Enterprise map of Rwandan maize, tourism and dairy value chains

This research paper reviews detailed data collected by the Rwanda Revenue Authority to consider the structure and behaviour of three value chains in Rwanda. This data analysis exercise complements a larger IGC study into regional value chains. Consequently, we consider the structure and behaviour of the maize, dairy and tourism value chains.

This research paper found the following key findings:

Service sectors are vital parts of the maize, dairy and tourism value chains.

We find that services make up 40 percent, 38 percent and 46 percent of the total number of suppliers in the maize dairy and tourism sectors respectively. This includes vital financial services, transport services, and professional services. This provides strong evidence in the Government of Rwanda’s support to pre- and post-production service growth in Rwanda, a key comparative
advantage.

Imports are crucial to domestic production, especially from China and India.

In maize, key imports include fertiliser and machinery. In dairy, packaging plays an important role. In tourism, construction materials are vital. All three of these import items could be produced locally, providing an opportunity for import substitution.

The EAC and the DRC have increasingly become an export destination for new agro-processing exports.

One of the founding aims of the EAC is to encourage new export diversification. Rwanda has shown impressive growth in non-traditional exports to the region. These exports are primarily in agroprocessing especially in wheat and maize flour, hides and skins and dairy.

The D.R.C represents a key export destination as well as Uganda and Kenya.

Some firms in Rwanda have substantially more market power than others. In the dairy sector, there are very few processors of dairy products. This lack of competition could lead to monopoly pricing given the sector relies heavily on one large buyer. This is, however, likely to be offset by the home processing of milk by informal firms.

Following this research, we make the following recommendations:

There are substantial opportunities for companies to source materials locally if domestic industries can be developed in fertiliser, building materials and packaging.

The Government may wish to encourage new entrants into these sectors and can utilise this data to encourage foreign investors to enter.

There is clear evidence to support the Government’s strategy of support to the domestic service sector, given this research has shown they are crucial to the productivity of all other sectors.

The Government may wish to support financial services, transport services, and professional services through reduced taxation.

If the Government is interested, it can work with the IGC to develop these datasets to answer key policy questions including:

1. How do shocks to firms input costs get transferred to buyers and sellers?
2. How do anchor firms influence the creation of industries and what identifies an anchor firm?
3. How do domestic and foreign investors influence domestic firms
4. Efficacy of tax incentives
5. EAC integration, transport costs, exports and domestic spillovers.