Achieving Rwanda’s 2020 vision through Agro-processing

Achieving Rwanda’s 2020 vision through Agro-processing

Rwanda’s Agro-Processing products

The role of agro-industry as a sector of the economy has multiple facets and changes in the course of development.

In the early stages of growth, industrial processing of agricultural products tends to be limited to a few export crops, while the majority of agricultural products are consumed after minimal forms of processing that are performed entirely within the agricultural sector.

The government is embarking on aggressive strategy to strengthen the Agro-processing sector in Rwanda.

With its various intertwined services, the government facilitates the strengthening of agro-industrial capabilities and linkages that improve opportunities for added value and serve as effective means of achieving economic transformation and sustainable livelihoods.

The scope of this assistance goes beyond urban agro-industries to reach poor and marginalized rural populations as well as communities in post-war situations with services such as skill development, emergency supplies of agro-equipment, and the rehabilitation of food industries.

In line with the Millennium Development Goals and through Ministry of Trade and Industry (MINICOM)’s thematic priorities—primarily “Poverty reduction through productive activities”, the Ministry contributes to sustained and equitable economic growth that leads to reductions in the incidence of poverty in Rwanda.

This is achieved through technical assistance, including direct interventions, and policy advice to enhance the flexibility, productivity and competitiveness of agro-based industries.

The Ministry provides technical assistance in the leather, textiles, and wood and non-wood forest products sectors and helps upgrade agro-industrial equipment.

It also provides advice on techno-economic development options for strengthening the agro-industrial sector and fostering the equitable integration of agro-enterprises into market-oriented systems.

Special emphasis is given to technical feasibility studies, assessments of potential economic and environmental impact, and organizational linkages.

Furthermore, the MINICOM supports capability building at institutional and industry levels as a critical means of enhancing industrial productivity and marketing performance.

Particular attention is paid to strengthening technical support institutions and professional associations as well as to the creation of design and technology centers and demonstration units for basic and advanced technologies.

Support to agro-industries to improve their productivity and efficiency, increase their integration into regional and global value chains and promote diversity in rural livelihoods.

This entails skill upgrading, working methodologies and guidelines, process optimization, the diffusion of appropriate agro-engineering systems, product innovation and diversification, compliance with quality and environmental standards, and participation in trade fairs and trade missions.

Textiles: weaving the fabric of competitive products

The Ministry continues to support both conventional and informal producers of textiles and garments with advice on adequate technology, product diversification and the identification of market opportunities.

Special attention is given to value addition in processing natural fibers such as silk, coir, cotton and jute. Product development in this and other areas is facilitated through the establishment of design centers.

The paradigm change from the simple assembling of garments to “full package” services such as design, fabric sourcing, trims and logistics requires additional skills and knowledge and therefore specialized training.

Moreover, conventional trade barriers tend to be replaced by demands that producers adhere to quality and environmental norms, such as ISO9000 and eco-labeling, which can be easily met by manufacturers in Rwanda.

 Leather industries: opening roads to regional markets

Skill development and technology upgrading across the entire range of operations in the leather value chain have long been the centerpiece of MINICOM’s support.

The benefits of enterprises receiving pilot assistance include productivity gains and a significant increase in the quality of their products. By establishing and supporting trade associations and training centers, the Ministry ensures the dissemination of such improvements in manufacturing performance.

Practical assistance in marketing has allowed enterprises to capitalize on improved product quality and design capabilities and consequently increase their export earnings.

In the next coming years, the Ministry will encourage the mechanism of subcontracting as the fastest and most effective access route to the regional market.

Enterprises assisted by the government will upgrade in-plant as well as end-of-pipe pollution control to meet discharge norms and avoid harsh penalties. Emphasis will also be given to waste utilization and safe disposal, and to occupational health and safety.

The multiplicative power of the agro-processing industry throughout the economy through the linkage effects appears to be an important factor of growth both for both developing and developed countries.

 An additional reason why agro-industries are especially effective in activating demand from the upstream and downstream sectors lies in the position of food in the consumption chain.

Thus, even at a relatively low level of sophistication with limited backward and forward linkages, agro-industries may still be particularly effective in channeling increased global demand into increased output.

This is so because, at the earlier development stages, a high share of private expenditure is directed towards cereals and other staples and, later on, as development progresses, towards fruits and vegetables and other food products whose income elasticity is relatively higher.

At later stages of development, it is the growing integration of the producing sectors that mainly ensures the capacity of food production to activate the rest of the economy, although the contribution of consumption to the industry multiplier remains sustained through diversification and growth of products with higher income elasticity.

An important feature of agro-processing industries is that they are a major source of employment and income, thus providing access to food and other necessities to large groups of population. They are, therefore, essential elements in the attainment of food security goals.

A factor underscoring the importance of agro-processing activities as sources of employment and earnings relates to the differences in productivity between, on the one hand, raw material production – where gains have been in many cases spectacular – and, on the other hand, agro-industry.

Although intra-sectoral comparisons may be misleading unlike raw materials, volume gains in agro-industrial output may be relatively small per unit of input, but undergo significant quality change, faster progress in labor productivity at the farm level may suggest less ability to create, or retain, employment, than agro-processing.

Further, the share of costs arising from primary products in total processing is in many cases so low as to be of minor significance to the food company.

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