Rwanda to boost local production of edible oil with US$10m investment in new processing plant

RWANDA – Kayonza Distribution Company Ltd, a Rwandese retail and distribution company, has invested US$10 million in the establishment of an edible oil manufacturing plant.

The investment is aimed to boost local supply of cooking oil in the country and trim the import bill.

Targeted to commence operations by the end of the year, the processing facility is expected to produce 100 tonnes of cooking oil per day, reports New Times Rwanda.

With this new investment, Rwanda hopes to gradually reduce cooking oil imports, which peaked at 126,002 metric tonnes last year, up from 121,981 metric tonnes in 2019.

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The East African country spent a staggering Rwf106 billion (US$105m) on the importation of the commodity last year, which is among the top 10 products that were shipped into the country.

Rwanda produces at least 80,000 metric tonnes every year and imports an average of 125,000 metric tonnes, making it a net importer of cooking oil.

A rise in local production of cooking oil will also increase competition among producers and thus reduce prices. Also increased investments will potentially boost exports.

Rwanda produces at least 80,000 metric tonnes of edible oil every year and imports an average of 125,000 metric tonnes

In 2019, Rwanda only exported 37,399 kilogrammes of cooking oil, which generated Rwf257.8 million (US$256,000) while re-exports were equivalent to 42,664,161 kilogrammes worth Rwf33.7 billion (US$33.5m).

In 2020, it exported 20,697 kilogrammes worth Rwf418 million while re-exports were 37,652,496 kilogrammes worth Rwf35 billion (US$34.8m).

In this fiscal year, overall growth in export revenue is expected to outpace imports, with export revenues projected to increase by 22.6 per cent, while imports will grow by 14.3 per cent.

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According to the Made-in-Rwanda policy, US$450 million can be saved annually by reducing the trade deficit.

The government is rolling out incentives aimed to boost investment in the agro-processing industry, such as exempting companies setting up industries or expanding operations in the sectors from import duty for materials and equipment, bought for purposes of setting up the production plants.

The investment in the oil processing factory is timely given that the prices of cooking oil in the market has been on the rise in the recent months.

For instance, 20 litres, which used to cost Rwf22,000 (US$21) at wholesale level now cost Rwf35,000 (US$34.8).

This is the same narrative witnessed in the Kenyan market with the retail price of edible oil having increasing by a quarter for a 20-litre container since January on the back of a rally in edible oils cost globally.

The global price of palm oil, the most widely consumed edible oil, has been increasing since last year after the Covid-19 lockdowns cut output from plantations in Southeast Asia.

Reuters reported on June that Malaysia’s benchmark crude palm oil price touched US$1,007.30 a tonne (Sh108,587) in mid-March, the highest since 2008.

The UN food agency, Food and Agriculture Organisation also said the increasing price in vegetable oils is driven by the higher cost of other oils such as palm and soy, due to slow production growth in major exporting countries while global imports remain strong.

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