Shem Oirere, Africa Correspondent02.09.18
Rwanda has in the two decades gained notoriety as one of the few sub-Saharan Africa’s fastest growing economies, with higher than global average gross domestic product (GDP) annual growth rates, driven largely by expanding construction, agriculture and services sectors, which are some of the largest consumers of paints and coatings.
The country’s economy on average grew at the rate of 8 percent annually between 2001 and 2014 and it is anticipated the growth for 2017 will be 6.2 percent growth with the potential to rise to 6.8 percent this year. A large section of the Rwandese people have for the last few years also experienced an increase in their purchasing power, which is a good thing for an industry such as coatings that thrive largely on a higher private consumption.
In the short and medium term, Business Monitor International (BMI) said Rwanda’s private consumption is anticipated to grow on the back of projected population growth, urbanization and migration of labor into higher value added sectors.
BMI said despite Rwanda’s poor infrastructure, consumer spending will rise in real terms was estimated at 6.5 percent in 2016 and could reach 6.6 percent in 2017.
Although this expected sustainable higher consumer spending will drive paints and coatings market trends in Rwanda, it is the construction sector, currently growing at 7 percent annually, which is likely to underpin growth much of the country’s industry going into the future if the current public and private spending indicators are anything to go by.
The construction of the new Bugesera Airport and the upgrading of the existing Kamembe airport are some of the large infrastructure projects Rwanda is implementing and form a large share of the construction spending during the 2017/18 financial year.
In 2015, Rwanda’s spending on the construction sector was $546 million with an annual growth of 10 percent while expenditure on the real estate sector was $471 million and has been rising at 7 percent every year according to the Rwanda Development Board (RDB).
Rwanda’s construction sector is set to grow at 5.4 percent in 2017 and could double the performance to 10.5 percent this year on account of the infrastructure projects in the medium term according to professional services firm KPMG.
This landlocked country’s policy of free entry and exit for private investors in the construction sector has not only enabled foreign firms such as those from Turkey and China to enter and pour in millions in Rwanda’s infrastructure development but has also supported projects by the government. Rwanda Development Board estimated the sector could contribute more than 7 percent to the national gross domestic product and drive even higher the current private and public works growth in the next five years.
Paint manufacturers such as Crown Paints Ltd. and Sadolin Paints Rwanda Ltd. are expected to take advantage of the projected expansion of the construction sector to increase the size of their footprint in the country and also offer a wide variety of quality products despite the likely competition because of the small size of the market compared to those of neighboring economies of Kenya, Tanzania and Uganda.
“With the rise in construction, Rwanda market has posed a great opportunity for Crown Paints and we have gained a great level of stability in a short period,” said Rakesh Rao, Group CEO of the Kenya-based Crown Paints Ltd during a previous briefing of the company’s shareholders following the company’s foray into Rwanda more than two years ago.
“There is a boom in the construction sector in Rwanda and consumer tastes are changing fast with more people using texture and stone finishes,” said Rao.
Crown Paints, which opened an ultra modern showroom in Rwanda’s capital Kigali after launching a depot in the country, distributes paints for decorative purposes, automotive industry, coatings, adhesives, flooring and niche paint brands such as Armorcoat, silicon, acryline and flowcrete.
The company had announced a five-year plan in 2015 to invest $2.5 million in Rwanda’s paint and coatings industry terming the market the “next frontier for Crown Paints in coming years.”
Despite the growth optimism by Crown Paints and an aggressive marketing campaign for a larger share of the Rwandan paints market, the company faces stiff competition from other key players such as Sadolin Paints Rwanda, Amaco Paints Ltd., AMEKI Colors Ltd., Shalom Paints Ltd. and Sigma Paints to name but a few.
But it is Sadolin Paints that continues to pose the greatest competition among paint suppliers in Rwanda because of what the company said is its “wide varied range of high-quality decorative products for both commercial and retail markets.” Sadolin maintains a licence agreement with Sadolin Paints Denmark Limited which is now part of AkzoNobel, the largest paint company in the world.
Going forward, approved government spending and the related trigger effect on consumer spending is likely to shape the trend of Rwanda’s paints and coatings market.
For example in the 2017/2018 financial year, Rwanda’s national budget laid emphasis on the transport sector as part of its second Economic Development and Poverty Reduction Strategy initiative that targets raising of GDP per capita to $1000, reduction of population below poverty line to less than 30 percent and that of people in extreme poverty to less than 9 percent.
Rwanda’s Minister of Finance and Economic Planning Claver Gatete announced last June the government will be spending $293 million for improving the country’s public transport including Bugesera and Kamembe airport projects.
More importantly for paint suppliers in Rwanda is the likelihood of higher consumer spending after the government increased its recurrent expenditure to 54 percent of the total national budget for higher public workers salaries and wages.
Gatete said Rwanda’s recurrent expenditure in 2017/2018 went up by $155 million to be spent on increased salaries and wages especially for teachers and also to finance ongoing government restructuring and newly created government agencies. The total recurrent expenditure for the current financial year is estimated at $1.3 billion.
The country’s economy on average grew at the rate of 8 percent annually between 2001 and 2014 and it is anticipated the growth for 2017 will be 6.2 percent growth with the potential to rise to 6.8 percent this year. A large section of the Rwandese people have for the last few years also experienced an increase in their purchasing power, which is a good thing for an industry such as coatings that thrive largely on a higher private consumption.
In the short and medium term, Business Monitor International (BMI) said Rwanda’s private consumption is anticipated to grow on the back of projected population growth, urbanization and migration of labor into higher value added sectors.
BMI said despite Rwanda’s poor infrastructure, consumer spending will rise in real terms was estimated at 6.5 percent in 2016 and could reach 6.6 percent in 2017.
Although this expected sustainable higher consumer spending will drive paints and coatings market trends in Rwanda, it is the construction sector, currently growing at 7 percent annually, which is likely to underpin growth much of the country’s industry going into the future if the current public and private spending indicators are anything to go by.
The construction of the new Bugesera Airport and the upgrading of the existing Kamembe airport are some of the large infrastructure projects Rwanda is implementing and form a large share of the construction spending during the 2017/18 financial year.
In 2015, Rwanda’s spending on the construction sector was $546 million with an annual growth of 10 percent while expenditure on the real estate sector was $471 million and has been rising at 7 percent every year according to the Rwanda Development Board (RDB).
Rwanda’s construction sector is set to grow at 5.4 percent in 2017 and could double the performance to 10.5 percent this year on account of the infrastructure projects in the medium term according to professional services firm KPMG.
This landlocked country’s policy of free entry and exit for private investors in the construction sector has not only enabled foreign firms such as those from Turkey and China to enter and pour in millions in Rwanda’s infrastructure development but has also supported projects by the government. Rwanda Development Board estimated the sector could contribute more than 7 percent to the national gross domestic product and drive even higher the current private and public works growth in the next five years.
Paint manufacturers such as Crown Paints Ltd. and Sadolin Paints Rwanda Ltd. are expected to take advantage of the projected expansion of the construction sector to increase the size of their footprint in the country and also offer a wide variety of quality products despite the likely competition because of the small size of the market compared to those of neighboring economies of Kenya, Tanzania and Uganda.
“With the rise in construction, Rwanda market has posed a great opportunity for Crown Paints and we have gained a great level of stability in a short period,” said Rakesh Rao, Group CEO of the Kenya-based Crown Paints Ltd during a previous briefing of the company’s shareholders following the company’s foray into Rwanda more than two years ago.
“There is a boom in the construction sector in Rwanda and consumer tastes are changing fast with more people using texture and stone finishes,” said Rao.
Crown Paints, which opened an ultra modern showroom in Rwanda’s capital Kigali after launching a depot in the country, distributes paints for decorative purposes, automotive industry, coatings, adhesives, flooring and niche paint brands such as Armorcoat, silicon, acryline and flowcrete.
The company had announced a five-year plan in 2015 to invest $2.5 million in Rwanda’s paint and coatings industry terming the market the “next frontier for Crown Paints in coming years.”
Despite the growth optimism by Crown Paints and an aggressive marketing campaign for a larger share of the Rwandan paints market, the company faces stiff competition from other key players such as Sadolin Paints Rwanda, Amaco Paints Ltd., AMEKI Colors Ltd., Shalom Paints Ltd. and Sigma Paints to name but a few.
But it is Sadolin Paints that continues to pose the greatest competition among paint suppliers in Rwanda because of what the company said is its “wide varied range of high-quality decorative products for both commercial and retail markets.” Sadolin maintains a licence agreement with Sadolin Paints Denmark Limited which is now part of AkzoNobel, the largest paint company in the world.
Going forward, approved government spending and the related trigger effect on consumer spending is likely to shape the trend of Rwanda’s paints and coatings market.
For example in the 2017/2018 financial year, Rwanda’s national budget laid emphasis on the transport sector as part of its second Economic Development and Poverty Reduction Strategy initiative that targets raising of GDP per capita to $1000, reduction of population below poverty line to less than 30 percent and that of people in extreme poverty to less than 9 percent.
Rwanda’s Minister of Finance and Economic Planning Claver Gatete announced last June the government will be spending $293 million for improving the country’s public transport including Bugesera and Kamembe airport projects.
More importantly for paint suppliers in Rwanda is the likelihood of higher consumer spending after the government increased its recurrent expenditure to 54 percent of the total national budget for higher public workers salaries and wages.
Gatete said Rwanda’s recurrent expenditure in 2017/2018 went up by $155 million to be spent on increased salaries and wages especially for teachers and also to finance ongoing government restructuring and newly created government agencies. The total recurrent expenditure for the current financial year is estimated at $1.3 billion.
