadership, Rwanda’s agricultural exports grew rapidly, with annual revenue reaching 516 million USD in 2017-2018, close to the overall goal of 567 million USD set by the previous NAEB strategic plan. Tea and other emerging commodities exceeded or reached close to the targeted projections either in absolute terms or in their pace of growth, while coffee, horticulture and pyrethrum did not meet their targets of aggressive | Increasing Agri-export revenues 16 growth. Tea exports reached 88 million USD in 2017-2018, close to the target of 95 million USD, and grew at a similar CAGR of 7% to the expected rate of 8%, from the 2012-2013 baseline. Coffee exports revenue fluctuated and overall remained at the same level due to shifting global prices and various challenges in the sector. Pyrethrum exports struggled as the sector experienced an unexpected global market shift and plummeting of the price as a result, while horticulture’s slower growth could be partly explained by gaps in implementation of planned activities. Meanwhile, other emerging commodities including cereals and animal products experienced substantial growth beyond expected targets, allowing Rwanda ag exports to meet its overall targets. The rapid assessment of the NAEB’s performance in the previous strategy points to the need for i) detailed and rigorous analysis on growth drivers to set targets for specific value chains; ii) programming areas that align with new ambitious targets and ensuring appropriate funding in delivery; iii) clearly defined and assigned roles to the implementer (NAEB team or external partner); and iv) aggressive approach in implementation leveraging both NAEB’s internal capability and external stakeholders who can accelerate growth. The NAEB Strategic Plan 2019-2024 aims to fill the gaps observed from the 2013-2018 strategic plan, in order to achieve its 1 billion USD annual export revenue goal by 2024. Specific drivers of growth for each agriculture export commodities over the past six years are detailed in the chart below: Figure 6: Growth drivers of each agriculture export commodity from 2013-2014 to 2017-2018 EU is the main export destination for traditional and high-value exports including tea, coffee, pyrethrum, and increasingly horticulture, followed by a few Asian countries which mostly import tea and horticulture products. Rwanda exports over 52% of its tea to Asia and 28% to the EU. Rwanda exports over 60% of its coffee to the EU, 20% to the US, and in smaller quantities to the Asia/Pacific region. Rwanda has diversified its export markets for pyrethrum beyond the US, to cover the EU and | Increasing Agri-export revenues 17 Asia. While most horticulture exports were regional, high-value horticulture crops including flowers, French beans, chilies, and passion fruits exports went to the EU market. The region – East Africa and other surrounding neighbors – dominates low value and staple crop export markets, with DRC as the largest buyer in the region as it accounts for 80% of all of Rwanda’s regional exports. DRC bought 75% of low-value horticulture exports and 99% of all cereals exports. Rwanda also continued to provide live animals and meat, fish, meat, and dairy to DRC, while also exporting milk to Sudan, South Sudan, and Tanzania in smaller volumes. 50% of these regional exports were informal in nature, and 40% were re-exports. Figure 7: Rwanda agriculture products' export destinations Over the upcoming six years, Rwanda’s agriculture exports are projected to reach 1 billion USD in annual exports revenue by 2024. This will require doubling down on exports of emerging crops, while steadily growing traditional exports crops. To achieve the ambitious goal of reaching 1 billion USD in ag exports revenue per annum by 2024, NAEB will need to operate differently by building on and scaling-up on past successes and prioritizing key crops that will give Rwanda a competitive advantage. International exports growth will be led respectively by (i) exponential growth in horticulture high-value fresh products (French beans, snow peas, passion fruits, chilies, and cut flowers) mainly towards the European market, followed by the Middle East, and the rest of Africa; (ii) continued growth in tea as Rwanda increases its global market share and diversifies into specialty tea, therefore capturing higher value; (iii) steady growth in coffee exports value by increasing sales of specialty coffee; and (iv) increase in pyrethrum exports volumes and value by increasing productivity and diversifying into value addition. Regional exports will grow less rapidly than past trends given expected increased stability in the region but offer tremendous opportunities for growth in specific product segments. Re-export of value-added cereals will continue to grow rapidly in the cereals sub- category. Beyond traditional and emerging export crops, new growth value chains hold the potential to grow in the upcoming years and will be tested out to unlock their potential. These include essential oils, stevia, honey, and new exports products that NAEB may identify in the upcoming years. | Increasing Agri-export revenues 18 Figure 8: Rwanda agriculture export value, past trends and projection I.2 AGRICULTURE EXPORTS OPPORTUNITIES AND CHALLENGES TO ACHIEVE GROWTH OBJECTIVES Overall agriculture exports opportunities and challenges Strong institutional capacity and market competitiveness are the main strengths of Rwanda’s agriculture exports; However, challenges related to logistics, human capital, and private sector investments need to be overcome to leverage its full potential. A summary of the agricultural exports sector’s strengths and challenges are included in the figures below. | Increasing Agri-export revenues 19 Figure 9: Strengths of Rwanda's agriculture exports Figure 10: Challenges in Rwanda's agriculture exports Apart from the overall opportunities and challenges that Rwandan agriculture sector as a whole face, each value chain also has specific opportunities and challenges, which are explored in the next paragraphs. Value chain specific opportunities and challenges and prioritization Priority value chains for the strategy are assessed based on their market opportunity to help reach the 1 billion exports target, and Rwanda’s ability to address challenges in the value chain. A market | Increasing Agri-export revenues 20 opportunity for a crop can be defined by positive market trends, appropriate agronomic conditions, and potential to bring incremental income to Rwanda. Natural or structural challenges are usually imposed by Rwanda’s natural environment constraints such as the hilly landscape, the landlocked nature of the country limiting sea freighting for high weight perishable crops, and therefore relatively difficult to address. Other challenges are often driven by the nascency of the value chain or limited resources (financial, knowledge, and human), which are often addressable. These two criteria, as further described below, guide the prioritization for high-potential value chains that will be a focus for the strategy. Figure 11 Value chain prioritization criteria Based on these criteria, we assessed different value chains in Rwanda exports. These value chains fall within two categories: (1) high potential value chains, and (2) value chains with opportunities in specific segments. I addition to these two categories, NAEB may identify new growth value chain in the upcoming years to keep diversifying and strengthening the exports base. The table below summarizes the assessment of value chains, which is further expanded in subsequent paragraphs. Figure 12: Value chain prioritization assessment | Increasing Agri-export revenues 21 Value chain opportunities and market potential To achieve the $1 billion agricultural exports goal, Rwanda needs to strategically focus its resources on areas where opportunities lie within each value chain (e.g., product lines and target markets) and fully capitalize those opportunities. High value and traditional agricultural export products will continue to target the international market, mainly the EU but also increasingly the US, Middle East, Asia, and to the rest of Africa (West and Southern Africa). Low value and high-volume commodities will continue to serve the regional market. Below is the summary of the specific value chain and market opportunities, and specific segments within value chains that will receive the most focus from NAEB in the next six years. Detailed value chain assessments and market potential are included in Annex IV.1. Value chains with fast growth potential • Horticulture: The global market for fresh fruits and vegetables is projected to continue its growth trend at a CAGR of 6% (reaching 5.4 trillion USD in 2030) 3 due to increasing consumer preference and health awareness for diversified, fresh products. Europe and the Middle East will continue to dominate the global demand for fresh horticulture products. Given Rwanda’s ability to address key challenges, horticulture exports will continue to grow rapidly. Exports will also continue to diversify towards the rest of Africa (mainly Western and southern Africa) • Tea: The global tea market is projected to grow at a CAGR of 5.75% from 2017 to 2024 (reaching 73 billion USD),4 driven by both continued growth in black tea exports and rising demand for new diversified tea categories. Rwanda’s tea holds a unique quality and is well- positioned to take advantage of the global tea market trends towards specialty tea. Focus markets will remain, Asia, Europe, and increasingly North Africa. • Pyrethrum: The global pyrethrum market is projected to grow at a CAGR of 6.4% from 2017 to 2026 led by rising demand both for natural insect repellent products (expected to reach 3.7 billion USD by 2026) and organic pesticides in agriculture (global market to reach 279 billion USD in 2023). The market price is expected to stabilize in the coming years as the global demand grows and the buyers become more diversified. This trend presents opportunities for continued exports of pyrethrum extracts to Asia, the EU and the Americas while diversifying into local value addition to produce and export ready-to-use organic pesticides, both for regional and export markets.5 Value chains with growth potential in specific segments • Coffee: The global coffee market grew slowly at a 1.26% annual rate between 2014 and 2017 but is projected to grow at a CAGR of 5.3% from 2019 to 2024, with rising demand for diversified products including organic, specialty, and single origin coffee. Global coffee prices are often volatile, with a recent downward trend, but specialty coffee can fetch a price premium of about 21% for African coffee. Diversification into higher value coffee can support Rwanda’s export growth. • Cereals: Rwanda can best increase its cereals export revenue by targeting value-added cereals (e.g. maize flour) and increasing productivity without expanding the land area under production dedicated to exports. The regional market for milled cereals is limited outside

3 Fruit Logistica, 2018, Trend Report : Disruption in fruit and vegetable distribution

4 Statista, Accessed March 2019, Global tea market size 2017-2024

5 Allied Market Research, 2018, Global organic pesticides market expected to reach $279,195 million by 2023 | Increasing Agri-export revenues 22 DRC (with a total market worth 40 million USD), which is the major buyer in East Africa and to which Rwanda currently supplies over 74% of its import. The value-added re-export category holds potential in the upcoming years. • Animal products: Animal products exports grew at a CAGR of 11.15% in the past six years but are projected to show a slower growth as they heavily rely on the regional demand built on instability, and the feed shortage will increasingly become a major bottleneck as the sector expands. There is opportunity for diversification from live animals to fine cuts as they have the potential to gain access to international and regional markets currently served by RwandAir, and small ruminants exports. New growth value chains Some of the nascent value chains in Rwanda, including essential oils, stevia, and other new value chains that NAEB may identify in the upcoming years are worth looking closely into as they both have positive global market outlooks and fetch high prices. • Essential oils: The global essential oils market is projected to grow at an 8.83% CAGR from 2017 to 2022 mainly led by demand in food and beverages and spa and relaxation industries, but also their versatile applications in perfumes, pharmaceuticals and cosmetics. 6 While most of Rwanda’s essential oils are currently sold in the region and increasingly to Europe, Rwanda has potential to serve the international market if it can produce sufficient volumes to supply the rising demand in the Asia Pacific and the US. • Stevia: The global market for stevia is projected to grow from $492 million in 2018 to $818 million by 2024, 7 with increasing health awareness and food and beverage industries shifting to natural sweeteners. There is an opportunity for local processing and therefore a higher revenue margin if Rwanda can secure a production volume large enough to run an extraction factory. Value chain challenges and Rwanda’s ability to address such challenges To taking advantage of Rwanda’s competitiveness in growing markets, specific value chain needs, and challenges must be addressed to achieve each sub-sector’s potential growth. Value chain needs are spread across the supply chain as summarized in the figure below.

6 Statistics MRC, 2017, Global essential oils market report, size, share, analysis 2017 and forecast to 2023; Dalberg analysis, 2019

7 IMARC, Stevia Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019-2024 | Increasing Agri-export revenues 23 Figure 13: Summary of value chain needs Some of these needs are faced across several value chains, while others are only relevant to a few. Specific value chain needs are summarized in the figure below and expanded in annex IV.1. Figure 14: Value chain needs in each stage of value chain processes, by crop/sector Challenges in tea, new growth value chains, horticulture, and pyrethrum respectively show the greatest potential to be addressed while those in coffee, cereals, and animal products cannot be fully controlled by Rwanda. | Increasing Agri-export revenues 24 • Horticulture: There is a high potential to increase the quality and quantity of horticultural crops with increased sector coordination in Productivity and quality management, and possibility to increase air freight capacity through attraction of global air cargo operators, utilization of the currently untapped cargo space, and with the new Bugesera airport. • Tea: Rwanda can increase tea yield through facilitating access to inputs by farmers, capacity building, and more R&D efforts. In addition, Rwanda can increase exports via increased market linkage efforts and fetch higher prices given its high-quality tea. • New growth value chains: There is room for capacity building and attracting operators to address challenges on low production and processing capacity and limited farmer knowledge on these crops due to their nascency in Rwanda. There is also opportunity for increasing private sector engagement in these value chains through different engagements such as business incubation. • Pyrethrum: Investment in capacity building of farmers on production best practices such as the use of fertilizers can solve the issue of low productivity. There is also opportunity for market diversification through increased market linkages and local value addition which can lead to increased export prices • Coffee: Rwanda has little control over fluctuating global prices and scattered production areas and aging trees puts Rwanda at a disadvantage in terms of competing on the global market with large-scale producers. Diversification into specialty/higher value coffee can be supported through sector coordination initiatives. • Cereals: Issues of low yields and limited post-harvest handling knowledge can be partly addressed, and capacity can be addressed with efforts into farmers capacity building, although Rwanda cannot reach large scale production of cereals due to the hilly landscape. However, Rwanda can increase cereals exports by focusing on value-added cereals re-exports. • Animal products: Limited capacity for local feed production given low levels of cereal production pose challenges with Rwanda’s competitiveness for animal products. Small grazing animals require less feed, but to export to the biggest potential market, the middle east, will require sea transportation via neighboring countries and can put Rwanda at a disadvantage for live animals which are mostly in demand. Existing initiatives in place to improve production and productivity in animal products such as the Gako integrated beef project and cattle genetic improvement can help increase competitiveness in specific segments. | Increasing Agri-export revenues 25 Strategic objectives for 2019-2024 SECTION II | Increasing Agri-export revenues 26 II.1 STRATEGIC VISION Strategic vision summary Strategic priorities NAEB’s strategic business plan (SBP) 2019-2024 aligns with Rwanda’s Plan for Agricultural Transformation (PSTA IV), with an increased focus on marketing across priority value chains explored in the section above. Rwanda’s PSTA IV puts forth four priority areas and seeks the “transformation of Rwandan agriculture sector from a subsistence sector to a knowledge-based value creating a sector that contributes to the national economy and ensures food and nutrition security in a sustainable and resilient manner”. The NAEB strategic plan 2019-2024 aligns and measures its activities against internal core objectives deriving from PSTA IV. These include: (i) improved quality and supply of quality agri-export products to the markets; (ii) sustained agri-export markets and increased revenues from agri-export products; and (iii) sustainable and functional institutions to meet agri-export market demand. Strategic objective 1: Support an increase in productivity and quality of prioritized agri- export value chains. This strategic objective will result in reduced post-harvest losses, continuous supply of Rwanda agri-export to the market and increased demand for our products and hence gain trust from buyers of respective products. Strategic objective 2: Support increased value addition and market penetration of Rwanda agri-exports. This strategic objective will receive closer attention than traditionally and will ultimately lead to increased contribution of agri-exports to the country’s balance of payments and good visibility of prioritized Rwanda agri-export brands on international markets. The cost of engaging in international trade will also reduce as a result of intelligence studies, adopting the use of efficient and effective export logistics, market linkages and adoption of online trading platforms. Strategic objective 3: Enhance sector coordination and the enabling environment for sustainable growth of agri-exports. This strategic objective will lead to effective personnel and institutional coordination mechanisms in production, value addition and marketing services to grow the prioritized agri-exports. To deliver on its Mandate, NAEB will need to operate differently by building on and scaling-up on past successes and prioritize key value chains that will give Rwanda a competitive advantage. Our strategic framework to grow Rwandan agriculture exports will focus on fast growth value chains (including identifying and developing new ones) and niche opportunities within value chains with growth potential in specific segments. Prioritized value chains will benefit from nine programmatic areas, using a market-driven approach to support down the export value chain, as well as supporting interventions. These programming areas, as illustrated in the overarching strategic structure below and further expanded in the next section. These include branding, market linkage, global operator attraction, business incubation, quality production, and productivity management, logistics and infrastructure coordination; as well as financing, policy and regulation, and strategic analytics as cross- cutting programming areas. Across execution of these programming areas, NAEB will ensure mainstreaming of thematic considerations including human capital development, knowledge management, environmental sustainability, and gender and youth. NAEB will implement these | Increasing Agri-export revenues 27 initiatives, leveraging new and existing partners in government and outside of government based on specific needs for each program. The strategic framework is illustrated in the figure below. Figure 15: Summary of overall strategy framework Export growth projections In line with prioritized value chains, Rwanda’s exports are projected to reach $1 billion annually by 2023-2024, led by exponential growth in horticulture, rapid growth in high-quality tea, and steady growth in many other sectors. The market outlook for Rwanda’s positioning in regional and international exports reveals strong export potential for Rwanda in horticulture, tea, pyrethrum, as well as new potential growth value chains (e.g., essential oils, stevia, etc.). In addition to these, specific segments of growth potential exist with coffee (specialty coffee), cereals (value-added re-exports), and animal products (small grazing animals such as sheep and goat). Horticulture growth will be led by high-value crops exports to the European market and in smaller quantities to the regional and middle eastern markets, while tea will continue its fast growth rate as Rwanda increases productivity and diversifies progressively into specialty tea. Pyrethrum growth will come from increased market diversification for pyrethrum extract exports and diversification into value-added products such as insect repellents and organic pesticides for agriculture. Coffee will grow slowly after production consolidation and land re-allocation for aging trees. Cereals exports growth continue at a slower rate as the region stabilizes and Rwanda continues re-exporting through value addition. Animal products exports will grow similarly to that of cereals. | Increasing Agri-export revenues 28 Figure 16: Rwanda agriculture export value, past trends and projection Although key growth value chains are focused on international markets, the regional market will continue to represent a significant portion of projected export revenues. Figure 17: Breakdown of export revenue by market Growth in annual export value will result from increased export prices of high-quality and specialty products for crops such as tea and horticulture, combined with growth in productivity and production. Export value growth will not translate into a similar volume growth rate for all products. While products such as value-added cereals and animal products will undergo insignificant changes, products such as tea, coffee, and pyrethrum can fetch higher prices for a portion of exports via | Increasing Agri-export revenues 29 diversification into specialty or higher quality products. Volume growth projections required to achieve export revenue targets are outlined in the table below, while detailed growth assumptions for each value chain is detailed in the following table. Table 2: Export volume (kg) projections by commodity Commodity 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 Horticulture 28,308,944 28,867,312 30,367,526 33,501,950 39,198,847 52,675,902 92,535,175 Tea 27,006,190 30,434,956 35,810,398 41,063,891 47,404,792 55,221,183 65,099,107 Pyrethrum 23,262 25,000 27,464 30,171 33,145 36,411 40,000 Coffee 20,094,527 20,867,642 21,824,392 22,825,006 23,871,498 24,965,970 27,371,400 Cereals 237,686,941 243,959,047 250,396,662 257,004,153 263,786,003 270,746,814 277,891,307 Animal 56,926,010 58,106,592 59,311,659 60,541,717 61,797,286 63,078,893 64,387,079 products International exports will register the highest growth in value from current $61 million to $120 million by 2024, mainly led by horticulture and tea. Regional exports will grow less rapidly than past trends given increased stability in the region but offers tremendous opportunities for growth, such as value-added cereals. Detailed assumptions for growth projections of each value chain are outlined below: Table 3:Summary of growth projection assumptions by sub-sector Sub-sectors Growth projection assumptions Horticulture • Exponential growth in high-value crops (Chili, French beans, flower, grapes, macadamia, mushroom, and passion fruit) export value, capturing 3% of the EU market by 2024 • High-value crops to increase in yields (by 20%) and area planted to produce target volumes • Other horticulture crops’ export to grow linearly, both in volume and value at the historical growth rates Tea • Continued growth in total tea export volumes, reaching 3% of the global market by 2024 • Diversified teas exported volumes to increase, reaching 20% of the total tea exported volumes from Rwanda • Specialty tea to fetch a premium price of at least 35% above black tea prices Pyrethrum • Export value to grow at the same rate as the global market demand as NAEB strengthens existing trade partnerships and explores new ones • Area planted to remain constant at 3,000 ha while yield to increase progressively from current 0.5 MT/ha to 0.8 MT/ha • Pyrethrum extract to fetch an average price of $250 New growth • Stevia, essential oils, honey and other newly identified value chains to value chains experience fast growth as they benefit from NAEB continued support and targeted investments • Stevia and honey to grow at 50% of the historical growth rate for new growth value chains, and essential oils to grow at the global market CAGR • | Increasing Agri-export revenues 30 Coffee • Steady increase in coffee exports value as the specialty coffee exports increase to be 25% of total coffee exports and fetch higher prices • Area planted to reduce by 5% while yield increases progressively at a 5% annual rate from current 0.5 MT/ha to 0.7 MT/ha by 2024 • Conventional coffee price to remain constant at the average price between 2012 and 2017 Cereals • Export of processed cereals to grow at a slower rate than the historical trend as the regional instability decreases and given Rwanda is not a surplus producer of grains • More focus on re-exports of value-added products • Less focus on producing cereals for exports (but for food security) to prioritize land for high-value crops • Yields to increase in current areas planted Animal • Export of value-added livestock products to grow at a slower rate than products the historical trend • Faster growth in small grazing animals and derivatives, and in dairy added products Others • Slower growth rate as the regional instability decreases and low-value, regional crops to decrease in export values | Increasing Agri-export revenues 31 II.1 PROGRAMMING AREAS & INTERVENTIONS Programming areas summary Key export value chains have similar needs to reach targeted growth; these needs can be grouped into six main programs. Specific value chain needs can be grouped into six main programs including Productivity and quality management, global operator attraction, business incubation, logistics and infrastructure coordination, market linkage, and branding. These grouped needs are illustrated in the graphic below and inform program details in the following section. Figure 18: Grouped value chain needs NAEB will use a market-led approach to transform and grow Rwanda’s producers from supply- driven exporters to market-led and knowledge-intensive exporters. Programs cut across priority value chains with a varying level of focus on value chains based on their specific needs and potential. NAEB has traditionally offered similar services, but with a stronger focus on production and logistics and infrastructure services. To transform and grow Rwanda’s producers from supply-driven exporters to market-led and knowledge-intensive exporters and achieve its ambitious exports goals will require a more aggressive market-led approach to ensure that market needs, trends, and requirements inform efforts in production and logistics coordination. NAEB will, therefore, strengthen its marketing capacity, adopt initiatives that will attract both international and domestic investors in agri-export emerging opportunities, increase production, and support agri export stakeholders to enhance productivity and meet international markets food safety requirements. Further, business incubation is particularly important to increase the size of private sector activity in emerging sectors such as horticulture, in order to keep track with sector growth targets. Setting up strategic partnerships with buyers in Europe and the Middle East, as well as with some Asian countries such as China and South Korea, will help Rwandan producers expand their market outreach. | Increasing Agri-export revenues 32 Figure 19: Programming areas summary and value chain focus These programming areas will be supported by other cross-cutting areas within NAEB’s mandate, to ensure an enabling environment for programs to thrive. In addition to value-chain oriented programming areas, other programming areas are underlying or cross-cutting in their nature and come in support of the value chain programmatic areas. These cross-cutting programming areas relate to financing, policy and regulation, and strategic analytics. While NAEB will oversee all programming areas and lead the majority of execution, we will strategically leverage new and existing partners where necessary, to support in execution. NAEB’s core functions related to export market development and innovation, value chain development and regulation, and finance, planning, and exports services provision are paramount to enable execution of the strategy. In addition to these core functions, NAEB will associate existing partners in and outside of government and will seek new ones to lead, co-lead or support execution of specific programs. By their nature, some programs are well suited for a strong public sector role played by NAEB and other government partner institutions, while others will require third parties with in-depth expertise in specific areas to play a stronger role. The figure below outlines key NAEB’s role in implementation and guide the allocation of different programs within NAEB and key partners, in the detailed programming areas description. | Increasing Agri-export revenues 33 Figure 20: Framework on key NAEB roles in implementation | Increasing Agri-export revenues 34 Value chain-oriented programming areas detail Value chain-oriented programming areas are summarized in the table below and detailed in the following sub-sections. Table 4:Value-chain oriented programing areas summary Programming areas Key programs Expected targets/ outcomes Market linkage and High priority • Unique buyer-exporter export promotion • Develop a market information system (MIS) or relations created: Horticulture: decision support model (DSM) for information minimum 30, tea: 10, pyrethrum: sharing on key markets for major export 2, coffee: 6, essential oils: 3. products • Generated total sales value • Support local exporters to strengthen (USD): Horticulture: relationships with new and existing buyers 100,000,000, tea: 50,000,000, through trade fairs, forums and one on one pyrethrum: 2,000,000, coffee: meetings 6,000,000, essential oils: • Maintain an active roster of exporters with 1,000,000 key information to facilitate negotiations with • Number of product lines: buyers on specific products Horticulture: 5, tea: 2, • Support exports through local physical pyrethrum: 1, coffee: 2, essential marketplaces and e-commerce platforms in oils: 1 target markets to diversify market and reach more buyers Branding High priority • Increased recognition of Rwanda • Develop and communicate content behind brands as quality brands Rwanda brands, ensuring Rwandan products associate with high quality, taste, sustainable, climate and environmental • Enforce compliance with Rwandan brand standards Medium priority • Develop traceability system of exported products Leverage international events in Rwanda and abroad to advertise Rwanda brands Global operators High priority • Value chain-specific businesses attraction • Identify investment opportunities for attracted: Horticulture: 5, tea:2, identified land sites, and develop business pyrethrum: 1, essential oils: 1 cases • Total investments committed • Attract global and regional operators to (USD): horticulture: 23 million, establish/or co-invest in Rwanda tea: 60 million, pyrethrum: 10 • Support operators in establishing and million, others: 4 million beginning operations in Rwanda • Support operators in continuing their operations or expanding their businesses Business Incubation High priority • Businesses supported: • Support expansion of early- and mid-stage Horticulture: 45 international- exporters in established value chains market focused businesses, 17 Medium priority existing international-market focused businesses, and 20 | Increasing Agri-export revenues 35 • Innovation experimentation in new growth existing regional-market focused value chains (proof of concept) businesses, others: 3 • Support creation/development of ag technology and innovation with the potential to catalyze ag exports growth Productivity and High priority • Optimized land area under quality • Facilitate exporter-farmer cooperative cultivation: Horticulture: 7,442 management clusters for increased access to agronomic ha for high value crops, tea: from technical knowledge, quality inputs, 26,897 to 35,000 ha, coffee: 24% production and post-harvest management reduction of current area. infrastructure, and compliance with quality • Increased yield (MT/ha): standards and regulation requirements Horticulture: 20% increase for • Showcase new crops and varieties, new high value crops, tea: early technology, and best agronomic practices estates (0.8 to 2.2), adolescent through demonstration farms estates (3.25 to 6), Pyrethrum: Medium priority 0.5 to 0.8, coffee: 0.5 to 0.7. • Agriculture land mapping and planning, • Exporters supported: 37 existing leveraging existing MINAGRI efforts + 45 new for horticulture, 16 (agriculture land information system – ALIS) existing + 3 new estates for tea, 1 • Accelerate R&D efforts in key sectors that existing for pyrethrum, 4 existing contribute to the export base for cereals, 3 existing for essential oils and 1 existing for stevia • Farmers supported: Horticulture: 85,000, tea: 45,840, coffee: ~12,000, coffee: 355,771 • Improved feedback from buyers/market Logistics & High priority • Number of businesses infrastructure • Provide infrastructure and logistics support supported: 72 (37 existing + 45 coordination for perishable products for international new) export markets – Increase airfreight capacity) • Provide infrastructure and logistics support for perishable products for regional export markets – Facilitate investments in infrastructure and processing (e.g., slaughterhouse) Medium priority • Provide warehouse for non-perishable exports for both international and regional export markets Market linkage and export promotion Programming area objectives and target Via this programming area, NAEB seeks to support Rwandan exporters to create new buyer relationships, with the aim of supporting market diversification for Rwandan products and potentially securing higher margins. Creating new buyer relationships and strengthening existing | Increasing Agri-export revenues 36 ones is particularly important to ensure increased exports towards diversified target markets. This should be an ongoing initiative as new and existing Rwandan exporters grow from small-scale, early- stage businesses to commercial-scale. To achieve this, NAEB needs to develop inhouse capability and understanding of international market requirements, needs, trends, how to identify buyers, manage them and increase tangible impact. Figure 21: Market linkage targets Key programs The market linkage program hinges on four categories of activities, detailed below: 1. Develop a market information system (MIS) or decision support model (DSM) for sharing supply, demand, price trends, and barriers to entry across key markets for major export products. The MIS or DSM is an analytical tool, incorporating a thorough screening process that facilitates systematic export market selection through the identification of realistic export opportunities for firms wanting to expand their sales reach into foreign markets. It also offers alternatives to exporters where they are facing saturation and/or declining growth in their traditional markets.8 The tool will be used to share and promote periodically key market opportunities to exporters. For continuous easy access, a simple visual tool with high-level opportunity indicators will be embedded on its website, while a trained NAEB staff will be available to assist exporters in contextualizing and interpreting the market information and/or

8 IGC – Viviers and Cameron, 2017, Using a Decision Support Model to Identify new export opportunities for Rwanda The DSM methodology takes into consideration all possible worldwide products, country combinations and, using four filters, progressively eliminates less promising markets until those with the greatest prospects of success are revealed. | Increasing Agri-export revenues 37 DSM outputs. Such service could potentially be provided on a membership basis, for businesses to understand markets with the highest demand for different products, at what price point competitors are supplying those markets, and key regulatory requirements and other barriers to entry to access each market. The regulations and standards across key markets can be used to inform NAEB’s quality assurance efforts across all value chains. NAEB, in partnership with the International Growth Centre, has undertaken an initial assessment for such a tool in 2017, and the results must be leveraged towards implementation. 2. Support local exporters to strengthen relationships with new and existing buyers by increasing participation in trade fairs and forums, inviting buyers to Rwanda for one on one meetings and production site visits and skilling exporters how to maintain and strengthen these relationships sustainably. Increasing participation in trade fairs and forums includes identifying in advance key and strategic international trade fairs and forums with the greatest potential to attract new buyers, planning for the relevant fairs and forums by seeking buyers information ahead of the fairs and preparing brochures adapted to the audience, and coordinating and supporting exporters in setting up at those events. For one-on-one market linkage relationships building, the program will also involve inviting potential buyers for business site visits in order to witness firsthand Rwandan crops quality and increase their interest in buying Rwandan products from specific exporters. Finally, for sustainability purposes, the intervention will seek to equip exporters with the appropriate level of professionalism and business skills to continue to strengthen these buyers relationships. Strengthening buyer relationships will also require collecting buyer’s feedback shared with companies (e.g., product rebate, issues with specifications requirements, etc.) on a continuous basis to identify key areas of training required for exporters in specific value chains, and administering a quarterly feedback survey to buyers for feedback on products imported from Rwanda, across specific product categories. 3. Maintain an active roster of exporters with quantity and quality of crops they can export on a daily/weekly basis and possessed trade certificates to better inform buyer negotiations on specific products. NAEB will maintain an active roster of exporters and key export information, keeping an actively updated table which provides key information that the exports market development team can use to support their buyer negotiation efforts. 4. Support exports through local physical marketplaces and e-commerce platforms in target markets to diversify market and reach more buyers. NAEB has some ongoing projects in horticulture and tea value chains to support and promote this purpose. These include : (1) an ongoing initiative of establishing a Kigali Wholesale Market for Fresh Produce to serve as ‘an aggregation hub to catalyze supply to both international and regional markets in neighboring countries‘ 9 among others ; (2) the establishment of Rwandan e-tea and -coffee auctions to improve grading efforts of Rwandan tea in order to secure higher prices equivalent to the premium tea quality produced, and expand market for high-quality coffee ; as well as (3) using Alibaba’s e-commerce platform for the sale of coffee and other products to China – with the potential to expand into new products. This will help to increase market penetration and market expansion beyond wholesalers (e.g., to coffee shops, tea shops, agents, etc.) across markets. This activity will be a continuation of ongoing NAEB’s efforts and may include

9 Kilimo Trust, 2019, Kigali Wholesale Market | Increasing Agri-export revenues 38 creating similar new initiative in the upcoming years such as joining new e-commerce platforms such as Amazon and e-buy, to name a few. Implementing actors and approach Table 5: Market linkage programming area implementing actors and approach Activities NAEB’s role & Point Supporting/ Implementing Priority person/team within NAEB partners Develop a • NAEB’s role: Oversee An ideal lead implementer High market implementation and select a should have good analytics information partner to develop the tool capabilities, access to key system (MIS) or • Point person/team within agricultural exports a decision NAEB: International & regional market data and support model market development specialist experience in building (DSM) similar tools Support • NAEB’s role: Oversee An ideal lead implementer High exporters in implementation by should be involved in strengthening coordinating with similar initiatives or work relationships implementing partners with a large network of with new and • Point person/team within buyers in the global north, existing buyers NAEB: Export market and other relevant development and innovation markets, coupled with division good delivery capacity to help nurture buyers relationships Maintain an • NAEB’s role: Lead Exporters – to avail data High active roster of implementation on available products and exporters (to • Point person/team within specification, volumes, and inform exporter- NAEB: 1 team member in the timelines buyer export services division with relationships oversight of products that strengthening) transition to exports Support exports • NAEB’s role: Oversee the An ideal lead implementer High through local implementation and outsource should have experience in physical a partner to lead execution coordinating marketplaces marketplaces • Point person/team within and facilitating agricultural and e- NAEB: Export market products sales and commerce development and innovation auctions platforms division manager; Specialists in respective value chains division | Increasing Agri-export revenues 39 Branding Programming area objectives and target This program is focused on increasing visibility of Rwandan brands on regional and international agriculture export markets. Rwanda brands are not yet known on the global market and this, along with other factors, hinders the sales of export crops at higher prices matching their quality. Kenya has been historically the main source in our supply-chain for horticulture products in Africa, and we progressively expanded into new countries such as Egypt, Tanzania, and Ethiopia. It is only recently that we have come across of Rwanda as a potential long-term partner. – Importer from the EU As a result, this program aims to promote Rwandan brands on international markets as high quality products by: (1) developing content behind and advertising Rwanda brands; (2) enforcing compliance with the Rwandan brand standards; and (3) leveraging international events in Rwanda and abroad to advertise Rwanda brands. Figure 22: Branding programming area targets Key programs NAEB can increase branding efforts of Rwandan products via three categories of activities, detailed below: 1. Develop and communicate content behind Rwanda brands, ensuring Rwandan products associate with high quality, taste, sustainable, climate and environmental. Under NAEB’s leadership, Rwanda has developed key products brands including Rwanda Tea, Rwanda Coffee, and Rwanda Fresh. These brands are not yet fully established and used by exporters, given the development of its content is still ongoing. The content behind the brands may include: o Product grade – For example, by deciding product grades that are suitable for exports to international markets and therefore eligible to carry the brands o Minimum required certifications, as applicable – basic export certifications such as Global Gap can be included in the brand, but this must integrate feasibility for exporters to acquire such certifications, and requirements of the destination market o Phytosanitary compliance – ensuring that exported products comply with the phytosanitary standards included in the order from the specific buyers or destination markets before exports, such as Maximum Residue Levels (MRL) | Increasing Agri-export revenues 40 o Sustainability and environment standards compliance 2. Develop a traceability system of exported products which includes tracing exported crops back to their origin, important information for buyers and end consumer who care about product quality or supporting smallholder farming communities. The development and implementation of this system will require i) an initial assessment of traceability system's needs in line with market requirements and current gaps in existing data recording procedures, ii) software development to address issues surfaced by the initial assessment, iii) laptops provision to each collection point in the value chain (to record products characteristics), iv) training of stakeholders along the value chain, and v) verification of traceability processes along the value chain by technical staff.10 Traceability efforts can also include the profiling of key characteristics of products grown in specific parts of Rwanda. For example, NAEB is already implementing an ongoing appellation program for Rwanda coffee, aimed at establishing unique flavor and taste profiles of coffee in different coffee growing regions of the country,11 in order to enrich the coffee brand. The cost of traceability systems often falls heavily upon producers while the surplus revenue accrues to traders and exporters. Accompanying traceability with a fair minimum farmgate price policy could incentivize farmers to participate. 3. Enforce compliance with Rwandan brand standards. Once the brand content is approved, NAEB will be in charge of close monitoring to ensure exporters are fully compliant with the requirements to use the Rwanda brands. For example, to ensure phytosanitary compliance, NAEB can put in place random sample testing for products from specific exporters 4. Leverage international events in Rwanda and abroad to advertise Rwanda brands – identifying events with large coverage to showcase Rwanda brands, E.g., Africa CEO forum, Tour du Rwanda, World cup, etc. Implementing actors and approach Table 6: Branding programming area implementing actors and approach Activities NAEB’s role & Point person/team Supporting/ Implementing Priority within NAEB partners Develop and • NAEB’s role: Lead Ideal support partners High communicate development of the brand should have expertise in content behind content and Point person/team brand development, and Rwanda brands within NAEB: Respective value strong understanding in chains specialists in the certification and traditional and emerging regulatory requirements in commodities divisions and the target markets quality assurance and regulatory division

10 International Trade Center and Trade Impact for Good, 2015,Traceability in food and agricultural products

11 NAEB, 2014, Tender Notice: Request for expression of interest to the recruitment of individual consultant to do the appellation program for Rwanda coffee on behalf of PRICE/NAEB | Increasing Agri-export revenues 41 Develop • NAEB’s role: Co-lead Ideal supporting Medium traceability implementation by developing implementing partners system of or strengthening of a should have expertise in exported traceability system for key traceability programs, products value chains (horticulture and quality assurance, and coffee), supporting the private product profiling sector in managing the traceability system for well- established value chains (tea), and training stakeholders • Point person/team within NAEB: Respective value chains specialists in the traditional and emerging commodities divisions and the quality assurance and regulatory division Enforce • NAEB’s role: Lead N/A High compliance with implementation Rwandan brand • Point person/team within standards NAEB: Quality assurance and regulatory division Leverage • NAEB’s role: Oversee Marketing companies with Medium international implementation and select a extensive experience in events in marketing company to lead international events Rwanda and implementation coverage to design, adapt abroad to • Point person/team within branding materials, and advertise NAEB: PR & communication advertise at key Rwandan specialist under the Chief international events brands Executive Officer Global operators attraction Programming area objectives and target The global operator attraction programming area aims to attract global businesses to invest and operate in specific Rwandan value chains for production and exports and in other cross-cutting extension services. Via this program, NAEB aims to not only attract global operators to Rwanda, but to also to provide continued support after they have established in Rwanda, to facilitate their operations. The program will prioritize attracting operators in tea, horticulture, and essential oils production (and processing), as these value chains can benefit the most from scaled and commercialized production and increased access to markets given their current international market positioning and potential to grow.12

12 Pyrethrum production and export sales will be facilitated mainly through the market linkage program. Stevia sector already has an international investor operating in Rwanda and committed to increase production and launch a processing facility, given current low volumes produced | Increasing Agri-export revenues 42 This programming area targets global/regional operators in specific value chains production with capabilities to set up and manage commercial-scale production sites in Rwanda, and ideally with established linkages to export markets – e.g., Vertically-integrated supplier of value chains, food/plant-based products manufacturers, global retail chains, etc. These include global operators into fresh export value chains such as horticulture, or involved in processing/value addition for value chains that have potential to gain additional export revenue margins from local processing, refining, or drying of the raw ingredients – e.g., Stevia extracts and essential oils Figure 23: Global operator attraction targets Key programs Programs are designed to support prospective operators before, during, and after investments take place. 1. Opportunity identification a. Land mapping and earmarking for specific investment opportunities – This is a critical step prior to operator attraction and is further developed in the quality and productivity management programming area b. Ongoing identification of investment opportunities for specific land sites and developing business cases (investment IRR analysis, advantages to investing in Rwanda, etc.) 2. Operator attraction – Attract global/regional operators to come into Rwanda through: a. Outreach to potential global operators and showcasing business opportunities – Leveraging international gatherings such as the Africa CEO forum, or by tendering bids for interested global operators to apply b. Participation in negotiations, if necessary and alongside RDB as lead negotiator, terms of the business deal 3. Establishment facilitation – Support operators in establishing and beginning operations in Rwanda in areas such as: (i) land development, (ii) supply chain support (e.g., farmers/cooperatives organization, around the farm or factory), (iii) farmer/cooperatives training and inputs access, and (iv) export certification. | Increasing Agri-export revenues 43 4. Post-establishment support – Support operators in continuing their operations or expanding their businesses through: (i) government relationship management, (ii) identifying and connecting with potential partners (incl. local supply partners or investors to scale operations or support in easing certain value chain challenges), and (iii) other additional and relevant support required for expansion – e.g., land expansion. Implementing actors and approach NAEB and RDB will work closely together in approaching operators, pitching business cases, and facilitating operator establishment in Rwanda. Each institution’s role will vary in every case depending on their strengths, weaknesses, strategic positions, and relationships with the potential operator; however, effective communication and streamlining approaches and delivery speed between NAEB and RDB, and other ag institutions (RAB and MINAGRI) will help ensure that operators have the same experience while establishing in Rwanda, regardless of who the first touchpoint institution is. Table 7: Global operators attraction implementing actors and approach Activities NAEB’s role & Supporting/ Implementing Priority Point person/team within NAEB partners Opportunity • NAEB’s role: Lead • MINAGRI: Support land High identification implementation by identifying mapping and planning land sites for specific uses through the land mapping and planning program, and developing business cases for earmarked lands • Point person/team with NAEB: Planning division – GIS specialist, Planning specialists; Operator • NAEB’s role: Co-lead • RDB: Co-lead High attraction implementation with RDB by implementation by leveraging business cases to marketing business identify and approach global cases, attracting global operators, and also engage an operators and leading external partner to support in deal negotiations marketing business • External partner: An opportunities in Rwanda, with ideal supporting partner global operators should have a strong • Point person/team within established network NAEB: Strategic investment with global operators in analyst specific value chains production Establishment • NAEB’s role: Co-lead • RDB: Co-lead High facilitation and implementation by supporting implementation by post- operators to set up businesses providing support in establishment (farms or factories) work with business registration support farmers and cooperatives, and aftercare services training farmers; ensure (e.g., support to solve any issues that may | Increasing Agri-export revenues 44 agriculture exports sector arrive post- stakeholder management establishment) • Point person/team within NAEB: Division managers of respective value chains Business incubation Programming area objectives and target Business incubation will support early- and mid-stage exporters in established value chains, innovation experimentation in new growth value chains (proof of concept), as well as support ag technology and innovation with the potential to catalyze ag exports growth. The program will increase private sector engagement in established sectors with few exporters such as horticulture, value-added pyrethrum, by supporting existing and new export-oriented businesses in those value chains. Such support includes grouped logistics services as well as business development support (BDS). The business incubator will also serve for innovation experimentation (e.g., testing production, value addition, and export opportunities in new growth value chains) to serve as proof of concept for private sector investment. Finally, it will serve as BDS provider to ag technology and innovation businesses which can serve to boost the growth of businesses in key value chains. The NAEB business incubator is unique in a sense that it does not only focus on providing typical business development support (BDS) services offered by conventional incubators but offers most importantly, complementary services and shared infrastructure (e.g., packhouse, cold chain transport, etc.), along with support in obtaining certifications, reaching buyers, etc. These services help businesses grow technically and to establish themselves in key markets. It does not, therefore, replace other nationwide incubation initiatives such as incubators to be set up within the Kigali innovation city. | Increasing Agri-export revenues 45 Figure 24: Business incubation targets Key programs 1. Support early or medium-stage export-oriented businesses in established value chains by leveraging specific services from other programming areas (e.g., market linkage, exports logistics, and infrastructure coordination, Productivity and quality management, etc.) and tailoring these to specific value chain needs and growth stages. a. Support in exports business establishment and business management practices, including: (i) business registration support, (ii) providing shared office space, (iii) identifying suitable land for production (land allocation to grow successfully), (iv) financial planning, and (v) business management skills b. Support in agronomic technical capacity building: (i) Increase access to quality products along the supply chain via linkage to producer groups, (ii) Transfer best agronomic practices and support in securing certifications, and (iii) monitor quality management at production, post-harvest, processing, and handling of export products c. Support in access to shared facilities (e.g., packhouse, warehousing, etc.). In line with the New Bugesera airport construction, this will involve construction a new shared packhouse for early-stage exporters, closer to the new airport d. Grouped logistics and equipment support to enable efficient connection to markets, especially for perishable products. Most early-stage exporters aggregate small volumes from smallholder out-growers, 13 and grouped logistics can maximize the existing logistics capacity and streamline the process from aggregation to shipping to export destinations. NAEB has been providing some of these services to horticulture exporters in the past 2-3 years, attributing the fast growth of the horticulture sector. Extension of the grouped logistics services to exporters of other new growth value chains can spur even higher growth. These grouped logistic services can be provided

13 NAEB, 2017 Annual Report 2017-2018; In 2017 only 17 exporters exported more than 500 MT per shipment, the minimum volume required for using the airport logistics | Increasing Agri-export revenues 46 by a private operator connected to early-stage businesses via the incubator. Specific services include: i. Grouped product collection and transport: Grouped pick-up of products from farms to the packhouse, and from packhouse to airport, to maximize (cold chain) transport logistics capacity usage. ii. Grouped airport/seaport/border clearance: A single service provider manages grouped clearance. Exporters can save on fragmented handling expenses paid to various clearing agents and gain in the margin. iii. Coordination with air freight companies for fixed daily cargo space for perishable crops: A single service provider organizes scheduling for shipping with all airfreight providers (e.g., RwandAir, KLM, Brussels, etc.), and can offer a fixed daily space average cargo price for all exporters. With fixed daily cargo space paid by the service provider, airfreight providers can block cargo space for exporters, and exporters can avoid off-loadings or losses or delays in delivery. Shipment volumes and schedules managed by a single entity can also improve efficiency in off-loading trucks, airport handling, and loading planes. e. Support in increasing and strengthening market linkages by supporting small exports to develop and strengthen relationships with new and existing buyers f. Other business management practice support such as financial planning and day to day business management skills 2. Innovation experimentation in new growth value chains – As NAEB identifies potential new growth value chains, the incubator will serve to support the development of seed businesses with the purpose of testing new business opportunities within growth value chains worth experimenting (including in production and value addition) for exports. The main purpose for this program is the to develop the proof of concept for new exports products, with successful cased evolving/maturing to move into the first program (incubation of export businesses in established value chains). To do so, the program will: a. Leverage strategic analytics to identify potential market opportunities / new products and raise entrepreneurs interest into these sectors. In some cases, NAEB may co-invest in some market opportunities where there are hesitations from the private sector to come in (e.g., as done previously in the flower sector). b. Closely support businesses to develop their product (s), and test them out as proof of concept c. Support successful cases to mature into the first program (incubation of export businesses in established value chains), where they will receive the same services to expand to early/mid-stage businesses 3. Incubation of ag technology and innovation businesses – Innovations related to agriculture technology, equipment, Fintech, ICT, etc., are emerging trends that can be looked at as part of innovation in the ag sector. Creation of such innovations can play a catalytic role in expanding agriculture production, processing, quality management, and marketing, at a faster pace. Conscious of this, the incubation programming area will involve support to new technology- driven innovative ideas in testing and rolling out their innovations in collaboration with businesses in the sector. These innovations if proven will overtime benefit ag export-focused businesses within the incubator and beyond. | Increasing Agri-export revenues 47 Implementing actors and approach Table 8: Business incubation implementing actors and approach Program NAEB’s role & Supporting/ Implementing Priority Point person/team within NAEB partners Established value • NAEB’s role: Co-lead • An ideal lead partner should High chains business implementation with a partner be involved in similar incubation involved in similar incubation incubation work with a work successful record in markets • Point person/team within similar to Rwanda – to co- NAEB: Divisions already lead implementation with leading other NAEB strategic NAEB programming areas linked with • Organizations/implementing business incubation (e.g., partners already leading or market linkage. Productivity supporting other NAEB and quality management, etc.) strategic programming areas Innovation • NAEB’s role: Oversee linked with business Medium experimentation implementation while selecting incubation (e.g., market in new growth a partner to lead execution linkage, quality production, value chains • Point person/team within and productivity NAEB: Chief operation officer management, etc.) in charge of Value chain development & regulation Ag tech and • NAEB’s role: Promote • Kigali Innovation City to lead Medium innovation programs by attracting other implementation – as part of businesses partners to implement (e.g., its mandate, the Kigali incubation Kigali Innovation City via RDB) innovation city will involve an • Point person/team within innovation lab and incubator NAEB: Export market with a focus on key development and innovation innovation areas, including ag division tech • External partner: An ideal lead partner should be involved in similar incubation work with a successful record in markets similar to Rwanda – to co- lead implementation with NAEB Productivity and quality management Programming area objectives and target These programs aim to improve both the quantity and quality of production of agriculture export products by (i) increasing yield, (ii) expanding the land area under cultivation, and/or (iii) enhancing post-harvest handling practices that affect the quality of produce after harvesting. Both yields and | Increasing Agri-export revenues 48 production areas for high potential crops are currently not optimized given the limited resources and agronomic expertise of farmers, especially in nascent sectors such as horticulture and stevia, and in highly fragmented sectors such as coffee. Post-harvest quality management is particularly critical for perishable products such as horticulture, animal products, etc. to keep in line with quality and safety standards required by importing countries (particularly EU countries), but also to attract higher prices and become renown as trustworthy business partners. Figure 25: Productivity and quality management targets Key programs The programs under Productivity and quality management are organized around capacity building of farmers and exporters to support production of commodities in higher quantity and quality in response to increased market demand resulting from market linkage and branding efforts. To achieve these goals will require a combination of different programs including: (1) Agriculture land mapping and planning, leveraging existing MINAGRI efforts, to ensure effective land allocation for crops based on their potential to grow in certain areas and their value contribution to the export base; (2) Exporter- farmer clusters facilitation for increased access to agronomic technical knowledge, quality inputs, and production and post-harvest management infrastructure; (3) Demonstration farms to showcase best agronomic practices and test new value chains or varieties; and (4) increasing R&D efforts in key crops. Each of these factors heavily affect production quality and quantity. 1. Agriculture land mapping and planning, leveraging existing MINAGRI efforts, to ensure effective land allocation for crops based on their potential to grow in certain areas and their value contribution to the export base. | Increasing Agri-export revenues 49 a. Map lands available for farming across the country: Effective land mapping is a critical step to ensure optimum allocation to key large-scale agriculture projects that NAEB will undertake, and also informs allocation of NAEB’s scarce resources to crops/areas that need them the most. To do so, NAEB should: i. Develop a categorization of crops most appropriate to grow in specific regions of the country based on their climate, geographic, and soil conditions, leveraging NAEB, Ministry of Agriculture, and support organizations in the agriculture sector’s existing studies. This will lead to the development of agro- ecological zonal clusters adapted to specific crops. ii. Identify current use of agriculture lands and their conditions, leveraging recent agriculture census and similar work conducted recently in Rwanda, including the agriculture land information system (ALIS 14 ), combined with GIS and satellite imaging b. Land planning and allocation: Based on land mapping, NAEB will earmark key lands for commercial production of specific crops to inform Global operator attraction efforts, and where required, will undertake land re-allocation to ensure optimum land use for productivity. For example, in the coffee sector where production is scattered across the country, there are production areas in the Kivu belt where scattered farmers can be brought together on consolidated production of up to 100ha, by filling gaps in between different producers and allocating current unused land to other farmers. Where applicable, land planning may also result in encouraging farmers to switch to or diversify into crops most appropriate for their lands or higher value crops. 2. Exporter-farmer cooperative clusters facilitation for increased access to agronomic technical knowledge, quality inputs, and production and post-harvest management infrastructure. Rwandan agriculture is dominated by smallholder farmers who can be difficult to reach directly to improve production techniques at scale. However, in export-oriented production, these smallholder farmers can be more easily reached via exporters who are often involved in direct sourcing from farmers, technical capacity building in agronomic practices, and in some cases, inputs financing – this is the case for tea and horticulture. In established sectors such as tea, these clusters already exist at different stages of maturity, enabling farmers to access inputs and technical capacity building via the processor/exporter, but new emerging sectors do not yet have such structures in place. Facilitating exporter-farmer cooperative clusters help bridge this gap while in turn increasing supply of quality produces to exporters. Achieving objectives of this activity requires some semi-flexible structure illustrated below, enabling to provide three types of services to farmers via the exporter and with support of technical partners:

14 Land information database providing information such as plot size, agro-ecological conditions, and proximity to water sources, feeder or main roads, and through which prospective investors can locate land that meets the selection criteria for their investment ideas. | Increasing Agri-export revenues 50 Figure 26: Example exporter-farmer cluster illustration Source: Dalberg analysis, 2019 a. Agronomic technical capacity building –Exporters equipped with appropriate knowledge in farming and post-harvest handling can provide technical capacity building to farmer cooperatives in their supply chains. Farming technical knowledge and skills to increase productivity and quality, include (i) crop rotation, (ii) integrated pest management (IPM), and (iii) specific agronomic practices that will lead to quality improvement – e.g., increase pyrethrin content in pyrethrum, steviol glycoside content in stevia, etc. Knowledge and skills in post-harvest handling include (i) temperature and humidity control, and (ii) product hygiene and sanitation maintenance, throughout the stages of cleaning, sorting, grading, and transporting to the packhouse. NAEB currently provides training to farmers on seedling multiplication and good agricultural practices in key export value chains, which it will expand on. In relevant cases, NAEB and its technical partners will accompany early/mid-stage exporters in quality and safety standards compliance to access specific certifications or comply with market regulations. b. Improve access to quality inputs – Exporters supply inputs to their out-grower farmers, either directly or by providing formal contracts as guarantees for direct inputs loans to farmers. NAEB will also develop co-funding mechanisms with exporters to ease inputs financing for farmers, as further detailed in the financing cross-cutting intervention c. Support access to production infrastructure i. Improve access to reliable and adequate irrigation infrastructure depending on types of crop and farm locations. The Ministry of Agriculture has installed large irrigation systems on some productions sites across the county and these can be further expanded, by bringing in new partners to fund their successful replication. Irrigation is also the largest investment component of the PSTA IV (25% of the total PSTA IV budget), via the Rwanda Agriculture Board (RAB) as main implementation institution. NAEB will leverage these investments by advising on locations that can benefit the most from these infrastructures, especially for irrigation-dependent crops such as horticulture. | Increasing Agri-export revenues 51 ii. Improve access to post-harvest equipment and/or facility by (i) acquiring and leasing equipment to farmers for post-harvest handling (e.g., graders, sizers, dryers, box-fillers, etc.), and (ii) installing storage and handling structures (e.g., cleaning and sorting rooms) on aggregated farmlands for farmers to directly access, etc. 3. Demonstration farms to test and showcase new crops and varieties, new technology, and best agronomic practices. These farms will be used as testbeds for cultivating new growth crops identified by NAEB in Rwanda and/or new crop varieties that are developed as a result of the R&D efforts detailed below. Set up near aggregated farmlands, demonstration farms will also serve as centers of excellence for farmers and exporters, demonstrating various agricultural techniques for new emerging crops (e.g., horticulture, stevia, and essential oils) that are yet to be widely adopted. 4. R&D on key crops – NAEB will partner with the Rwandan Agriculture Board, NIRDA and the private sector to accelerate R&D efforts in key sectors that contribute to the export base such as tea, and in new emerging crops, on a need basis. This will require associating the private sector in research efforts in order to tailor research efforts to actual private sector and consumer needs and includes: a. Strengthening Rwanda’s internal research capabilities on crop varieties, pests and diseases, and pest risk mitigation practices, for some of the important crops such as tea. b. Developing seedlings and new pest-resistant varieties suitable for Rwanda’s agronomic condition, on a need basis. c. New product and technology development by identifying and testing new crops and exploring opportunities in processing. The outcomes of this R&D focus will feed into programs under global operators attraction and business incubation. 5. Inputs distribution for key value chains traditionally supported by NAEB (seeds, fertilizer, pesticide) Implementing actors and approach Table 9: Productivity and quality management implementing actors and approach Program NAEB’s role & Supporting/ Implementing Priority Point person/team within NAEB partners Land mapping • NAEB’s role: Co-lead • MINAGRI to co-lead Medium and planning implementation by developing implementation via the production maps for key crops Agriculture land • Point person/team within information system NAEB: Planning division – GIS (ALIS) specialist, Planning specialists Exporter- • NAEB’s role: Co-lead • Exporters aggregating High farmer clusters execution by coordinating from out-growers exporters and farmer • Technical assistance cooperatives, and associating providers – ideal technical assistance partners, partners should be as necessary institutions with • Point person/team within expertise in agronomy, NAEB: Specific value chain post-harvest handling, | Increasing Agri-export revenues 52 specialists, Quality assurance and quality and regulation division management in the manager specific value chains • Financial institutions providing agricultural loans Demonstration • NAEB’s role: Lead • RAB: Provide new crop High farms implementation by operating varieties and products demonstration farms in • Institutions with partnership with other agricultural research research institutions or capabilities (e.g., NGOs, organizations with technical universities), or with production knowledge in line technical production with destination market knowledge in line with requirements destination market • Point person/team within requirements NAEB: Product development and innovation specialist, specific value chain specialists, laboratory technicians, in collaboration with specific value chain specialists R&D • NAEB’s role: Promote • RAB: Lead Medium implementation by providing implementation with areas of research needs and NAEB’s advisory supporting dissemination of • NIRDA research findings • Institutions with • Point person/team within agricultural research NAEB: Product development capabilities (e.g., NGOs, and innovation specialist and universities) laboratory technicians, in collaboration with specific value chain specialists Logistics & infrastructure coordination Programming area objectives and target This programming area aims to improve the efficiency of supply chain logistics of export products from production site to export destinations via grouped warehousing and transportation activities. Logistics coordination and storage support is necessary for all agricultural value chains but particularly for perishable crops and needs to be tailored to each crop’s specific handling needs. | Increasing Agri-export revenues 53 Figure 27: Logistics coordination targets Key programs The logistics and infrastructure coordination programming area centers around the following two categories of programs, based on product’s perishability: 1. Infrastructure and logistics support for perishable products a. Strengthen handling capacity at airport, for improved management of perishable products: This aims to ensure that high value perishable products such as fresh horticulture products are handled and maintain according to best practice standards at the airport, and that they arrive at exports destinations in good quality b. Increase air freight capacity, for international exports: NAEB will promote and support initiatives that expand air freight capacity available for perishable products within the current capacity limit, to reach the export volume targets. RDB and RwandAir will play a critical role in attracting global air cargo operators to run flights from Kigali and negotiating prices and securing cargo space for high-value perishable crops exported to global destinations. The following are both short-term and long- term solutions to unlock additional air freight capacity: i. Maximizing the utilization of currently available yet untapped cargo space in passenger flights by commercial airlines already operating in Rwanda. Doing so will require revising prices at which Rwandan exporters are willing to ship their products while remaining competitive in their product offerings, in comparison to other countries in the region. For example, RwandAir’s current discounted airfreight rate of 0.95 – 1.10 USD/kg are below rates applied in other airports in the region and other carriers operating in Rwanda, which is an average of 1.60 USD/kg. Enticing commercial airlines to keep cargo space for Rwandan exporters requires exporters willingness to pay competitive airfreight rates. ii. Attracting air cargo to stop in Kigali or start a new route from Kigali, to the EU, the Middle East, or other African regions. This will require bringing in some patient capital or a form of financial guarantee to increase operator’s | Increasing Agri-export revenues 54 confidence to establish in Rwanda while exporters reach consistently large volumes for exports iii. Expanding RwandAir’s capacity through additional fleets and routes to other regions. RwandAir plans to launch new routes to major cities in Africa and Asia in 2019 and double its fleets by 2024. 15 While RwandAir’s management is committed to supporting the growth of agriculture exports via air freight, it is constrained by limited funds and the lead time of up to two years from ordering a plane to being operational. The expansion will, therefore, require financial support and advanced strategic planning taking the export volume growth projections into considerations. c. Facilitate specific value chain investments in processing and logistics infrastructure, for regional exports: Sectors such as animal products require specific value chain investments such as a slaughterhouse for meat (e.g., ongoing Gako Beef Integrated Project16 – with potential to expand to goat and sheep). 2. Warehousing for non-perishable export crops, for both international and regional exports: NAEB already offers a warehouse for storage of ready to export products matching export requirements, such as fully washed coffee. Moreover, there is an existing agreement between the Ministry of Trade and Industry and Dubai Port World to develop and operate the Kigali Logistics Platform (KLP) that is going to provide several services to exporters, including storage facilities.17 This intervention will continue to provide such services to exporters and expand to other relevant value chains, on a need basis, while leveraging private sector support. Implementing actors and approach Table 10: Logistics & infrastructure coordination implementing actors and approach Program NAEB’s role & Supporting/ Implementing Priority Point person/team within NAEB partners Infrastructure • NAEB’s role: Promote air • RDB High and logistics freight capacity expansion by • RwandAir and other support for supporting RwandAir and RDB airlines operating from perishable in attracting global air freight Rwanda products for operators and identifying international sources of finance export markets • Point person/team within – Increase air NAEB: CEO office, strategic freight capacity investment analyst Infrastructure • NAEB’s role: Lead • Global logistics High and logistics for implementation operators perishable • Point person/team within products for NAEB: Export services division regional export – Cold chain specialist; Quality markets – assurance and regulatory

15 Stakeholder interview, 2019

16 Flagship project co-led by MINAGRI and the Ministry of defense to increase quality meat production for local and export markets 17 Ministry of Trade and Industry, 2016, Kigali Logistic Platform to boost international trade and competition in external market | Increasing Agri-export revenues 55 Facilitate division manager; Relevant specific value value chains division managers chain investments Warehousing • NAEB’s role: Lead Organizations with Medium for non- implementation by operating worldwide experience in perishable crops the existing warehouse, storage and customs managing inventories, and clearance services overseeing the quality of products • Point person/team within NAEB: Export services division – Warehouse officer; Quality assurance and regulatory division manager; Relevant value chains division managers Cross-cutting programming areas detail Figure 28: Cross-cutting programming areas summary Table 11: Cross-cutting programming areas summary Supporting Objectives Key programs interventions | Increasing Agri-export revenues 56 Financing Ensure availability of High priority appropriate finance for • Facilitate understanding of agricultural export agricultural exports across businesses by banks and investors and strengthen different sectors. linkage with agricultural export businesses • Facilitate input financing schemes for smallholder farmers in specific value chains in collaboration with the private sector. Policy and Feed technical inputs into High priority regulatory support appropriate institutions to Infuse data, knowledge, and learnings to influence key influence favorable policy policies related to formulation in support of • Productive land access agricultural exports • Regional trade • Quality and safety regulation Strategic analytics Provide data-driven High priority insights that will guide • Data-driven research to support decision-making in NAEB’s decision-making. other programming areas • Problem-solving and continuous strategy improvement: Systemically identify sector challenges and trends that require attention and fast decision- making and develop solutions to enable or facilitate growth. Financing Program objectives The aim of the financing intervention is to ensure access to adapted financing options for agricultural export businesses. The percentage of loans to the agricultural sector is currently only 1.5%18 despite the significance the agriculture sector has in Rwanda’s economy; agriculture accounted for 33% of the nation’s GDP and employed 66% of the total workforce in 2017-2018.19 Despite the amount of financing available, agricultural businesses struggle to find appropriate financing mechanisms adapted to the cyclical nature of cashflows in agriculture. Ensuring the availability and accessibility of appropriate financing options for all aspects of agri-exports can help support exports growth. Some financing schemes are currently available in Rwanda for different segments in the agriculture sector. For example, the Business Development Fund supports youth-owned agribusinesses to access bank loans, especially those who lack sufficient collateral when seeking credit, 20 while the HortInvest 21 project’s Investment and Innovation Fund (IIF) co-invests with horticulture cooperatives and businesses into the expansion of their operations, with the involvement of small and medium sized farmers. 22 NAEB needs to promote these types of financing solutions, leveraging currents learnings, to benefit a broader set of exporters.

18 BNR, 2018, Annual Financial Stability Report July 2017-June 2018

19 Ibid

20 Republic of Rwanda, 2016, BDF, a new established company to boost SMEs development

21 HortInvest is a four-year project (Jan 2018-Dec2021) funded by the Embassy of the Netherlands in Rwanda, put in place to improve market-led horticultural production and supplies for domestic and international markets, enhance food and nutrition security of rural households involved in horticulture and urban consumers, develop high-value horticultural crops, and create an enabling environment for commercial horticultural developments.

22 SNV, 2018, HortInvest project Investment and Innovation Fund open for applications | Increasing Agri-export revenues 57 Figure 29: Loan distribution per sector in comparison to GDP contribution Key programs • Facilitate understanding of agricultural export businesses by banks and investors and strengthen linkage with agricultural export businesses. This entails: o Understanding the needs of agricultural exporters and communicate them to banks and investors: By enhancing the understanding of agricultural export businesses, NAEB can improve banks and investors’ interest in funding ag exporters. o Consolidating and disseminate information on agri-financing opportunities for agriculture exporters. This can be part of a periodical bulletin shared with exporters or an integrated page into NAEB’s website which agri-exporters can easily navigate to learn about available financing options and their eligibility criteria. o Facilitating dialogs between businesses and financing institutions. This involves connecting interested businesses to financial institutions and coordinating inter- sectoral meetings as necessary. • Facilitate input financing schemes for specific value chains in collaboration with the private sector: In sectors such as tea, farmers typically access inputs advance from exporters, costs of which are deducted at harvest from farmgate prices when farmers supply the harvested products to exporters. However, farmers who grow perennial crops need longer payback periods in their first years of production to be able to invest consistently in production. Input financing schemes, therefore, require some level of flexibility, and NAEB can step in by supporting the setup of inputs revolving funds (e.g., as currently done in tea), or by attracting philanthropic investors or donors with patient capital to serve as a guarantee or to complement private sector efforts. | Increasing Agri-export revenues 58 Implementing actors and approach Table 12: Financing programming area actors and approach Activities NAEB’s roles & Supporting/ Implementing Priority Point person/team within NAEB partners Facilitate • NAEB’s role: Lead Analytics team High understanding of implementation agricultural • Point person/team within NAEB: Chief finance officer’s export businesses office and various commodities by banks and divisions investors and strengthen linkage with agricultural export businesses Facilitate input • NAEB’s role: Support in design • Exporters involved in co- High financing schemes and co-lead execution financing farmers within for specific value • Point person/team within their respective supply NAEB: Chief finance officer’s chains for inputs access, as chains in office co-lead collaboration with • Financial institutions the private sector • Development partners, including those with ability to provide patient capital Policy and regulatory support Program objectives Policy and regulatory support are necessary to create an enabling environment for businesses in Rwanda’s agriculture exports to thrive. NAEB will feed technical inputs into appropriate institutions to influence favorable policy formulation in support of agricultural exports. To do so, we will infuse data, knowledge, and learnings to influence institutions in charge of key policies related to (i) productive land access, (ii) regional trade, and (iii) export product quality regulation. Key programs • Land access – As a landlocked and densely populated country, Rwanda has limited agricultural land, which increasingly competes with human habitation and other usages, as population growth and urbanization continue. Such competition has led to the heavy involvement of government in land allocation and affects the ability of local and international operators to access appropriate productive land for their operations. To increase accessibility and availability of agricultural land for production for exports, NAEB will leverage findings from the land mapping and planning program to infuse into key policy decisions regarding agriculture land allocation for priority export value chains. • Trade policy – This is an advocacy initiative for NAEB and includes efforts to facilitate the ease of regional trade by reducing both tariff and non-tariff barriers to trade (NTBs). o The current EAC Common External Tariffs (CET) is 50% for maize and 35% for wheat. Negotiating their removal from the Sensitive Items list or facilitating cereals | Increasing Agri-export revenues 59 processors to import quality raw materials at international prices would improve competitiveness of value-added cereals from Rwanda. o Most exports from Rwanda get exported through the Mombasa and/or Dar es Salaam ports due to the landlocked nature of the country. Exporters incur high transportation costs and sometimes face delays due to multiple weigh points and non-tariff barriers to trade.23 Trade policy arrangements that allow for a reduced time and cost associated with border compliance (customs clearance and inspection procedures will smoothen and expedite the export process). • Quality and safety regulation – Different export markets require compliance with their quality and safety regulations. NAEB often ensures compliance of export products by controlling to-be- exported product quality with specifications provided by the buyer. Going forward and to ensure systemic compliance, NAEB will keep ahead of market information, learning new regulations on specific markets, and leveraging these to inform the Rwandan regulatory body on the needs for the establishment of specific regulations that conform with the international regulations and advise on stricter enforcement. Implementing actors and approach Table 13: Policy and regulatory support programming area actors and approach NAEB’s roles & Supporting/ Implementing partners Priority Point person within NAEB • Role: Promote policy reforms • Ministry of Agriculture and Animal High across land access, trade, and Resources (MINAGRI) quality and safety regulations, • Ministry of environment and supporting businesses as • Ministry of Local Government (MINALOC) necessary • Ministry of Trade and Industry • Responsible team within NAEB: • Rwanda Standards Board (RSB) Chief Executive Officer’s office, • Rwanda Food and Drugs Authority (FDA) Planning Division - Planning • Rwanda Institute for Conservation Specialist, GIS Specialist, and Agriculture (RICA) Quality Assurance and • Rwanda law reform commission Regulatory division Strategic analytics Program objectives Strategic analytics will allow NAEB to make timely and targeted responses to the changing sector realities and markets by providing data-driven insights that will guide NAEB’s decision-making and by developing strategies to address emerging and ongoing challenges within and across value chains. Strategies founded on strong analytics will enable the flagship programs to be run successfully: As many of these programs are market-facing, either involving direct interaction with the market or indirect relationship through supporting exporters who face the buyers, it is critical to feed the analytical information on the constantly changing market outlook, regulations and requirements, and opportunities and challenges that Rwanda’s ag export sector faces, into each of these programs. For

23 Export.gov, Rwanda – Trade Barriers | Increasing Agri-export revenues 60 example, analytics can support with the Global operator attraction programming area by informing NAEB on which new growth value chains have high potentials for growth and specific segments within the value chains that need the most investment. This information will then help NAEB build a business case around those opportunities and use it to attract global operators. Likewise, analytical information on Rwanda’s current logistics capabilities and future value chain volume projections can inform decision-making for the exports logistics and infrastructure coordination programming area. Key programs NAEB will improve its decision-making capabilities and efficiency by engaging a dedicated strategic analytics team, to support the following: • Data-driven research to support decision-making in other programming areas: The analytics team will sit at the back office, analyzing data and providing strategic advice to the CEO’s office regarding key programs and resource allocation across value chains. Strategic analytics will feed into many programs but particularly into programs under market linkage, Global operator attraction, business incubation, and exports logistics and infrastructure coordination. • Problem-solving and continuous strategy improvement: The analytics team will also systemically identify sector challenges and trends that require attention and fast decision- making (e.g., an oversupply of milk in Rwanda, limited air freight capacity, changing political- economic climate in East Africa, etc.) and develop solutions to enable or facilitate growth. In addition to a one-time problem-solving, the team will also continuously respond to internal NAEB needs including exploring new products and markets, implementing actors and approaches. Implementing actors and approach Table 14: Strategic analytics programming area implementing actors and approach NAEB’s role & Supporting/ implementing partners Priority Point person/team within NAEB • Role: Fundraise for and select • An ideal partner should have strong data High an analytics partner, and analytics capabilities, while bringing in a Oversee implementation strategy lens, to focus efforts on the areas • Point person/team within that need attention the most NAEB: Chief Executive Officer • The partner will work closely with and and relevant division managers support the NAEB team and implementing partner for the MIS or DSM development and management | Increasing Agri-export revenues 61 II.2 THEMATIC CONSIDERATIONS Across key programs, NAEB will incorporate the cross-cutting considerations below as an integral dimension of the design, implementation, monitoring, and evaluation of the programs under its strategic plan 2019-2024. Knowledge management NAEB and other government institutions regularly collect detailed data points on Rwanda’s agricultural production and exports and publish them in periodic reports. By improving the quality and reliability of those data and making those data easily accessible and into effectively visualized forms, NAEB can better inform the key decisions made by various actors involved in Rwanda’s agriculture exports. By infusing the knowledge perspectives in all its activities and strategic objectives, NAEB can also ensure the transformation of information into actionable intelligence for evidence-based decision making within the organization. NAEB can achieve these objectives by: • Increasing staff capacity to effectively collect, manipulate and disseminate accurate information and insights, both internally and externally • Making NAEB data publicly available, easily downloadable, and ready-to-use, on its online platform (website) to promote learning and data usage by all actors in the agriculture exports sector • Streamlining control mechanisms for data collection and publication Human capital development NAEB's organizational structure has been reviewed and modified to align with its new mandate and business strategy. NAEB, as a leading implementer of many of the programs in this strategy, must be able to flexibly, responsively, and professionally respond to the initiatives/program needs and the fast- changing trends in the agriculture export sector. To do so, NAEB will accelerate efforts in human capacity building by: • Recruiting and maintaining retention of high-quality staff by providing competitive incentives • Carrying out periodic training on data management and analytics to improve analytical capabilities of NAEB staff to allow NAEB to make flexible, timely, and targeted responses to its changing program or value chain needs and market trends. Gender and youth The government of Rwanda has made a strong commitment to gender equality and to mainstream gender issues in government policies at all levels. PSTA IV provides that all interventions target, include, and empower women both socially and economically. PSTA IV also considers youth to play a critical role in driving growth in agriculture and agribusinesses, through developing skills and promoting entrepreneurship. In line with these considerations, NAEB's programs and activities must include women and youth as their target beneficiaries as well as key driving actors. Given the currently limited access of female farmers to agricultural inputs including seeds and fertilizers, extension services, and agricultural credits/loans than their male counterparts,24 and low participation of youth

24 NISR, 2018, Agricultural Household Survey 2017 | Increasing Agri-export revenues 62 in agriculture, NAEB will ensure that these sub-groups equality benefit from its interventions by targeting types of value chains and particular stages of value chains in which they are most involved. Value chain stages involving women and youth Generally, women and youth tend to be involved in specific segments of a value chain. Women in Rwanda are heavily involved in production, often as farm workers, as their ownership of land is less common than that of men. They are also often employed at for factory work that involve being detail- oriented, e.g., product sorting and packing. Youth are less involved in the production stage, but more are interested in agribusiness opportunities in value-addition (through packaging and processing), trading (through aggregation, logistics, and storage), or marketing. Youth are also often encountered as factory or packhouse workers at the processing stage. Types of value chain involving women and youth Apart from women working in a few commercialized value chains, such as tea plantations or flower farms, most of women involved in agriculture are in subsistence farming, as they have limited access to the market and decision-making power in their family. Youth tend to be attracted to non- land/capital intensive value chains, and opportunities that allow quick and high returns. Youth, as they are much more inclined and open to adopting technology, can be engaged in jobs and activities that involve extension support and ag tech. Figure 30: Types of value chains with women and youth involvement Enabling women farmers and business leaders with access to inputs, financing, and other extension services, and supporting youth participation in farming and agri-businesses can improve productivity and promote innovation in the sector. NAEB can warrant diversity and inclusivity by including gender and youth indicators in its M&E framework and by tracking the share of youth and women who are direct beneficiaries of key programs. Further, as NAEB extends support to farmer cooperatives, we will encourage women participation in cooperative leadership as we prioritize beneficiaries of specific programs. Environmental sustainability Changing climate affects the mode of agriculture production, especially since most farmers in Rwanda rely on rain-fed agriculture with limited irrigation and drainage systems. For example, due to its | Increasing Agri-export revenues 63 natural landscape, Rwanda is prone to experience landslides in the occurrence of heavy rainfall. Hence, terracing and conservation of the riverbanks and hillsides have been a focus of the environmental conservation efforts to protect agricultural productive land against perennial erosion. Furthermore, PSTA IV advocates for the sustainable use of resources and promotes environmentally friendly options for development in all stages of the value chains. With such understanding, NAEB seeks to promote climate resilience in agriculture value chains and environmental conservation by: • Assessing the environmental implications of the new and existing value chains that NAEB supports, and ensuring that its interventions are environmentally friendly (or do not interfere with the environmental sustainability objective at the least) • Supporting implementation of climate-smart agriculture practices • Facilitate, coordinate, and support Rwandan agriculture exporters to take advantage of carbon credits between EAC members and the EU • Continuously track carbon emissions vs. carbon credits of ag exports (both in production and in exports via air, roads, and sea) • Continuing the preservation efforts of wetlands and terracing of the hillside farms • Promoting agroforestry – planting tree crops such as macadamias around or among pastureland – to both reduce soil erosion and reap additional harvests and export revenues These thematic considerations will be tracked by different teams and or committees within NAEB as detailed in the table below Table 15: Thematic considerations implementing actors within NAEB Activities Point person/team within NAEB Knowledge Planning Division; M&E officer management Human capacity HR and Administration Officer development Gender and Officer of each value chain to oversee, and the M&E Officer to track results youth Environmental Officer of each value chain to mainstream environmental sustainability in sustainability interventions, and the M&E Officer to track results | Increasing Agri-export revenues 64 II.3 SUMMARY OF GOVERNMENT-APPROVED PROJECTS TO BE IMPLEMENTED OVER THE COURSE OF THE STRATEGY NAEB-led projects project name Description Total Period Relevant Supporting Other comments budget value chains institutions (M USD) Kivu Belt Kivu Belt is a development project to promote tea, coffee 7925 2020 to Tea, coffee, RAB, This expansion will create two new and Macadamia value chain in western province. It will be 2034 Macadamia Respective tea factories with a capacity if developed on 16000Ha, with 2377Ha for Macadamia, districts 3000MT/year each by 2030, new 5 2057Ha for coffee and 12165Ha for tea. It will also help coffee washing station and 3 in erosion control through perennial crops Macadamia collection centers Kigali Kigali Wholesale Market (KWM) is a planned platform to 36 2019 to All fresh RDB,PSF The project will be implemented as Wholesale create an organized market for fresh produce in Rwanda. 2034 produces a PPP where NAEB will partner Market The project will be located in Gasabo Special Economic with Kigali City and a Private sector Zone (SEZ) and will be serving Kigali and secondary partner, as key stakeholders. The cities’ markets. project will indirectly benefit 1.5 million small holder farmers through increased market transparency Green House The project consists of producing fresh produce in 191 2019 to Horticulture RAB, for Vegetable protected greenhouse technology over an area of 2024 (vegetables) Respective production 1200Ha districts, PSF Flower park Production of roses and high value summer flowers for 13 2016- Roses and Bella Flower The project is executed by private (Gishali, exports. Target area is 200Ha onward summer Japanese company and Bella Nyacyonga) flowers Flower, a GoR commercial company 25 Investment up to 2024, production will take place in subsequent years | Increasing Agri-export revenues 65 Sunfresh Horticulture project on consolidated land of ~250Ha. It 0.7 2017 Horticulture NAEB, RAB, Sunfresh is a joint venture between is a joint venture between NAEB and Prodev, a private Onward (French Sunfresh NAEB and PRODEV, a private Rwandan company. Beans, chili, company potato); Maize Tea Tea plantation and factory set up by two big investors in 50, 2016 Tea RDB,PSF, The project is a joint venture expansion partnership with farmers and the Wood Foundation. The each26 Onward Unilever; between Wood foundation, (Unilever, tea plantations will be located in two districts: Nyaruguru Luxmi farmers and the respective Luxmi) and Karongi companies Projects implemented by other government institutions, with impact on exports revenues Project name 1-2 sentence description Total Period Relevant Implementing institutions budget value chains (M USD) Gako Beef Gako Beef is PPP project including integrated forage production, 22 2019 to Beef and Goats Lead implementer: PSF intensive cattle production, fattening, and meat processing. It covers 2024 a total of gross area of 6000ha of which 1050ha has been identified Supporting institutions: NAEB, for irrigated forage to support beef production. RAB Gabiro The project aims to irrigate 15,600 Ha of land in Eastern province 74M USD 2020- Horticulture (c Lead implementer: PSF for farm development. Private sector players are invited to lease for 2024 itrus, plots for farm development (70% commercial farming / 30% project vegetables, Supporting institutions: NAEB, smallholder). The project is expected to help save up to 60% of phase 1 avocado, RAB water due to drip irrigation technology. tomato); Cereals (Maize); maize, livestock, soy Export The objective of the Project is to improve the productive potential 120.05 2018 – Maize, pulses, Lead implementer: MINAGRI, Targeting of the identified command area in the Mahama, Mpanga and 2037 tomatoes, RAB Modern Nyamaguli sectors of Kirehe district by providing irrigation other 26 Investment period is up 2034 as MOU ref: article 5.1.17 | Increasing Agri-export revenues 66 Irrigated facilities using pumped water from Akagera. This will also include horticulture Agriculture Watershed Treatment Technology in arable / non-arable land products, etc. Projects in through drainage line treatment and other structural measures in Rwanda (ETI) the project area, to improve and develop the land for conservation of soil and reduction of erosion, in support of for long term sustainable agriculture growth. This is an integrated intervention covering identified 7000ha area. The farm output from the project will be further processed and exported in nearby countries after value addition. Besides, the project will include a center of excellence for advanced R&D in farm mechanization for the entire country. | Increasing Agri-export revenues 67 Strategy implementation, funding, and impact SECTION III | Increasing Agri-export revenues 68 III.1 COORDINATION FRAMEWORK AND IMPLEMENTATION FUNCTIONS Implementation of the strategy will require national level coordination by NAEB of technical partners and sector platforms, in addition to implication and ownership by district-level actors, as summarized in the coordination framework below. Figure 31: Strategy coordination framework NAEB core functions NAEB’s core functions are paramount to ensure successful implementation of the strategy and must, therefore, work in synergy to ensure implementation of key programming areas as well as supporting interventions. Based on NAEB’s revised structure, the key functions required for the implementation of the strategy are summarized in the table below and illustrated in Annex IV.5. These departments will work in synergy to deliver on NAEB’s mandate which involves: (i) productivity and value addition; (ii) new export products development; (iii) quality assurance of exported products; (iv) marketing; and (v) policy advisory and implementation. Table 16: NAEB's core functions for strategy implementation Key Role Corresponding departments / programming areas functions CEO office Coordinates operations of all divisions and oversees All programming areas involving external partners with a leading execution role, to provide directions for programs based on NAEB’s priorities. Uses strategic analytics inputs to make key decisions around new investments, programs, and potential program pivots. | Increasing Agri-export revenues 69 Export market In charge of market identification and continued innovation Market linkage, development and related to export commodities, including new diversification Branding, Global innovation markets. operator attraction, division Business incubation Value Chain Ensures quality production across traditional and emerging Global operator Development & commodities, and compliance with quality and safety attraction, Business Regulation office regulations in relationship with market requirements. incubation, Quality production, and productivity management Chief Finance Oversees organizational planning, export services to exporters Exports logistics and Office (e.g., packhouse, warehouses, etc.), and finance and infrastructure, administration related needs. financing Government implementing partners • In addition to its core functions, NAEB will associate existing partners in and outside of government and will seek new ones to lead, co-lead or support execution of specific programs. NAEB’s Government counterparts that influence agricultural exports and which NAEB will collaborate closely with include RDB, MINAGRI, RAB, Ministry of environment, and MINIMICOM. Beyond the national level, district-level actors will play a key role across implementation of all programming areas, in value chains relevant to those districts. Specific roles for government and non-government partners are detailed in the following tables. | Increasing Agri-export revenues 70 Government partners Table 17: NAEB's government implementing partners Partners Programming areas Key programs and role RDB Global operator attraction • Operator attraction: Co-lead implementation by marketing business cases, attracting global operators and leading deal negotiations • Establishment facilitation and post-establishment support: Co-lead implementation by providing support in business registration Business incubation (via Kigali • Agriculture support businesses support: lead Innovation city – KIC) implementation Exports logistics & • Infrastructure and logistics support for perishable infrastructure coordination products for international export markets – Increase air freight capacity: attracting global air freight operators and identifying sources of finance MINAGRI Global operator attraction • Opportunity identification: Support land mapping and planning Productivity and quality • Land mapping and planning management Policy and regulatory support • Land access policy regulation RwandAir Global operator attraction • Operator attraction: Support in attracting global air cargo operators to run flights from Kigali RAB Productivity and quality • Demonstration farms: Provide new crop varieties and management products • R&D: Lead implementation, with NAEB’s advisory National Productivity and quality • R&D Industrial management Research and Development Agency (NIRDA) Ministry of Policy and regulatory support • Land access policy environment Ministry of Local Policy and regulatory support • Land access policy Government (MINALOC) Ministry of Policy and regulatory support • Trade policy Trade and Industry (MINICOM) Rwanda Policy and regulatory support • Quality and safety regulation Standards Board (RSB) Rwanda Food Policy and regulatory support • Quality and safety regulation and Drugs Authority (FDA) Rwanda Policy and regulatory support • Quality and safety regulation Institute for Conservation Agriculture | Increasing Agri-export revenues 71 Rwanda law Policy and regulatory support • Land access policy reform • Trade policy commission • Quality and safety regulation District-level All programing areas • Vice-Mayor of economic affairs: District-level Mayor’s offices coordination • Task forces for exports: support annual planning process and district-level implementation for relevant value chains per district; district-level M&E as inputs to national level M&E by NAEB Non-government partners Table 18: NAEB's non-government implementing partners Programming Description of ideal implementing partner type by role and by specific areas programs Branding Lead/co-lead in implementation Leverage international events in Rwanda and abroad to advertise Rwandan brands: Marketing companies with extensive experience in international events coverage Support in implementation Develop and communicate content behind Rwanda brands: organization with expertise in traceability, quality assurance, and product profiling. Market Lead/co-lead in implementation linkage • Develop a market information system (MIS): Organization with good analytics capabilities, access to key agricultural exports market data and experience in building similar tools. • Support exporters in strengthening relationships with new and existing buyers: organization involved in similar initiatives or work with a large network of buyers in the global north, and other relevant markets, coupled with good delivery capacity to help nurture buyers relationships. • Support exports through local physical marketplaces and e-commerce platforms: Organization with experience in coordinating marketplaces and facilitating agricultural products sales and auctions. Support in implementation: N/A Global Lead/co-lead in implementation: N/A operators attraction Support in implementation Operator attraction: organization with strong established network with global operators in specific value chains production Business Lead/co-lead in implementation incubation • Established value chains business incubation: Organization involved in similar incubation work with a successful record in markets similar to Rwanda. | Increasing Agri-export revenues 72 • Innovation experimentation in new growth value chains: Ibid Support in implementation Ag tech and innovation businesses incubation: Ibid. Productivity Lead/co-lead in implementation and quality Exporter-farmer clusters: Exporters aggregating from out-growers management Support in implementation • Exporter-farmer clusters: o Technical assistance providers –institutions with expertise in agronomy, post-harvest handling, and quality management in the specific value chains. o Financial institutions providing agricultural loans. • Demonstration farms: Institutions with agricultural research capabilities (e.g., NGOs, universities), or with technical production knowledge in line with destination market requirements • R&D: Institutions with agricultural research capabilities (e.g., NGOs, universities). Exports Lead/co-lead in implementation: N/A logistics & infrastructure Support in implementation coordination Infrastructure and logistics support for perishable products: Global logistics operators. Financing Lead/co-lead in implementation Facilitate input financing schemes for specific value chains in collaboration with the private sector: Exporters involved in co-financing farmers within their respective supply chains for inputs access. Support in implementation: N/A Strategic Lead/co-lead in implementation analytics Support other programming areas and problem-solving and continuous strategy improvement: Organization with strong data analytics capabilities, while bringing in a strategy lens, to focus efforts on the areas that need attention the most. Support in implementation: N/A | Increasing Agri-export revenues 73 III.2 BUDGET Implementation of the strategy will require 375.2 million USD, from a combination of sources, in line with PSTA 4, including GoR funding, internal NAEB revenues, and donor funding. The total cost for the NAEB strategy between 2019-2020 and 2023-2024 is estimated at 180.3 million USD for NAEB’s development activities typically covered by GoR funding. This funding will be complemented by 16 million USD from NAEB’s internally generated funds to cover recurring NAEB’s functioning cots, as NAEB becomes a self-sustaining institution financially. In addition to public sector funding, achieving the ambitious strategic targets will require an additional 179 million USD to develop and implement key programs across the nine programming areas, in collaboration with world-class institutions. All funding combined amount to 375.3 million USD, as detailed in the table below. Figure 32: Strategy implementation costs, NAEB Strategy 2019-2024 in line with PSTA 4 The increase in the 2019-2024 strategy implementation costs align with the new ambitious goals set out in PSTA IV, and its funding sources are in line with the historical trends. The total estimated costs for strategy implementation increased from 93 million USD for the 2013-2018 strategy to 375 million USD. This is consistent with the increase in the PSTA implementation costs, from 848 million USD for PSTA III to 3.1 billion USD for PSTA IV. Historically, NAEB has financed its implementation costs with GoR budget (33-65%), donor funding (31-52%), and internally generated revenues (5-15%). For the 2019-2024 strategy, 48% of all implementation costs will be funded by Government budget, 48% by donor funding, and 4% by internally generated revenues. | Increasing Agri-export revenues 74 Figure 33: NAEB's historical financials (Actual), USD As the main agency in charge of agriculture marketing, NAEB’s strategy puts a greater focus on value addition and market (40% of total budget) to achieve exports targets. The strategic objectives under NAEB’s strategy align with three priority areas under PSTA IV, which include productivity and resilience (Priority Area II), inclusive markets and value addition (Priority Area III), and enabling environment and responsive institutions (Priority Area IV). While 53% of PSTA IV implementation costs are dedicated to increasing production and productivity and 26% to value addition and market penetration, NAEB’s strategy implementation costs focus more heavily on the second strategic objective, with 40% of all implementation costs dedicated to increasing value addition and market penetration of Rwandan ag exports. Although the strategy makes a major shift from production and productivity comparing to NAEB’s traditional approach, large investment projects heavily focused on production, already approved by government (e.g., Kivu Belt and Greenhouse construction projects) totaling $110 million GoR committed budget for the next 5 years result in a significant high portion (51%) of NAEB’s budget allocated to production and productivity. | Increasing Agri-export revenues 75 Figure 34: Strategy implementation costs breakdown per strategic objective, PSTA IV and NAEB strategy Nascent value chains will require the most incremental costs to yield substantial returns. Horticulture, tea, and coffee respectively, account for the largest cost components, while tea yields the highest returns on incremental investments. It is important to note that as the most nascent value chain to drive massive export growth, horticulture holds the largest cost component but will generate returns on investments that will reap export revenues for several years beyond the duration of the strategy. Finally, value chains such as cereals and animal products will require more funding than included in NAEB’s budget given these value chains are primarily coordinated by RAB; therefore, the relative investment amount is much larger. Figure 35: Total spending compared to incremental output per value chain, USD | Increasing Agri-export revenues 76 III.3 PROJECTED IMPACT OF THE STRATEGY The implementation of the strategy over the course of the upcoming five years will have far- reaching economic and social impact on Rwanda, including catalyzing private sector investments worth 1 billion USD, creating over 313,000 jobs, and supporting 525,000 farmers. Key programs implemented under the 2019-2024 strategy are projected to bring a cumulative exports revenue of 3.7 billion USD during the five-year-period and to catalyze over 1 billion USD in private investments from the local private sector, global operators and investors attracted to Rwanda, financial institutions and patient capital providers. Figure 36: Projected impact of the strategy implementation on the Rwandan economy The strategy implementation will also improve livelihoods of Rwandans through attracting or creating 60 new businesses while supporting 130 existing businesses across value chains, and through jobs, including over 313,000 new on-farm and off-farm jobs, as well as supporting the livelihoods of over 525,000 smallholder farmers. | Increasing Agri-export revenues 77 Figure 37: Impact of the strategy on businesses and job creation The strategy’s impact will build up progressively over the upcoming five years, as key interventions are implemented. The following table provides the estimates of the strategy’s impact in annual breakdown. The growth in the scale of impact and will accelerate over the five-year-period, in line with planned interventions under the strategy. Table 19: Impact of strategy annual breakdown 2019- 2020- 2021- 2022- 2023- Year Total 2020 2021 2022 2023 2024 Annual export revenue generated (M USD) 593 643 706 801 1,001 3,744 Private sector investments attracted (M USD) 15 126 148 506 299 1,093 Private sector contribution to PPP projects - 31 31 155 26 243 Local private sector direct investments 15 39 61 71 104 290 Global operator and investors - 56 56 280 168 560 Businesses supported 13 26 34 46 71 190 Existing businesses supported 13 17 21 27 52 130 New businesses created - 7 13 14 16 50 Businesses attracted 2 - 5 3 10 Social impact outcomes New jobs created 21,424 42,847 56,031 75,807 117,006 313,115 Number of farmers supported 49,200 68,090 94,371 131,000 182,147 524,809 | Increasing Agri-export revenues 78 III.4 FUNDING MOBILIZATION STRATEGY AND SUSTAINABILITY NAEB will work closely with key partners to raise funding from development partners to complement GoR funding. GoR funding has already committed for major NAEB projects over the next five years. The next big source of funding to complement GoR funding is donor funding. A portion of this funding will be harnessed by ensuring funding allocated to export commodities by existing donors to the agriculture sector are oriented towards the directions for the NAEB strategy and therefore contribute to achieving overall sector goals. NAEB aims to secure the rest of donor funding required by leveraging its partners with access to donor networks to raise funds from both existing and new donors towards funding of key programming areas. While fundraising for all programming area costs may not be guaranteed, NAEB will work with partners to attract funders with interest in specific priority programming areas to ensure implementation of majority of these. Further, NAEB envisages to become self-sustainable, starting from 2020-2021, in line with its new legal status. NAEB recognizes the need to move towards a sustainability model in financing its operations. Therefore, from the year 2020-2021, 100% of NAEB’s recurring/functioning costs will be covered by internally generated fees by NAEB. These include: • Fees generated from NAEB’s investments in companies (shares in companies such as Sunfresh, Bella Flowers, Rwanda Farmers Coffee Company, etc.), • Management fees for large GoR projects • Service fees based on services provided to exporters – e.g., packhouse, cold truck, warehousing, etc.; and • Revenue from commodity-linked fees such as fixed fees set on exported coffee and tea NAEB’s projected internal revenues in comparison to recurring costs for the next five years are summarized in the table below. Table 20: NAEB's financial sustainability summary 19-20 20-21 21-22 22-23 23-24 Total Internally generated revenue27 785,891 4,039,776 4,941,335 5,579,618 5,810,388 21,157,008 Recurrent Cost 2,780,283 2,974,903 3,183,146 3,405,966 3,644,384 15,988,682 Surplus/(Deficit) (1,994,392) 1,064,873 1,758,189 2,173,652 2,166,004 5,168,326 Source: NAEB’s calculations, 2019 III.5 RISK ANALYSIS AND MITIGATION STRATEGIES The NAEB strategic business plan 2019-2024 and its implementation are exposed to various external and internal risks, which the strategy has already taken into account in the analysis of the sector and plans to retain, mitigate, or eliminate their sources through the planned programs in the 27 Assumptions informing projected export revenues are included in annex. Some of the projected income sources such as fees on exported coffee are yet to be approved by government and therefore are accounted for, only from 2021 | Increasing Agri-export revenues 79 strategy. External risks, which are external to NAEB and therefore often uncontrollable by NAEB, include market risks, regional political risks, environmental risks, and risks in enabling environment. Internal risks, arising from within the organization and during the operations, include sustainability risks and financing risks. The tables below illustrate potential risks to the strategy implementation, and NAEB’s planned strategies to mitigate them. Table 21: External risks and mitigation strategies Description Mitigation strategies Market / economic risks Global macroeconomic To minimize the impact of a global economic downturn on Rwandan recession ag exports, we retain our focus on exports to the regional market, which are less likely to be affected by the global economic trends, in the current strategy. To further mitigate the risk, we will also consider broader intra-African trade opportunities, outside the EAC.28 Market volatilities – • We will support exporters to establish linkages with large buyers Lower/Fluctuating global who can offer more consistent prices year-round, through Market demand or prices for linkage programs specific products or specific • We also intend to support exporters to meet quality and safety markets standards requirements and secure greater and more consistent volumes, to be able to supply to large buyers, through Business incubation and Productivity and quality management programs. • Leveraging analytical insights provided through the MIS or DSM, the private sector can make an informed decision on diversifying its value chain offerings or target markets. Rise of competition due to • Capacity building, increased access to quality inputs, and improved increased number of production and post-harvest infrastructure, made available competitors through Productivity and quality management programs, will enhance Rwandan exporters’ capability to compete on quality or price. Regional political risks Exacerbation in relations • We have already accounted for these risks in our value chain with neighboring countries growth projections and prioritization. While focusing on high leading to increased trade growth potential value chains that mostly target international barriers markets, we also intend to explore opportunities of exporting to the rest of the African continent beyond the East African regional Improved stability in the market. region, leading to lower demand for certain products Environmental risks Climate change (e.g., • To mitigate against this risk, the strategy includes support in changing rainfall patterns improving access to reliable and adequate irrigation and increased 28 Opportunities in other African countries outside of the EAC for all priority crops is further assessed separately | Increasing Agri-export revenues 80 unpredictability in infrastructure, as well as protecting the environment by promoting weather) safe agriculture practices • Depending on the crop and regional needs, we will consider additionally supporting farmers and exporters with better water management and flood control systems. • Land mapping and planning exercises and identification of potential new growth value chains will take these risks into account – e.g., identifying available farmlands that may not be as severely affected by heavy rains, and identifying and diversifying into crops that are resilient to the changing climate. Enabling environment risks Limited logistics capability • The strategic plan caters for this risk under the Logistics & (e.g., few airfreight infrastructure coordination programming area, and suggests three operators attracted, or interim or long-term strategies to expand capacity of existing major breakdown of export channels existing routes provided by existing flight operators) Policy and regulations • Recognizing the importance of policy and regulatory environment bottlenecks in attracting in supporting the growth of the ag exports sector, this strategy global operators and includes efforts to influence favorable policy formulation. investors, and local • Establishment facilitation and Post-establishment support businesses and creating a programs, under the Global operators attraction programming good business environment area, are designed to ensure that global operators are able to for them smoothly establish, continue, and expand their businesses in Rwanda. Other institutions failing • NAEB will disseminate the strategy and communicate as to deliver their mandates proactively as possible with other institutions in charge of (e.g., delayed establishment implementing key GoR programs, to ensure respective institutions of infrastructure required are aware of timelines for key NAEB targets and the implication on for exports, such as timelines for implementing priority components of their irrigation, roads, etc., due to respective programs. responsible institutions not securing financing) Table 22: Internal and operational risks and mitigation strategies Description Mitigation strategies Sustainability risks Uncertainty in being able • The strategy caters for setting the important pre-requisites for to sustain the growth exports growth to continue beyond the next five years. In fact, we beyond the upcoming five have identified and included in the strategy, potential new growth value chains for NAEB to start investing in today, in order to reap years, after the current fruits in the next five years and beyond. These emerging value strategy chains, while currently small (in terms of export revenue) and nascent in Rwanda, could become major growth drivers in the | Increasing Agri-export revenues 81 next five years with the right level and form of support in implementing the current strategy. • Simultaneously, strategic analytics will allow NAEB to continuously improve the strategy’s focus by making informed, timely and targeted decisions in response to the changing sector realities, and by systematically identifying ongoing challenges in the sector and problem-solving. Limited implementation • To ensure successful implementation of the strategy, we have capacity assigned each program to specific roles in NAEB, and plan to leverage world-class partners to work closely with the NAEB team in areas where we don’t have the capabilities to implement • Over time, we will strongly encourage and actively facilitate the skills and knowledge transfers from the partners to pertinent teams at NAEB, to capacitate the organization and its staff. • Under the new organizational structure, we will hire qualified staff with expertise in agronomical practices, finance, sales and marketing, logistics, etc. Providing a competitive salary and employee benefits package could attract and increase the retention of qualified staff. Financing risks Insufficient funding due to • Conscious of the fact that scarce government resources may not NAEB not securing the full be fully allocated to NAEB or that NAEB’s fundraising goals may funding amount required not be reached, the strategic plan prioritizes programs under each programming areas. In the case of insufficient funding, we will first implement programs with high priority. | Increasing Agri-export revenues 82 Annex SECTION IV | Increasing Agri-export revenues 83 IV.1 ASSESSMENT OF PAST STRATEGIC PLAN (2013-2018) AND IMPLICATIONS Under NAEB’s leadership, Rwanda’s agricultural exports grew rapidly, with annual revenue reaching 516 million USD in 2017-2018, close to the overall goal of 567 million USD set by the previous NAEB strategic plan. Tea and other emerging commodities exceeded or reached close to the targeted projections either in absolute terms or in their pace of growth, while coffee, horticulture and pyrethrum did not meet their targets of aggressive growth. Tea exports reached 88 million USD in 2017-2018, close to the target of 95 million USD, and grew at a similar CAGR of 7% to the expected rate of 8%, from the 2012-2013 baseline. Coffee exports revenue fluctuated and overall remained at the same level due to shifting global prices and various challenges in the sector. Pyrethrum exports struggled as the sector experienced an unexpected global market shift and plummeting of the price as a result, while horticulture’s slower growth could be partly explained by gaps in implementation of planned activities. Meanwhile, other emerging commodities including cereals and animal products experienced substantial growth beyond expected targets, allowing Rwanda ag exports to meet its overall targets. Figure 38: Rwanda annual agriculture export revenues, targets and results Outcome and output indicators in 2017-2018 show that overall progress has been made since the baseline in 2012-2013, but shortcomings in the outcomes partly contribute to the gaps observed in the export revenue performance. The 2013-2018 strategic plan had set four main objectives to achieve the overall and specific targets, including: i) to increase production and productivity of ag export commodities; ii) to enhance value and quality of ag export commodities; iii) to improve business environment for ag exporters; and iv) to enhance inter-institutional coordination and NAEB’s capacity in supporting ag exports. The below table shows outcome indicators under each strategic objective, the baseline figures in 2012-2013, the previous strategic plan’s targets for 2017-2018, and the actual | Increasing Agri-export revenues 84 outcomes in 2017-2018. Between 2012-2013 and 2017-2018, productivity increased in coffee and pyrethrum. Gaps in tea yields are explained by the rise of new tea plantations, still at an early stage, who often record much lower yields in their first years of existence – sign of rising investments in the tea sector. The percentage of annual increase in export volumes rose more than expected, however, this indicator does not capture the growth trend over the years, and whether it is a one-time increase or a sustained growth. Other indicators have not been fully tracked and will be captured in a follow- on detailed assessment of the previous past NAEB strategic plan. Table 23: Strategic plan 2013-2018 outcomes: baselines, targets, and actual results Strategic objectives Outcome Indicator Value chain 2012-13 Targets in Result in Baseline 2017-18 2017-18 Increase farm production Yield (MT/ha) Tea 6.8 9.0 6.329 and productivity of the Coffee 2.2kg/tree 3.1kg/tree 3-4.4kg/tree targeted agricultural export commodities Pyrethrum 0.25 1.3 0.5 Horticulture N/A N/A N/A % increase in export Tea -1.20% 7% 7% volumes (from the Coffee 0.07% 10% 9% previous year) Pyrethrum 55% 92% 149% Horticulture F&V: 4% 20% 13% Flowers: 0% 50% Enhance value and assure Share of value-added Tea <1% 2 N/A quality of agriculture final products vis a vis Coffee 1 5 export communities to total production within increase their demand and priority export value Pyrethrum N/A 5 price on national, regional chain per annum (%) Horticulture N/A 20 (F&V) and international markets Improve business Percent increase in N/A 79.8 million 15% N/A operating environment private sector USD through providing investment in effective trade support agriculture export services commodity Value agricultural Tea 63.9 94.9 88.1 export products (million Coffee 69.7 104.3 69.4 USD) Pyrethrum 9.7 46.2 3.7 Horticulture 6.1 129.6 23.4 Enhance inter- % of trained 40%. At least 80 % N/A institutional coordination professionals who apply professionals professionals and strengthen the acquired skills in trained in will be trained capacity of NAEB and developing export- export in export agricultural export oriented agribusiness oriented oriented support institutions to sector agribusiness agribusiness) effectively provide sector adequate services to the Tea 15 19 N/A sector Coffee 89 229 29 Difference explained by the rise of new tea plantations, still at an early stage, who often record much lower yields in their first years of existence. | Increasing Agri-export revenues 85 No. and % of total Horticulture (F&V) N/A 60% cooperatives and farmer organizations which apply improved managerial and business skills Updated, effective and Horticulture Horticulture, N/A streamlined legislation, subsector tea, coffee, regulation and strategy, old new strategies aligned with coffee and tea emerging government regulations chains policies and targets development policies, regulations and strategies In place Key learnings from the previous strategy point to important priorities that inform the 2019-2024 strategy formulation. The rapid assessment of the NAEB’s performance in the previous strategy points to the need for i) detailed and rigorous analysis on growth drivers to set targets for specific value chains; ii) programming areas that align with new ambitious targets and ensuring appropriate funding in delivery; iii) clearly defined and assigned roles to the implementer (NAEB team or external partner); and iv) aggressive approach in implementation leveraging both NAEB’s internal capability and external stakeholders who can accelerate growth. The NAEB Strategic Plan 2019-2024 aims to fill the gaps observed from the 2013-2018 strategic plan, in order to achieve its 1 billion USD annual export revenue goal by 2024. | Increasing Agri-export revenues 86 IV.2 VALUE CHAIN PERFORMANCE AND OUTLOOK – DETAIL Tea sector performance and outlook Past export trends Figure 39: Rwanda tea exports trends • Tea is one of Rwanda’s leading cash crops for over a decade. It has experienced annual growth of 10% between 2013 and 2018,30 reaching 88 million USD in 2018, representing 0.18% of the global tea market.31 • Rwanda’s tea holds a unique quality and favorable plantations set-up for competitive production. Rwanda possesses unique climatic and soil conditions and consolidated tea plantations with anchor farms and smallholder out-growers that allow it to produce quality tea competitively. These unique advantages, among other factors, have attracted global brands such as Unilever and Luxmi to set up operations in Rwanda. • Tea is one of the leading employers among agriculture exports sectors, with over 42,840 farmers involved in production expanded over 26,897 ha of land.32 • Rwanda exports tea to leading global importers such as Pakistan, UK, Egypt, Russia, and the USA, with Pakistan and the UK, respectively, being the largest buyers. In 2017-2018, Rwanda exported over 52% of its tea to Asia, led by Pakistan, and 28% to Europe, led by the UK. Other major buyers include Kazakhstan, Ireland, Egypt, Russia, UAE, and Sudan to name a few. The five largest buyers of tea globally are Pakistan, Russia, USA, UK, and Iran. 33 The figure below presents Rwanda’s tea exports destinations in comparison to the largest tea buyers.

30 Dalberg analysis, 2019

31 Dalberg analysis, 2019

32 NAEB, 2017, 2016-2017 annual report

33 World’s Top Exports (WTEx), 2019, Tea imports by country | Increasing Agri-export revenues 87 Figure 40: Rwanda tea importing countries and world largest buyers of tea Market outlook The global tea market is projected to grow at a 5.75% CAGR from $49.46 Billion in 2017 to $73.13 Billion in 2024, 34 driven by continued growth in black tea exports, and rising demand for new diversified tea categories. Black tea exports are projected to increase at a 2.23% CAGR from 1.45 million tons in 2017 to 1.70 million tons in 2024, 35 while premium and specialty teas markets are projected to grow even faster. Green tea exports are projected to more than double, growing from 337,300 tons in 2014 to 804,300 tons in 2024.36 Specialty teas such as white and organic tea are also projected to grow significantly from a current low base, driven by the awareness of their health benefits. The figure below shows the projected growth of black tea (CTC and orthodox combined) and green tea from 2017 to 2024.

34 Statista, Accessed March 2019, Global tea market size 2017-2024

35 World Tea Economy, 2016, Trends and Opportunities

36 Ibid | Increasing Agri-export revenues 88 Figure 41: Forecasted global black and green tea exports Specialty tea is driving higher prices globally, while black tea prices are expected to decline progressively over the next decade, putting pressure on producing countries for increased diversification. Global black tea prices have been increasing over the last decade reaching an average of 3.15 USD/ kg in 2017, up from 2.39 USD/kg in 2008. However, these prices are projected to decline over the next 10 years reaching 3.0 USD/kg in 2027.37 Meanwhile, the specialty tea market, including green tea, is considered the most profitable segment due to the rise in demand as people become aware of their health benefits.38 The price differential compared to black tea is 36% for organic tea, 195% for organic green tea and this price differential can be higher for other categories of specialty tea.39 In view of the market outlook, Rwanda’s tea holds a unique quality, positioning the country to take advantage of market trends. Rwanda possesses unique climatic and soil conditions that allow it to produce quality tea competitively and could leverage this advantage to diversify its production into premium specialty tea categories. “Rwanda should maintain recognition of its quality tea. Rwanda can grow the best tea in the world” – International organization “Rwanda should consider adding value and packaging tea locally” – Tea buyer Key challenges and value chain needs To take advantages of the market opportunities in tea, Rwanda must address key challenges in the value chain related to production and productivity, as well as processing and marketing. These challenges are detailed below:

37 FAO, Committee on Commodity Problems, 2018, Current market situation and medium-term outlook

38 Allied Market Research, 2019, Tea Market, Global Opportunity Analysis and Industry Forecast 2017-2023

39 Tea exporter interview, 2019; Dalberg analysis, 2019 | Increasing Agri-export revenues 89 Production and productivity • Limited farmers’ investment into production inputs – in new tea estate settings, where farmers are not yet recording optimum yields to invest in fertilizer and other production inputs. Little investment into production inputs can delay the number of years to reach maturity from ~15 years to up to 20 years. • Limited knowledge in farming best practices by farmers in young tea estates. • The above challenges lead to lower yields: for mature tea plants – 10MT/ha in average instead of optimum 15 MT/ha; juvenile plants – 5 MT/ha instead of 8 MT/ha; and young tea plants – 1.4MT/ha instead of optimum of 3 MT/ha.40 • Limited R&D capabilities leading to imports of clones which are not always suitable to grow in Rwanda’s climatic conditions.41 Processing and marketing • Limited knowledge in quality management across production and processing stages such as timely adequate tea plucking, and processing – especially by young tea factories with limited experience. 42 • Limited market information – to establish direct buyers relationships, and to sell at a higher value.43 • Non-optimum prices fetched for high-quality Rwandan exported tea – 75% of produced tea is sold through auctions where Rwanda has little control over the grading of its tea, hence fetching lower prices for its high-quality tea than it would if sold through direct buyer relationships. • High logistics costs affecting competitivity or marking potential – given its landlocked nature, Rwanda tea must face additional road transport costs from Rwanda to Kenya, for shipping via Mombasa.

40 NAEB, Tea division data, Green leaf production per factory and estimative yield

41 NAEB, 2019, tea division data

42 NAEB data, 2019

43 Ibid | Increasing Agri-export revenues 90 Coffee sector performance and outlook Past export trends Figure 42: Rwanda coffee exports trends • Coffee is one of Rwanda’s leading exports crops but witnessed unstable growth over the past decade. The value of Rwanda’s exported coffee remained unstable in the past decade but grew at a 10% CAGR between 2013 and 2018.44 • Rwanda exports most of its coffee as green to the EU and the USA who are among the largest buyers globally. Rwanda exports over 60% of its coffee to EU, 20% to the USA, and in smaller quantities to Singapore, Belgium, and Uganda to name a few. The five largest buyers of coffee globally are the US, France, Japan, Germany, and Spain. Other buyers include Canada, Netherlands, UK, South Korea, and Russia.45 44NAEB 2012-2018 annual reports; Dalberg analysis, 2019

45 Harvard University, Center for International Development, ATLAS of economic complexity | Increasing Agri-export revenues 91 Figure 43: Rwanda coffee importing countries and world largest buyers of coffee Market outlook The global coffee market has been marked with a slow growth between 2014 and 2017 at a 1.26% annual rate but is expected to grow faster in the coming years due to rising demand for new diversified coffee categories. Global demand for coffee grew at an annual rate of 1.26% from 2014- 2017.46 This trend is expected to improve in the upcoming five years, with an average annual growth rate of 5.5% between 2019 and 2024 due to the growing market of organic and specialty coffee.47 The global organic coffee market, for example, is projected to grow at a CAGR of 12.8% from 2,733.2 million USD in 2016 to 4,998.6 million USD in 2021. This growth will be driven by rising health consciousness as organic coffee does not contain any toxic residue of synthetic fertilizers. 48 Despite growing market demand, and price premium for specialty coffee, the global coffee market is marked by volatile prices, with a downward trend. Global coffee export prices are marked by constant fluctuations, with a recent downward trend, as presented in the figure below. Specialty coffee, however, fetches a price premium on top of the price for conventional coffee. The price premiums for organic coffee as compared to regular coffee differ depending on the quality and origin of the coffee and can increase based on other certifications held by the producers. 49 Specialty coffee from Africa fetched an average of 21% price premium over conventional coffee between 2014 and 2016.50

46 United Nations Conference on Trade and Development (UNCTAD), 2018, State of the Global Coffee Market

47 Mordor Intelligence, 2018, Global coffee market, Coffee market- Growth, Trends and Forecasts (2019-2024)

48 Technavio Research, 2017, Global organic coffee market 2017-2021 - Market Analysis and top drivers

49 FAO, 2009, the market for organic and Fairtrade coffee 502014-2016 average conventional coffee from Rwanda as compared to 2014-2016 specialty coffee price from Africa as found in Transparent Trade Coffee, 2017, From transparency reports to a potential transaction guide for specialty coffee purchases, 2017 | Increasing Agri-export revenues 92 Figure 44: Fluctuation of coffee export prices Key challenges and value chain needs To better capture opportunities in coffee exports, Rwanda must address key challenges in the value chain related to production and productivity, quality, as well as diversification into higher value coffee. These challenges are detailed below: Production and productivity • Scattered farmer production areas with low yields (0.5-0.6 MT/ha) and inefficient value chain coordination, leading to higher logistics and production costs for smallholders who often complain of little or no margins. These challenges are reinforced by the aging farming population with limited implication of younger farmers which may threaten future • Aging trees – 25.8% of coffee trees are above 30 years old.51 This also contributes to low yields in the coffee sector • Low quality of harvested cherries- Only 64% of total production was fully washed coffee of high quality in 2018.52 The rest of the cherries which were of lower quality were mostly sold on the local market at lower prices Processing and marketing • Inefficient utilization of coffee washing stations (CWSs) due to poor managerial practices at CWSs among others – In 2018 coffee washing stations utilized an average of 84 % of their capacity.53 This reduces the exporter margin on coffee.

51 NAEB, 2015, Coffee census

52 NAEB, 2017, 2016-2017 Report

53 NAEB, 2019, Coffee division data | Increasing Agri-export revenues 93 • Limited diversification into specialty/higher value coffee: 97% of coffee exported from Rwanda is green coffee, with limited diversification into specialty or single origin coffee. | Increasing Agri-export revenues 94 Pyrethrum sector performance and outlook Past trends Figure 45: Rwanda pyrethrum export trends • Rwanda pyrethrum exports fluctuated over the past five years, due to the limited market for pyrethrum extract54 leading to selling only a portion of the production. Despite low volumes exported from Rwanda, Rwanda is the second world producer after Australia. • Rwanda diversified its exports markets in 2017-2018 beyond the US, to cover the EU and Asia. European countries include Spain, Italy, and Germany while Asian countries include China, South Korea and the UAE.55 • Rwanda primarily produces pyrethrum extracts – with one single pyrethrum processor (SOPYRWA) in the country dominating the sector Market outlook The global pyrethrum market is projected to grow from a low base, at a CAGR of 6.4% between 2017 and 2026,56 led by rising demand both for natural insect repellent products and organic pesticides in agriculture. 57 Rising demand for insect repellent products (expected to reach 3.7 billion USD by 2026)58 and organic pesticides in agriculture (projected to increase at a 15.9% annual rate from 99.2 million USD in 2016 to 279.2 million USD in 2023)59 is driving global exports of pyrethroids (synthetic product similar to pyrethrin) and pyrethrin (pyrethrum extract) products. Pyrethroids dominate the pesticide market, with pyrethrin global market growing from a very low base. As the second largest exporter of pyrethrum extract after Australia, and with ~15% of globally exported pyrethrum

54 NAEB Annual Report 2016-2017

55 NAEB, 2019, July 2018 – March 2019 pyrethrum refined and crude extract exports value, volume and destination countries

56 Research and markets, 2018, Pyrethrin – Global Market Outlook (2017-2026)

57 Coherent market insights, 2019, Pyrethroids Market Worldwide: Latest Industry Trades, Supply, Demand, Future prospects by 2026

58 Transparency market research, Flies Repellent Market to Touch US$ 3,724.5 Mn by 2026; Demand for Green Products on the Rise

59 Allied Market Research, 2018, Global organic pesticides market expected to reach $279,195 million by 2023 | Increasing Agri-export revenues 95 extract, 60 Rwanda exported just ~4 million USD worth of pyrethrum in 2017-2018. However, pyrethrum extract is witnessing increasing demand given its biodegradable nature and minimal impact on human health and environment and is expected to grow at a CAGR of 6.4% between 2017 and 2026.61 North America is the largest import market given a high concentration of industries in the sector in this region, but the Asia Pacific will witness the fastest growing demand over the upcoming years – due to increasing population and a growing industrial belt in the region. Pyrethrum prices have fluctuated over the past years, affecting export revenues, but are expected to stabilize with current market diversification beyond North America. 62 Rwanda’s exports fluctuation in past years were partly due to fluctuating market prices, going as low as 162. USD/kg in 2017, down from 300 USD/kg in 2012. However, Rwanda’s total exports and exports prices are expected to grow again given market diversification efforts beyond north America, to cover Asia and the EU at more attractive prices.63 Global demand trends coupled with Rwanda’s natural advantages present opportunities for pyrethrum value addition to export ready-to-use pesticides regionally and internationally and circumventing price fluctuations. Rwanda possesses volcanic soils, high altitudes, low temperature, and a good distribution of rainfall favorable for competitive production of pyrethrum. Ability to intercrop pyrethrum with staple crops such as Irish potatoes, serving as a natural and harmless fertilizer also presents a good incentive for farmers to actively be involved in growing pyrethrum, hence contributing to increased exports. Rwanda has traditionally exported crude pyrethrum extract but recently diversified into the processing of insecticides and organic pesticides. Rwanda can leverage its natural production advantages regionally and internationally to increase value addition efforts to produce organic pesticides that not only serves the growth of organic production locally, but also serves exports of such products to the east African region and beyond. Key challenges and value chain needs To take advantage of the market opportunities in pyrethrum, Rwanda must overcome pertaining challenges related to production and productivity and market linkages. These challenges are detailed below. • Limited suitable land for production expansion. Pyrethrum plants require 6-12 degrees Celsius at night for quality pyrethrum flower development, 64 temperatures which can be obtained only in some areas of the Northern province, with competition over land for food crops and tourism activities • Low productivity (yield of 0.5MT/ha compared to the optimum yield of 1 MT/ha), due to limited use of fertilizers and knowledge of best practices by farmers • Market diversification: Pyrethrum processors do not have sufficiently established and diversified market linkages and products. This limits their opportunity to sell at a higher value

60 NAEB, 2019, Diversification division data

61 Research and markets, 2018, Pyrethrin – Global Market Outlook (2017-2026)

62 NAEB, 2019, Diversification division data

63 Ibid

64 Brown P.H., Menary R.C., 1994, Flowering in pyrethrum (Tanacetum cinerariaefolium L.). I. Environmental requirements | Increasing Agri-export revenues 96 Horticulture sector performance and outlook Past export trends Figure 46: Rwanda high value horticulture export value Figure 47: Rwanda other horticulture export value • Horticulture exports grew rapidly from $10 million in 2013-14 to $23 million in 2017-18, at a compounded annual growth rate of 18%. • Exports of high-value crops such as cut flowers, French beans, macadamia, chilies, passion fruits, mushrooms, and grapes have grown faster than others, at a compound annual growth rate of 326%. This growth can be attributed to increased investments and coordination from | Increasing Agri-export revenues 97 NAEB in cold chain infrastructure, coupled with air freight capacity via RwandAir, which led to an increasing number of horticulture export companies in Rwanda. • Other horticulture crops, which still account for 65% of the entire horticulture export, are exported in large volumes but at lower prices, and grew by 11% each year during the same period. • NAEB has made or facilitated investments in some of the high-value crops and extension services, supporting the rapidly growing horticulture exports. Such initiatives include Gashora Farm, Gishali Flower Park, Nyacyonga Flower Farm, Muyumbu Macadamia Nursery, and the NAEB packhouse and cold chain logistics. Market outlook The global market for fresh fruits and vegetables is projected to growth at 6% annually, reaching $4.8 trillion Euros, led by demand from Asia, Oceania, and the EU respectively. Global imports of fresh fruits and vegetables have globally shown a year on year growth of 5% between 2010 and 2016, and their total value estimated to be $150 billion in 2016. 65 Consumer spending on fruits and vegetables is projected to reach €4.8 trillion by 2030, growing at a CAGR of 6%.66 Asia and Oceania are the largest (56% of global demand) and also the fastest growing (CAGR of 7%) segment of the global market, followed by Europe (16% of global demand, at 3% CAGR) and the Middle East and Africa region (13% of global demand, at 5% CAGR). 67 High and growing prices for high-quality fresh fruits and vegetables, especially organic products, in international markets suggest a high revenue potential for both Rwandan farmers and exporters. The average farmgate price for horticulture products per hectare is more than ten times greater than those for staple crops, 68 and margins for exports to Europe are higher than margins for regional exports, for the same crop. The market for organic produce – especially for vegetables within the EU – grew at a CAGR of 12% between 2006 and 2016, reaching €30.7 billion in retail sales in 2016. 69 Organic fruits and vegetables can fetch a price premium of 20-40%. However, complying with organic standards in Europe may be costly and difficult given that the requirements are designed for the EU context that is different from the socio-economic and geographical conditions that small organic producers face in developing countries.70 Majority of Rwanda’s horticulture exports were regional; however, most of high-value horticulture exports were internationally oriented. DRC is the largest importer of Rwanda’s fresh fruits (75.2%) and vegetables (69.1%). However, most of the flowers, French beans, chilies, and passion fruits exports went to Europe, while macadamia was largely exported to Vietnam. Given Rwanda’s natural constraints of small land size and being landlocked, it should strategically focus on exporting high value horticulture crops that are highly profitable, agronomically viable, and are relatively free from those structural or natural challenges. Among the high value crops that are highly demanded in the EU and other international markets, perishable and low weight crops (e.g., French beans, passion fruits, etc.) can bring the most export earning potential for Rwanda. High value

65 FAOSTAT 2016 data

66 Fruit Logistica, 2018, Trend Report : Disruption in fruit and vegetable distribution

67 Fruit Logistica, 2018, Trend Report : Disruption in fruit and vegetable distribution

68 Dalberg analysis, 2018 ; Farmer annual income per crop: Maize $297/ha, chili $4,336/ha, snow peas $4,588/ha, passion fruits $4,985/ha

69 Research Institute of Organic Agriculture (FiBL), 2019

70 CBI, Which trends offer opportunities on the European fresh fruit and vegetables market? | Increasing Agri-export revenues 98 but high weight (e.g., avocado) or low value and high weight (e.g., tomatoes) fruits and vegetables can focus on targeting the local or regional markets where they can be shipped by ground transport. The figure below illustrates a number of high value horticulture value chains that have been prioritized for international market exports based on assessments of their agronomic viability, profitability, competitiveness, and social impact (how much can farmers earn):71 Figure 48: Commercial opportunities in horticulture value chains Rwanda is well positioned to produce some of the high-value horticulture crops which are in high demand in Europe due to its favorable climatic and agronomic conditions and low labor costs. Horticulture crops have limited growing conditions in Europe, especially during the winter season. Low labor costs allow Rwanda to be cost competitive in producing technical and labor-intensive crops such as cut flowers (roses), French beans, snow peas, chilies, and passion fruits. Key challenges and value chain needs Key challenges of the horticulture sector span across production and productivity, quality management, logistics capacity, and market linkage. Inconsistencies in quantity and quality of products resulting from the first three needs are causing difficulties to Rwandan exporters in finding long-term business relationships with buyers in international markets who demand regular shipments. 71 Dalberg, 2018, USAID/ISP Rwanda Value Chain | Increasing Agri-export revenues 99 Production and productivity • Limited access to quality inputs – Out-grower farmers lack quality input financing, most of which are imported and costly. This leads to crops’ high vulnerability to pests and diseases and lower yields. • Limited technical agronomic know-how – Farmers need to build agronomic knowledge and skills to get the best yields of some of the highly technical high-value crops such as snow peas and French beans, given the relative nascency of the sector. Quality management • Limited post-harvest handling knowledge and skills – Currently reject levels of fresh horticulture produce such as French beans are as high as 30-40% of production on out-grower farms due to limited post-harvest handling capabilities and equipment, higher than the industrial average of 10-15%.72 • Compliance with quality and safety standards requirements – The EU, which is the largest market for high-value horticulture crops, has strict regulations around the maximum residue levels (MRLs) for pesticides, maximum levels for certain contaminants, and plant health (sanitary and phytosanitary – SPS) issues. While horticulture commodities fetch higher prices in the EU than in other places, the investments required for Rwandan products to comply with the EU requirements are also substantial. Logistics capacity • Limited cold chain logistics capacity – the Export volume of produce that requires cold storage reached 55MT per week in 2018 during peak seasons. These volumes are soon expected to exceed the current capacity of the NAEB shared packhouse (32MT at a time) and the cold room at the Kigali International Airport (10MT at a time), given the continued growth of export volumes. 73 Horticulture exporters share only one NAEB cold truck, resulting in delays in delivery to the airport, challenges with coordinating schedules and crowding of the airport cold room facilities. Few successful mid-stage exporters have recently started invested in cold rooms and cold trucks themselves as a result; however, most early-stage and small- scale exporters do not have sufficient financial means to afford them, nor do they produce enough to fully utilize the cold chain facilities themselves.

72 Stakeholder interview, 2018

73 Stakeholder interviews, 2019 | Increasing Agri-export revenues 100 Figure 49: Air freight capacity growth projection • Limited air freight capacity – Airfreight capacity is the primary limiting factor of how much volume of crops Rwanda can export in the future. Rwandan exporters have been able to take advantage of the discounted air freight rate offered by RwandAir. However, the weekly export volume (55MT) has already exceeded the current RwandAir air cargo capacity to the EU (30MT per week) and the Middle East (21MT per week). Air cargo space is available on other airlines such as KLM, SN Brussels, and Turkish Airlines that fly out of Kigali to the international market destinations, however at higher prices than what RwandAir currently provide. Even when all the cargo space of untapped flight routes or airlines are combined, the horticulture export volume that requires air freight is soon expected to exceed the capacity. • To attract commercial air freighters to stop in Kigali, a more competitive rate should become available. Limited private sector investment • Limited number of sizeable horticulture exporters – Of 17 horticulture exporters that were able to make air freight shipments to international markets in 2017, only eight of them have constantly remained in business; Most of them had an annual revenue of less than $1 million in 2018.74 Market linkage • Limited marketing capabilities – Early stage horticulture exporters do not have sufficient market information and marketing capabilities to find and establish business relationships with buyers.

74 Except for Bella Flowers, a state-owned company with 100% shares from NAEB, with annual sales of ~2million USD | Increasing Agri-export revenues 101 Cereals sector performance and outlook Past trends Cereals exports have increased sharply since 2015-2016 from $28 million to $104 million in 2017- 2018 at a CAGR of 38%, largely due to the entrance of industrial cereals processors into Rwanda. In 2017-2018 cereals accounted for 20% of the total agricultural exports, making it the second largest exported agricultural sub-sector category next to animal products. Figure 50: Rwanda exports of cereals and composition Source: NAEB, 2018, Strategic Business Plan 2019-2024; NAEB, Export and re-export values and export destinations 2017-2018 However, the majority of Rwanda’s cereal exports are re-exports, with a small portion (6.4%) of value-added re-exports as cereals flours, the majority of which is exported to DRC. Figure 51: Composition of Rwanda cereals exports | Increasing Agri-export revenues 102 Rwanda’s cereals exports can be classified as the following:75 • Pure exports (60.6%): Grains produced in Rwanda and exported as grains, or grains produced and milled in Rwanda and exported as flours – e.g., maize flour milled in Rwanda using locally produced maize • Pure re-exports (32.7%): Products produced and/or processed in other countries that were imported by Rwanda and exported to other countries without Rwanda’s value addition – e.g., broken rice, biscuits, spaghetti, etc. • Value-added re-exports (6.7%): Grains imported from other countries, milled in Rwanda, and exported as flours – e.g., wheat and maize flour milled in Rwanda using imported wheat and maize grains Milled products accounted for 64.4% of Rwanda’s total cereals exports, most of which went to DRC accounting for over 50% of DRC’s cereal flours imports.76 Most of the maize flours exported are those that have been milled in Rwanda (pure exports and value-added re-exports) while wheat flours exports consist of both those milled in and outside Rwanda (pure re-exports and value-added re- exports). Most of the unprocessed maize went to Burundi. Figure 52: Rwanda cereals trade flow and export destinations Market outlook The regional market for milled cereals is limited outside DRC, the major buyer in Eastern Africa and Rwanda’s limited production potential limits its ability to compete with other regional players. The domestic market for maize is projected to grow with the 2.5% annual population growth and the importance of maize as an affordable, nutritious, and traditional staple crop. Being able to produce for local consumption can be an opportunity for import substitution. However, Rwanda has limited competitiveness against other cereals exporting countries who are able to produce with higher cost

75 NAEB export data, 2018 ; Pure exports may include value-added re-exports to certain extent, however tracking the countries of origin for cereal flours milled in Rwanda is difficult. Industrial maize flour processors in Rwanda source 40-60% of maize grains from local farmers.

76 NAEB, 2018, Formal and informal exports 2017-2018 ; UN COMTRADE data | Increasing Agri-export revenues 103 efficiency such as Uganda and Zambia, which produce at higher yields, double of current Rwanda yields of 1.1 – 1.5 MT/ha.77 Given the limited regional demand for milled cereals (40 M USD in 2017) and Rwanda’s limited capacity to produce cereals at scale, Rwanda can increase cereals exports revenue by focusing on value-added re-exports. Value-added re-exports include both milling and/or packaging maize flour before exports. A few industrial maize flour processors based in Rwanda such as Africa Improved Foods and Minimex have been able to tap into the regional demand for refugee camps and population under malnourishment through institutional sales to international organizations (e.g., WFP and UNICEF), NGOs, and local governments: As shown in the figure below (left), the import demand for cereals flours by DRC and South Sudan is likely to remain important in the six five years as these countries are likely to remain largely politically unstable. Figure 53: Processed cereals imports in EAC and countries of origin for DRC’s processed cereals imports Key challenges and value chain needs Rwanda maize farming consists of smallholder farmers and is characterized by low productivity due to lack of agronomic and technical know-how. Rwandan farmers have an average land plot size of 0.5 - 1acre dedicated to maize farming, 78 and their average yield is between 1.1 MT/ha and 1.5 MT/ha, 79 much lower than 2.2-2.5 MT/ha of Uganda, and the optimum yield for maize of 10 MT/ha.80 Farmers also lack post-harvest infrastructure and knowledge of quality management practices, which lead to high moisture content, above the ISO-recommended level of 13.5%81, which affect processors’ ability to source raw maize. The average moisture level of maize on the market is 20-23%, above the recommended levels. Due to moisture content issues, when sourcing for maize, we have to reject up to 20% of our supply at

77 FAOSTAT, 2019

78 NISR, 2018, Seasonal Agricultural Survey 2017

79 NISR, 2018, Seasonal Agricultural Survey 2018

80 FAOSTAT, 2019

81 International Organization for Standardization, 2016, ISO 712:2009 | Increasing Agri-export revenues 104 the beginning of the season; two months into the season, the rejection rate can get as high at 80%. – Maize processor Cereals processors in Rwanda are well-positioned to serve the regional market, equipped with milling facilities capable of processing over 30,000 MT per annum, a sufficient volume to meet a significant share of the regional demand. However, they are challenged by the low quality of local maize and therefore import over 40% of maize grains, mostly from Uganda. 82 Rwanda’s cereals production and processing need support in the two following areas: Production and productivity • Infeasibility of mass production – Small land plot sizes and steep slopes make mechanized farming difficult, resulting in Rwanda’s limited competitiveness over regional players who are able to produce maize much more efficiently (e.g., Uganda, Tanzania, Zambia, etc.). • Low productivity – Farmers have insufficient farming skills and knowledge, and resources to produce at higher yields. Limited irrigation, pests and diseases, declining soil fertility, and low- quality seeds result in low yields. Quality management • Limited post-harvest handling knowledge and capacity – Farmers have insufficient skills, knowledge, and equipment to dry cereals quickly after harvesting. This results in higher moisture content, leading to aflatoxin contamination issues and high rejection rates by industrial millers (20% rejects; 80% rejects after 2 months into the season). • Limited quality and safety standards enforcement – 95% of cereals traded in Rwanda are informal, allowing for low-quality cereals to be traded at lower prices by farmers.

82 Stakeholder interviews, 2019 | Increasing Agri-export revenues 105 Animal products sector performance and outlook Past trends Animal products grew at a CAGR of 11.15% in the past 5 years and accounted for the largest sub- sector the agriculture exports (23%) in 2017-18. Live animals were the largest component of the animal products exports, but fish and milk were the main drivers of growth at CAGR of 28% and 15% respectively, between 2013-14 and 2017-18. Figure 54: Rwanda exports of animal products This growth can be explained by a set of challenges that rose in DRC in recent years, as reflected in the large value of informally traded goods in the animal products category (69%), and their concentration towards DRC.83 Of the formal trade, DRC was still the largest buyer of Rwandan live animals, fish, and milk.

83 The informal trade figures, provided by NAEB, are not captured by the export destinations and trade flow graphics | Increasing Agri-export revenues 106 Figure 55: Rwanda exports of animal products by formal and informal trade Market outlook Meat, fish, and milk have high regional demand, DRC and Kenya being the largest importers of these animal products. DRC’s meat imports reached $117 million and fish imports reached $83 million in 2017, while Kenya imported milk worth of $52 million and fish worth of $24 million.84 Figure 56: Animal products imports in EAC and countries of origin However, Rwanda has limited competitiveness in regionally supplying animal products, and the regional demand for Rwanda’s animal products, on which current exports heavily rely, is likely to be

84 UN COMTRADE data ; Due to the largely informal nature of the trades between Rwanda and DRC, Rwanda’s meat exports to DRC were not captured in the UN COMTRADE data. | Increasing Agri-export revenues 107 lower and less stable in the long term. Rwanda is a net exporter of live animals and milk only but is a net importer of fish. Meanwhile, most fish imported to Kenya and Tanzania come from Asia (China, South Korea, and Vietnam) at much lower prices, making it difficult for Rwanda to compete on the regional market. In addition, limited local access to fish feed is a challenge that further after affects Rwanda’s competitiveness. While large dairy processors in Rwanda already export to DRC, Burundi, Uganda, South Sudan, and Tanzania, the dairy sector as a whole has a lower productivity compared to other exporters in the region: Rwanda produces about 2 million liters of milk per day,85 which is much lower compared to Uganda’s much larger dairy industry with 4.5-6 million liters produced per day and which dominates over 95% of the largest regional market for milk imports (Kenya).86 Figure 57: Rwanda animal products trade flow and exports by destinations The government of Rwanda has led several initiatives to improve production and productivity in livestock, such as: • Gako integrated beef project, co-managed by MINAGRI and MINDEF, aimed to increase quality meat production for both local and export markets, on 5,000 hectares of land in Bugesera and with a slaughterhouse capable of processing over 15,600 cows per year (2.4 billion MT)87 • Cattle genetic improvement, led by RAB, included artificial inseminations of 77,221 cows (15% of cow population in Rwanda) in 2016-2017, to improve dairy productivity.8889 Key challenges and value chain needs Rwanda’s animal product sectors have limited capacity to grow in production due to highly fragmented and smallholder-based farming, limited access to feed, and low productivity of

85 MINAGRI, 2017, Rwanda Livestock Master Plan

86 Stakeholder interview, 2019 ;Dalberg, 2016 (Revised 2017), IFC Mapping and Analysis in Six Value Chains in East and West Africa: Uganda Dairy

87 The New Times, 2018, Rwanda to get largest beef processing plant in Bugesera

88 RAB, 2017, Annual Report 2016-2017

89 MINAGRI, 2017, Livestock Master Plan | Increasing Agri-export revenues 108 traditional breeds; However, there may be opportunities in small grazing animals. Most dairy farmers own 1-2 cattle each producing 5-15 liters of milk per day. 90 Both the farmgate price and market price for milk are low, leaving little margins for farmers and dairy processors compared to the investments needed for producing and processing milk. Limited access to quality feed is a challenge cross-cutting to all livestock and fish value chains, but even more particularly to Rwanda’s meat export sector as it mostly consists of beef, which requires highly intensive feeding or grazing for high quality and quantity production. Lamb and goat meat, which currently account for only 6% of the total meat export,91 have better production economics than beef as they require less feed and space. However, the East African market has a much smaller demand for lamb and goat meat than for beef, and Ethiopia, Kenya, and Tanzania export substantial amounts of lamb and goat meat to the Middle East.92 Production and productivity • Limited feed availability and quality – Rwanda imports about $1 million animal feed, and over $2.4 million, when including food residues for feed preparations, annually. Investments in the past few years have enabled local processing of feeds, however, the total production volume capacity remains small: The three existing large processors produce a total of 2,500 MT of feeds per month, which can feed only one-third of Rwanda’s poultry population. Furthermore, the cost of animal feed remains high for most of smallholder farmers, accounting for 60-70% of input cost, due to the high cost of raw materials (maize and soybean) – largely produced and imported from outside Rwanda. • Limited forage availability – There is limited availability of land for commercial-scale forage production or grazing for grass-fed animals as they compete in land usage with other agricultural production for human consumption. • Low productivity of local breed – 43% of cattle in Rwanda are local breeds but contribute to only 9% of total milk production due to their low genetic productivity potential.93 Quality management • Limited professionalism in quality control– Few dairy producers are specialized farms equipped with dairy meat technologists; meat processors have limited meat-cutting and grading knowledge and skills. • Limited quality and safety standards enforcement – In order to improve the quality of animal products and for the sector to be able to attract private investments, it is imperative to have a stronger enforcement of standards and regulations on animal breeding, animal commercial feeds formulation, grading and pricing, livestock identification, disease surveillance reporting, and livestock infrastructure development.94 Infrastructure for processing and cold chain logistics • Limited commercial scale processing infrastructure that enables the efficient collection, handling, and processing of meat and dairy products in large volumes – e.g., slaughterhouses, laboratories, milk collection centers (MCCs), milk processing factories, etc. • Limited cold chain logistics and transport pose challenges in storing and transporting highly perishable products such as meat and dairy to other countries in the region.

90 Stakeholder interview, 2019

91 NAEB, 2018, Formal and informal export 2017-2018

92 UN COMTRADE data

93 MINAGRI, 2017, Livestock Master Plan

94 MINAGRI, 2017, Livestock Master Plan | Increasing Agri-export revenues 109 Others sector performance and outlook Past trends Products in the other products category have rapidly increased in export value at a CAGR of 66% between 2013-14 and 2017-18. While roots and tubers, and pulses were the largest sub-categories, their export values showed fluctuations across the years as they were highly vulnerable to diseases and regional market price changes. Other miscellaneous products including groundnuts, soybeans, bananas, sunflower seeds, forestry, tobacco, and processed products such as cooking oil and sugar have a high aggregate export value but are mostly low-value commodities and informal exports. The rapid growth in others can be attributed to increasing capturing of informal export data in recent years. Figure 58: Rwanda other products export value There are a few nascent value chains that currently have insignificant export volumes, but might be good opportunities for investments, such as essential oils, stevia, sericulture, honey, and spices. The performance, market outlook, and challenges of essential oils and stevia are further detailed in sperate sections below. | Increasing Agri-export revenues 110 New growth value chains Beyond fastest growing sectors, there are new value chains with potential for future growth which should be tested in the upcoming years. New emerging value chains such as essential oils and stevia have shown recent signs of growth from a low value based. These value chains are worth testing in the upcoming years to identify potential growth opportunities among them. These new growth value chains may benefit from NAEB’s ongoing support and targeted investments as they are nascent sectors with limited agronomic knowledge of farmers, infrastructure or regulations to support and enable accelerated growth. Essential oils and stevia are just two examples of new potential value chains that may see fast growth in the upcoming years, and NAEB’s programs related to strategic analytics may identify and explore other nascent value chains with opportunities for fast growth. Products such as honey, sericulture, specialty mushrooms, herbs, and spices may qualify for such new growth value chains as they are already produced in Rwanda or can be produced well, sell at high prices in export markets, and have a positive outlook for the market in the next upcoming years. For example, Rwanda has excellent ecological factors for beekeeping, and progressively increased production and export of honey in recent years. Rwandan honey fetches a price ranging between 6-8 USD/kg in export markets, and the global market for honey is projected to grow due to increasing number of health-conscious consumers and the food and beverage industry looking for healthier alternatives to sugar. Essential oils sector performance and outlook Past export trends Figure 59: Rwanda essential oils exports | Increasing Agri-export revenues 111 • Rwandan essential oils exports started off low as the export market was led by one exporter from Rwanda. The export value experienced fast growth in recent years with more players progressively entering the market and diversifying into new export markets. • Rwanda exports essential oils to France and Germany, France being one of the largest buyers globally. In 2017-2018, Rwanda exported 54% of its essential oils to France and the remaining to Spain. The five largest buyers of essential oils globally are Germany, UK, France, China, and Hong Kong. 95 The figure below presents Rwanda’s essential oils exports destinations in comparison to the largest essential oils buyers. Figure 60: Rwanda essential oils importing countries and world largest essential oils buyers Market outlook The global essential oils market is projected to grow annually at 8.83% from 2017 to 2022, reaching 11.19 billion USD in 2022 – led by demand in food and beverages and spa and relaxation industries. 96 The essential oils market is segmented into several oil types including orange, lemon, lime, peppermint, corn mint, citronella, spearmint, geranium, clove leaf, eucalyptus, jasmine, tea tree, rosemary, lavender, and others oils.97 The orange oil and corn mint oil segments respectively account for the highest market share, holding together more than 57% of market share in the year 2017. 98 These leading segments are followed by Peppermint, Eucalyptus, and Citronella. Demand for essential oils is driven globally by the food and beverages, spa and relaxation, medical, and cleaning & home industries respectively,99 and is expected to rise to 1.19 billion in 2022, at an 8.83% CAGR.100 Demand for organic essential oils is also expected to rise from a low base, at a CAGR of 11.37% during the period 2017-2021, driven by increasing health awareness and preference for organic products. 101

95 Harvard University, Center for International Development, 2016, ATLAS of economic complexity

96 Research and markets, 2017, Global Essential Oils Market 2017-2022 by Product Type, Method of Extraction, Application

97 Ibid.

98 Market research future, 2017, Essential Oil Market Research Report- Forecast to 2023

99 Research and markets, 2017, Essential Oils Market Size, Share & Trends Analysis Report 2019 - 2025

100 Research and markets, 2017, Global Essential Oils Market 2017-2022 by Product Type, Method of Extraction, Application

101 Technavio Research, 2017, Global organic essential oils market 2017-2021 | Increasing Agri-export revenues 112 The natural advantage of Rwanda in some types of essential oils puts it in a good position to take advantage of global market opportunities. Some essential oils such as Eucalyptus, geranium, and other emerging categories such as patchouli grow naturally in Rwanda. Rwanda has an opportunity to explore these essential oil products in the upcoming six years and to position itself into niche export markets such as organic essential oils. Key challenges and value chain needs Rwanda’s essential oils sector is very nascent and is therefore marked by low production and local processing capacity for global market competition. • Low production and local processing capacity of essential oils, limiting export volumes. Production is currently dominated by smallholder farmers with no connection to an aggregator. This leads to the production of small quantities, around 1 kg per farmer, while buyers are looking for large quantities (3-5 tons of extracts at once), leading to untapped market opportunities.102 • Limited knowledge of farmers leading to the usage of essential oils trees for firewood: Most farmers don’t know the value of essential oil trees, which further reduces production. Stevia sector performance and outlook Past trends Stevia production and exports is nascent in Rwanda, with a small volume of exports that only started in 2016-17. Due to the small size, export value jumped quickly between 2016-2017 and 2017- 2018 at the growth rate of 69%. This growth can be attributed to NAEB’s support in land mobilization and expansion, and seedling production, as well as investments by SteviaLife Sweeteners, Ltd – the main commercial stevia producer in the country. PureCircle, a world’s leading producer and processor of stevia sweeteners for food and beverage companies including Coca-Cola Co, is currently the sole buyer of Rwanda’s Stevia exports.103

102 NAEB, 2019, diversification division data

103 Ibid. | Increasing Agri-export revenues 113 Figure 61: Rwanda exports of stevia Source: NAEB, 2018, Rwanda formal and informal export 2017-2018 Market outlook The global market for stevia has reached a value of more than $492 million in 2018, and further projected to grow to nearly $818 million by 2024, with food and beverage industry holding the largest share.104 Due to increasing awareness of health benefits associated with stevia, its market is expected to double between 2018 and 2024, reaching $492 million by 2024. 105 The market is segmented by application into the bakery, dairy food, beverages, dietary supplements, confectionery, and others. Global food and beverage manufacturers are the largest market segment and increasingly switching to natural sweeteners, totaling $110 million in 2013.106 Locally processing pure stevia extract has the potential to bring high revenue margins if Rwanda is able to produce sufficient volumes for a processing plant. 107 Stevia leaves are sold at $1,000-2,000 per MT, but the price could go up to as high as $5,000 per MT depending on the steviol glycoside content.108 Pure stevia crude extract can fetch up to $200,000 per MT.109 China is the largest producer of stevia leaves, but also a large buyer of stevia leaves as it is increasing stevia extraction capacity. Regionally, Kenya is already supplying to large stevia product manufacturers in China, and Tanzania is also seeking to enter the market as stevia is increasingly recognized as a lucrative crop. There is a growing market for organic stevia but limited to small brands selling organic zero-calorie sweeteners to supermarkets. While given the small volume there is more room for local processing at

104 IMARC, Stevia Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019-2024

105 IMARC, Stevia Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019-2024

106 Mintel, 2013, Stevia set to steal intense sweetener market share by 2017, reports Mintel and Leatherhead food research

107 Production on at least 1,000 hectares of land is necessary to meet a processing plant capacity. Currently, SteviaLife Sweeten ers has identified close to 350 hectares of land available for stevia.

108 Dalberg, 2019, stakeholder interview

109 The New Times, 2018, New firm takes over stevia project from cash strapped SteviaLife Ltd | Increasing Agri-export revenues 114 a smaller quantity, large food and beverage manufacturers will not pay for the price premium for the organic produce. Rwanda has suitable agronomic conditions to produce stevia and competitive advantage in low labor cost, with an existing global operator involved in production locally. Stevia grows well in temperatures between 15°C and 35°C, and best on acidic to neutral soils with a pH range of 5.5-6.5, which is 38% of Rwanda’s soil.110 Stevia also requires intense weeding, and Rwanda’s low labor cost can become a strength when competing against other major producers. There is an existing operator, SteviaLife Sweeteners, which has two farms totaling 146 hectares in Rulindo and Kirehe districts and is committed to working with out-growers, providing support to them, and planning to mobilize lands for additional plantations to reach a volume sufficient for establishing a processing plant. Key challenges and value chain needs Global food and beverage manufacturers, the major buyers in the market, have high volume demand that Rwanda is unable to meet with its current level of production. However, with a global stevia producing company operating in Rwanda and aggressively planning to expand its production, these challenges can be quickly resolved. Current challenges to overcome in the value chain are related to production and productivity and include: • Insufficient farmer knowledge – Due to the nascency of the crop in Rwanda, few farmers know about stevia and hence cultivate it. • High input cost – Seedling cost takes up a high proportion of the production cost, and farmers have to wait for a year to start harvesting.

110 PureCircle ; N.L Nabahungu, RAB‐Rwanda, 2013, Rwandan Soil Health Status for Sustainable Food Security and Economic Growth | Increasing Agri-export revenues 115 IV.3 EXPORT GROWTH DETAIL AND KEY NEEDS PER VALUE CHAIN Horticulture Growth projections Figure 62: Rwanda horticulture export revenue projection Projection assumptions • Exponential growth in high-value crops (Chili, French beans, flower, grapes, macadamia, mushroom, and passion fruit) export value, capturing 3% of the EU market by 2024, up from current 0.34% • High-value crops to increase in yields (by 20%) and area planted to produce target volumes • Other horticulture crops’ export to grow linearly, both in volume and value at the historical growth rates | Increasing Agri-export revenues 116 Tea Growth projections Figure 63: Rwanda tea export revenue projection Projection assumptions • Continued growth in total tea export volumes, reaching 3% of the global market by 2024 • Diversified teas exported volumes to increase, reaching 20% of the total tea exported volumes from Rwanda • Specialty tea to fetch a premium price of at least 35% above black tea prices Pyrethrum Growth projections Figure 64: Rwanda tea export revenue projection | Increasing Agri-export revenues 117 Projection assumptions • Export value to grow at the same rate as the global market demand as NAEB strengthens existing trade partnerships and explores new ones • Area planted to remain constant at 3,000 ha while yield to increase progressively from current 0.5 MT/ha to 0.8 MT/ha • Pyrethrum extract to fetch an average price of $250 New growth value chains111 Growth projections Figure 65: Rwanda new growth value chains export value projection Projection assumptions • Stevia, essential oils, honey and other newly identified value chains to experience fast growth as they benefit from NAEB continued support and targeted investments • Stevia and honey to grow at 50% of the historical growth rate for new growth value chains, and essential oils to grow at the global market CAGR.

111 New growth value chains include stevia, essential oils, and honey. Stevia, essential oils, and honey are illustrative examples of many high value crops that are nascent in Rwanda but well positioned to grow substantially with strategic support and investments. It is one of the Analytics and strategy team’s role to identify high potential crops such as these two, and their needs. | Increasing Agri-export revenues 118 Coffee Growth projections Figure 66: Rwanda coffee export revenue projection Projection assumptions • Steady increase in coffee exports value as the specialty coffee exports increase to be 25% of total coffee exports and fetch higher prices • Area planted to reduce by 5% while yield increases progressively at a 5% annual rate from current 0.5 MT/ha to 0.7 MT/ha by 2024 • Conventional coffee price to remain constant at the average price between 2012 and 2017 Cereals Growth projections Figure 67: Rwanda cereals export value projection | Increasing Agri-export revenues 119 Projection assumptions • Export of processed cereals to grow at a slower rate than the historical trend as the regional instability decreases and given Rwanda is not a surplus producer of grains • More focus on re-exports of value-added products • Less focus on producing cereals for exports (but for food security) to prioritize land for high- value crops • Yields to increase in current areas planted Animal products Growth projections Figure 68: Rwanda animal products export value projection Projection assumptions • Export of value-added livestock products to grow at a slower rate than the historical trend • Faster growth in small grazing animals and derivatives, and in dairy added product | Increasing Agri-export revenues 120 Others112 Growth projections Figure 69: Rwanda others export value projection Projection assumptions • Slower growth rate as the regional instability decreases and low-value, regional crops to decrease in export values

112 ‘Others’ include all other value chains not specified in this report and pulses and roots and tubers. | Increasing Agri-export revenues 121 IV.4 DETAILED ANNUAL PROGRAMMATIC TARGETS (RESULTS FRAMEWORK) 17-18 Outcome Value chains (baseline) 18-19 19-20 20-21 21-22 22-23 23-24 Total Branding Increased recognition of Rwanda brands as quality brands Market linkage # of unique buyer-exporter relations created 0 0 4 6 9 13 17 49 Horticulture 0 0 2 3 5 8 12 30 Tea 0 0 1 1 2 2 3 9 Pyrethrum 0 0 0 1 0 1 0 2 Coffee 0 0 1 1 1 1 1 5 New growth value chains 0 0 0 0 1 1 1 3 Total sales value (USD) 0 0 3,366,315 7,644,398 17,071,459 39,141,714 91,986,911 159,210,797 Horticulture 0 0 1,534,410 3,851,368 9,666,935 24,264,006 60,902,654 100,219,372 Tea 0 0 1,134,765 2,530,526 5,643,073 12,584,053 28,062,439 49,954,857 Pyrethrum 0 0 0 377,136 460,106 561,329 684,822 2,083,393 Coffee 0 0 697,140 885,368 1,124,417 1,428,010 1,813,572 5,948,506 New growth value chains 0 0 0 0 176,928 304,317 523,424 1,004,669 # of product lines 0 0 4 4 2 0 0 10 Horticulture 0 0 1 2 2 0 0 5 Tea 0 0 1 1 0 0 0 2 Pyrethrum 0 0 1 0 0 0 0 1 | Increasing Agri-export revenues 122 Coffee 0 0 1 1 0 0 0 2 New growth value chains 0 0 0 0 1 0 0 1 Global operator attraction 17-18 Outcome Value chains (baseline) 18-19 19-20 20-21 21-22 22-23 23-24 Total # of value chain specific businesses attracted 0 0 0 2 0 5 3 10 Horticulture 0 0 0 1 0 2 2 5 Tea 0 0 0 1 0 1 1 3 Pyrethrum 0 0 0 0 0 1 0 1 New growth value chains 0 0 0 0 0 1 0 1 Total investments attracted 0 0 0 50,000,000 10,000,000 30,000,000 25,000,000 115,000,000 Horticulture 0 0 0 0 0 0 0 Tea 0 0 0 50,000,000 0 25,000,000 25,000,000 100,000,000 Pyrethrum 0 0 0 0 10,000,000 0 0 10,000,000 New growth value chains 0 0 0 0 0 5,000,000 0 5,000,000 Business incubation 17-18 Outcome Value chains (baseline) 18-19 19-20 20-21 21-22 22-23 23-24 New businesses supported 0 0 0 7 13 14 16 50 Horticulture 0 0 0 5 11 13 15 54 Pyrethrum 0 0 0 1 0 0 0 1 New growth value chains 0 0 0 0 1 1 1 3 Ag tech and innovation businesses 0 0 0 1 1 0 0 2 | Increasing Agri-export revenues 123 Productivity and quality management 17-18 Outcome Value chains (baseline) 18-19 19-20 20-21 21-22 22-23 23-24 0 New land area under cultivation (ha) 0 0 2000 2000 2000 2000 2000 10,000 Horticulture 0 Tea 0 0 2,000 2,000 2,000 2,000 2,000 10,000 Pyrethrum 0 0 0 0 0 0 0 0 New growth value chains N/A N/A N/A N/A N/A N/A N/A Coffee Cereals N/A N/A N/A N/A N/A N/A N/A 0 Animal products N/A N/A N/A N/A N/A N/A N/A 0 Yield (MT/ha) Horticulture Tea (early estates) 0.8 0.9 1.1 1.3 1.6 1.9 2.2 N/A Tea (adolescent estates) 3.3 3.6 4.0 4.4 4.9 5.4 6.0 N/A Pyrethrum 0.5 0.5 0.6 0.6 0.7 0.7 0.8 N/A New growth value chains N/A N/A N/A N/A N/A N/A N/A N/A Coffee 0.5 0.5 0.6 0.6 0.6 0.7 0.7 N/A Cereals N/A N/A N/A N/A N/A N/A N/A N/A Animal products N/A N/A N/A N/A N/A N/A N/A N/A # of exporters supported 0 0 13 17 21 27 52 130 Horticulture 0 0 10 12 15 20 45 102 Tea 0 0 2 3 4 5 5 19 | Increasing Agri-export revenues 124 Pyrethrum 0 0 0 1 0 0 0 1 New growth value chains 0 0 0 0 1 1 1 3 Coffee N/A N/A N/A N/A N/A N/A N/A 0 Cereals 0 0 1 1 1 1 1 5 Animal products N/A N/A N/A N/A N/A N/A N/A 0 # of farmers supported 0 0 49,200 68,090 94,371 131,000 182,147 524,809 Horticulture 0 0 8,500 12,750 19,125 28,688 43,031 112,094 Tea 0 0 4,500 6,120 8,323 11,320 15,395 45,657 Pyrethrum 0 0 1,200 1,620 2,187 2,952 3,986 11,945 New growth value chains N/A N/A N/A N/A N/A N/A N/A 0 Coffee 0 0 35,000 47,600 64,736 88,041 119,736 355,113 Cereals N/A N/A N/A N/A N/A N/A N/A 0 Animal products N/A N/A N/A N/A N/A N/A N/A 0 Market feedback (Improved feedback from buyers/market based on qualitative assessment; in relation to market linkage activities) Logistics & infrastructure coordination 17-18 Outcome Value chains (baseline) 18-19 19-20 20-21 21-22 22-23 23-24 Total Businesses supported 0 0 10 17 27 37 54 145 Horticulture 0 0 5 8 13 18 28 72 Coffee 0 0 5 8 13 18 25 69 Cereals 0 0 0 1 1 1 1 4 Financing | Increasing Agri-export revenues 125 17-18 Outcome Value chains (baseline) 18-19 19-20 20-21 21-22 22-23 23-24 Total Input revolving funds developed 1 0 1 0 0 2 Policy and regulation 17-18 Outcome Value chains (baseline) 18-19 19-20 20-21 21-22 22-23 23-24 Total N/A N/A N/A N/A N/A N/A N/A N/A Strategic analytics | Increasing Agri-export revenues 126 IV.5 NAEB ORGANIZATIONAL STRUCTURE Figure 70: NAEB's organizational structure | Increasing Agri-export revenues 127 | Increasing Agri-export revenues 128