8 October 2012

Rwanda: Fertiliser Distribution to Be Privatised

The Ministry of Agriculture will pull out of fertiliser importation and facilitate private companies to take over the business in order to make it more competitive and self reliant by 2017.

Speaking at a meeting last week, the Coordinator of the Fertiliser Programme at the ministry, Dr. Charles Murekezi, said although government has been at the helm of fertiliser procurement and subsidisation for five years, there is need to kick start a market-friendlier system led by the private sector.

"Government has been purchasing fertilisers in bulk and selling them to distribution companies at a subsidised price; the distributors then sell them to smallholder farmers who are usually grouped in cooperatives. We are now preparing to transfer the importing responsibilities to private companies," Murekezi said.

He said that the new development is expected to stimulate demand for fertilisers, create sustainable markets and support the crop intensification programme.

To achieve this objective, the ministry partnered with the US Agency for International Development (USAID), the partnership birthed a project called the Privatisation of Rwanda's Fertiliser Import and Distribution System (PREFER), under which a roadmap was developed.

Jonas Ngarambe, a fertiliser distributor in Rubavu District, said although fertilisers were bought from the ministry at a subsidised price, most farmers did not have the capacity to payback.

"We usually acquire on loan fertilisers for priority crops like wheat, cassava, rice, beans and maize and government expects us to pay as soon as we get payment from the farmers. Unfortunately, the farmers delay the payments making it hard for us to repay the government," Ngarambe said in an interview with The New Times.

"Before the business is privatised, government should first make it easy for us to get credit from financial institutions because it might be tough for distributors to sustain this business on their own."

Under the privatisation framework developed by PREFER, government intends to improve loan recovery at farm level as well as sensitise farmers that it will pay 50 percent of the cost of the fertilisers they purchase.

This will be followed by mass sensitisation in 2014 about the new privatised fertiliser distribution system, which will be subsequently followed by declaring fixed fertiliser prices in Kigali, Musanze, Kayonza and Nyamagabe districts.

Finally in 2016, government will pave way for the private sector to import fertilisers while providing transport subsidies for grouped importers until 2017.

Government imports over 18,000 metric tonnes of fertilisers each year.

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