After the majority shareholder, South Africa’s Pretoria Portland Cement (PPC) Group, failed to create a bid last month, the Rwandan government is searching for fresh investors to purchase its stake in the fighting cement manufacturer Cimerwa.
The South African company was considering purchasing the 49 percent stake from the state when it was placed on the market previously in the year.
Cimerwa said PPC Group made a share valuation before it could make an offer. But it never bid and the government gave up.
Trade and Industry Minister Soraya Hakuziyaremye said Kigali is now looking for fresh investors.
“We gave priority to PPC and allowed them time to make the bid, but the time we gave them elapsed without them getting back to us,” she said.
The pressure to sell the government’s stake in the country’s largest and oldest cement manufacturer began in March when President Paul Kagame voiced frustration about the company’s constant bad results.
The state set July 5 as the deadline for interested companies to bid for their stake, but no offer has been passed.
The state is searching for private investors through the Rwanda Development Board.
The state has a 16.54 percent stake in the cement manufacturer, while the PPC has a 51 percent stake. Other shareholders are the Rwanda Social Security Board with 7,115,303 shares (20.24 per cent), the Rwanda Investment Group with 4,027,530 shares (11.45 per cent), and the Sonarwa Group with 268,502 shares (0.76 per cent).
Cimerwa had a opportunity to exert its dominance and expand its market share in the country’s cement market, particularly at this moment when imports from Uganda were stopped owing to the continuing political impasse between Kigali and Kampala, which escalated into border closure.
Production deficits, however, continued to plague the business, forcing the nation to depend on cement imports from Tanzania and other East African countries.
Cimerwa has continued to operate below its manufacturing capability of 600,000 tons, with enhanced demand for cement attributable to large infrastructure projects such as Bugesera Airport, the recently completed Kigali arena, and the construction of secondary cities.
It generated only 364,864 tons of cement in 2018 — less than 60 percent of total demand. Rwanda was forced to import more than 318,800 tons of cement to satisfy the requirement of 640,455 tons.
When PPC purchased the majority stake in Cimerwa in 2012, the company expected to turn its fortunes around, but this has not occurred, while demand for cement has continued to grow over the years.
Cimerwa prices have also stayed high, and imports from the region from Uganda such as Hima Cement and Tororo Cement, as well as Twiga and Simba from Tanzania, which are cheaper and deliver greater quantities, have gradually eaten into the market share of the cement maker.
The government is banking on Prime Cement, a plant under development in Musanze in northern Rwanda, in addition to Cimerwa, to increase national attempts to satisfy local demand.