a growing market

in an appealing
business context
with NO local
competitors

Wire and Cable

Manufacturing
in Rwanda

Construction in Rwanda
is Big & Growing
Trends in construction & materials:

Construction material is the largest and fastest growing component

of Rwandas manufacturing sector
51% of recent investments in the manufacturing sector have been in
the area of building materials
Construction spending in Rwanda
grew 24% (to 500 million USD)
between 2010 and 2011
Construction permits issued: see
adjacent chart
Commercial buildings and hotels
have dominated recent building
There are over $204 million USD
worth of building material
investments expected in 3 years

Local Dynamics Attract

Investment in Manufacturing
20 Rwandan manufacturers reveal key features and trends:

25% (5) have other production facilities in the region

70% (14) have expatriate management

50% (10) are exporting (Burundi and Eastern D.R.Congo)

Significant new investments committed in the sector

Rwanda is Well Positioned

Within a Growing Region
Rwanda:
Effective government;
stable political context
Strong business
environment; low corruption
Local insight; access to
Eastern D.R.C. & Burundi
Adequate labor pool

USD (Billions)

EAC Construction Spending

Trends
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

Burundi
Tanzania
Uganda
Kenya
Rwanda

2008

2009

2010

2011

Source: Data from Central Bank in Respective Countries (and estimates)

Global Wire and Cables:

Eyes toward Rwandan Market
Regional Wire and Cable Market
(annual market 2011 USD millions / yr)
Burundi,
12.9

Imports to Rwanda
Rwanda,
30.9

Aluminum and Copper Cables are 4th

largest building material import into
Rwanda after Cement, Rebar and
Metal Sheets

Of 160M USD imported in 2011,

Cables represented 30M USD

E. DRC,
40.2

Source: RRA Customs, Trademap, Interview Data

Expansion in the region

East African Cables (Ke) recent investments in DR

Congo and Tanzania

General Cable (US) current plants in Angola and

Zambia; recent investment in S. Africa

PowerTech (SA) expansion plans into SADC and

EAC

Note: highlighted countries are currently primary sources of cable and wire imports into Rwanda

Targeting 10x increase in Electricity

Installed Capacity by 2020
90% of Energy Production projected to be
from Renewables

Construction growth ~ 25% / year

Urbanization rate estimated 4.4% ~ 2.5

times global average

ICT Infrastructure attracted investment ~

500 M USD over last 3 years
Mineral exports growing at over 100% per
year

700

USD (millions)

Rwandan Wire & Cable Market

Drivers

600
500
400
300
Construction Spending and
Electricity Installed Capacity
Growing at ~ 25% per annum

200
100
0
2008
Construction GDP

2009

2010

2011

100
90
80
70
60
50
40
30
20
10
0

MW Installed Capacity

Strong Local Wire and Cable

Market Drivers

2012

Electricity - Installed Capacity

2011 BNR Annual Report; EWSA

Worthy of Note:

World Bank funded Rural Electrification project of 110 million USD

agreed in 2010; currently in implementation phase

Large housing developments underway (RSSB alone=4,000 units)

Demand Constrained
by Limited Quality Supply
100% Imported Supply

Wire & Cable Competitors

Market Share in Rwanda

EA Cables: recognized as the quality

leader, single largest importer, has
ownership of plants in Kenya, DR
Congo and Tanzania
Variety of other importers low
quality limited profitability due to
transport costs and taxes/tariffs/fees
> 45% on non-EAC imports

EA
Cables
11%

Other
Imports
89%

Source: Customs, TradeMap, Interviews

Not Difficult to Break into

Growing Local Market

Majority of market from Public Utility and

Large Contractors
Success based on Public Tender
process and a few key relationships
Copper primary product with limited
aluminum for overhead utilities

Wire & Cable Customers

Share of Market
Retail
7%
Telecom
38%

EWSA
25%

Large
Developers
30%

Rwanda Wire and Cable Import Trends

Source: Interviews

35

USD (thousands)

30
Aluminum

25

Wire & Cable Purchasing

Share of Market

Other Copper

20

Electrical
conductors
Insulated cables

15
10

Fiber optic

NonTender
37%

Tender
63%

Co-axial

0
2007

2008

2009

2010

2011

Source: RRA Customs, TradeMap

Source: Interviews

High Potential for

Profitable Local Manufacturing
Comparable P&L
Analysis

General Profitability

(millions USD)

Regional players with healthy margins

comparable to or better than large global
companies reflect opportunity

Profitability driven primarily attributable to

benefits of local production (limited
competition, reduced transport and tariff
barriers)

Revenue
Cost of Sales
Gross Margin
Gross Margin %
Other Costs
Net Income
Net Income %

58.5
43.5
15.0
26%
11.3
3.7
6.3%

Oman
Cables
(Oman)

KEI
(India)
215.4

General
PowerTe
Cable
ch (SA)
(US)

630.6
595.6
35.0
6%
17.8
17.2
2.7%

2.0
0.9%

Raw Material

5,866.7
5,241.1
625.6
11%
540.4
85.2
1.5%

955.0

13.8
1.4%

Source: Various Annual Reports

Raw material costs dictated by global copper and

aluminum commodity market fluctuations (advantage
of scale without local raw materials)

Rwanda Average Finished Cable

Prices (USD/MT)
9,000
USD (thousands)

EA
Cables
(Ke)

25

8,000

20

7,000

LME Cash Metal Price

(USD / MT)

6,000

15

5,000

10

4,000

3,000

Copper

2,000

0
2009

2010

Aluminum

1,000

2011

Aluminum Conductors

Armoured Cables

Auto / Battery / Flexibles

House Wire

0
2004

Source: Supplier Interviews

2005

2006

2007

2008

2009

2010

2011

Source: LME = London Metal Exchange

Transport and Carrying Costs

Primary Drivers
Costs

4,500

Staffing Costs: Rwanda has adequate supply

of low-skilled labor (65% low-skilled linemen)

4,000

Transport and Carrying Costs: Local production

will

2,500

Maximize inventory / product mix flexibility

Minimize transport costs coming from small

shipments and value-based transport pricing
(10% to 12% of value)

Avoid high local warehousing costs (5

USD/sqm/day)

Reduce significant non-tariff barriers

Target Investment

~ 10M USD plant converting semi-finished to

finished single-core copper and aluminum

2nd phase ~ 25M USD multi-core plant

3,500

Rwanda Manufacturing
Labor Costs
(USD monthly gross salary)

3,000
Max

2,000
Mean

1,500
1,000

Min

500

0
Low-skilled
Junior
Mid-level
Labor
Technician Technician
Source: Karisimbi Partners Survey

Senior
Manager

Steel Product Demand

Anticipates Growth in Energy

Based upon the draft Sector Strategic Plan

By 2018, the following will be spent on energy in Rwanda:

Electricity access roll-out program: 1.2 Billion USD

Electricity generation programs: 3.2 Billion USD
Transmission & distribution programs: 400 Million USD
Total Costs for Strategic Plan: $4.8 Billion USD

Rwandas energy sector plans will require significant

wire and cable material to be realized

Competition + Growth =
Limited Window of Opportunity

The case for investment:

Rwanda: ideal business & investment climate

Construction Boom: significant & growing
Building Materials in Rwanda: too import dependent &
quality products are too expensive at present
Wire & Cable Manufacturing: best investment
opportunity in the building materials sector

Large & Growing Demand

Good Profit Potential
Strong Labor Supply
Very limited competition
(but many investigating)

The time is ripe for the first local

production facility for wire and
cable manufacturing in Rwanda

Electrical Cables: Government

Support & Incentives

Government of Rwanda Support:

Visit Rwanda to learn more about manufacturing capacities and to meet senior
government officials
Construction is booming in line with Master Plan and Vision 2020 goals
The planning and implementation procedures are being streamlined
Special Economic Zones and land concessions are available for you

Completed initiatives to attract wire and cable

manufacturing:

Standards have shifted from French to UK as more architects have been

trained to UK standards
Rwanda Bureau of Standards has adopted EAC standards regarding low
quality and counterfeit products

Rwanda Offers an Climate for

Investment

Why is Rwanda a compelling business context?

1)

Political stability; sound rule of law; no tolerance for corruption

2)

Vision 2020: impressive growth to middle-income country status

3)

8% average year-on-year GDP growth from 2007-2011 (one of the

highest in Africa (and world)

4)

Global Reformer: ranked #4 out of 181 countries by World Bank

Doing Business Report 2013, improving the context for starting and
operating a business by making 26 different reforms since 2005 #1
in East Africa and #3 in Africa: as ranked by WEF Global
Competitiveness Report 2011-2012

5)

6-Hour Business Registration: ranked #8 easiest in the world

6)

New Special Economic Zone opened; 4 others planned; 30 district

industrial areas ready for development

Serviced Sites are Ready for

Investors in Special Economic Zone
Kigalis serviced Special
Economic Zone (SEZ):
Phase I: 98 hectares (ha.) Fully serviced and fully occupied
Phase II: 178 ha.

7 companies have already booked

space
Land price: $32 - $40 per M2

Phase III: 134 ha.

Additional sites outside SEZ
include:

Bugesera zone (serviced): $15 M2

Rwamagana zone (un-serviced):
$4,750/ha.

15

Investor Incentives are Available

Investment Benefits:

Free initial work permit & visa for investor and foreign workers

Assistance with land acquisition and concessions

Waiver of import duties, withholding and VAT for imported machinery and raw
materials

Waiver of duties for 1 personal vehicle; personal property import

Waiver of duties for special vehicles, trucks & heavy machines

Optional:

Construction projects greater than 1.8 Million USD: 10% flat fee for imported
materials

Income tax investment allowance of 40% inside; 50% outside Kigali

Tax deductible training and research expenses

Tax discounts based on the number of jobs created (900+ jobs = 7% discount)

Export earnings may secure tax discounts (5 Million USD exported = 5% discount)

Let us know how we can help you take the next step

Contact us today
Contacts:
Robert Muhizi
Manufacturing Development Division Manager
robert.muhizi@rdb.rw; +2560785342567; Skype: muhizir

Global Market:
Wire & Cable Manufacturing
2010 Global Cable and Wire Consumption
(USD billions)
Fibre Optic
Telecom /
data, 7

Winding
Wire, 25

Internal
Telecom /
data, 16
Aluminum
Power
Cable, 10
External
Copper
Telecom, 5

Low
Voltage
Energy, 62

Copper
Power
Cable, 37

Source: ICF Stats; CRU

Large (163 Billion USD) and

growing global market
Note: highlighted countries are currently primary sources of cable and wire imports into Rwanda

Rwanda: Facts & Figures

Population

11 million

Average age

18

Workforce

4.4 million

Literacy

71.1%

GDP/capita (PPP)

$1,400

GDP growth

8,8%

Inflation

3.9%

Prime lending rate

16%

Industrial production
growth

7.5%

Export growth
(ytd 11/12)

33%

Rwanda is the #1 in EAC and

Top Business Reformer Worldwide
Category
Starting a Business
Construction Permits
Getting Electricity
Registering Property
Getting Credit
Protecting Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Overall Ranking Ease of Doing Business

Rwanda*
8
84
50
61
8
29
19
155
31
45

*All scores are comparative ranking out of 181 countries featured

Source: WorldBank Doing Business Report, 2012

20

Rwanda Compares Well in

University Enrolment for Region

Source: WorldBank Doing Business Report, 2012

21

The Rwandan Context for

Manufacturing Support

In the region, Rwanda

compares well on many of
the factors important to
manufacturers (e.g. GDP
growth, literacy, labor)

Rwanda Manufacturing Labor Costs

(USD monthly gross salary)

Source: Karisimbi Business Partners Survey

Electricity Supplies are

Growing with Energy Demands

The Government has clear plans to increase energy availability for industry.

By the mid 2013, we expect that methane gas, extracted from lake Kivu will
increase supply by 25 MW and double the national supply (100MW+) by the end of
2014

Additional investments are being made in hydro-electricity which will produce a

further 45 MW by 2014

DSI Energy Ltd. has plans for $73 million USD investment for a 30MW solar power
project

Recent investments in peat energy generation is expected to produce as much as

100 MW additional energy by 2015.

The above initiatives will enable the government to increase access to electricity to
meet the growing demand of industrial users while expanding domestic supplies.

Current industrial rates per KWH are shown in the table below:
Time
07.00 - 17.00
17.00 - 23.00
23.00 - 07.00

RWF
126
168
96

USD
0.20
0.27
0.15

23

Next Steps
Contact an RDB representative to register
your interest and gain added detail

Work with Government of Rwanda

stakeholders and agencies to improve
conditions for your pending success

Craft detailed business plan

Seize the benefits of being Rwandas first

manufacturer of wire and cable products