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Section 1: Industrial Manufacturing Focus in Rwanda

The manufacturing sector in Rwanda is still small and only accounts for around 7% of total gross value added. Several policies and strategies, such as the National Industrial Policy and the National Export strategy, have been developed to accelerate industrial and export growth. Rwanda's exports continue to be concentrated in agricultural products. Tea and coffee were top products, and agricultural products constitute over 80% of total exported goods.

Chart: Manufacturing Sector as a Share of Total Gross Value Added (%), 2018
Chart: Manufacturing Sector as a Share of Total Gross Value Added (%), 2018

Industrial Clusters: Parks and Zones

Rwanda has established the Kigali Free Zone (KFZ) as a special economic zone (SEZ). Bonded warehouse facilities are now available both in and outside of Kigali for use by businesses importing duty-free materials. Kigali SEZ originated as a merger of the Kigali Free Trade Zone and Kigali Industrial Park. It is located in Gasabo (just outside the capital), and it has been designed for ‘mixed use', which means it accommodates a variety of industries, including heavy and light manufacturing; chemicals, pharmacy and plastics; commercial wholesalers and warehousing; ICT; tourism; and service industries. The SEZ is serviced with roads, electricity, water, a fire-fighting system, a sewage system and fibre-optic cables. The SEZ was developed in two phases. The first phase, covering 98 hectares of land, was opened in 2014. All plots developed under this phase have been allocated. Firms in the SEZ include those related to garments and apparel (CandH Garments), electric components and laptop assembly (Positivo BGH).

Manufacturing Prospects

The government's Vision 2020 policy envisions that SEZs will foster annual growth rates of 12% within industry and non-agriculture sectors by 2020 and create 600,000 new urban jobs. However, Rwanda's manufacturing industry has not been able to grow significantly in spite of the promotion of SEZs. The skills relevant for manufacturing are in short supply, imposing significant training costs on manufacturers. Moreover, the opportunity cost of establishing manufacturing hubs in Rwanda compared to Kenya or Tanzania is high due to low levels of demand. Given the small size of the domestic market (less than 12 million people), investments should focus on exports. Regional markets (in particular Burundi and eastern DRC) are increasingly important, and wider global markets offer opportunities through preferential trade agreements such as Everything But Arms Initiative (EBA) and African Growth and Opportunity Act (AGOA).

Suitable Industries

Textile: Textile exports have grown steadily over the past decade. Rwanda textile exports benefit from the AGOA duty-free privileges on clothing exports to the US. Rwanda is also classified as a Least Developed Country (LDC) and has EBA status, allowing it to export textiles (amongst other products) to the EU duty free.

Machinery: Machinery exports have been varied, but largely fall into the broad category of construction machinery. This includes mechanical bulldozers, levellers and shovels.

Electronics: Electronics exports averaged US$12.8 million over 2014-2016. Mobile phone parts and accessories have dominated electronic exports. The vast majority of these exports have been regional within East Africa. However, there is some growth in exports to France.

Aerospace: Although aerospace exports still only accounted for 0.2% of total goods exports in 2018, they have grown strongly over recent years. Aerospace exports averaged US$3.6 million annually over 2014-2017, having grown from negligible levels in 2008. Production is dominated by aircraft parts for shipment to the US and Ethiopia.

 

Manufacturing in East Africa: Rwanda

Section 1: Industrial Manufacturing Focus
Section 2: Labour & Land Resources
Section 3: Infrastructure
Section 4: Regulations & Tax Incentives
Appendix: Relevant Government Bodies
        
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Content provided by Picture: Fitch Solutions – BMI Research
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