Minister of Trade and Industry, Dr. Jean Chrysostome Ngabitsinze
The Ministry of Trade and Industry (Minicom) has presented a new road map that will enable the country to improve the current status of industrial parks to attract more local and foreign investment.
The road map follows a parliamentary field visit report presented February 20, 2024 which showed challenges faced by small and micro industries and development of industrial parks and economic zones across the country.
For example, on most of the planned industrial parks and economic zones, the report showed that they have no basic infrastructure (water, roads and electricity), no feasibility studies and master plans but also that the existing some zones were put in place without conducting an environmental impact assessment (EIA) report.
The report showed that six industrial parks (in Huye, Rusizi, Rwamagana, Musanze, Nyabihu, and Muhanga) plus one economic zone- the Kigali Special economic zone (KSEZ) were constructed without an EIA report.
For example, the report showed that most industries, hotels and restaurants around these parks (KSEZ) are not able to separate waste water and end up dumping in the newly established Nyandungu Urban Wetland Eco-Tourism park.
The report also showed that there were delays in acquiring licenses from Rwanda Standards Board (RSB) and Rwanda Food and Drugs Authority (FDA) and other permits were expensive and short lived and required renewal.
For example, a premises license costing Rwf200.000 is valid for one year, the product registration costs Rwf500.000 and Good manufacturing practices permits expire in five years.
This according to industry owners is coupled with challenges getting raw materials locally for production and packing materials, thus creating a high cost of production even among industries in which government has shares (Rwamagana banana wine and Southern Province Investment Corporation (SPIC)-Muhanga– which produces local brews.
The report also showed that some districts had already started constructing industrial parks without needed infrastructure while citizens living around the parks (in Muhanga and Bugesera) have also not been expropriated (compensated), and some investors are delaying to set up facilities in the designated parks.
Members of Parliament, Chamber of Deputies
Members of Parliament asked how this was possible considering the requirement that is essential to environmental protection measures, the law that requires compensation before expropriation and how industries are reflected in the upcoming second National Strategy for Transformation (NST2).
There are currently two special economic zones in Kigali City and Bugesera district (330ha) and seven industrial parks in Huye, Rusizi, Rwamagana, Musanze, Nyabihu, and Muhanga, Rubavu, Nyagatare districts.
Status To Date:
Kigali Special Economic Zone in its second phase, will soon have major plans for a 3rd phase
KSEZ is the only complete one with 155 industries and an investment of over $2billion for the two phases which have all needed infrastructure but with plans to add a third phase.
Bugesera Special Economic zone which has 330ha is now privatized through a joint venture to ARISE Integrated Industrial Platforms ((ARISE IIP) –a Pan-African developer and operator of world-class industrial parks. Bugesera has 11 industries with investments worth $95million and two more industries under construction.
Rwamagana industrial park has 80ha with $59.5million investments in 11 industries and 15 more to be constructed. Expropriation and feasibility study already done and road constructed pending other infrastructure needs to be established but land not fully utilized.
Huye has 50ha with investment worth $7m with three functioning plants and three more under construction. Residents have been expropriated and feasibility studies done.
Musanze has 167ha and currently home to one cement investor- Prime Cement ($47m investment) and more coming in soon. Citizens were expropriated and the design is available but there is no infrastructure.
Muhanga with 63ha has four factories and fifth coming but so far has investment of over $100m. Not all citizens (20 families remaining to be expropriated though Rwf2billion was spent on expropriating others last year. There is no infrastructure as required even though a design is available.
Rubavu– this is the newest of all parks approved in June 2023 by the district council with a new plan with 50ha after revising the previous plan which was close to the border and environmentally unfeasible. No infrastructure in place yet.
Nyagatare industrial park is relatively new and this one is expected to take over agro processing activities which were formerly in Nyabihu park. This will come with expanding the surface area in the new upcoming feasibility study.
The Nyabihu has been put on temporary hold so that the Musanze park (which is focused on manufacturing) grows without duplicating the same activities in Nyabihu.
The project is being re-designed with the help of the Africa Development Bank to have it as an integrated agro industrial park.
The Minister of Trade and Industry, Dr. Jean Chrysostome Ngabitsinze explained that the previous policy on industrial parks was revised in 2017 when some of the industries had been put in place without EIA reports.
Though industries are growing, the minister acknowledged the challenge with the plastic imports of which he said that they are thinking of a special levy charge and collection to reduce environmental impact.
The Road Map:
Ngabitsinze said that with time the new policy (in NST2) will be inclusive of all requirements for industrial parks but more funding will be needed.
In the ending 7-year NST1, the government had budgeted Rwf250billion for investment and some funds were solicited by the government and private sector.
“For example, the ARISE Integrated Industrial Platforms was a good deal for us to have an investor manage all 330ha. With this good deal, we plan to have all industrial zones go to private investors,” Ngabitsinze said.
The minister said the government will be soliciting funds to address the issues of lacking basic infrastructure and expropriation -which have to be done by government and from the national budget.
He said that currently they are negotiating a loan from Arab and Exim bank which will mature by next year, however there is a plan to work step by step in addressing particular challenges in each area.
“In the next five years we plan to have all industrial parks complete to have all them ready for private sector investment,” Ngabitsinze said.
Musanze will be the first to be considered with basic infrastructure then followed by Rubavu– which urgently needs a feasibility study. However, Rwamagana- which only needs tarmac roads, a waste treatment plant and its land being distributed to investors will also be prioritized.
Depending on the budget available, Rusizi will follow with roads constructed, while Huye and Muhanga districts (which have issues of roads and expropriation respectively) will follow.
Ngabitsinze said that the most urgent is Rwf300million needed to expropriate 20 families in Muhanga and then move to Kigali City where over Rwf250billion is needed to expropriate citizens so as to have third phase at KSEZ before embarking on other needs.
“Then rest will follow but we will start with key issues of infrastructure and expropriation and feasibility studies needed,” said Ngabitsinze.
The 19th National Dialogue Council (Umushyikirano) 2024 tasked the ministry to reduce the process of and number of licenses and permits acquisition for small and medium industries.
Ngabitsinze said that there is a problem with licensing institutions but an expert team is working on a sustainable way to have this resolved soon and possibility of some unnecessary permits scrapped.
To support the industry with costs of production, the minister also revealed that a new tariff on electricity will be announced soon.
