High utility prices in Rwanda are taking toll on manufacturing industry, forcing investors to push for incentives to make local industries competitive like their regional peers.
It is hoped the incentives will contribute to the growth of the sector, which is crucial in reducing the import bill, Rwanda Today reported.
Data from the National Bank of Rwanda shows that manufacturing sector is struggling after contributing a paltry 1.2 percent to the real GDP growth in quarter three of 2014.
“We have carried out a research on the impact of high energy and water costs and recommendations that we are to present to government. We are pushing for a reduction in the costs of the utilities,” said Rutayisire Manzi, director of advocacy at Private Sector Federation.
The direct incentive energy consumers get from the power company is the reduced tariffs of up to 30 percent when a manufacturing plant operates from 11pm to 5am.
Other countries in the region, among them Uganda and Kenya get incentives on energy, which makes goods imported from the region competitive even on the Rwandan market, which manufacturers said is edging them out of the market as consumers turn to imported products.
Aquasan, plastic products producers in Rwanda, are the latest manufacturers to complain, saying water tanks from Burundi and Uganda are giving the factory a run for its money on pricing.
Ugandan large industrial consumers pay Rwf71 ($0.10) per Kwh between 5am and 6pm and the tariffs keep reducing as they enter deep into the night while in Kenya commercial users pay Rwf64 per Kwh.
Analysts said incentives that support local agro-processing industries is critical to promote local manufacturing, which will provide the needed 200,000 non-farm jobs annually.
They argue that local incentives for local manufacturing and agro-processing should be accompanied by investments in energy and road infrastructure. In order to create adequate jobs for majority of low skilled and unskilled workers in Rwanda, singling out agro-processing as priority sector.
