Agro-processing sector could save Rwanda $118m annually

With the government keen on reducing the trade deficit, the National Industrial Research Agency (NIRDA) says that supporting local food production industry and addressing pressing challenges in the sector can save the country up to $118 million annually by 2020.

Samson Bimenyimana, a researcher in agro-processing and biotechnological research at NIRDA, told Business Times that by addressing the sector’s key challenges, it can meet the local demand and result in exports, thus helping reduce the country’s trade deficit.

Bemenyimana was speaking at a recent training for Small and Medium Enterprises in the food production industry.

Among the main challenges that continue to hold back the sector’s productivity include inadequate raw materials which are often a result of post-harvest losses.

“Some of the key challenges include lack of enough quantity of raw materials due to post-harvest food losses which is currently estimated to be between 30 per cent and 50 per cent of total food production depending on the type of products and the storage conditions,” he said.

The sector, he said, also continues to experience huge food losses largely due to poor handling and processing methods.

The researcher said that findings indicate that lack of access to technology remains a key challenge to the sector, which is characterised by low levels of automation, outdated practices leading to poor productivity and output quality.

“Currently, about 70 per cent of banana processing industries still use manual practices, 19 per cent of them are semi-automated while only 1 per cent of them are fully automatic. In cassava processing, 100 per cent of Small and Medium Enterprises were found to operate manually while 48 per cent of local maize processing industries operate manually,” he said.

Other longstanding challenges revealed by the agency include low capacity in research, low innovation for product development, lack of product diversification and weak linkages with research development institutions and the rest of the private sector.

Bemenyimana said other challenges include lack of adequate knowledge and skills in regards to processing as well as lack of proper information systems on the agro-processing industry.

The expert said players in the local food industry ought to embrace food infections control to allow for food safety certification enabling firms to compete on international markets.

Complementing export strategy

The sector’s Domestic Market Recapturing Strategy 2015-2020 has a target to facilitate national savings of about $450m in foreign exchange as part of the country’s National Industrial Policy and National Export Strategy.

At the moment, the agro-processing sector accounts for over 12 per cent of Rwanda’s net imports, the study showed.

The continued reliance on imports in the sector, the study showed, is partly a result of insufficient raw materials to be processed for the domestic market. For instance, maize mills in Rwanda were found to be underutilised working at only 65 per cent.

Bimenyimana said the agro-processing sector is the largest manufacturing sub-sector with a potential of saving the country foreign exchange of up to $118m annually by 2020.

“Agro-processing sector output is currently worth Rwf197 billion in food and beverages production alone which is about 70 per cent of total manufacturing. It is the emerging sector in our economy considering its role in employment, income generation and food security,” he said.

According to Dr George Nyombayire, the Head of Research and Development Coordination Department at NIRDA, meeting safety standards in food production will ensure products reach the desired quality to be exported to foreign markets in line with the national export strategy II.

“We have to raise the competitiveness of local industries in order to increase their export potential,” he said.

Currently, he said, only 40 per cent of industrial food products are certified for food safety standards on the local market.

Processors’ viewpoint

Emile Nsanzabaganwa, the chief executive of Kinazi cassava processing plant, said that lack of food safety certificates is one of the key challenges that has hindered local producers from making the most of the local market.

“When we export our products, clients ask us if we have safety certificates. Lack of such requirements will hamper our penetration into common market areas in Africa and the rest of the global market. We need guidance on certification, the process should be fast-tracked. If some SMEs lack financial capacity, the Government can intervene and guide them on what to do,” he said.

Alphose Kubwimana, the chief technician at a Gisagara-based agro-business firm, which produces banana wine, said they are in the process of ensuring they meet all required safety standards in food production.

By his estimation, they are past the 80 per cent mark.

“We have realised that, as SMEs, it requires us to buy stainless machines as recommended, using glass bottles, have skilled staff, among others, which cannot be afforded immediately,” he said.

His firm, he said, is currently processing about 20,000 tonnes of bananas to produce 7000 litres of wine. However, they fear that failure to meet required standards could see them lose the market they are currently enjoying.

Prof. Bikoro Munyanganizi, a researcher in agro-processing technologies, said that certified industries in the sector could serve purposes of demonstration as well as incubation for emerging firms and SMEs in the food production industry.

Anicet Muriro, from the Rwanda Standard Board, said the support to meet standards ought to be accompanied by frequent surveillance to ensure firms do not fall back.

“We have to ensure agro-processing industries are supported to embrace required technologies and ensure continuous assessment after the certification. Besides surveillance of local producers, we also do it on the market so that products that do not meet standards are not allowed into the market,” he said.

The Private Sector Federation last week signed an agreement with Rwandan Standards Board to cooperate in standardisation of local products and services so they can favourably compete on the international market.

The deal is also aimed at establishing a long-term partnership between the two organisations and to put in place a clear roadmap on how to facilitate local investors to upgrade on matters related to safety and standards.

The partnership will further help to equip the business community with knowledge and common understanding of standardisation processes, metrology, certifications and conformity assessment services in line with existing policies and regulations.

Source: The New Times

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