Rwanda: Powdered Milk Plant Suffers Setback Due to Shortage of Funds

Dairy farmers in Gicumbi and neighbouring districts will have to wait longer to get the much anticipated factory that would be processing fresh milk into powdered milk after its construction has faced financing problems.

According to information from the Ministry of Trade and Industry, the factory will process 252,000 litres of milk per day.

The Rwf37 billion plant is a joint venture investment between South Africa's TRIOMF East Africa and Rwandan investors, its majority shareholder.

The planned factory will be the first of its kind in Rwanda as the country has been only relying on milk powder imports, and it would be a ready market for dairy farmers' produce that sometimes lacks buyers and incur losses.

Construction of the plant was expected to have started by the end of 2020 in Byumba Sector of Gicumbi District in Northern Province, and it would take a year for it to be completed, according to Antoine Juru Munyakazi, Executive Chairman of TRIOMF East Africa.

The factory will be owned and operated by a company called East African Dairies, a shareholding between TRIOMF East Africa and dairy farmers in Gicumbi District.

TRIOMF East Africa will own 80 per cent while farmers will own 20 per cent of the factory.

Powdered milk has a far longer shelf life than liquid milk and does not need to be refrigerated, facilities that are not readily available everywhere.

In January 2020, Munyakazi told The New Times that the company would invest its own money as well as bank loan, adding that the request for loan was promising.

On Tuesday, January 5, 2021, Munyakazi told The New Times, that the plans to construct the plant have not been cancelled but indicated that the problem has been its financing.

"The financing that we were seeking in Rwanda was not possible owing to the Covid-19 problem ... the factory requires a lot of money as it is a big project. Because of the Covid-19 impact, our banks are not interested in taking risk on big projects," he said. "So, the investors for the factory are now mainly trying to source financing from outside the country," he said, adding that funding negotiations are still ongoing with financiers.

He said that the will to set up the factory is still live, and that it is needed by the dairy farmers.

Pierre-Célestin Hakizimana, the president of IAKIB - a dairy farmers' cooperative in Gicumbi District, told The New Times that the cooperatives had already mobilised Rwf360 million from their savings and allocated to that activity.

IAKIB represents the 10 cooperatives that will have shares in the factory.

However, he said that the investor - TRIOMF - told the dairy farmers that it would secure financing for the entire project, including the investment required from the dairy farmers - equivalent to 20 per cent of the factory shares.

He explained that the farmers would reimburse the credit later through deductions from the profits on milk sales that they would be supplying to it.

"The investor told us that we should put the money we had raised into increasing milk production so as to ensure sustainability of milk supply that the factory will need," he said.

He indicated that they dairy farmers' cooperatives still keeps such money on a savings account in BPR Atlas Mara as they were discouraged from haltered progress on the factory establishment.

The cooperatives in Gicumbi District collect about 95,000 litres of milk per day, and were planning to increase production thanks to the availability of the factory, he estimated.

The factory, he said, would not only source milk from Gicumbi dairy farmers, but also those from the neighbouring districts in the Northern and Eastern Province of the country.

Currently, he said, IAKIB alone collects 38,000 litres of milk per day, but lacks ready market for 8,000 litres of milk a day.

Rwanda produces more than 2.2 million litres of milk a day, while only about 10 per cent of it gets processed into different dairy products, according to data from the Ministry of Agriculture and Animal Resources.

The country spent over $10.7 million (Rwf10 billion) on importing over 4 million kilogrammes of milk powder in 2019, show statistics from the Ministry of Trade and industry.

The figures imply an increase of 25 percent in milk powder import bill compared to over $8.5 million (about Rwf8 billion) it spent on more than 3.6 million kilogrammes in 2018.


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