About 1,000 people who have been working at Burera Garment Factory are now jobless as the plant remains idle following the dissolution of partnership between Burera district and Noguchi Holdings Company.
The garment factory and adjacent Integrated Craft Production Centres (ICPC) locally known as ‘Agakiriro’, located on 2.5 hectare in Rugarama Sector in Burera, was established through a joint venture between the two parties as shareholders
The hundreds of jobless people, mostly youth, may have to wait a bit longer to regain employment, until the district sells its shares as part of the ongoing effort to privatize the plant.
“There is an issue of lack of working capital and therefore Burera district seeks to sell its shares worth 55 percent so that the factory fully goes in private hands,” Joseph Munyaneza, Burera district vice mayor in charge of economic development, told The New Times.
Valued at about Rwf1 billion, the facility had the capacity of making over 480,000 pieces of cloth per month and creating about 1,000 jobs in garment production.
However, its operations hit a snag in 2018, after the parties disagreed on a working strategy.
The disagreement also left in limbo the process to acquire a loan from a local bank to get the money that was to serve as operational capital.
The two parties reached the decision to resume separate operations, meaning that Noguchi Holdings had to fully operate the factory while the district had to operate the Agakiriro.
Financial constraints
However, Munyaneza told The New Times that the company could not buy the district’s shares to fully operate the factory alone citing financial constraints.
This has led the factory to stop operations again in 2020.
“The factory is not operating. It lacked financial capacity to run and therefore stopped operations. It is set to resume operations once totally privatized. Whoever will buy the district’s shares will then have a joint venture with Noguchi Holdings,” he said.
The New Times has learnt the privatization process is set to be launched on May 22 this year.
The privatization process, he said, is led by the Rwanda Development Board.
Gislain-Marcel Ibariza, the chair of board of shareholders of the company told this paper that when they started, the company designed a project and applied for loan in a local bank to get enough capital but the district council refused to approve.
This, he said, led to lack of working capital leading to operating below capacity.
However Burera district council had in its response said that the company failed to prove to the district that they could run the factory and make profits, which the district asked them to first fix before acquiring a loan.
The district council had requested the company to show a clear marketing strategy, working plan, when the company would start generating income, what would be the interest and when they would start servicing the loan.
Despite the requirements, the two parties didn’t agree on a working strategy leading the district to prefer selling its shares.
“This means if the district sells its shares, as private investors we will have freedom to acquire loan from the bank and devise our strategy. The factory has potential to produce garments and generate money,” Ibariza said.
He said that besides disagreement on acquiring a loan, the working strategy was not agreed upon.
“For instance I think the district had the potential to help us work with schools so that we produce students’ uniforms. This is an opportunity that was not tapped into. If this happens, working capital cannot be an issue. Working strategy takes 90 percent while working capital takes 10 percent to streamline operations in my opinion. We really need a focus and better organization,” he said.
The company was supposed to produce cotton fabrics, jeans, underwear and shirts among others.