Dairy farmers in Gicumbi are in a dilemma after the construction of the much-anticipated milk powder factory was halted, as investors from South Africa and Rwanda pulled out of the business, The New Times has learnt.
It was expected the plant would be the first of its kind in Rwanda and estimated to cost around Rwf37 billion in investment, according to information from TRIOMF East Africa, a joint venture firm that was owned by South African and Rwandan investors.
Data from the Ministry of Trade and Industry indicated that the installed capacity of that factory would allow it to process 252,000 litres of liquid milk into powder per day. It would be constructed in Byumba Sector of Gicumbi District, a major milk-producing district in the Northern Province.
Powdered milk or milk powder has a far longer shelf life than liquid milk and does not need to be refrigerated in controlled temperature facilities that are not readily available everywhere in the country.
Construction of the plant was expected to have started by the end of 2020, and be completed by the end of 2021, which was not the case.
Speaking to The New Times, Antoine Juru Munyakazi, Executive Chairman of TRIOMF East Africa -- a now 'defunct' firm -- said the firm was made up of 20 investors, of whom 10 were South Africans and the other 10 Rwandans.
He indicated that the majority shareholders in the company were South African investors who had 90 per cent of the shares, while Rwandan investors held a 10 per cent stake.
Munyakazi said the investors were confronted with different challenges including the inability to secure the required funding for the establishment of the factory.
"There was a problem of lack of access to finance, and of course Covid-19," he said, indicating that the financing issue was the major constraint.
Asked whether the construction of the milk powder plant will not happen, he said 'unless other entities set it up, but TRIOMF East Africa East Africa will not construct it.'
Regarding the ownership aspect, the factory would 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 would have 80 per cent, while farmers would own 20 per cent of the shares of the factory.
Agnes Mukangiruwonsanga, the president of IAKIB, a cooperative for modern dairy farmers in Gicumbi District, told The New Times that dairy farmers in the district had collected about Rwf380 million that they would invest in the powdered milk factory construction.
She added that the money was deposited in a savings account opened in Banque Populaire du Rwanda (BPR), estimating that it has increased to about Rwf500 million currently, as a result of accrued interest rates.
"We were saving Rwf10 per litre of milk supplied by a farmer," she said, referring to the sourcing of the funds.
However, after realising that the plan for the factory construction was coming to a halt, deductions on cattle keepers' milk sales were stopped.
"Dairy farmers were demotivated by the fact that the factory they needed was not constructed," she said, adding that the factory would offer a ready market for their milk production, and encourage them to make investments meant for increased production and income.
The planned factory is also the first of its kind in Rwanda in that it will be producing powdered milk, something that is unprecedented in the country.
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Meanwhile, Munyakazi said that a milk powder factory that is being constructed by Inyange Industries in Nyagatare District, Eastern Province of Rwanda - with a capacity to process 500,000 litres of milk per day -, will respond to the powdered milk needs in the country.
Mukangiruwonsanga also said as Gicumbi dairy farmers are still waiting for a milk powder factory there, they will be taking their milk to the factory in Nyagatare once it is completed, though that implies a logistic challenge, including increased transport costs.
Data from the Ministry of Agriculture and Animal Resources' annual report for 2021-2022 shows that Rwanda's annual milk production was 999,976 tonnes - which represents an average of over 2.7 million litres per day.
Yet, the report indicated, the country's milk processing capacity was 300,000 litres a day (for dairy products like cheese and yoghurt, among others), representing 11 per cent of the country's production.
