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Premium market potential for private sector

Interview - September 7, 2016

Rwanda’s government has now taken the role of an enabler, not a competitor, to the private sector by working with it to unearth the country’s full agricultural potential – particularly in niche markets, such as producing traceable, origin-certified products for which consumers are prepared to pay extra. CEO of the National Agricultural Export Board (NAEB) Bill Kayonga explains the enabling stance the government is now employing to help private investors add value to the sector and encourage youth involvement through investing in technological training and innovative yielding techniques.



Africa is expected to host the largest labor force in the world, 1 billion workers strong. As agriculture employs the largest part of the population, what are the challenges to take these people into the productive sector and how should they be addressed?

The agriculture sector today hosts an ageing workforce. Our first challenge is to implement strategic operations aimed at attracting the youth, at encouraging them to enter the agricultural sector. This is not purely in terms of employment, but also in terms of entrepreneurial possibilities. The same way the young population is devoted to developing energy and ICT, there is a need for innovation in agriculture in order to feed this growing population. We want to see our young minds engage in all agricultural steps, from management to primary production. By doing this, our youth will increase the productivity and usage of agriculture. We must create innovative techniques and beneficiary financial schemes to attract them.


The Rwanda Tea Authority (OCIR-Thé), Rwanda Coffee Authority (OCIR-Café) and Rwanda Horticulture Authority (RHODA) were merged under NAEB. How did this merger increase efficiency and used the existing synergies?

From a historical point of view, OCIR-Thé and OCIR-Café were mainly government agencies. From production to processing, passing by marketing and distribution, these companies were involved in direct investment targeted at ameliorating the products’ value-chain. However, with the market’s liberalization came the privatization of tea and coffee companies.

The government has now taken the role of becoming an enabler, not a competitor, to the private sector. Its role is to support the private sector by ameliorating production, facilitating exportation and adding competitive advantages to the entire value-chain. When the government retracted from production, it was decided to merge these companies in order to ally the right skills with the right techniques.

As an export development agency, we support the private sector in becoming competitive in the worldwide export market.


With the new bill presented to the Parliament, NAEB could become a fully business-oriented public enterprise. How would this transformation from a regulator to an enterprise affect the sector?

This new mandate is not aimed at competing with the private sector. It is aimed at providing further services required for private companies to thrive in a timely and cost-effective manner. We are here to address the key challenges faced by delivery requirements. For example, if an entity wanting to export vegetables to the European market demanded 1x1 meter boxes, we would provide these boxes for them. The majority of challenges we face regard shared facilities and shared items. When a common item breaks down, it becomes a true nightmare to replace it fast enough in order not to hinder all companies’ activities.

So, our mandate is not aimed at overcrowding the private sector. It is aimed at addressing these challenges and at providing cost-effective services in order to create a positive business environment.


In that sense, the State Minister for Agriculture, Tony Nsanganira, said that the intention of government is not to run business but to encourage private sector. What other services will you provide to the private sector to boost its activities?

We are going to provide quality insurance, tailored services, targeted advisory, and top-notch logistics. Simultaneously, we will also provide incoming investors with in-depth data research and statistical market analysis. The government will therefore have a dual role. On the one hand it will take care of physical needs. On the other hand, it will provide assistance and guidance.


Rwanda has recently engaged in the construction of mega-projects, as embodied by the recent infrastructural developments around the Northern and Central Corridors, or the KivuWatt plant. How are these projects going to contribute to the agriculture sector?

It is all about the business environment. Having cheap energy sources and universal connection are two necessities. The KivuWatt Plant will greatly reduce energy costs, while the corridors will cut down on transportation prices.

Within the agriculture sector, we have factories that consume a lot of energy. In terms of infrastructure projects, we are very far from the sea, hence, a need to build an enhanced transportation system. For our commodities to get anywhere around the world we need to reduce cost to become more competitive.

We must all work together as a team to figure out how all of this fits together. When talking about opportunities in agriculture, we link them with what is happening in other sectors. This allows us to draw a positive picture not only of our sector, but of our economy as a whole.


As embodied by the financial meltdown of neighboring countries that over-relied on petroleum, diversifying a country’s raw production is key to long-term sustainability. NAEB also impersonates the idea to diversify towards non-traditional commodities in the agriculture sector with export potential. How important is this diversification policy and what strategies will you implement?

Diversification is critical. Today, the trade in primary commodities is over-salient and sector-dominating. However, from new green beans to raw materials, there is still an amazing potential to diversify.

Over the years, we have developed certified special coffee products targeted at specific market segments. These traceable origin-certified products allow us to adjust our prices and to penetrate a different market. There are still many opportunities to diversify within pre-existing commodities. The scale and magnitude of the possible diversification of tea and coffee products remains largely untouched. Rwanda will never be able to compete with big international producers, so we must focus on exploiting market niches. Our products have to be targeted at high-end luxury coffee lovers who are willing to pay an extra dollar for quality.

To conduct this diversification model, we acquire relevant sectorial international information. We then use this data to direct the private sector’s activities towards profitable markets. Today, we are looking at stevia as an alternative for sugar. Producing and processing stevia perfectly fits in our expansion profile. One gram of stevia is equivalent to 200 times the value of one gram of sugar. International populations want to be healthy and we want to address this trend. We have also been looking at innovative animal product substitutes.

These non-traditional products constitute about 48% of our exports. There is a great interest in healthy alternatives, an interest we are trying to fulfill. We have already identified certain opportunities across different sectorial demands; now we must engage in deeper value-chain analysis to achieve maximum potential.


As we are experiencing a downturn in commodities, focusing on specialty products, for which buyers are willing to pay a premium for quality, environmentally friendly and origin-specific commodities is key. How are you strengthening this market niche?

In the past, the market was not as well connected as it is today, and the consumer was not as well informed. Today, if you pick up a cup of coffee and ask the seller where it comes from, he will be able to tell you the exact geographical position of the producer. We must be strategic and forward thinking as to what the customer wants. People are ready to pay the extra dollar to purchase certain certified appellations. The market has understood that financial benefits are created at the top of the production chain. By finding these key buyers, we will create higher profitability margins.


Minister of Agriculture and Animal Resources Gerardine Mukeshimana told us about the strategy to mechanize 50% of the land by 2020 in order to enhance efficiency and productivity. How is NAEB aligned to this plan?

We realized that mechanization would not only enhance labor productivity and reduce cost, it will also ensure a certain product quality. From land care to irrigation, passing by crop harvesting, mechanization has the potential to ameliorate all areas of the value chain. It will also serve as an attractive way to build the interest of younger workers.

While our population is growing, our land remains the same, so we must find ways to maximize the territorial production we already have. We are therefore investing in technological training and innovative yielding techniques. We have been resisting this phenomenon because of a commitment to quality, however, as technology grows, we will be able to maintain this top quality.


In the “Made in Rwanda Expo,” Trade and Industry Minister François Kanimba said entrepreneurs don’t have the culture of advertising their products. How are you promoting Rwandan products abroad?

As representatives of the agriculture sector, we belong to international bodies located in Europe and in Asia. Our work is to allow the private sector to portray their stories abroad. By allowing the private sector to be at the forefront of its own corporate image, we enable it to effectively communicate the growing potential of Rwandan products. Coffee and tea consumption are growing internationally, and with this growing demand we see an expansion of Rwandan products in supermarkets. Very encouraging!


According to Minister Gerardine Mukeshimana, the PPP format is key to attracting investors. What opportunities brought by the PPP model would you like to highlight to our international audience?

The reason why PPPs are so important is because our market subsectors still need to mature. PPPs provide financial risk insurance while assuring the implementation of constructive dialogues between private companies and the government.


After the US Secretary for Commerce’s visit in January, the US government stated Rwanda is a key ally in enhancing trade in the region, and the US is also opening the gates for more Rwandan exports under AGOA. How would you assess the relationship between Rwanda and the US?

In terms of trade, the United States’ further regional involvement is a clear benefit. After Europe, the United States is our second biggest market for coffee exports. If we add to that account other commodities that we sell to our American counterparts, it is clear that enhancing our relationship is greatly beneficial.


As former Permanent Secretary of the Ministry of East African Affairs, what is your take on the latest efforts to increase regional integration?

Our leadership has successfully identified the key characteristics that define our country. The government has developed tools to turn our landlocked position and our small size into a competitive advantage. By developing connectivity and regional alliances, we now have access to a larger market. These policies have created a positive environment for Rwanda to thrive in an environment that allows us to equally compete with larger nations.