The government has pledged to help struggling Community Processing Centres (CPCs) with business plans and marketing strategies in order to turn around their dwindling fortunes before being privatised.
Béata Habyarimana, Minister of Trade and Industry made the disclosure on Tuesday while responding to queries of the Plenary Sitting of the Chamber of Deputies on the poor performance of CPCs.
The moves comes after the Auditor General’s report exposed challenges in the management and performance of these community-based factories, saying that they were costing the government a lot of money with minimal impact on society.
"The process to privatise the remaining factories will be done after they have started making a profit so as to prevent losses that the Government might incur which can stem from less valuation caused by their poor performance,” said Habyarimana, citing the privatisation of Burera Dairy and Nyanza Ceramics in which government lost huge sums of money.
Government invested some Rwf4 billion in the setting up of six CPCs in six districts to spur rural economic growth.
They include Nyabihu Potato in Nyabihu District, Burera Dairy in Burera District, Rwamagana Banana Wine in Rwamagana District, Nyanza Ceramics in Nyanza District, Rutsiro Honey in Rutsiro District and Gatsibo Leather in Gatsibo District.
Audits revealed that the CPCs were established without carrying out a needs assessment and business plan, as well as a study on the required technology and equipment.
MPs argued that this issue is one of the factors to blame for the performance of those facilities.
Poor performance
The PAC Chairperson, Valens Muhakwa, said that as a result some of the needed equipment was not bought, others were found to be inadequate in addition to procurement delays.
For instance, Muhakwa said that the operations of the Gatsibo Leather CPC were short-lived as they stopped as a result of inadequate equipment and lack of maintenance of existing ones, and working capital.
"Such a situation has a negative impact on the factory’s work including the inability to pay workers,” Muhakwa said.
For Rutsiro Honey, Muhakwa said that it had to make eight honey products but has been making one – liquid honey – even at a low rate of between six and 13 per cent of its capacity).
For Nyabihu Potato CPC, Muhakwa said that it would make four products but was only producing one product – crisps - adding that it is working at less than one per cent of its capacity.
Other products that the over Rwf1 billion ($1.2 million) would produce from Irish potatoes include French fries, peeled potatoes (mainly to be supplied to hotels and supermarkets) as well as washed fresh potatoes are still a thing of the future.
Ray of hope?
Talking about Rutsiro Honey, Habyarimana said that a study was conducted to establish the state of honey wine in Rwanda so that it informs the new product that the factory wants to debut on the market.
It is expected, she said, that the honey wine will enter the market by the end of this year, increase the number of the factory’s products as well as turnover such that the loss will be reduced within three years.
"It (honey wine product) is expected to increase the financial means of the factory so that it recovers from at least Rwf124 million loss that the factory has been plunged into since 2018,” she said.
For Nyabihu Potato CPC, Habyarimana said that the factory working well below its capacity, resulting in high fixed costs. She added that the factory has incurred a loss of at least Rwf99 million.
However, she said that once the standardisation mark is acquired for the crisps and French fries – which is expected by the end of this year, she said, adding that by June 2022, the factory will be able to work at 85 per cent of its capacity.
For the Burera Dairy, according to the Auditor General’s report, on December 18, 2019, NIRDA and BDF sold their 548,970 shares – initially worth Rwf548,970,000 for Rwf270 million to an investor – African Solutions Private Ltd (Afrisol), a Zimbabwean agro-processing firm. This, the report indicated, resulted in a loss of over Rwf278 million for the Government on the sale of the dairy.
Habyarimana said that after the sale of the factory, it is working well whereby it moved from processing 500 litres of milk per day to 2,000 litres per day, implying that it quadrupled production.
And, she said, aside from offering a ready market to the dairy farmers in Burera District, the dairy’s milk is much sought after in Bukavu, DR Congo.
"The factory has markets both within the country and in DRC, where Bukavu needs up to 4,000 litres of milk per day. Now, the factory is building its capacity to be able to meet that demand,” she said.
Concerning the Rwamagana Banana factory, she said that it was faced with different problems including delays in the procurement for important machinery and in training workers who would use them.
Habyarimana said that the factory started production of two alcoholic banana beverages on April 1, 2021, which are S-mark certified.
Currently, the Minister said, it is supplying the banana beverages to different districts including Rwamagana, Kayonza, Ngoma, Nyagatare, Kicukiro, Gasabo, Nyarugenge and Musanze.