19 June 2019

The Government of Rwanda has
finally put its last stake in Cimerwa on the market, calling on individual
investors and companies to show interest for its shares.

The Government has 16.54% stake
in Cimerwa held through Agaciro Development Fund, Rwanda’s Sovereign Wealth

However, other shareholders,
including SORAS Group, Rwanda Social Security Board (RSSB), and Rwanda
Investment Group (RIG) have also expressed interest to offload their shares.

The Minister of Trade and
Industry, Soraya Hakuziyaremye, noted that it was at the “discretion of
shareholders to exercise their right to increase or not to increase their
shareholding” when the Government offloaded its shares.

Currently, South Africa-based
Pretoria Portland Cement (PPC) is the majority shareholder in Cimerwa with 51%
shareholding which it bought back in 2012.

The firm had been expected to
turn around the cement industry but Government lost patience and interest after
the company failed to meet the domestic demand for cement.

While Cimerwa is the largest
cement producer in the country, the firm is currently unable to meet local
demand as it operates below its production capacity of 600,000 tons per year.

Last year, Cimerwa produced only
364,864 tons of cement – less than 60% of the total demand. The country
imported 318,854 tons to meet the demand of 640,455 tons, according to the
statistics from the National Bank of Rwanda.

The company has been making
losses over the years. In 2017 the firm’s losses stood at Rwf5.5 million and
that increased to Rwf 7.1 million in September 2018.

This are among the factors that
prompted the Government to exit the business.

According to RDB, Government has
already established a panel of representatives to review the viability and fit
of prospective investors with a view to determining whether they are a suitable
for the Government and the other shareholders in Cimerwa.

It has set July 5 as the deadline
for interested investors to submit the proposals to buy its stake.

This comes following an
announcement by the Government in March this year that it was in the process of
withdrawing its investment which essentially has not been profitable despite
more efforts to keep the company afloat.

According to the information
memorandum, the Government is offering the shares in Cimerwa in entirety. The
shares are 5,817,543 representing 16.54%.

RSSB has 7,115,303 representing
20.24 per cent; Rwanda Investment Group has 4,027,530 shares representing 11.45
per cent, and SONARWA Group has 268,502 which is a representation of 0.76 per
cent. Thus 17,228,878 shares are available for investors – 49% of the total
shares in the cement maker.

The Government is trying to
appeal to investors, saying that it is seeking to level the playing field for
all players in the cement industry, highlighting that Cimerwa still has an edge
as it is the leading cement producer in the country.

Hakuziyaremye highlighted that
with the construction of another cement factory which is underway in Musanze
district, there was hope that the country’s domestic producers would satisfy
the market.

Milbridge Group through its local
firm Prime Cement last year in August kicked off the construction of their
cement factory, and once complete, this will end Cimerwa’s monopoly in the

Rwanda’s cement demand has been
rising. Cement demand moved from 493,587 tons per year in 2013 to 640,455 tons
in 2018.

This is a result of on-going mega
infrastructure projects, several stadiums, Kigali Innovation City and low-cost
housing projects. 10,000 affordable houses are set to be constructed in Rwanda.

According to a 2012 study
conducted by Planet Consortium (An international consulting company) and the
Ministry of Infrastructure, the annual demand for new dwellings in Rwanda was
31,279 housing units per year against the supply of about 1,000 units.

This demand is expected to reach
340,000 units by 2022, mainly for affordable and mid-range housing.

According to a report by EcoBank in 2016, East Africa’s installed cement capacity was estimated at 15.6m tons, with 0.15m tons being produced in Rwanda representing 0.9%.

Read the latest issue

Latest Issue