Kigali — President Paul Kagame last week launched a $14million granite plant becoming only the third in the region which heavily relies on imports of the vital construction material from China, Italy and Spain.
When Minister Rwangombwa announced a 5% tax on all imported construction materials during his budget speech, constructors growled with anguish and analysts predicted doom on the housing sector.
This was because Rwanda relies mostly on imported construction materials reason why though booming, available houses on the market are still high priced for only the super rich to afford.
However, the unveiling of Rwanda's first Granite plant is hoped to kick start a 'made in Rwanda' revolution that could see import volumes reducing over time as they get replaced by locally made products.
The granite plant is located in Nyagatare District, in Rwanda's Eastern Province. It's a collaborative venture involving the East African Granite Industries (EAGI), Rwanda Social Security Board (RSSB) and Crystal Ventures.
Nick Barigye, the Project Manager says they have invested $13million of which $9.5million was Equity and $ 3.5million a loan from the Rwanda Development Bank (BRD), used to set up the factory.
"We intend to spend more $2million in exploration of other quarries and purchase of cobblestone cutting machine to be able to put to use granite waste into stone that will be used to make cobblestone roads," revealed Barigye.
He explained that EAGI expect to have started mining of marble in the next five years so that they can offer the market both granite and marble in different colors.
According to available statistics, Rwanda approximately imports 100,000 square meters of granite annually with the Average price of granite being $160 per square meter and close to 1.5million square meters of ceramics.
Majority of the granite is imported from China, followed by India and Italy."We look to capture 90% of this market not only because of our competitive price of USD 60 per square meter of granite tiles and USD 100 per square meter of granite slabs but also because we have very good quality granite," boasted Barigye.
If EAGI can be relied on as far as quality is concerned, then the 90% market share they want will be easier to attain considering that the factory is close to the client thus guarantee timely delivery and also offer them customized services.
"Yes, it's possible because we have equipment to produce as per client specifications," Barigye reassured.
Besides producing for the local market with in Rwanda, EAGI says they will also expect to supply close to 100,000 square meters of granite to the regional markets in Uganda, Kenya, Burundi and DRC.
Research in EAC member states indicates that approximately, 450,000 square meters of granite are imported.
According to Barigye, the plant capacity is 200,000 square meters thus well positioned in terms of capacity to drastically reduce to level of not only the country but regional volumes of materials imported.
According to a contractor with Real construction group in Rwanda, orders have to wait for 3-4 months for the goods to be delivered from China, India, Spain or Italy.
Rwanda's revenue base is still small with over 40% of the current budget expected to come from donors. The new factory however is expected to contribute tax Revenue to the tune of $1.2million payable per year.
The investment has almost instantly changed the fortunes of Nyagatare district, known to be a pastoral area.
According to EAGI, the company has already created over 150 jobs which are expected to increase as the business takes root.
"We have also invested in road infrastructure, Power and Water. All these were not in place when we were setting up the plant," said Barigye who adds that the company had to construct roads, a power line and piped water line and as a result, a trading center has sprung up near the factory.
"We also have plans of setting up a water treatment plant so that the surrounding community can access piped water," he further added.
Regarding challenges, EAGI's entry will stir competition from Zhongfa in Tanzania and Arthi River M & G in Kenya the two only factories in the region that mine, cut and polish granite.
'We expect regional competition but we believe we have competitive advantage in terms of equipment, quality of our granite that we have called 'Thousand Hills Gray' in addition to competitive and attractive prices," Barigye.
Ironically, Barigye says something else and not competition is their biggest threat.
"The biggest challenge is the confusion between Granite and Ceramics," he says adding that presently, most people cannot differentiate the two and others confuse genuine granite with fake granite called Granito.
"We intend to develop a sensitization campaign through newspapers, radio, TV, online, participating in trade exhibitions and also holding press conferences and launch cocktails to sensitize the public about the difference between granite, ceramics and granite," Barigye.
Rwanda's import bill rose by 32% in the last five months against 14.5% recorded in the same period of the last year.Capital goods increased significantly (54.5%) during the first five months of 2012 compared to 2 % recorded the same period of last year with intermediary goods increasing by 33% compared to 23% recorded last year.