Garment plant lies idle over disagreement between Burera District and shareholder

What was expected to be a good start that would boost the garment industry in the country and promote Made-in-Rwanda programme may have hit a snag, following the temporary closure of the Burera Garment Factory.
Some of the equipment that is not being used in Burera Garment Factory. File.
Some of the equipment that is not being used in Burera Garment Factory. File.

What was expected to be a good start that would boost the garment industry in the country and promote Made-in-Rwanda programme may have hit a snag, following the temporary closure of the Burera Garment Factory.

Burera Garment Factory is a joint venture between Burera District and Noguchi Holdings, a local company.

Located in Rugarama sector, the factory is established on 2.5 hectares of land and is part of Integrated Craft Production Centres (ICPC) locally known as ‘Udukiriro’.

The district has 48 percent shareholding while the Japanese firm is the majority shareholder with, 52 per cent.

The district availed the land and Nuguchi Holdings set up infrastructure. The district also bought materials such as modern tailoring machines and other equipment.

However, after the equipment was bought and the factory was ready to set off, both parties disagreed on a working strategy, which 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 company had applied for a loan from the Development Bank of Rwanda (BRD), but due to the disagreement, the district refused to sign it off for the money to be released, paralysing activities of the plant.

“We have stopped and we are not operating over unclear reasons,” said Jean Marie Niyonzima, the chief executive officer of the garment factory.
Apparently, the district and the Noguchi Holdings have disagreed, with the district asking the company to convert the entire facility into Agakiriro and relocate the factory elsewhere, a position that is opposed by the other shareholder.

“The district wanted to take ownership of the infrastructure that we built and only leave the equipment to us, which is unfair because the fixed property is more valuable than movables, relocating the facility would also have a negative impact and our wish is to see the factory running as planned as we still need to work with the district,” Niyonzima said

As a result of disagreements, the district denied signing for the company to acquire a loan they have applied for in the Development bank of Rwanda (BRD).

“We have stopped operating as we don’t have working capital, when we started the project, we planned to acquire a loan and we fulfilled all the requirements but it is blocked due to disagreement with the district,” he said.

He said that the factory is losing as machines and other equipment lie idle, stressing that depreciation of the machines can so far be estimated at 20 per cent as the warrant they have is five years.

“The only option is for one shareholder to take full ownership and reimburse the other. However, our wish is to let the factory function and we both benefit from it,” Niyonzima noted.

The company has trained 120 workers including technicians who are now stranded, he said.

When contacted Florence Uwambajemariya, the mayor of Burera District, said that the factory stopped operating because it lacks working capital but could not delve into the disagreements between the parties.

However, according to Dr Faustin Habineza, the president of the Burera District advisory council, the company failed to prove to the district that they can run the factory and make profits, which he said the district asked them to first fix.

He said several meetings were held and they failed to agree on a working system adding that they are still working on ways they can restart operation.

Habineza denied allegations that the district wanted to separate the facility stressing that the district remains a shareholder and all they need is to see the factory running and serve its purpose of boosting the Made in Rwanda.

“We are still shareholders, we can’t let the company get a loan before they show us their marketing strategy, working plan, when they will start generating income, what would be the interest and when they will start servicing the loan,” he said.

According to Germain Niyomutabazi, an Entrepreneurship Development Policy Specialist at the Ministry of Trade and Industry, the two parties need to work out their differences to ensure both the Agakiriro and the garments factory are operational because they are all needed.

“We need garment factory to boost Made-in-Rwanda, we also need Agakiriro to create jobs, however, both parties disagreed and that is the reason why the operation stopped,” he said.

He said they are working with both parties and they have advised them to agree on working system and resume operation, saying that the facility currently lies idle yet it would be contributing towards the district’s development.

Burera Garment Factory had signed a lucrative contract with a Hong Kong-based firm to export over 200,000 pieces of apparels per year.

Worth about Rwf1 billion, the facility had the capacity of making over 480,000 clothes per month and create over 1,000 jobs for full time employees in garment trade alone, according to officials.

The factory also has a section for artisans including, shoe making, carpentry, weaving, among others, which is run by local cooperatives.

editorial@newtimes.co.rw

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