Foreign firms rush for shares in Kitabi, Gisakura tea estates

Several International companies have rushed to buy shares in the Gisakura and Kitabi tea factories, though they are faced with the challenge of fending off competition from their Rwandan rivals in acquiring stakes in the lucrative industry.

Several International companies have rushed to buy shares in the Gisakura and Kitabi tea factories, though they are faced with the challenge of fending off competition from their Rwandan rivals in acquiring stakes in the lucrative industry.

Following the announcement by the Government to sell its 45 percent and 60 percent stake, in Gisakura and Kitabi respectively, 13 companies have submitted bids; with four being foreign while the rest are locally based.

The tea firms were recently put on the market by government through the Rwanda Development Board (RDB).

The ceremony to open bids was carried out in a public session at the RDB offices in the presence of bidders, journalists and members of the ad hoc committee set up to privatize the tea factories.

The Government has lined-up the two lucrative factories for sale in order to attract buyers with adequate expertise and financial means to facilitate the much needed investment for expansion of the sector.

Earlier, the Director General of OCIR-The, Anthony Butera, had explained that selling the factories does not imply that they are not profitable, but rather the need to identify a strategic investor with the capacity and experience to ably develop the sector.

“Government thought the factories can be managed better in the hands of the private sector,” Butera said of the two factories located in Nyamagabe and Nyamasheke districts.

Technical evaluation and vetting on the companies is currently being done by RDB and the ad hoc committee before the triumphant companies are announced.

The winners will be selected basing on, among other things, the capacity to add value to tea, penetration of niche markets and technology transfer.

According to RDB, only bidders whose technical offers will have been awarded at least 70 percent of marks will have their bids considered.

According to the available work plan, privatization of shares in Gisakura and Kitabi tea factories should come to a close at the end of September 2009 with the signing of the Share Purchase Agreement.

Both factories had been targeted by Dubai World in 2008 before the United Arab Emirates (UAE) consortium scaled down its investment options and pulled out of the deal, citing the global financial crisis.

Tea is Rwanda’s second most lucrative cash crop after coffee due to its high quality nature, a result of the alkaline-volcanic soils that favour tea growth.

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