THE GLOBAL RECESSION: Which one first the good news or the bad news?

The word ‘global recession’ has become the economic forecast of 2008. Certainly these words are true for the United States of America and the Euro zone as well as countries that have unwisely pegged their futures with these two largest global markets. Simply put a decline in a country’s gross domestic product [GDP} or negative real economic growth over a given period of time is a recession.

The current recession in the US and the EU, which has somehow become global, is caused by increased costs of oil, food, gold, inflation and a credit crunch caused by the implosion of a rather dubious form of mortgages called sub-prime lending.

The ‘developed’ world that happens to be our largest market is in recession but what does that mean for a country like Rwanda? The bad news first. Tourism might record a decline in visitors as their clients no longer have enough disposable income to take trips abroad. Similarly, demand for tea and coffee will drop and this may in turn drive prices for these agricultural products down. In this respect, tax revenues for 2008 will not be as high as previously hoped for.

However, if the taxman will be less than thrilled in 2008, consumers will be happier because consumer goods in the west will become cheaper to cater for reduced disposable incomes. Thus every consumable imported will be cheaper. That is, until the high petroleum costs kick in.

Another benefit of the recession is the resulting effect it has had on the US dollar which has been losing its strength due to domestic inflation. This means that the Rwandan Franc has been more or less stable for the last two years. This helps put a brake on inflation as the value remains constant. This means that the banks in Rwanda do not have to increase their interest rates in turn and produce a credit crunch of their own. It also translates into increased earnings for people with funds in treasury bills, savings accounts and fixed-deposit accounts.

The global recession is also an opportunity for the African continent to increase intra-continental trade. African countries benefiting from the high prices in oil and gold can use their increased revenues to develop their own markets and maybe even invest in the rest of the continent. It is also an impetus for Rwanda to make use of its methane gas in order to reduce energy costs and if it’s as vast as it is said to be, exportation of gas in its original form or as electricity would be a boost to the economy and reduce our demand on petroleum.

Taken as a whole, the recession of 2008 is an opportunity for Rwanda and the continent to, at least, beginning the journey to coming into their own as a viable global economic unit. It may require some adjustments, not all of them pleasant, which will ultimately pay off.

by Oscar Kabatende

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A WEAK DOLLAR- THEIR MONEY, OUR PROBLEM

A former US Treasury Secretary coined a phrase that stuck when asked what his government would do about the weak dollar; “it’s our currency but it’s YOUR problem”!

That pretty much sums up the situation today. The US dollar has hit a recent low against the Euro and the Pound Sterling but the US Federal Reserve Bank is none too concerned as it concentrates on warding off the impending recession and credit crisis. This is a complex situation that is as much beneficial as it is dangerous for the American economy.

A weak dollar makes American exports more affordable but it increases the price of oil and hence ultimately all goods. The dollar is not just the currency of America; it is the currency of the world much like the ancient Roman Sistirci or the Pound Sterling of years ago.

The world economy moves in sync with the US economy; when it’s in good condition so are we. When the Americans sneeze, we get a cold; we are all interlinked in the globalized economy where no man is alone. The dollar has been on a downward trajectory for more than a decade.

As a result of the rise of China, American Treasurers have sought to lower the value of the dollar in order to compete with Chinese exports, which are made at a fraction of the cost of their American competitors.

The US in the nineties found its manufacturing sector losing out to its Chinese counterpart while its economy became weakened by home industries relocating to cheaper locations like Vietnam and Mexico. Though the American exports could compete in terms of quality when it came down to just cost they were outdone.

When the former Chairman of the Federal Reserve Bank at the time, Alan Greenspan, one of the greatest economists of our time, moved, markets jumped. He watched, year after year, as the dollar slid against all major currencies leading to people assuming this was actual policy. For, it was assumed, the maestro would have acted if he thought that it bad for the economy.

Now retired, Alan Greenspan has since predicted that the dollar will lose even more value. US exports begun to rise in turn with the dollar falling; now American exports were out competing their European counterparts with British exports suffering the most due to the strong pound.

The weaker dollar saved many manufacturing sector jobs which were being shed as volumes rose while profits remained the same. This led to a large section of manufacturing firms going out of business; this period coincided with the consolidation of the sector as larger firms bought up smaller ones. Once the exports were tied to the lower dollar there was little chance of the dollar rising again.

In most Third World countries the dollar is the unofficial currency, accepted without exception. A number of countries (13) peg their currency to the dollar. Most international commodities are bought and sold in dollars be it oil, steel, wheat, you name it.

Oddly, the majority of dollar bills are in circulation outside the borders of the United States. China is estimated to have more than a $1.43 trillion in State coffers and it is using this war chest to buy influence in the Western economy like its recent purchase of 15% of banking giant Goldman Sachs. The America Treasury isn’t happy about this but is powerless to act as it can not force the Chinese to return their hard-earned dollars.

Money is a curious thing; just a piece of paper that we all agree is worth whatever we say it is worth. Right now the dollar is low but it still has the safest value of any currency. It is all about time; eventually the dollar will rise and some lucky person will have more money than they had before, just like that.

The real problem is not the dollar but the potential recession in the US and the world in general. If there is a global downturn then it will not matter how low the dollar is. The main factor in all this is rarely spoken about; the dollar though by far the most dominant global currency, is no longer the main reserve currency. Central banks now spread the risk by investing in a basket of currencies as opposed to the dollar exclusively. The market has responded to the weak dollar by diversifying into commodities; oil, steel, gold, wheat and even water are at record prices for peace time.

The dollar has wildly fluctuated against various currencies; against the pound sterling it’s almost lost twice its value. Against the Euro, it started on parity when the Euro was enacted in 1999, to $1.48 to the Euro. The most serious deficit is with the Chinese Yuan despite China’s refusal to revalue their currency. The Japanese Yen has also been re-valued and is really high against the dollar adding further pressure.

A credit crunch is looming and a weak dollar might help the situation by softening the impact as billions of dollars are written off in bad debt. It is better if that bad debt is in weak, not strong, dollars. The Federal Reserve under Ben Bernanke has been heavily focused on cutting interest rates to make money available to banks; the weak dollar has been a secondary concern.

Rwandans have been seeing the effects of this weak dollar as the prices of basic foodstuffs and imported goods have been creeping up, the rise of oil prices is another pressure. When one goes to the market you now get slightly fewer tomatoes than you got last month; the tomatoes require petrol to drive them from farm to market and petrol is pegged to the dollar.

Here is a table showing the average price rises of basic goods

Product

Previous price

Current price

% increase

Salt

Frw100

Frw140

40%

Soap

Frw50

Frw100

100%

Potatoes

Frw100

Frw120

20%

Tomatoes

Frw400

Frw500

25%

Beans

Frw300

Frw400

30%

Peas

Frw600

Frw1,000

66%

Beef/kg

Frw1,000

Frw1200

20%

USA oil

Frw2,900

Frw4,000

38%

Basmati rice

Frw5,000

Frw6,000

20%

Charcoal

Frw5,000

Frw5,000

0%

(Source: New Times)

What this table shows is that traders are speculating and increasing prices at a higher rate than the rise of the price of Oil or the fluctuation of the dollar.

When one tries to rent a house is an affluent area of Kigali, the price is up because it is measured in dollars. Anyone involved in import/export is affected, retailers are affected and ultimately customers have to pay higher prices. From New York to Nyabugogo, the wheels of the global economy grind swiftly and affect each other; we are connected and intertwined. The weak dollar is a momentary blip in of a problem; Rwanda will go regardless, as we are caught in a full economic boom. Rwandans will also diversify the hard currencies they use in importing/exporting as the Euro has gained local value. The weaker dollar is better for Rwanda as investors can get more value for money in Rwanda. As inevitably as the sun will rise, so will the dollar, as it will be the world’s premier monetary unit for the foreseeable future.

Barclays eyes BK

The government of Rwanda is in the process of selling at least 70% of its shares in Banque de Kigali to Barclays Bank.

“We are now engaged with Barclays bank and we hope to conclude this exercise in June,” Rwanda’s Finance Minister, Mr. James Musoni said recently. According to the minister, negotiations are well into the due diligence stage.

The deal comes over two years after the government increased its shareholding in Banque de Kigali from 36.5% to almost 99.8% after repurchasing 50% shares owned by Belgolaise, a Belgian bank that pulled out in 2005.

Its gross income increased by 20.8% from Rwf9.9bn ($18.3million) in 2006 to Rwf12billion ($22.1million) in 2007. Banque de Kigali closed 2007 with an increase of 44% in net profit from Rwf2.9bn ($5.4million) in 2006 to Rwf4.2bn ($7.8million). Deposits increased by 47.6% from Rwf69billion ($126.8mn) in 2006 to Rwf101.8bn ($187.1mn). Total loans in the year in question increased by 28.6% from Rwf37.8bn ($69.5mn) in 2006 to Rwf48.6billion ($89.4mn).

The Barclays team was in Kigali in the beginning of the year to assess the banks position.

If the deal is successfully brokered Barclays PLC, the third largest bank in the United Kingdom PLC and among the ten largest banks in the world by market capitalization ($94.79 billion), would be the fifth foreign bank to enter the Rwandan banking sector. Other foreign banks currently active are Actis, Access, Ecobank and Fina bank.

Micro Solutions for Macro Problems

There are few people who can be as self-satisfied as Muhammad Yunus. When he goes to bed at night he basks in the glow of his overall goodness, he must look at his family, Nobel peace prize and his billions of dollars and think life is good. His story is the greatest vindication of capitalism which so often is derided for exploiting the poor; he has proved that you can help the poor and make billions. His Grameen Bank started in 1976 in rural Bangladesh with only $27 in capital but now has distributed $6.5 billion in loans.

His business is the template for aspiring micro-credit businesses worldwide including those in Rwanda. In the years following independence, African countries borrowing billions of dollars for huge white elephant projects that were expected to kick-start our economies in the Keynesian model but alas this did not happen. It is only now that we see that the money would have been better spent if it was used for micro-credit. People are better at assessing their priorities or problems and more efficient than government bureaucracies, which due to their size and nature are slower to react to events on the ground.

The top-down model (trickle-down) has been proved not to work so bottom-up models are required, there will still be need for top-down leadership from the government but bottom-up solutions are more democratic, efficient and always have the support of the end-users. Micro-credit exemplifies this ethos, helping people to help themselves and letting them pull themselves out of poverty. Micro-credit is the solution to some of our problems but it has to follow strict rules in order to succeed.

Firstly the company lending has to think local and be in sync with its clients who are often poor. The firm has to abandon all the precepts of large-scale banking such as looking for wealthy clients and charging higher rates. The profit motive must be there otherwise the whole system will crash but the costs must be low and the lender must be sensitized to the problems facing the debtor. Likewise the lender will benefit by knowing the opportunities in the market as well as the pitfalls. Local issues occur independently of global issues; for example a drought in a particular district can lead to economic collapse while the next district is unaffected. Multinationals have the motto “Think global, act local” but in micro-credit it is “Think local, act local.

Secondly the sums lent must be small, in order for the client to be able to repay, for example people sometimes use a goat as collateral because it is the most valuable thing they own. This helps the micro-business to grow organically due to good management and not because of high start-up capital. This also helps limit the risk involved and lower sums mean that you can lend to more people. Micro-credit must help the society in general not single individuals as businesses need to develop alongside their markets. The small sums highlight the fact that micro-credit is needed just to kick-start businesses, sometimes people need as little as $10 to start a business but even that is beyond the means of many people in poverty. This also means that a successful business can be out of debt in a matter of weeks if all goes well unlike firms who borrow larger amounts and can be in debt for years. This also helps turnover money quicker because the quicker they pay the quicker they can lend somebody else.

Thirdly support must be given to the client, it is not enough to just give them money, you have to give them skills, moral support, more time to pay if necessary and help develop symbiotic relationships. It is not the lenders interest for the business to fold and everything must be done to help them. Nobody ever has the whole answer; local knowledge must be added to modern business practices to produce a dynamic system to deal with problems. Education must be very important to the lender and vocational skills must be imparted to borrowers. If the population is better educated then it more likely to succeed, issues like resource management are important because these are often rural areas in delicate eco-systems. The projects must also be sustainable, not only in the environmental sense but economically and socially. Local customs and traditions must also be taken into account.

Lastly, women are the key to the success; in their role as primary care givers they are more likely to spend money wisely. Yunus saw women as the key his success, the same applies to Rwanda where women underpin the rural economy. If a woman is educated then her children are more likely to be educated, and if a woman is economically self-sufficient then her children will be as well. This was seen first hand in rural Rwanda when micro-credit was first introduced, the loans were given to men as they were the head of the family according to tradition but the money often ended up paying for local brew and increased alcoholism. Women however were seen to be more sensible in their handling of money.

In the absence of banking for the poor, or the just generally disadvantaged, micro-credit can fill a void that established banks have left behind. There still needs to be serious regulation of these firms to make sure they are not charging extortionate rates otherwise they can end up just being loan sharks.

The hardest part of banking is scrutinizing the character and determination of the borrower to pay, when someone is borrowing they always promise to pay but circumstances dictate whether they will. Close community ties make it easy to keep track of debtors. Micro-credit develops in conjunction with the needs and aspirations of a community; for now people want money to buy a goat or heifer but eventually they will need money to buy computers or cars. Micro-creditors have to stay in sync with their clients and think like they do no matter how big they get. They can provide micro-solutions for the global problem of poverty, one person as a time.

By Rama Isibo

CLIMATE CHANGE: ‘Let’s cry wolf’

The hot topic of this new millennium is definitely climate change and the theory of global warming. The emphasis on ‘theory’ is deliberate because the greenhouse effect on global temperatures is still a theory. Surprised? Read on.

By now, everyone has heard of climate change. But what does it actually mean? Climate change, caused by either natural internal processes or persistent anthropogenic [human influenced] changes in the composition of the atmosphere and land use, is a significant variation in either the mean state of the climate or in its variability, persisting for an extended period- typically decades or longer. “Sounds dramatic”?

Global warming is the theory that increased emissions of so called ‘greenhouse gases’ most especially carbon-dioxide leads to rise of temperatures by trapping heat bearing infra-red rays within the earth’s atmosphere. This is, in fact, the largest cause of climate change. Every chart one sees on the subject will show a steep incline resembling a mountain slope showing the increase in carbon-dioxide. The facts are truly amazing in that they do not support such an alarmist point of view.

No one was recording the amount of carbon-dioxide emissions in 1850 but the proponents of the threat of climate change usually place the figure at 280ppm [ppm stands for ‘parts per million’] in that year. Today it stands at 380ppm, 160 years later. That’s an increase of 0.01% in 16 decades, with a projection of 560ppm in 2100, a further increase of 0.018%. To put this in context, carbon-dioxide makes up 0.01% of the total atmosphere. In short, the theory of climate change is based on a projected 0.018% rise of a gas that makes 0.01%. 

At this point most proponents point out the effects of this theory of global warming that are already taking place such as receding glaciers, the shrinking Kilimanjaro snow cap and an increase of extreme weather. Firstly, less than 1% of the total glaciers have been studied at all. Of these, there is admittedly a trend towards melting around Greenland and some parts of the Antarctica land mass. In the case of the latter, this has been going on for 4000 years and can safely be said to pre-date climate change as we know it. So, you notice that there is nothing exactly new in that in the case of the Antarctica, in fact it has been said to be getting cooler overall. For the Kilimanjaro, the receding glaciers around the peak cannot be caused by higher temperatures because there has not been any drastic increase in mean temperature at the peaks, surface or atmospherically. More likely, deforestation is the culprit by causing reduced amounts of precipitation.

As for the increase of extreme weather, nothing suggests this is true, most statistics show that the general trend has not changed since the turn of the century. Recorded floods, hurricanes, typhoons and violent storms have not shown any variation since 1900. Two things have changed since then, population density and satellite TV. Higher densities means that casualties and destruction is far greater than before and satellite TV, which actually concentrates on reporting bad news, will give the impression that natural catastrophes are happening more often than before. As a personal point of speculation, I believe that if there are any increases recorded in extreme weather, it could also be because data collection on weather has improved a lot since the turn of the century, which is why even hurricanes that don’t hit land are reported even if they have sometimes blown themselves out into simple rainstorms by the time they hit land.

Which brings us to the topic of increasing temperatures. If the theory of global warming is correct, then the near atmosphere should be getting warmer, right? Strangely enough, there appears to be little consensus on this point with the proponents of climate change coming up with varying figures for mean increase in temperatures, some as low as 0.18C°  to as high as 0.74C° during the last century ending 2005. Am not sure how this would be interpreted by the reader but such wide divergences are usually a sign that people have no idea what they are talking about. At best, they have proved a suspicion of increased temperatures in the near atmosphere.

It is true, however, that average surface temperatures have increased over the last 150 years in several parts of the world although, quite strangely, the warmest recorded period was the late 30s to almost the end of the 40s. The coldest period was in the 50s. This makes it awkward for the climate change proposition, were the 50s less industrialised than the 30s? Of course not, the 30s where dominated by a global depression and the 40s saw most of industrial Europe reduced to ruins. This goes to show that perhaps even surface temperatures are not determined by trapped infra-red rays whose wavelengths don’t allow them to penetrate the atmosphere.

Land-use is a more likely culprit; a lot of former bush and forest lands are now either used for agriculture or have become part of the urban concrete jungle. Shanghai has recorded an increase of 8C° in the last decade. It is more reasonable that land stripped of vegetation will be warmer than it was before. Conversely, places that have not had any significant increases in population or change in economic activity generally have not seen an increase in temperature and sometimes there have been recorded decreases. In 1985, it was reported that mean global temperatures would have gone up by 1C° by 2000 [in fifteen years]. It increased by just under 0.3C°, the forecast was off by more than a factor of 3. The projections by the IPCC [Inter-Governmental Panel on Climate Change] of increase of mean global temperature for the year 2100 are between 1.1C° and 6.4C°.   Once again, this range suggests a lack of knowledge.

So, why is climate change such a big deal? This is the part where speculation can come in. Hazarding a guess, one could pin it down on the increased industrialisation of the third world and the emergence of their economies. Examples of this are China, India, Mexico, Turkey and Brazil with Nigeria, Ghana, Mozambique and Uganda on the way to joining them. The second reason could perhaps be linked with oil. The increased industrialization threatens to reduce the relevance of the West and reduce their ability to procure favorable trading terms for themselves. A conspiracy theory? Maybe, but notice that all their industries are becoming increasingly out-sourced, their populations [and presumably their markets] are shrinking placing increased strains on social security and, by extension, a workforce that is finding it harder and harder to find employment while growing ever smaller. Halting industrialization by waving the ‘C’ [Climate] card is one way of ensuring their dominance.

There is increased knowledge that the oil peak of production is fast approaching. If this were to happen, decreased oil supplies for a larger market would ensure that the price of oil would become ever higher eventually becoming a crippling burden on the states of the West as most third world countries do not have to worry about winter and heating. Ironically, if the theory of global warming is correct, milder winters would make their lives a bit easier. Then there is of course the knowledge of dependence for oil supplies on countries in the Middle East and an increasingly assertive Russia that may not be above using energy as blackmail. Perhaps for these, admittedly speculative, reasons climate change is beginning a topic at the forefront of global discussion.

These days, everything is ‘green’ this and ‘bio’ that. We are all insisting that everything and every activity be ‘eco-friendly’ and the word ‘carbon’ has become a prefix in its own right with the suffixes being ‘footprint’, ‘emission’, ‘cycle’, ‘tax’, ‘offset’ and ‘sequestration’, these are only the ones I can think of. Not that human activity is benign, it isn’t. Pollution is such a big problem that athletes are threatening to keep away from the Beijing Olympics this August because the air quality is so bad. This, in a city that just over 15 years ago was complaining of an excess of bicycles because very few people owned cars. The sad fact is that every human activity will affect the environment in one way or another, most times negatively. What this article is trying to decry is the apparent hullabaloo over climate change over the flimsiest and most imprecise evidence presented for so serious a charge. As a humble submission, the focus should instead be moved to rapid growth of population and sensationalist media. If growth isn’t stopped there will be some sort of environmental backlash, climate change or not while the beloved media will keep us well scared the whole time. Anybody for crying wolf?

WHY FUEL PRICES WILL CONTINUE TO RISE

How many times have you heard this refrain of late, “fuel has risen”? If you have a car you’ve said it yourself but even if you don’t own a car you still hear it; it affects all aspects of life. Now whenever you buy tomatoes, a loaf of bread or a soda you will hear the same chorus “fuel has risen”!

Energy price increases have knock-on effects on every sector and show in ways you wouldn’t expect. There are a number of global, regional, national and local macro and micro economic factors affecting this hike that all come into play and affect the supply chain.

Firstly, globally a barrel is just below $100 on the NYMEX (New York Mercantile Exchange). Remember when less than ten years ago a barrel was $28 and belief was that the days of oil dependence were over? So how did we get to the point where oil is so outrageously expensive?

Demand is obviously the main reason for the increase. America is consuming more oil than it ever did as is the developing world. China is the best example of globalization gone mad. The classic picture of a million bicycles riding through Tiananmen Square is old news; now those bicycles have been replaced by automobiles. China and India, which have about a combined population 2.5 billion and with a middle-class of 700 million between them, have joined the global consumer economy with gusto.

As the entire world has become more prosperous more people can now afford cars. The demand for plastics and oil-derivatives has also increased the demand for oil. Goods are now produced and transported thousands of miles to their eventual markets; this has meant that transport costs have increased the demand and final cost of goods.

The cost of prospecting and drilling for oil has also increased, oil is being found in very inaccessible places and the cost of putting pipelines is expensive. The aging oil fields have also made it more expensive to drill deeper for oil; this requires massive investment which is eventually passed on to the consumers. The oil companies made a mistake of overestimating the reserves of oil they had and had to revise them by reducing estimates by 30% thus made their existing oil stocks extremely valuable. OPEC countries are reluctant to increase production in order to preserve remaining stocks, to keep the price high and to reduce production costs

The global political situation is the final major factor in short-term increases; most oil producing areas or regions are unstable. The Middle East is affected by the Iraq insurgency and the Iranian nuclear crisis; this potential volatility makes markets restless.

Nigeria has conflict in its oil-producing Delta Region, Venezuela has been trying to use oil as a stick to beat America with and Russia has also used oil and gas to further its interests.

Supply lines are also threatened with their longer distances involving more risk. Refining costs have also gone up and that the quantities of petrol available to consumers are reduced. Petrol is produced JIT (Just in Time) meaning it goes straight to the market and isn’t stored in bulk as much; this means sudden jumps in demand cannot be coped with.

Regionally, the situation in Kenya has really affected the price of oil; making the price increase in Rwanda by 15% – 20%. The Kenya crisis showed us just how dependent we are on each other. The far distance of Rwanda from the coast increases the cost of transportation which is the biggest factor affecting our prices. It is also expensive for transporters to enter the market because of the high cost of buying and maintaining tanker-trucks.

In ‘poor’ Rwanda there is a prevalence of gas-guzzling 4×4’s while in the ‘rich’ United States Americans are switching to smaller, more effective cars. The fact that fuel is subsidized in Rwanda protects drivers from the proper cost of driving. The final destinations on the supply chain- which is the petrol station- are owned by a myriad of small companies. These smaller firms cannot afford to buy in bigger bulk to achieve economies of scale to pass on to the consumer in the form of lower prices.

Globalization means that events on the Mercantile Exchange in New York are felt acutely by a man 7,000 miles away in the backstreets of Kigali. The Government is trying to solve the issue. Claire Akamanzi, the deputy director of RIEPA, recently announced plans to form a uniquely Rwandan petroleum company to protect supplies. Rwanda consumes 130,000 liters a day or 15 million cubic meters a month that is a lot for a small country but underlines the logistical problem of transporting fuel. It is hoped that the new company will be able to store 4-6 months worth of fuel; this will stabilize the supply and avoid sudden rises of the price of fuel. The Kenya crisis has been a wake-up call to Rwanda and might help put on the right track in the reorientation of our supply routes as well as storage facilities.

It would take billions of dollars in research and development to discover a new sustainable energy source. New sources like bio-fuels have proved to be environmentally damaging as rainforests are cut down these bio-fuels compete for food with people for example in corn and sugar thus increasing food prices.

Oil is a bad source of energy but is the best we have to fulfill our short-term needs; however, the entire world is coming to the conclusion that it needs an alternative source of energy soon. The problem is; these new sources need to be cheaper than oil no matter how good they are for the environment.

By Rama Isibo

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.