Tunis, 6 October, 2010 - The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, 6 October 2010 in Tunis, a USD 30-million loan to finance the construction of Rwanda’s cement production plant (CIMERWA).
The project involves the construction of a 700,000-ton per annum cement plant in Rwanda that will replace the existing 100,000 capacity plant with the objective of making up for cement supply shortage and satisfying local demand which continues to be high, mainly driven by housing sector growth and infrastructure development. CIMERWA will also operate several open-pit quarries located near the plant site.
Increased cement production will potentially result in a decrease in the price of cement for end-users, thus diminishing the cost of a key component in the construction industry, and boosting the development of the country’s manufacturing sector.
The project will be the Bank’s first private sector industrial investment in Rwanda, and one of the largest industrial investments in the country. It will therefore pave the way for other private sector projects by demonstrating local entrepreneurs’ ability to initiate large transactions with significant knock-on effects on the national economy.
The operation will further boost the construction sector and foster economic growth. It will create 285 jobs as well as enhance social infrastructure (health, education, access to water) for neighboring communities. It will also provide additional resources to the Rwandan government in terms of foreign currency savings through import substitution, as well as improve regional trade within the East African economic community.
The project will specifically:
- Promote human resources development while laying emphasis on science and technology;
- Support infrastructure development;
- Foster regional integration; and
- Reduce the incidence of poverty in the country.
The project is consistent with the Bank’s Private Sector Operations strategy that aims at catalyzing private sector investment and supporting indigenous entrepreneurs. Furthermore, as the Rwandan government has a 10% stake in CIMERWA, the project highlights the importance of public-private partnerships as a “smart financing” vehicle to leverage public financing for private sector development.
The project will also help to demonstrate the impact that private sector development can have in reducing constraints on strategic sectors like manufacturing, which is much related to the activities of the construction sector.