18 March 2019

Rwanda to Fast-Track Sale of Shares in Cimerwa

Photo: The New Times
Cimerwa employees monitor the plant's production line (file photo).

The Rwandan government is in the final stages of selling its shares in the cement maker, Cimerwa.

The announcement comes in the wake of criticism by President Paul Kagame at a recent leadership retreat.

The president wondered why the government continues to hold shares in the company even when it is making losses and struggling to stay afloat.

In 2012, Pretoria Portland Cement (PPC) bought a majority stakes in Cimerwa, taking up 51 per cent shareholding, with the government retaining 41 per cent. This was expected to turn around the fortunes of the company.

The president said he had lost patience with the cement maker, expressing frustration that it had failed to produce enough cement for the market, and that that cement remains more expensive than regional imports.

"Cimerwa can't produce enough cement, and they are very expensive. Yet the government maintains its shares there. They think we can stop cheaper cement from coming in so that they can sell?" President Kagame said.

When he asked about the progress of the government's divestment, Prime Minister Edouard Ngirente said they had given PPC up to the end of the month to decide if they were buying out the government, otherwise they would go ahead and float them for sale to the public.

Market share

Despite being in existence for more than 30 years, Cimerwa has struggled to cement its position in the market, but imports from the region--Hima cement from Uganda, Twiga and Simba from Tanzania and others--have progressively taken up its market, largely because they offer high volumes at slightly lower prices.

The company controls up to 60 per cent market share--estimated at 600,000 tonnes annually--which has been decreasing in the past few years.

The construction boom in the country that started five years ago has seen cement demand grow by 20 per cent annually.

The cement wholesalers and retailers that The EastAfrican talked to said that much as the Cimerwa brand is the most popular in the market, inadequate supply is the main challenge.

"Cimerwa has a big market here that they can't even satisfy. They seem to be disorganised, they also don't know the politics of business. For instance, foreign companies give us cement on credit but Cimerwa doesn't," said Hakizimana Etienne, a cement wholesaler in Remera.

His warehouse had multiple cement brands like Twiga, Simba and Dangote, which he said they are introducing in the market, but was quick to point out that Hima Cement no longer comes to the local market because of the Rwanda-Uganda border closure.

A cement retailer told this paper that despite the slightly higher market price, if Cimerwa had dependable volumes cement from other countries would lose market in Rwanda.

"Right now we don't have Cimerwa cement, many customers have been asking for it since morning, they have a new plant I have even been there but I don't know why their volumes are still low," noted a retailer who preferred anonymity.

The company invested $170 million in a new modern dry process production plant at its head office in Bugarama with the capacity to churn out 600,000 tonnes of cement per year, but this is yet to be realised.

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