FLYING HIGH: INYANGE’S CRUCIAL EXPANSION

One of Rwanda’s best known juice makers and mineral water bottlers, Inyange, is currently in the process of unveiling a new state of the art plant that will have the capacity to produce five times the current capacity for its juice and mineral water brands while giving Inyange the ability to add new products into its product line.

The new plant is nearing completion with the installation of machinery planned for completion in October. While the new plant is supposed to be commissioned in the final quarter of 2008, full production is expected in the first quarter of 2009. The new plant will have several production lines and will be able to mass produce new products that will be unveiled to coincide with its opening.

The mineral water and juice lines will have the ability to bottle the products at an impressive capacity of 13,000 bottles an hour. This will be the largest industrial capacity in Rwanda and will ultimately reduce the cost to the customer. The newly designed bottles will be recyclable along with being more stylish.

The Tetra Pak line (UHT- Ultra High Temperature) will produce juice in cartons that will compete with more established foreign brands such as Ceres, Splash and Kenylon. The wide product range in the juice category will include syrup, a ready to drink carton and a low-calorie product for the more health conscious. The capacity of this line is 5,000 packs an hour and about 80% of this output is geared towards the export market.

Since most of these new Tetra Pak products are intended for the export market the branding and product quality are high standard and comparable to any imported brand. There are also plans to export 200 liter drums of concentrated juice to other African and Western countries.

Mineral water from the mountains of Byumba will continue to be bottled at the plant but there are also plans to produce table-water.

The other part of the plant will be dedicated to dairy products and there is a new product range as well. A UHT line to produce long-life milk in Tetra Pak cartons will be installed.

In a country like Rwanda UHT milk is particularly popular because its ability to stay fresh without refrigeration. This UHT milk line will be able produce up to 5,000 packs an hour and will cater for the needs of the local and export market. Three types of milk will be produced to cater for varied tastes; a skimmed (no fat), semi-skimmed (low-fat) and whole milk.

Inyange will continue to produce pasteurized milk but in a new package which will be opaque to protect the milk from damaging ultraviolet rays. Yogurt will also be produced in 250ML and 120ML containers. Yogurt is also going to be available in various flavors such as strawberry, apricot, vanilla and pineapple. Ice-cream, in several flavors, will be produced in the plant as well and will no doubt be a popular addition to the products on sale. Cream and butter will also round off Inyange’s product range.

Inyange is looking forward to the challenge of running this high-tech plant and is doing all that is necessary to achieve this.

Inyange is negotiating with local suppliers to ensure the raw materials of milk and fruit can be provided and it is working with local cooperatives to ensure supply. Inyange are now seeking to expand the skills base of its employee’s because the new plant will require a high level of expertise; it fully intends to employ locals and train its staff highly.

The new plant will employ 120 people but will also employ hundreds more indirectly as suppliers, logistical support and providers of other services. The current Inyange site will remain in use as a depot and is undergoing renovation.

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Rwanda enters the Libyan portfolio

In her quest for continental coverage, a Libyan firm has taken over a number of companies all over the continent through takeovers, mergers and acquisitions. Following its recent takeover of Uganda Telecom, Mali’s Sahelcom, has successfully bought off Rwandatel.  

The deal, which clearly appears to be more of a pan-African conquest than mere business transaction, is symbolic of Libya’s commitment to one African economic and political block. Lap Green the bid winner is owned by the Libyan Africa Investments Portfolio for Africa, a consortium set up to reorganize the interests of the Libyan government on the continent. 

The company plans to operate a borderless network between Rwandatel and Uganda’s UTL. Such a move if achieved will symbolize yet another regional communication milestone not too different from MTN Rwandacell’s recent pact with Safaricom and MTN Uganda. 

The Rwandan government said in a statement that the new owner of Rwandatel will have to meet certain objectives outlined in the country’s Vision 2020 as a strategic investor with the capacity to improve the quality of services and meet the increasing expectations of the telecommunications market in Rwanda.”

Africa’s Complex passage to Connectivity

CONNECT AFRICA 2007, KIGALI

Annita Kabbatende

Long before the African ICT revolution began, one of the biggest problems the continent’s major cities were facing was the high rate of rural-urban migration that had left these scions of national development looking rundown as shanty towns kept mushrooming at an alarming rate.

Despite the detrimental effects this has had on the development of rural areas, it was and still is an understandable trend that truly reflects human nature. From the beginning of time, people have always moved in search of a better life.

At the two-day long Connect Africa Summit held in Kigali, October 29 2007, delegates aimed to mobilize the human, financial and technical resources to close Information and Communication Technology (ICT) gaps throughout Africa.

During the conference, the ensemble of leaders from public, private and financial sectors debated the key success factors vital to advance ICT investment and boost growth in Africa, including the expansion of broadband infrastructures, “last mile” access and rural connectivity solutions, establishing a business-friendly policy and regulatory environment, developing an ICT-skilled workforce and relevant applications and services and striking the right balance between private and public investment.

The aims of the summit definitely had all the actionable buzzwords. However it is not easy to appreciate the enormity of the task ahead of the continent’s leaders in the coming eight years to meet the 2015 deadline for achieving the World Summit on the Information Society (WSIS) goal of connecting all villages, towns and cities of the world.

A look at this year’s statistics on the access to ICTs for Africa shows that, despite the fact that Africa has the fastest growing mobile phone industry, this growth has taken place mainly in urban areas and Africa is still way behind in every other facet of ICT, mobile phones inclusive. The number of broadband subscribers can barely be expressed using a percentage and the total price for 100 minutes of mobile phone use is approximately 77% of the Gross National Income per capita in Africa compared to the world average of 30% and 6.3% in Europe.

With regard to Rwanda, the numbers are shocking. As of July 2007, the International Telecommunications Union reported that only 3.4% of the population is mobile phone users and 0.7% is connected to the Internet. In spite of this, we need to compare these statistics to the statistics showing the number people with running water in their houses or connected to the electricity grid. The numbers are pretty much the same. This poses the question: how are the people in the rural areas going to use broadband infrastructure if they cannot turn on their computers?

If digital and physical connectivity is to reduce poverty, then partnerships between networks must be closely examined so that the resources needed to provide infrastructure services in small and medium sized cities, as well as rural areas are better shared, and the unit cost of delivering these services considerably reduced. Connecting networks such as post, water, power, telecommunication and other utilities in peripheral regions is very likely to trigger unexpected economic gains. As the dot.com crash illustrated, getting the technology right is only half the answer for Rwanda. New business models and financing mechanisms will have to be developed to sell equipment and services to consumers with medium to low incomes.

History has shown that development is driven not so much by government policy but by the private sector, which is usually spurred on by necessity. The Rwandan government has already put the policy in place in the form of its Vision 2020, which, while many times seems to be a vision only for our ICT sector, is actually all encompassing. If there is to be any hope to achieve these goals, private sector needs to move to seize the opportunities that emerge from this vision. As His Excellency Paul Kagame so aptly said, “The barriers that governments put in the path of entrepreneurs need urgently to be removed. Individuals and companies create wealth, not governments. That is not to say that the state should become invisible. But governments should see their roles as enablers of business, and not gatekeepers that control and hamper it.”

The statistics paint a pretty dire situation. However, our private sector needs to take a “glass half full” approach to it. For Rwanda to meet the 2015 deadline there will have to be a massive rollout of infrastructure and this presents the opportunity of a lifetime for local investors.

A look at the pledges made during the summit implies that the funds are plentiful to make significant progress in achieving the goals of WSIS. The GSM association is investing US$50 billion to blanket Africa with telecoms and Internet access over the next 5 years. The World Bank Group expects to double its commitment to ICT in Africa to US$2 billion by 2012, from its current investment program of US$1 billion over the past five years. The funds will be channeled through its three financing arms: the World Bank, the International Finance Corporation, and the Multilateral Investment Guarantee Agency.

This financing is expected to promote private sector participation, while supporting public-private partnerships to address market gaps, with an emphasis on affordable high speed Internet.

In the last 10 years, the private sector has invested almost US$25 billion in Sub-Saharan Africa, representing about one third of all foreign direct investment in the region. In particular, mobile telephony is a remarkable success story in Africa. This is largely due to the opening up of the ICT markets throughout Africa. In addition, it is now predicted that four-fifths of new global market growth over the period 2007-2010 is expected to originate in emerging markets. Investors cannot afford to ignore developing countries and must look to develop business models tailored to meet the needs of emerging market consumers.

The time has come for Africa to catch up with the rest of the world, which may seem like an impossible task, as all the development efforts need to happen at once, as opposed to gradually, like the more developed nations of the world. The Connect Africa Summit attempted to act as a promoter and catalyst for ICT development in Africa by engaging government leaders, service providers and the international donor community to try and find the right balance between public and private investment.

There is no “one-size fits all” strategy to create digital opportunity and effectively use ICT as a tool for development. However, one durable solution to bring our rural areas into the ICT age is to encourage people to see themselves, and more importantly, the societies they come from, as masters of the modern world and not as victims.

How to open up and modernize rural areas is a long, hard and complex challenge. But surely one key is for technology to be seen by these societies and people as a helpful and necessary entity and for the private sector to realize the potential for financial gain in investing in these areas. Fortunately for us, that is one battle we have a chance of winning.

Deregulation: A modern day Trojan horse?

Deregulation: A modern day Trojan horse?

A. Nkindi

The great conceit of the 1990s was that previous experience counted for nothing: “The Internet changes everything.” All the old rules needed to be torn up. But history has a way of taking revenge on those who think the past is irrelevant.

When it first broke into public view, the Internet seemed like an economic as well as a technological miracle. Consumers came to expect that the information and services they found online would be free, while investors believed that the Net would generate billions of dollars in profits. A miracle is exactly what it would have taken to realize both those expectations.

Right after the Internet changed everything, the dot-com boom collapsed in the classic pattern of a stock-market bubble, and many of those who had explained to old-timers why companies with no earnings could be worth billions were shocked to discover that the old rules still applied.

Although the Internet mania helped to set it off, the telecom boom differs in several ways. First, compared with fizzy dot-coms, telecom companies develop tangible assets that are valuable in the information age: fiber-optic networks, routers and other telecom equipment, satellites, wireless systems, and upgraded telephone and cable TV networks capable of providing high-speed Internet connections.

Second, the telecom industry was not only well-established but had long been the very embodiment of stability and guaranteed returns.

Third, and this is a key distinction between the dot-com and telecom booms — governments all over the world, led by the United States, opened up their telecom markets to competition. Public policy was inviting new entrants to jump in. Competition meant that returns were no longer guaranteed, but the simultaneous rise of the Internet and advent of deregulation created an unprecedented opportunity to make money — and, as many discovered, to lose it.

Creating an industry that induces a gold rush of sorts creates an environments were massively parallel systems are built up. Only for companies to realize that there simply isn’t enough business to go around, and begin a race “to gain market share” in a burst of “hypercompetition” and “vicious price wars” that drive down revenues.

Rwanda is hardly at a point of market saturation in the ICT industry but the “Vision 2020” policy aims to make Rwanda an ICT centre of excellence for the region, the continent and in the long run internationally. In this regard, when a point of market saturation is reached, policy makers will be able to pat themselves on the back for having reached the goals they set out to achieve.

To date, Rwanda has two mobile phone operators which is a clear sign that the regulatory body as well as the investment authority conduct a careful sieving process that makes sure that the companies that emerge with the coveted licenses are reputable, of adequate financial standing and their presence in Rwanda will beneficial to the country.

Needless to say that this state of affairs will change in the near future, Rwanda is already accepted as an emerging economy and that status is encouraging local and international investors to try their hand at expanding the industry which at this point is without a doubt a great investment.Competitiveness in the global information economy can only be driven by creating a strong reputation in the electronics, semiconductor, software design and telecommunications sectors. On a worldwide scale, the electronics industry has been growing rapidly in response to the information technology revolution. Even as the PC market has stalled, the market for new electronic end products such as PDAs, mobile phones, DVD players, video games and software applications that make life easier has exploded. Designers and marketers of these products are based in the United States, Europe and Asia, but Rwanda is emerging on the playing field, a much younger player, but a skilled one nonetheless. In light of Rwanda’s “Vision 2020”, the country has set it self up in a manner that companies can find a competitive advantage for manufacturing of electronics and software components. Key initiatives in government policy with regards to local ICT industries hopes to increase foreign direct investment allowances that will spur strong industry competition in both telecommunications products and services, opening the door for growth in the Internet economy.One of the key questions that need to be answered in an open market environment in the telecoms industry is whether players will be allowed to provide their own infrastructure as if the answer is yes, then Rwanda will see massive growth in the industry, but if it is determined to be no, we will likely see a rise in grey market services and the current infrastructure providers – will in effect still control the price of telecoms services.

 

Fortunately in Rwanda, the key players, MTN Rwandacell and Terracom Communications are indeed providing their own infrastructure, setting up their own networks with their immediate and long term goals in mind which leaves prices at the discretion of the providers. 

The early delays and continuing disappointments especially with regards to internet services should not obscure the big picture: Competition in telecoms is a powerful force, with both positive and destabilizing effects. As in the early stages of the long forgotten telegraph and telephone development, competition accelerated the deployment of new networks and the introduction of new services.

The great benefit of competition is a rapid rollout of new technology. Companies in the long-haul fiber-optic, local-telephone, wireless and other sectors of the industry are undertaking massive capital expenditures to develop and upgrade networks. As a result, telephone companies will offer high-speed access to their subscribers in most areas of the country. With huge investments in spectrum technology, wireless service will dramatically improved and charges will fall.

The flip side of this rush is that network expansion can also lead to huge overcapacity. Companies build networks and use untold amounts of money. It would be a shame to see fiber-optic networks costing billions of dollars remain unused because there is no prospective demand for them, and the companies that built them left with their books in the red.

Telecom regulation originally emerged from the realistic assessment that full-scale network competition is inefficient and unsustainable. Outside the industry, there are always demands for public protection against monopoly power. Inside the industry there should be recognition that a stable regulatory environment offers advantages for long-term recovery of investment as we will not see redundancy in the networks.

As ICT investors come into Rwanda, watch out for intermodal competition — alternative technologies offering the same consumer service. A century ago, only the telegraph offered an alternative to the telephone for instantaneous messages. Today, wire, wireless, cable, direct-broadcasting, satellite and conventional broadcasting compete to some extent with one another internationally. It is important to remember that despite the romantic appeal of competition and the imperfections of regulation, that at the end of the day, old market and business principles still hold a lot of water so that as we become an ICT centre of excellence we do not fall into traps that have already snared many larger economies that at one point were emerging economies as well.

One of the “Vision 2020” key aims is to stimulate competition and create opportunities for innovative companies. Companies that invest generally do so in response to competitive threats and to take advantage of competitive opportunities. The framework facilitates market entry and encourages investment by ensuring a level playing field for new companies, while providing users with basic services at affordable prices.

New entrants and incumbents should respond to competition by investing to extend and upgrade fixed and wireless network infrastructure in order to cut costs and provide innovative services.

In conclusion, competition drives investment. The Rwandese regulatory framework has the flexibility to handle new and volatile markets, and has the tools for regulators to take account of the need for risky investments to generate an adequate return on capital when mandating pro-competitive access obligations.