Establishment of Rwanda’s first powdered milk plant met with setback due to financial constrains

RWANDA – It’s a year since TRIOMF East Africa, a joint venture firm owned by South African and Rwandan investors in collaboration with dairy farmers in Rwanda through the IAKIB cooperative, unveiled plans of establishing a Rwf37 billion (US$37 million) powder milk processing plant.

The project to be located in Gicumbi District, Northern Province of the country was scheduled to commence construction by the end of last year and be completed within a year’s time.

However, according to reports by New Times, the dairy farmers who were looking forward to the ready market for their milk will have to wait longer to get the much-anticipated factory as its construction has been faced with financing problems.

Antoine Juru Munyakazi, Executive Chairman of TRIOMF East Africa had earlier indicated that the company will invest its own money as well as bank loan and contribution from the dairy farmers of IAKIB cooperative.

“The financing that we were seeking in Rwanda was not possible owing to the Covid-19 problem …the factory requires a lot of money as it is a big project.  Because of the Covid-19 impact, our banks are not interested in taking risk on big projects,” he said.

“So, the investors for the factory are now mainly trying to source financing from outside the country,” Munyakazi further highlighted adding that funding negotiations are still ongoing with financiers.

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Pierre-Célestin Hakizimana, the president of IAKIB representing 10 cooperatives, told The New Times that the cooperatives had already mobilised Rwf360 million (US$363,000) from their savings and allocated to the initiative.

However, he said that the investor – TRIOMF – told the dairy farmers that it would secure financing for the entire project, including the investment required from the dairy farmers – equivalent to 20 per cent of the factory shares.

“The financing that we were seeking in Rwanda was not possible owing to the Covid-19 problem …the factory requires a lot of money as it is a big project.”

Antoine Juru Munyakazi – Executive Chairman of TRIOMF East Africa

He explained that the farmers would reimburse the credit later through deductions from the profits on milk sales that they would be supplying to it.

“The investor told us that we should put the money we had raised into increasing milk production so as to ensure sustainability of milk supply that the factory will need,” he said.

He indicated that the cooperatives still keep the money on a savings account in BPR Atlas Mara as they were discouraged from the haltered progress on the factory establishment.

The planned facility with an installed capacity to process 252,000 litres per day will be the first of its kind in Rwanda as the country has been only relying on milk powder imports.

The factory will be operated by a company called East African Dairies and co-owned by both TRIOMF East Africa 80 per cent and farmers 20 per cent.

Rwanda produces more than 2.2 million litres of milk a day, while only about 10 per cent of it gets processed into different dairy products, according to data from the Ministry of Agriculture and Animal Resources.

The country spent over US$10.7 million (Rwf10 billion) on importing over 4 million kilogrammes of milk powder in 2019.

The figures imply an increase of 25 percent in milk powder import bill compared to over US$8.5 million (about Rwf8 billion) it spent on more than 3.6 million kilogrammes in 2018.

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