The Essential Oils

Industry in Rwanda
Botho Emerging Markets Brief
January 2019

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Farmland in the Rusizi District, image by the Rwandan Government
The Essential Oils Industry in Rwanda Botho Emerging Markets Group

The Essential Oils Industry in Rwanda

Botho Emerging Markets Brief

Botho Emerging Markets Group © January 2019

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The Essential Oils Industry in Rwanda Botho Emerging Markets Group

Executive Summary

The essential oils industry in Rwanda offers investors a to 2023). Central to the government’s strategy is the
niche and high-value opportunity in an underdeveloped move to producing high-value crops, with the plants
and high growth market. used in manufacturing essential oils (e.g. patchouli
and geranium) recognised as one such opportunity for
The global essential oils industry is currently valued at farmers in the country.
approximately USD 6 billion, with this number expected
to grow to around USD 13 billion by 2023. Essential oils A central tenet of the government’s EDPRS-2 and
are increasingly being used in a number of high value EDPRS-3 strategy is the move to the private sector as being
industries, including: Flavour and Fragrance, Beauty and the driver in enhancing economic growth and reducing
Cosmetics, Food and Beverage, and Pharmaceuticals. poverty. With this being the case, the government has
The rapid increase in demand for essential oils is being offered a number of incentives to encourage both foreign
driven by several factors, most notably: and domestic investors, including tax exemptions and
low-interest loans. The government has also invested
i) a rise in disposable consumer income, particularly in in key infrastructure and R&D across a number of
Asia, Latin America and Africa, and sectors, with the aim of improving Rwanda as an investor
destination. For example, in 2016 the government built
ii) changing customer habits, with a growing interest in the first essential oils testing and certification laboratory
naturally-sourced products. in East Africa, meaning that products can now be tested
to international standards locally.
Rwanda is well-placed to take advantage of the increasing
demand for essential oils. The country has the climate The essential oils industry in Rwanda is currently
and soil to produce high-quality and high-volume plants, underdeveloped. There are just a few startup companies,
particularly patchouli and geranium, from which two of led by Ikirezi Natural Products (“Ikirezi”), which is the
the most popular essential oils are produced. Rwandan only exporter of essential oil products. Ikirezi currently
farmers can produce three or four harvests a year, a produces organic geranium, organic lemongrass,
clear advantage compared to many other essential organic rosemary, organic patchouli, eucalyptus, and
oil producing countries (e.g. South Africa has only two tagetes (marigold). It has faced three main challenges
harvests a year). since incorporation in 2005: slow smallholder farmer
mindset change from subsistence to commercial
The Rwandan government has identified the farming; difficulties acquiring land for expansion; and
modernisation of its agricultural sector as an important access to impact investment. Nonetheless, Ikirezi retains
aspect of its Economic Development and Poverty ambitious growth targets, its confidence based on
Reduction Strategy (“EDPRS”), currently transitioning accumulated experience, increased global demand for
from its second phase (EDPRS-2, which ran from 2013 essential oils, and the conducive business environment
to 2018) to its third phase (EDPRS-3, running from 2018 established by the Rwandan government.

Essential Oils, by Thomas Picauly from Unsplash

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The Essential Oils
Industry

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What are Essential Oils?

Essential oils are volatile and liquid aroma compounds Asia was the continent responsible for the largest share
extracted from plants and have the characteristic of essential oils exports, with an estimated 33 percent
fragrance and flavour of the plants from which they total market share.5
are extracted. Essential oils are generally extracted by
distillation, and are either sold as pure oils or combined The top importers in 2016 were the United States (22
with a carrier liquid to create a product that is ready percent of global market share) France (8.2 percent),
to use. Many essential oils undergo a manufacturing Germany (6.6 percent), the UK (6.1 percent), China (4.4
process to produce (1) fragrance compounds used in percent), and India (4.4 percent).6 Europe was responsible
cosmetics and personal care products, as well as in for the largest share of essential oil imports, with an
pharmaceuticals (notably, for aromatherapy); and (2) estimated 39 percent total market share. It is expected
flavour compounds used in food and beverages.There are that the market for essential oils will grow fastest in the
over 90 commonly used essential oils, with widely-used Asia Pacific region over the coming decade.7
oils including orange, lavender, peppermint, eucalyptus,
patchouli, and geranium.1 The growth in the Essential Oils industry is being driven
by a combination of factors, most notably the following:
The Essential Oils Industry
• Increased consumer disposable income, particularly
There are conflicting reports regarding the global value in Asia, and the resulting increase in demand
of the essential oils industry. Most studies approximate for non-essential or “luxury” products, with this
the sector to be currently valued in the region of USD including goods derived from essential oils (e.g.
6 billion.2 What is universally acknowledged is that beauty treatments and health food products).8
the essential oils industry is growing rapidly. A report
published by Statistics MRC in October 2017 estimated • There is a trend amongst consumers in both
that the industry is set to be valued at USD 13 billion developed and developing countries demanding
by 2023, growing at a compound annual growth rate naturally-sourced products.9 This can be explained
(“CAGR”)3 of 11.7% between 2016 and 2023.4 by the increasing belief in the health benefits of
natural ingredients and the growing influence of
In 2016 the largest exporters of essential oils were: “wellness”.10

Essential oils are used in a variety of fast-growing

Largest Exporters of Essential Oils, Globally 4
industries including: i) Flavour and Fragrance, ii)
Country % of Global Market Share Beauty and Cosmetics, iii) Food and Beverage, and iv)
United States 13 % Pharmaceuticals. Outlined in Table 1 below is a summary
of the estimated current and future values of the four
India 11 %
industries.
China 10 %

France 8.4 %

Brazil 6.9 %

Indonesia 4.7 %

Argentina 4.2 %

1 For further information see Healthline: https://bit.ly/2Q6ebpv 5 For further information see MIT Atlas Media: https://bit.ly/2PD0r65
2 For example see Grand View Research: https://bit.ly/2S1bL8T 6 For further information see MIT Atlas Media: https://bit.ly/2TtXO4Uv
3 The compound annual growth rate is a measure of growth over multiple 7 For further information see Business Insider: https://read.bi/2PD0XB3
time periods. It is the growth rate that gets you from the initial investment 8 For further information see Grand View Research: https://bit.ly/2S1bL8T
value to the ending investment value if you assume that the investment has 9 ibid
been compounding over the time period. 10 Wellness is described on the website for Global Wellness Day as: “Well-
4 For further information see Reuters: https://reut.rs/2JEbBUk ness is an active process of becoming aware of and making choices towards a
healthy and fulfilling life.”

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Table 1: Understanding the current and future value of the industries which use Essential Oils

Industry Summary
Flavour and - The Flavour and Fragrance market is growing rapidly. In 2015 the industry was valued at USD 19
Fragrance billion. This is expected to grow to USD 33 billion by 2022.1
- The main areas of expected growth for flavours and fragrances include food, beverages, and
toiletries.

Beauty and - In 2017 the Beauty and Cosmetics industry was valued at approximately USD 500 billion. The
Cosmetics industry has grown rapidly over the last five years, particularly in developing countries. For
example, the industry is expected to grow by USD 21 billion in China and USD 10 billion in Brazil
between 2014 and 2019.2
- In 2016 the natural and organic beauty sector was estimated to be worth USD 11 billion. This is
expected to rise to USD 22 billion by 2024.3

Food and - In 2017 the Food and Beverage industry was valued at USD 5.65 trillion.4
Beverage - In 2016 the market size for flavours and enhancers stood at USD 9.2 billion. This is expected to
rise to USD 12.8 billion by 2023 (with CAGR for the period expected to be 3.8 percent).5

Pharmaceuticals - In 2016 the global pharmaceutical industry was valued at USD 967 billion.6
- The industry is expected to be worth over USD 1 trillion by 2022.7

1 – 6 Source: Statista
7 For further information see Pharmaceutical Commerce: https://bit.ly/2oNeEyY

The Essential Oils Value Chain

The end-to-end process of making essential oils the value chain, Research and Development is another
involves a number of stages. Even so, there are several key area for investment. At a fundamental level, R&D is
opportunities for investors across the essential oils value necessary to understand which indigenous plants could
chain dependent on their area of expertise. be used to derive commercially viable essential oils. It is
also essential to move further up the value chain into the
There is an urgent need for increased investment at the flavour & Fragrance (F&F) industry, as there are very few
production level as essential oils remains a relatively players within the region who are currently producing
new industry within the region. In countries like Rwanda, F&F compounds and formulations.
farmers need significant training and sensitization
because crop production for essential oil distillation Figure 1 below provides an overview of the end-to-end
requires skills training and follow-through. Further up process of producing and manufacturing essential oils.

Figure 1: Understanding the Essential Oils Value Chain

PRODUCTION

Natural Raw Materials (e.g. geranium flowers)

MANUFACTURING MANUFACTURING

Solvent, Extraction, Distillation, etc. Further Chemical / Biological Modification

Retinoid | Oleoresin | Essential Oils Aroma Chemicals

MANUFACTURING COMPOUNDING / BLENDING

Purification Compounded Flavours and Fragrances

Flavour | Perfume Essences

SALES TO END MARKETS

Flavours and Fragrance | Beauty and Cosmetics

Food and Beverage | Pharmaceuticals

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The Essential Oils
Industry in Africa

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The essential oils industry in Africa is small in terms of Africa remains a small market for essential oils, with
both exports and imports. the continent responsible for only 1.7 percent of the total
global imports. The largest three importers of essential
In 2016, the total exports from the continent were valued oils are as follows: 1
at approximately USD 211 million, accounting for 4.4
percent of the global total. The largest exporters of
Largest Importers of Essential Oils in Africa 1
essential oils were as follows:1
Country % of Total Global Imports Value (USD)

Largest Exporters of Essential Oils in Africa 1 South Africa 0.48 % 22.7 million

Country % of Total Global Exports Value (USD) Egypt 0.33 % 15.4 million

Egypt 0.93 % 44.2 million Nigeria 0.33 % 11.5 million

Madagascar 0.80 % 38.1 million

North Africa has the most developed essential oils
Morocco 0.79 % 37.6 million
industry in Africa, with Egypt, Morocco and Tunisia the
South Africa 0.61 % 28.9 million major producers in the region. Madagascar and South
Tunisia 0.43 % 20.5 million Africa are the other major producers of essential oils on
the continent. Outlined below is a brief summary of the
Other producers include but are not limited to: the essential oils industry in each major producing country.
DRC, Kenya, Tanzania, Comoros, Burundi, Malawi, Cote
D’Ivoire, and Somalia.2 As of 2016 all had a larger market
share in the essential oils industry than Rwanda.3

Egypt is the largest producer of essential oils in Africa, Morocco is the third largest producer of essential oils
with the industry having a total export value of USD 44.2 in Africa, with the industry having a total export value
million in 2016. Almost all Egypt’s essential oils are from of USD 37.6 million in 2016. Essential oils in Morocco
cultivated sources. Egypt produces around 30 different come primarily from wild harvested crops, however,
essential oils; however, over 60 percent of the value of its production volumes of cultivated crops are becoming
exports is comprised by two crops: more prominent. The major wild harvested crops include
rosemary, thyme, lichen, argan, wild chamomile, myrtle,
i) Geranium, which accounts for around 45 percent of atlas cedar, laurel and artemisia. The main cultivated
export totals with production volumes in the range of 150 crops are coriander, lavender and lavandin, cumin,
to 180 tonnes, and sesame, aniseed, and bitter orange.2

ii) Jasmine, which accounts for around 20 percent of In 2016 the majority of Morocco’s essential oils were
export totals with production volumes of around 3.3 to exported to Europe (76 percent), with France the largest
3.5 tonnes. Egypt’s other main oils produced are cumin, single country buyer (56 percent). North America
violet leaf, onion, clue chamomile, petitgrain mandarin, accounted for 18 percent of Moroccan exports, with Asia
and neroli.4 accounting for 2.9 percent. Only 0.25 percent of Moroccan
essential oils were purchased by African countries.3
In 2016 the majority of Egypt’s essential oils were exported
to Europe (69 percent), with France the largest single
country buyer (36 percent). North America accounted for
17 percent of Egyptian essential oils exports, with Asia
accounting for 10 percent. Only 0.80 percent of Egyptian
essential oils were purchased by African countries.5

1 All the remaining figures in the paragraph relate to the percentage of total 1 For further information see MIT Atlas Media: https://bit.ly/2PD0r65
global exports. 2 For further information see Intracen: https://bit.ly/2TrYEyS
2 For further information see MIT Atlas Media: https://bit.ly/2PD0r65 3 For further information sse MIT Atlas Media: https://bit.ly/2PD0r65
3 ibid
4 For further information see Intracen: https://bit.ly/2TrYEyS
5 For further information see MIT Atlas Media: https://bit.ly/2PD0r65

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Tunisia is the fifth largest producer of essential oils in South Africa is the fourth largest producer of essential
Africa, with the industry having a total export value of oils in Africa, with the industry having a total export value
USD 20.5 million in 2016. Tunisia’s essential oils industry of USD 28.9 million in 2016. South Africa produces a large
is centred primarily on the harvesting of the leaves number of essential oils, with the majority of exports in
and flowers of the bitter orange tree to produce neroli citrus oils (e.g. orange) and eucalyptus oil. Other oils
oil, orange flower water, bitter orange concentrate, produced in South Africa include, but are not limited
petitgrain oil, and petitgrain water.1 to: jasmine, lavender, mint, geranium, chamomile, and
rosemary.5
In addition to this, rosemary and myrtle are wild
harvested, with most of the land on which this is done In 2016 the majority of South Africa’s essential oils
controlled by the Tunisian state; harvesting rights are were exported to Europe (41 percent), with the UK the
auctioned each year to the highest bidder. Total annual largest single country buyer (10 percent). North America
exports of rosemary are estimated to be in the range accounted for 38 percent, and Asia 9.9 percent. 7.2
of 70 to 90 tonnes, and of myrtle in the range of 2 to 3 percent of South Africa’s essential oils were purchased
tonnes.2 by African countries.6

Madagascar is the second largest producer of essential

oils in Africa, with the industry having a total export
value of USD 38.1 million in 2016. Madagascar produces
a number of essential oils, including ylang ylang, clove,
palmarosa, geranium, niaouli, and helichryse. Around 80
to 90 percent of the oils are exported, with the remainder
left for the domestic market.3

In 2016 the majority of Madagascar’s exported essential

oils were exported to Europe (50 percent), with France
the largest single country buyer (34 percent). Asia
accounted for 30 percent of Madagascar’s exports, with
North America accounting for 8.9 percent. 3.3 percent of
Madagascar’s essential oils were purchased by African
countries.4

1 For further information see Intracen: https://bit.ly/2TrYEyS 5 For further information see ZA Department of Agriculture, Forestry &
2 For further information see MIT Atlas Media: https://bit.ly/2PD0r65 Fisheries : https://bit.ly/2QYFGOW
3 For further information see Madagascar Consulate: https://bit.ly/2TszXCB 6 For further information see MIT Atlas Media: https://bit.ly/2PD0r65
4 For further information see MIT Atlas Media: https://bit.ly/2PD0r65

Rhodes Fruit Farm, Stellenbosch, Western Cape, South Africa, from South African Tourism, on Flickr

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Rwanda – An Overview

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Rwanda is a small landlocked country in East Africa. i) good governance and increased efficiency in the private
With a population of over 12 million1 and a total area of sector,
approximately 2.6 million hectares, it is one of the most ii) skilled human capital bolstered by education, health,
densely populated countries in Africa.2 The country is and information technology,
hilly and fertile, with agriculture being the traditional iii) a vibrant private sector,
mainstay of the country’s economy. iv) world-class physical infrastructure,
v) modernisation of agriculture, and
vi) regional integration.3

Over the last ten years, Rwanda has implemented two,

five-year Economic Development and Poverty Reduction
Strategies – EDPRS (2008 to 2012) and EDPRS-2 (2013 to
2018). Both plans were designed with the aim of meeting
Vision 2020’s six pillars.4 The country is currently
transitioning to EDPRS-3, which will run from 2018 to
2023.

Under Kagame’s stewardship, Rwanda has

had an impressive economic record, with real
GDP growth averaging approximately 7.31
percent from 2000 to 2018.5
Since the end of the Rwandan Genocide in 1994, the
country has experienced a long period of political
stability. The Rwanda Patriotic Front (“RPF”) has held There has been considerable success in diversifying the
power since 1994, led by Paul Kagame since 1998 (with economy, with Rwanda now seen as a hub for a number of
the RPF leader rising to President of Rwanda in 2000). knowledge-based industries in the region; there is a high
Kagame has made considerable efforts to transform the number of technology start-ups based in Kigali. In 2017,
economy into a diverse knowledge-based middle-income Rwanda was ranked fifty-sixth out of 190 countries in the
country. This formed the central tenet of his “Vision World Bank’s “Doing Business Report”, and received a
2020” development programme, launched shortly after distinction as the second easiest country in which to do
assuming the presidency. This programme is based on business in Sub-Saharan Africa.5 Rwanda’s success has
six principle pillars: led the country to be coined as the “Singapore of Africa”.6

1 For further information see World Bank: https://bit.ly/1aJuZTN 3 For further information see Upflow: https://bit.ly/2BmZPJ3
2 For further information see Phys.org: https://bit.ly/2uyrbcJ 4 For further information see World Bank: https://bit.ly/1aJuZT
5 For further information see Upflow: https://bit.ly/2BmZPJ3
6 For further information see Graphic: https://bit.ly/2OTu0ew

Paul Kagame, President of Rwanda, image from https://bit.ly/2HOTK8onews/57741

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Rwanda’s Agricultural
Sector

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In EDPRS-2 there is recognition that “land is perhaps

Agriculture remains the bedrock of the
Rwanda’s scarcest resource”, referring to the fact that
country’s economy, currently contributing 39
the demographic changes in Rwanda necessitate better
percent of GDP and employing approximately
use of the country’s limited supply of land. Given this, a
80 percent of Rwanda’s working population.
key objective of EDPRS-2 is stated as being:

A key objective of EDPRS-2 has been rural development “Over the longer term, the climate, and favourable
through the intensification and commercialisation of endowments of water and labour favour high-value
the agriculture sector.1This was in recognition of the crops. These products are labour intensive, require
prevalence of poverty caused by low productivity in technical and value chain expertise and can generate
subsistence agriculture, and the understanding that high levels of income per hectare. Promoting high-value
“economy-wide growth led by the agriculture sector has products to diversify smallholder farming and satisfy
a greater effect on poverty reduction than does the same increasing urban, domestic and regional incomes and
level of growth driven by the non-agriculture sector.”2 diet, will be a priority.”4
One of the strategies for increasing the productivity in
agriculture is the enhancing role of the private sector EDPRS-2 also recognises the role of trade in enhancing
across the value chain. The Rwandan government has the Rwandan economy. With this being the case, EDPRS-2
made efforts to support private sector investment through targets a 28 percent increase in the value of exports by
offering various incentives such as tax exemptions and 2020. In order to achieve this, there is recognition that the
low-interest loans to support agribusiness in the country. economy must modernise and diversify. Agriculture is
In addition, the government has looked to make the one of the targeted industries for export-led growth, with
investment opportunity more attractive by, for example, essential oils one of the possible “high-value” products
providing training programmes for farmers and investing which could help reach the 28 percent target.5
in agriculture-based research and development.3

1 For further information see World Bank: https://bit.ly/2qY3kzq 4 For further information see The Republic of Rwanda, EDPRS2: https://bit.
2 This statement was made by the International Food Policy Research Insti- ly/2Klc9fI
tute in a study on Rwanda in 2009: https://bit.ly/2Klc9fI 5 ibid
3 For further information see Upflow: https://bit.ly/2BmZPJ3

Horticulture in Rwanda, image by The East African, https://bit.ly/2A72Mwb

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Innovation in Rwanda

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The essential oils value chain not only represents a Fund to create an ecosystem that will spur continuous
compelling investment opportunity, but also heralds innovation across a variety of industries serving markets
the development of a new cluster of industries that across Africa. Launched in June 2018, the fund aims
can collectively supply high-value, natural products to to invest in tech start-ups and innovative enterprises in
regional and global markets, generating employment Rwanda and the wider region.
opportunities among all skill levels. There are two
essential prerequisites to capitalising on the industry’s Furthermore, Rwanda is striving to cement its reputation
growing potential: as a preferred destination for proof-of-concept initiatives.
Through Zipline, for example, Rwanda is home to the
i) a combination of suitable conditions at the production world’s first drone-enabled healthcare delivery service.
level, discussed in sections V and IV of this report; and As of October 2018, Rwanda was the first country in
Africa to be admitted into Alibaba’s Electronic World
ii) an environment that is conducive to research and Trade Platform.
development.
As a country that is committed to serving as Africa’s
The Rwandan government has made a concerted effort “test kitchen”, where innovation and experimentation
to position itself as an epicentre for innovation within the are actively encouraged, Rwanda is well-suited to house
region. Experiencing an annual growth rate of 11% since a regional F&F hub that tests limits in creating new and
2006, Rwanda’s ICT sector is expected to reach $5 billion exciting flavour and fragrance formulations.
by 2025. The Kigali Innovation City combines technology
companies, higher learning research institutions, an
industry skills academy, and the Rwanda Innovation

Kigali, Rwanda - Image from Flickr, by Mighty Travels

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The Essential Oils
Industry in Rwanda

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The Essential Oils industry in Rwanda is nascent, Rwanda’s revived essential oils industry is only around
with one main company – Ikirezi Natural Products – a dozen years old, meaning operationalising farms and
currently active in the market and exporting abroad. upskilling farmers to manufacture oils remains a work in
Established in 2005, the company is owned by three progress.7 Nonetheless, Ikirezi’s investment in new crop
Rwandan shareholders including its Managing Director introduction, farmer training, husbandry and distillation,
Dr Nicholas Hitimana (“Hitimana”). Ikirezi has held an and quality control has resulted in high quality exports
ECOCERT organic compliance certificate since 2006, recognised globally. The essential oil industry has high
valid in both the EU and USA.1 barriers to entry due to the difficulty in growing and
cultivating the plants, and the concentrated presence
Ikirezi partners with small farmers in Rwanda, with an of a few large international players in the market.
estimated 30 hectares of plantations under management Despite this, Ikirezi’s owners Hitimana believes there is
and employing more than a hundred farmers full-time “great potential” in the essential oils sector due to the
and many more during the peak seasons.2 There are also increasing global market for essential oils, successful
additional areas of land from which the company sources research and development, and the enthusiasm of the
products, although Ikirezi does not manage the land Rwandan government to support this industry.8
directly. Instead, supply comes from the “outgrowers”
cultivating this land. This “hybrid model” means
that Ikirezi does not have to rely fully on the supply of
raw material from outgrowers. Hitimana expressed
IKIREZI – FIVE FACTS
that further investment is needed such that Ikirezi
Ikirezi was established by Dr Nicholas
can introduce drip irrigation, which would increase
productivity and thus overall output without the need to
1 Hitimana and is the only exporter of
acquire more land.3 essential oils in Rwanda.

Ikirezi runs a “hybrid model”, with the

Expected growth is driven primarily by the anticipation
of introducing drip irrigation to existing cultivated land,
2 majority of its plants and flowers used for
and through higher eucalyptus and tagetes harvests. In essential oils coming from 30 hectares of
addition, the company is looking to develop more end- land which it has under management, with
user products such as toiletry products and mosquito the remainder coming from “outgrowers”.
repellents, as well as anticipated regional expansion
Ikirezi expects to sell over 2 tonnes of
by 2021.4 If Ikirezi grows in-line with expectations it will
employ over 500 farmers by 2020/21.
3 oils in 2018, mainly on the international
market. Over the next few years the
company is expecting to grow significantly.
Ikirezi currently produces seven essential In 2019 Ikirezi is projecting sales of 4.1
oils, including: i) eucalyptus, ii) geranium, iii) tonnes of oils, and by 2021 sales of 12.8
lemongrass, iv) rosemary, v) patchouli, and vi) tonnes.
tagetes (marigold).
Ikirezi currently produces six essential
4 oils, including: i) eucalyptus, ii) organic
They are preparing to launch a new essential oil in early geranium, iii) organic lemongrass, iv)
2019. The company currently exports the majority of organic rosemary, v) organic patchouli,
essential oils to international buyers. Ikirezi also sells and vi) tagetes (marigold).
oils in 5 and 10 millilitre vials from its headquarters in
Kigali, and works with a number of retail outlets, hotels, The majority of the Ikirezi’s essential oils
gift shops, and spas in the country; beyond mosquito 5 are exported, with buyers from South
repellent, the majority of domestic sales are through Africa, Kenya, UK, USA and Canada.
spas.5 EThough efforts have been made to move into the The company does sell its essential oils
domestic pharmaceutical sector, so far this has failed to locally, with the majority being sold to
take off; Hitimana expressed that this would need more hotels, boutiques and spas.
marketing and sensitisation of customers.6

1 For further information see: https://www.ikirezi.com/ 7 ibid

2 For further information see: https://www.ikirezi.com/; Botho interview with 8 For further information see: https://bit.ly/2BmZPJ3
Nicholas Hitimana
3 Botho interview with Nicholas Hitimana
4 ibid
5 For further information see: https://www.ikirezi.com/
6 Botho interview with Nicholas Hitimana

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Botho Emerging Markets has identified patchouli oil

and geranium oil as offering particular investment
opportunities in Rwanda (both oils are currently produced
in the country).

Patchouli Oil Geranium Oil

Patchouli oil is derived from the leaves of the patchouli Geranium oil is derived from the leaves and flowers of
plant. Patchouli belongs to a family of a number of well- the geranium shrub. The shrub is indigenous to South
known aromatic plants that includes lavender, mint and Africa, though is now cultivated throughout much of the
sage. Patchouli is native to a number of Asian countries, world, including in Central America, Europe, Russia,
including China, India, Malaysia, and Indonesia. It is also Japan, and various African countries (e.g. Rwanda, the
grown and cultivated in Rwanda and Brazil.1 Congo, Egypt).4

The oil price per kilogram is approximately USD 90-175, The oil price per kilogram is approximately USD 215, with
with an average oil yield of 3 to 3.5 percent. The average an oil yield of 0.1-0.2 percent. The yield material is 15-40
yield material is around 2 tonnes per hectare.2 tonnes per hectare.5

Patchouli oil has a number of uses, including in Like patchouli oil, geranium oil has multiple uses. In
perfumery, aromatherapy, cosmetics, cleaning products, particular it is used in aromatherapy, with it thought to
and house detergents. The oil is particularly popular as reduce feelings of stress, anxiety and depression. It is
an alternative medicine, with it thought to relieve stress, also commonly used in the cosmetics industry as a face
anxiety and depression.3 cleanser.6

1 For further information see New Directions Aromatics: https://bit.ly/2Qfr00Q 4 For further information see New Directions Aromatics: https://bit.ly/2Tr6SYl
2 Botho Research (Expert Interviews) 5 Botho Research (Expert Interviews)
3 For further information see New Directions Aromatics: https://bit.ly/2Qfr00Q 6 For further information see New Directions Aromatics: https://bit.ly/2Tr6SYl

Dense agriculture in Rwanda

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Investment
Opportunities in the
Rwandan Essential
Oils Sector

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Rwanda has suitable conditions to facilitate considerable

growth in the essential oils sector. This was recognised
in a 2002 market study completed by Agribusiness in
Sustainable African Plant Products (“ASNAPP”), a value
chain development organisation based in South Africa.
In this study they recommended essential oils as an
attractive agribusiness opportunity in Rwanda.1 Whilst
the uptake in the essential oils industry has been slow,
there are excellent conditions for development of the
sector, with these making it an attractive opportunity for
investors. These investment conditions have improved
significantly since the ASNAPP report, across a number
of areas:

I. Rwanda has the possibility of producing up to three Kigali Innovation City (KIC) serves as an innovation
or four harvests a year due to good soils and weather and knowledge hub combining world-class learning
conditions in the country. This is a comparative institutions, tech companies, innovation friendly
advantage compared to a number of essential oil- financing and strong government commitment.
producing countries. For example, in South Africa These foundations mean Rwanda is well-equipped
only two harvests are possible annually.2 to develop its own F&F industry with the right
investments.
II. In 2016 the Rwanda Standards Board (“RSB”) acquired
equipment for testing and certification of essential III. As previously referred to in this report, the
oils.3 The laboratory is one of a kind in East Africa, Rwandan government has recognised “high-value”
allowing RSB to test essential oils to international agricultural products as a central tenet in developing
standards. Prior to this, Rwandan essential oils had the country’s economy. This is particularly important
to be sent to Europe for testing, a time-consuming given Rwanda’s continued reliance on the agricultural
and expensive process. The laboratory has been sector and the limitations to growth opportunities
key to developing trust in the Rwandan essential due to the country’s size. Essential oils provide an
oils market and eliminating the possibility of ideal opportunity for this growth given their high
counterfeits.4 In conversations Botho held with value and increasing demand in the global market.
Hitimana he expressed that whilst the building of the With this being the case, the Rwandan government
laboratory has been a positive step, there remains has provided various incentives to attract investors
a “real need” to further the capabilities of the and has made clear through EDPRS-2 its support
laboratory in order that it can undertake Research for private sector-led investment in the sector.
and Development into the essential oils sector; for Agriculture across Africa is also being supported
now, it simply establishes and maintains standards. by the African Development Bank (“AfDB”) with
As mentioned previously, R&D is necessary both to the sector recognised as a key area for enhancing
understand which indigenous plants could be used growth across the continent. AfDB has made clear
to derive commercially viable essential oils, and to their intention to invest heavily to transform African
make inroads into the F&F industry by producing agriculture (an estimated USD 24 billion is set to be
complex compounds and formulations. Rwanda has spent by the Bank by 2028 as part of its Feed Africa
made great strides in positioning itself as a centre of Strategy)5, with the Bank’s President Akinwumi
innovation and as a testing laboratory for proof-of- Adesina stating “Africa must become a global
concept initiatives within the region. For instance, powerhouse in food and agriculture.”6

1 For further information see: https://www.ikirezi.com/historybackground/ 5 For further information see AFDB: https://bit.ly/2MtjGtd
2 For further information see Yahoo: https://yhoo.it/2PHq2uv 6 For further information see AFDB: https://bit.ly/2y5ubix
3 The RSB is a public institution established by the Rwandan government to
undertake all activities pertaining to the development of standards, conformi-
ty assessment and metrology services in the country
4 For further information see New Times: https://bit.ly/2Fz5NL8

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7 The Essential Oils Industry in Rwanda Botho Emerging Markets Group

IV. Rwanda has had political and economic stability VI. The essential oils industry is growing across the
for a number of years. As previously referred to in East Africa region; there is an increasing number
this report the government has been successful in of Kenyan companies manufacturing the equipment
growing and diversifying the country’s economy, needed for the extraction and distillation of essential
making it less exposed to potential shocks in oils. This leads to the possibility of increased regional
international markets (e.g. a drop in the price of integration across the essential oils industry. This
crops). The government has also been successful process is made easier due to the generally cordial
in dramatically improving Rwanda’s transport relationship between the East African countries,
infrastructure, with this a crucial building block for the trade policies being implemented across Africa,
developing successful industries. and the improving infrastructure across the region;
for example, as a free trade area the East African
V. The essential oils industry in Rwanda is still Community, of which Rwanda is one of five fully
undeveloped, offering early-stage investment participating members, has facilitated significantly
opportunities across the value chain. This gives higher levels of regional trade.
investors the chance to play a major role in shaping
the country’s up-to-now untapped essential oils
industry.

Man clearing grass in Rwanda, by Serrah Galos from Unsplash

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 8
Comparison –
The Netherlands

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8 The Essential Oils Industry in Rwanda Botho Emerging Markets Group

Rwanda is one of the smallest countries in Africa, which • The Netherlands, like Rwanda, has excellent
limits agricultural production capacity. Whilst this is the conditions for growing crops. Both countries have a
case, the country’s size should not be seen as the only mild climate and fertile soils (the Netherlands also
determinant in its potential success as an agricultural has the advantage of being predominantly flat).2
producer.
• The Netherlands has made significant investments
To exemplify this, one can look at the success of the into the agricultural sector; there has been a
agricultural sector in the Netherlands. The country concerted effort to ensure the country has world
is roughly double the size of Rwanda, but still can be leading Research and Development. For example,
considered extremely small compared to most large Wageningen University has been ranked as the best
agricultural exporters. agricultural university in the world for the past three
years in The National Taiwan Ranking for scientific
Despite the Netherlands’ size it is the second largest and research excellence. In addition, a number of
exporter of agricultural products in the world, behind the world’s largest agri-food companies are based
only the United States. In 2017 its food exports were or have research facilities in the country (e.g. in 2016
approximately USD 93 billion, putting it ahead of Germany Danone opened an R&D facility in Utrecht).3
(USD 87 billion), Brazil (USD 79 billion), France (USD
74 billion), and China (USD 63 billion). The agricultural • The Netherlands has been effective in developing
sector in the Netherlands is diverse, with it covering a well-run, efficient agricultural production chains.
range of livestock and plant-cultivation sectors.1 This has been important in ensuring buy-in from
farmers and growers.4
The success of the Netherlands’ agricultural sector
is remarkable, and can be attributed to geographical The success of the Netherlands shows that small
luck, effective use of technology, and advanced farming countries with favourable growing conditions are able to
techniques. develop large agricultural sectors if the sector receives
heavy investment and is well-managed. The Dutch
agricultural sector should be seen as a template for
Rwanda.

1 For further information see: https://www.hollandtradeandinvest.com/ 2 ibid

key-sectors/agriculture-and-food 3 ibid
4 ibid

RWANDA’S ESSENTIAL OILS INDUSTRY IS POISED FOR GROWTH

The global demand for essential oils is growing Rwanda has extremely favourable conditions
1 rapidly, driven by increased incomes and 3 to grow the plants and flowers that produce
changing customer habits. A number of studies essential oils, with up to four harvests per year.
looking at the industry expect it to more than
double in size by 2023. Rwanda has a stable political climate, with
4 the government putting in place extremely
Rwanda’s essential oil industry is far below its favourable business conditions to encourage
2 production capacity. It is one of the smallest both local and international investors.
active producers of essential oils in Africa, with
only one company – Ikirezi Natural Products – Rwanda’s government has recognised the
active in the marketplace. 5 potential for the essential oils sector in
the country and is developing the required
infrastructure to support the sector, for
example, the testing and certification laboratory.

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The Essential Oils Industry in Rwanda Botho Emerging Markets Group

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