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The East African : July 21st 2014
The EastAfrican 44 MOVE TO EXPAND EXPORT BASE Chinese firm to set up textile plant in Rwanda C&H said it plans to invest up to $10 million in the next five yea≥s in the plant at the Kigali Special Economic Zone By BERNA NAMATA The EastAfrican shift its manufacturing base to Africa in the face of rising labour costs at home, that are making the Asian country’s products less competitive than before. C&H, a Chinese garments com- R pany announced last week that it plans to invest up to $10 million in the next five years to set up a local textile plant in the Kigali Special Economic Zone. “We will soon be shipping new equipment from China and plan to recruit our initial 200 workers in September. We believe that Rwanda can offer a strong and disciplined workforce for a successful business exporting garments to both Europe and the US,” said Helen Hai, one of the proprietors of C&H Garments Company, after signing a memorandum of understanding with the government. C&H was among a group of Chi- nese firms that were in Rwanda last week to explore investment opportunities in textiles, shoes, mechatronics, industrial sewing machines and other sectors. The company, which supplies to US-based retail store Walmart and Target, plans to employ more people as it diversifies and increases its capacity to supply both regional and international markets. “At the beginning we have to import a lot of raw materials from abroad and focus on training. But the whole idea is to build a supply chain,” said Ms Hai who also manages Hua Jian, a Chinese shoe producer based in Ethiopia. In the two years to 2012, Hua wanda has become the latest beneficiary of China’s move to Jian employed 2,000 workers and exported $12 million worth of shoes to the US and EU making it the largest shoe exporter in Ethiopia. Rwanda is hoping Chinese com- panies will invest in its budding manufacturing sector and help expand the export base beyond tea, coffee, pyrethrum and minerals. “We need to export finished goods …The people who are good at this are the Chinese,” said Clare Akamanzi, the chief operating officer of the Rwanda Development Board (RDB). “This company is going to help us show other Chinese investors that it is possible to invest in Rwanda.” The finished products will be exported mainly to the US where Rwanda is yet to significantly exploit the Africa Growth and Opportunity Act (Agoa) window. Agoa provides quota and duty-free entry into the US for certain goods from Africa including textiles and apparels. In 2013, RDB put official Chinese investment in Rwanda at $4.5 million. In Africa, Chinese firms see an opportunity to maintain competitiveness in the export sector amid rising labour costs. “China has been the factory of the world for many years but with the economic development in the past few years, the wages in China have grown from about $100 per month to about $600,” said Henry Tan, the chief executive officer of Hong Kong based Luen Thai Holdings Ltd, a consumer goods supplier with an annual revenue of over $1.2 billion. The minimum daily wage in Rwanda is Rwf100 ($0.14) but on BUSINESS JULY 19-25,2014 KPA sets deadline to f≥ee up po≥t By SCOLA KAMAU Special Correspondent SHIPPING LINES and agents across the region have less than a month to collect empty containers at the Mombasa Port before the Kenya Ports Authority starts disposing of or destroying them. In a notice, KPA gave the agents up to August 6 to collect any empty container that had been lying at the Port in excess of 30 days by July 1. According to Bernard Osero, KPA head of corporate affairs, agents and shipping lines were avoiding extra costs at the container warehouses, opting to leave the empty containers at the port. A token administrative charge of $100 per empty container collected will be applicable, KPA said in the advertisement. Juma Tellah, the chief executive of the Kenya Ships Agents Association blamed the Kenya Revenue Authority for failure to communicate on the existence of such containers. “When cargo is either destroyed President Paul Kagame on a visit to the Special Economic Zone in Kigali last year. Picture: File TRADE DEFICIT Rwanda’s limited export base is one of the challenges facing the country in its efforts to reduce the external trade deficit and strengthen the currency to withstand external shocks. For instance, while exports are projected to grow by seven per cent to $751 million from $703 average casual workers are paid Rwf1,000 ($1.46) per day. The minimum wage was set in 1978 and is set for review by the end of the year with differentiation of compensation across sectors a key goal. Economic experts say the average minimum wage across should be increased to at least Rwf40,000 ($58.7) from Rwf3,000 ($4.4) per month. million in 2013, the import bill is also expected rise by 16 per cent to $2147.4 million from the $1148.4 million last year. As a result, the country’s current account deficit is expected to decrease to $803.2 million from $537.5 million in 2013. “African labour is much cheaper in labour compared with countries like Myanmar and Bangladesh — the difference is that Africa has the Agoa Act and Economic Partnerships agreement with the EU. The duty saving will probably be an important reason to attract investors in the light industry to invest here,” Mr Tan said. Uganda’s Cabinet to app≥ove Competition Bill By ISAAC KHISA Special Correspondent UGANDA’S CABINET is to approve the Competition Bill this month, paving the way for parliament to debate and pass a law that local and regional trade lobbies want expedited to curb uncompetitive business practices in the country. Delay in coming up with the law, which was developed in 2004 and revised three years later, stems from the absence of a competition policy and clear cost estimates relating to the implementation of the law. Steven Kamukama, the senior commercial of- ficer at the Ministry of Trade, Industries and Cooperatives told The EastAfrican that the national stakeholder consultations on the draft policy and law have now been carried out and cost estimates for implementing the law drawn up. “The drafts were submitted to Cabinet and the Cabinet secretariat made comments that were then incorporated into the Cabinet memorandum in June. The final drafts are to be submitted to Cabinet within this month for endorsement,” Mr Kamukama said. If the Bill is passed into law, Uganda will join its East African Community peers Kenya and Tanzania, which already have competition laws, critical tool to enforcing fair business practices in an economy. Currently, businesses in Uganda are free to set prices for their products on their own, a scenario that has seen disadvantaged firms in the same business rendered uncompetitive. For example, in 2010, steel manufacturer Uganda Baati threatened to stop further capital investment in Uganda due to what it termed as unfair competition. The company wanted the government to protect it through imposing a 10 per cent import duty on galvanised coils that competing firms imported, while Uganda Baati locally manufactured the same locally. The Competition Bill proposes to create an independent body — the Uganda Competition Commission — with powers to investigate uncompetitive practices and behaviour and impose penalties where appropriate. The Bill articulates three main competition issues of anti-competitive agreements, mergers and acquisitions and abuse of dominant position in the market. or auctioned, the containers are dumped at the port without the knowledge of the lines and agents, it is upon the government-KRA to inform the parties,” said Mr Tellah. Information flow Ugandan traders also blame the delay in picking up containers at the port on the lack of free flow of information. “Ugandan businessmen pre- fer paying for the shipped goods when the ship has docked, but by the time they discover this through their agents at the port, it is a month later, meaning the goods have already attracted penalties,” said William Lusabya Kidima, the representative of the Ugandan business community in Mombasa. Experts said the decongestion exercise on cargo and empty containers by KPA should be carried out more often. “The decongestion will enhance the efficiency of the port at a time expansion plans are underway. It is not a warehouse to hold containers and goods,” said Polycarp Igathe, chairman of the Kenya Manufacturers Association. The launch of the Mombasa Port Community Charter, which hopes to bring together 24 agencies, is expected to improve efficiency. A single window is expected to double East African trade to $33.3 billion by 2016, and enhance transport along the Northern Corridor from the port of Mombasa to Uganda, Rwanda and Burundi. “By bringing together all clear- ing agents and authorities at the port, it will be easy to find a way of working together and reducing the cost of doing business,” said Meshack Kipturgo, executive director of the Shippers Council of East Africa.
July 14th 2014
July 28th 2014