Rwanda’s Development Board is searching for new investors to acquire the government’s stake in the troubled cement manufacturer, Cimerwa. This comes after the majority shareholder, Pretoria Portland Cement (PPC) Group, failed to make an expected bid in July.
The South African-based PPC Group has a 51 percent stake in the cement maker, while the Rwandan government owns 16.54 percent. Other shareholders include the Rwanda Social Security Board, which has 20.24 percent, Rwanda Investment Group with 11.45 percent, and Sonarwa Group with 0.76 percent.
Earlier this year, the total 49 percent government stake was put on the market, which PPC Group considered buying. The government had set July 5 as the deadline for interested investors to bid for its stake. According to Cimerwa, PPC was doing a share valuation before it could make an offer. However, it never made a bid and the government has moved on by looking for new investors.
“We gave priority to PPC and allowed them time to make the bid,” Minister of Trade and Industry, Soraya Hakuziyaremye, said. “But the time we gave them elapsed without them getting back to us.”
Despite being Rwanda’s biggest and oldest cement maker, Cimerwa has endured a rather persistently low performance in recent years, leading to the government’s decision to sell its stake.
The company has been operating below production capacity of 600,000 tonnes and in order to bridge the supply-demand gap, Rwanda has had to rely on cement imports from Tanzania and other East African states.
In 2018, Cimerwa produced only 364,864 tonnes of cement, which is less than 60 percent of the total demand. Consequently, Rwanda was forced to import more than 318,800 tonnes of cement to meet the demand of 640,455 tonnes.
Moreover, Cimerwa’s prices are high compared to imports from the region from the likes of Hima Cement and Tororo Cement from Uganda as well as Twiga and Simba from Tanzania. The imports, which are cheaper and offer higher volumes, have progressively eaten into the cement maker’s market share, the East African reports.
PPC bought the majority stake in Cimerwain 2012 with the hope of turning its fortunes around, but things have not gone as planned. Meanwhile, the demand for cement has kept growing over the years largely driven by big infrastructure projects like the Bugesera Airport, the recently completed Kigali arena, and the construction of secondary cities in Rwanda.
In addition to hopes of selling its stake in Cimerwa, the Rwandan government is throwing its support behind a new plant under construction, Prime Cement, to boost domestic efforts in meeting local demand.