Gov’t to privatise three rice factories

Government is set to sell some 60 per cent stake it holds in three rice mills in a bid to raise resources to finance the country’s development projects amidst budget constrain.
Government has already privatised three tea factories. The New Times / File.
Government has already privatised three tea factories. The New Times / File.

Government is set to sell some 60 per cent stake it holds in three rice mills in a bid to raise resources to finance the country’s development projects amidst budget constrain.

The move is also part of a wider strategy by government to divest from business as it seeks to support the growth of a robust private sector cable of driving the country’s ambitious target of middle income status by 2020.

The three rice mills set for privatisation this year are Gatsibo Rice Company, Kirehe Rice Company and Mayange Rice Company.

“We hope to get a good deal, because they are well equipped factories, modern and new equipment with the latest technology,” Daniel Ufitikirezi, the head of State property at Rwanda Development Board (RDB) told Business Times in an interview last week.

The factories have the combined capacity to mill 25,000 metric tones of rice per hour with ability to store 7000 metric tonnes.

Ufitikirezi said five local investors have bided for the factories that were built by the ministry of agriculture and to be used for the first time by the prospective investors.

The rice mills are the latest government parastatals to be privatised this year after the sale of Mulindi and Shagasha tea factories as well as the privatisation Savannah diary in Nyagatare district.

Government generated US$5.2 million through the privatisation of the tea factories. Some of the shares in the tea firms were given to farmers.

Experts say that government has to cautious while implementing its privatisation programme to ensure that investors implement their business plans.

Government has embarked on stringent measures of privatisation including tighten tightening the due diligence procedures and including clauses that protects government to retain the business in case of any failure on the part of the investor.

While government initiated a host of business reforms as part of its strategy to liberalise the market and attract investments, it has been a victim of “brief case companies” with some investors breaching contracts or failing to implement their business plans.

“We retain some shares to allow government monitor investors if they deliver according to their business plan,” Ufitikirezi said.

He stressed that government will monitor the technical proposal for five years and if the implementation is not as per the contract, government will retain the business.

Government plans to sell about nine companies with some in their advanced stages of negotiations, they include, Rwanda Printing and Publishing Company (RPPC), the National Hatchery and Hotel Laico Umubano.

Treasury plans to raise Rwf12.2 billion this fiscal year through the sell of some state owned companies as it steps up efforts to raise resources for financing development.

The proceeds are expected to be invested in the Kigali Convention Centre and the national carrier, RwandAir, as part of the plans to position the country as a regional service hub.

The Bugesera Airport project is particularly priority for government to cater for the growing air traffic at the Kigali International Airport. This year, Rwanda has so far attracted airlines such as South African Airways, Qatar Airline and the Turkish Airlines.

Figures from Rwanda Civil Aviation Authority show that last year aircraft movement reached a 17,272 from 9,406 in 2007. Kigali International Airport registered 376,918 passengers in 2011 compared to 238,909 in 2007.

 

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