7 September 2018

Rwanda: Govt Looking for Buyers for 5 Agribusiness Firms

The Government is in the process of divesting from five top agribusinesses as it seeks investors to recapitalise the businesses, increase production and efficiency.

Rwanda Development Board (RDB) pitched the opportunities to a host of investors and financiers attending the ongoing African Green Revolution Forum in Kigali.

Kigali Wholesale Market, a physical trading platform for fresh produce, is one of the projects that were pitched to investors at the Kigali Conventional Centre yesterday.

Located on seven hectares at Kigali's Special Economic Zone, the project aims to become a regional aggregator for fresh produce.

Rwanda trades an estimated 250 tonnes of fruits and vegetables daily, which demonstrates that the project has the potential to become a lucrative venture.

RDB Chief Investment Officer Guy Baron said that the venture is most suitable for patient investors as it will take between 3-4 years to be profitable.

Rwanda Farmers Coffee Company, which trades under the brand name 'Gorilla Coffee', is also one of the companies that are being considered for privatisation.

The coffee firm is a joint venture between the Rwandan government and Clinton-Hunter Development Initiative (CHDI). It began operations in 2015.

With the capacity to produce 3 tonnes of coffee every day, the company commands an estimated market share of 40 to 50 per cent.

Government said it was open to different models of divesting, including full acquisition, equity stake purchase as well as leasing.

With coffee prices improving steadily on the global market, the firm has a ready market, RDB said.

Coffee prices have improved from $2.66 per kilogramme to $2.76 per kilogramme as stakeholders are now exporting fully washed coffee. Coffee exports generated about $66 million between July 2017 and June 2018, up from $58 million in the previous year.

The Government is also keen on opening up Kigembe fish farm for investment and is considering full acquisition or a public-private partnership. The 10-hectare fish farm, located in Gisagara District, Southern Province, has 92 ponds and a research facility. Rwanda's nascent fish industry has been growing steadily with a stable market.

Rwanda's annual fish production is estimated at 25,000 tonnes, while imports stand at 15,000 tonnes, according to the 2015 statistics from Rwanda Agricultural Board.

Bart Gasana, an investor in fish farming and fish feeds, says that the fish market is growing and there are opportunities for value addition.

Government is also looking for investors to lease the Gabiro Irrigation Project, a commercial farm spanning about 15,600 hectares. The irrigation project has supporting infrastructure.

Government also plans to divest from Bella Flowers, a leading exporter of flowers located in Gishali, Rwamagana District.

RDB says that the facility has adequate infrastructure, including greenhouses covering 20ha under production, a large capacity packhouse with two cold rooms, a fertigation unit, fully equipped workshop and water reservoir.

Rwanda has readily available floriculture market in the Netherlands among other markets. Between July 2017 and March 2018, flower exports were worth $2.8 million up from $ 1.2 million in the previous year. Opening up the sub-sector to investment is aimed at creating diversity and increasing the level of expertise applied.

Another project, Gako Beef Farm, is also the subject of privatisation.

Financiers say there is room to find convenient financing models, including co-investing in viable projects.

Eric Rutabana, the Chief Executive of Development Bank of Rwanda, said they are keen on providing financing for equity, co-investing or direct lending with investors.

The African Development Bank says that they are seeking agriculture-related projects in the range of $10m to invest in while the International Finance Corporation is seeking projects worth around $5 million.

However, the Alliance for a Green Revolution in Africa (AGRA) said that they have a partnership with investors willing to inject capital in projects ranging between $500,000 million to $5 million.

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