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A Dream Deferred Comes True

15th Mar, 2017

Rwanda first planned to build a factory to produce its own cement in 1974, but decades of political turmoil derailed the project. Now, Cimerwa is enabling the country’s economic transformation

The coming of age of the Cimerwa Cement Factory in 2015 marked a watershed moment for a nation that had for four decades desired to produce its own cement to build its own future.

It was in 1974, when the nation was still recovering from the ripple effects of a coup de tat staged a year earlier that a Rwandan cement factory to supply local demand and to neighbouring countries was first conceived.

But it was not until 1984 — a decade later — that the first bag rolled off the factory.

This was thanks to a partnership reached with a Chinese investor under a Build, Operate and Transfer arrangement.

But, as they say, greatness is at times incubated in the crucible of rough times.

Cimerwa took a catastrophic hit from the genocide that descended on Rwanda in 1994.

The factory was closed — the company lost 58 employees in the wake of the genocidal spree — and what had been built for two decades was brought down almost overnight.

Just that it never left the collective Rwandan psyche that part of their national economic growth was to be driven by homegrown production, and that the breaking of a cooking spoon, as the Swahili say, does not mark the end of meal preparation.

Cimerwa had to be revived.

It was in 2008, based on economic growth projections, that it was decided to scale the production capacity up once more to 600,000 tonnes a year. By then, the Chinese partnership had come to its natural end and, to achieve the new goals, Cimerwa had to seek new partners.

“This is when the first payment for the equipment to scale up was done,” says Cimerwa CEO Busi Legodi.

In 2001, the plant’s capacity was increased from 50,000 to 100,000 tonnes a year

The expansion of the factory followed a deal in December 2012 that saw South Africa’s largest cement firm, PPC (Pretoria Portland Cement), acquire a 51 per cent share of Cimerwa’s equity with a buyout of US$69.4m.

“The risk here was that though PPC came with money, it was not enough. There was no bank that wanted to fund the project. KCB Bank was the first bank that had the appetite to go into this project. That’s when other banks came in and started showing interest. If KCB Bank had not come, I do not think we would have moved,” said Legodi.

Construction of the new $170 million, 600,000-ton per annum plant commenced in early 2013. By June 2015, civil construction, mechanical erections and electrical installations were complete and the plant was commissioned.

Cimerwa was growing into a market dominated by regional players such as Hima Cement from Uganda and Kilimanjaro from Tanzania.

It was no mean feat, and by the 2015 upgrade, Cimerwa was only commanding 20 per cent of the market, mainly serving the western parts of the country where the plant is located.

“We have grown that in just over one year to serve 53 per cent of the local market, and we’re growing,” said Ms Legodi.

The demand is driven largely by the retail market, which constitutes 75 per cent of Cimerwa’s current command.

“We have big construction projects where we are supplying but our biggest demand is in the homes market. Rwandans have really accepted our products,” she said.

The Cimerwa chief executive says that the cement maker values partnerships, and that PPC and KCB Bank are the two key partners that have propped the business — in addition to the sovereign foundation and support from the Government of Rwanda.

“Working with KCB Bank has been great because we are working with a partner who understands the balance between profits and growth. We would have meetings for two or three days but we would arrive at solutions because we had a common goal,” she said. “KCB Bank was the second biggest contributor to the project and it came in the form of dollars, which we really needed because our equipment was supplied in dollars.”

It was expected that the revamped company would still face competition from its regional counterparts who have relatively bigger production capacities from their headquarters and have been in the business for long, but there was a favourable platform.

Cimerwa’s story is inextricably tied to Rwanda’s rise from the ashes of the 1994 genocide.

Since that dark year, Rwanda has maintained political stability and economic growth.

According to the World Bank, Rwanda’s long-term development goals are defined in a strategy entitled “Vision 2020” which seeks to transform the country from a low-income, agriculture-based economy to a knowledge-based, service-oriented economy with a middle-income country status by 2020.

These goals, says the World Bank, build on remarkable development successes over the last decade which include high growth, rapid poverty reduction and, since 2005, reduced inequality.

“Between 2001 and 2015, real GDP growth averaged at about 8% per annum. Recovering from the 2012 aid shortfall, the economy grew 7% in 2014 and 7.5% in 2015, up from 4.7% in 2013,” says the report.

This growth has certainly included infrastructural development, which has naturally driven cement demand. The moment of pride for a nation on the rise was captured by Rwandan President Paul Kagame when he opened the factory in 2015.

“As a fast-developing nation, there is need for more and cheaper cement,” President Kagame was quoted by State media as saying. “With the new investor in Cimerwa, we expect the factory to perform much better than it did before.”

Cimerwa’s plant is strategically located in Rusizi District because of the availability of limestone and has taken that geopolitical advantage to make forays into Eastern DRC. The cement maker is also exploring the Burundi market, says Ms Legodi.

Rwanda is a hilly country and environmental degradation is one of the key concerns for the national cement maker — as they dredge out limestone for cement making.

“We pride ourselves as an environmentally responsible company. When we upgraded our plant we moved from what we call electrostatic precipitators on dust emissions to back filters. Our dust emissions are at extremely low levels and are monitored to meet standards, as are our mines,” said Ms Legodi.

Cimerwa also has a cooperative comprising local people who work to preserve the environment to avoid the eventualities of landslides from neglected pits. Local communities make blocks for soil stabilization to make sure that the countryside is not eroded.

Ms Legodi says that Cimerwa has succeeded in its meteoric rise in the market by building trust and delivering what they promise.

“Rwanda was eagerly awaiting for Cimerwa. Before the upgrade, we could not get the product in Kigali. It would be available mainly in the Western region. We promised that as soon as the plant was running we would have a footprint in the entire country, which we now have. We have put in place a transport management system to make sure that we don’t disappoint customers. Whenever they need our product, they have it,” she said.

Cimerwa also prides itself in keeping the highest efficiency and quality standards, and has recently applied to be reviewed for ISO 2001 certification.

“We are part of PPC, the biggest cement producer in South Africa who have highly sophisticated labs where we take our products for testing to make sure that we maintain the highest standards. The Rwandan Standards Board also comes often to take samples to check and make sure that what we are giving to the customers is what we have promised,” she said.

They are now offering what they call a “total solution” and are exploring the introduction of bulk loading and ready-mix concrete to the Rwandan market.

“We’re not going to only supply cement,” said Ms Legodi. “There’s still a lot of room for growth and we want to maintain the highest levels of efficiency. Once we are efficient, we can compete and grow the market share.”

Deals that prop you above the market

The Cimerwa chief executive officer says that the cement maker values partnerships, and that PPC and KCB Bank are the two key partners that have propped up the business — in addition to the sovereign foundation and support from the Government of Rwanda.

“Working with KCB Bank has been great because we are working with a partner who understands the balance between profits and growth. We would have meetings for two or three days but we would arrive at solutions because we had a common goal,” she said. “KCB Bank was the second biggest contributor to the project and it came in the form of dollars, which we really needed because our equipment was supplied in dollars.”

Cimerwa in the community

Rwanda’s first indigenous cement maker, Cimerwa, is involved in Corporate Social Responsibility programmes with the community around it.

“We are not just looking at growing as a business, but have also employed 50 graduates,” says Ms Legodi.

In addition, Cimerwa contributed to the construction of part of the road that leads to the plant, in partnership with the Rwanda government.

“We are also supporting the foreign exchange reserves in this country by reducing the amount of cement imported and exporting ours to other markets,” she says.

KCB Bank has supported this initiative by agreeing to convert some of the dollar-denominated loan into Rwanda Francs.

“That makes it easier for us,” she said.

Ms Legodi is also personally passionate about supporting the local people.

“The reason I came to Rwanda was not only to build the plant. For me, if you haven’t touched the people, nothing has changed,” she said.

When she arrived at Cimerwa, Ms Legodi sought to connect with the social side.

She noticed the level of unemployment and yet the plant could only absorb about 250 employees. She then launched a programme to build blocks and stabilize the ground to battle erosion, which has employed 70 women.

Then she made the decision to train local carpenters to make quality furniture so that they could supply the company, and the entire firm was furnished with locally made items, from the boardroom to the tea room, says Ms Legodi. She also initiated a programme to train tailors to make coveralls for use in the factory. “The tailors have become so good that they are even making suits and exporting them to DRC,” she said.

“We are partnering with the government to see how this can be sustained.”

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