Tea plays its part in Rwandan mission to succeed

It was a country once thought of in terms of mass genocide.

In 1994 more than one million people – largely Tutsis – were slaughtered in just 100 days as tribal conflict erupted between the Hutu-led government and the smaller Tutsi population, represented by the Rwandan Patriotic Front.

But now Rwanda is gaining a reputation for financial probity and economic growth – helped in part by growing value from tea exports.

There is still a long way to go both in terms of reform and through continued problems with Hutu rebel militia groups operating out of the Democratic Republic of Congo.

But at a time when Kenyan tea exports are falling due to drought conditions, countries such as Rwanda are able to provide some of the shortfall, helping its own economy.

The current Rwandan tea industry consists of 10 tea factories, eight government owned plantations known as Blocs Industriels (BI), three tea cooperatives known as Coopthés and 11 tea small holders associations known as Thé Villageois.

The sector employs about 53,000 people, tea farmers and workers and currently sells 60% of its tea in bulk through the Mombasa Auction market.

Last year the country earned around US$45 million from tea, when it was expecting around US$40 million.

This year the tea authority, Ocir-The is predicting around US$54 million, even taking into account the worldwide recession.

Over the next few years Ocir-The has big ambitions, though it has been revising these downwards.

In its latest mission statement Ocir-The said it wants to see around 35,000 tonnes of dried tea produced each year by 2012, up from this year’s predicted 24,000 tonnes and last year’s 20,000 tonnes.

By 2012 the authority said it hopes tea exports will earn the country around US$70 million.

This requires a yearly growth rate of exports of almost 17% during the next five years and a rapid growth in direct sales from less than 20% today to 50% by 2012.

But whether it can keep up the pace of increased production is linked to better roads and dams to allow for better access to worldwide markets as well as factory expansion. All of this clearly takes time.

Part of this production rise has been due to a privatisation programme of the factories by Ocir-The, but it has also been using funding from western governments to enable more factories and estates to be built.

The tea authority plans to build another six factories over the next few years, when there is also going to be more emphasis put on concentrating on quality tea, branding and packaging.

This is because niche markets are seen as ripe for growth, allied with likely long-term declines in prices globally for bulk black tea.

Putting tea into an overall context, Rwanda ’s US$ 4.2 billion economy grew 7.9% in 2007 and an estimated 8.5% in 2008.

Average real GDP growth rates showed a considerable slow-down from an annual rate of about 10.5% attained over 1996-02 – the first few years following the conflict—to 5.6% over the period 2003-2007, but is now once again picking up, due largely to strong agricultural progress.

At present, the global economic slowdown has had a limited effect on Rwanda’s economy due to the country’s low level of integration with the global economy and the relatively high dependence on subsistence agriculture; however, a continued global slowdown may lead to a 2.5% decrease in GDP growth over the medium term due to lower tourism receipts, reduction in remittances and a slowdown in the construction sector.