Following disagreements between Burera District and Noguchi Holdings, a local company, over operations of Burera Garment Factory, the two parties have finally agreed to dissolve their partnership.
The factory, located in Rugarama Sector in Northern Province, was established through a joint venture with the two parties as shareholders.
Initially, the plant was to operate as part of the Integrated Craft Production Centres (ICPC), locally known as Agakiriro.
However, its operations hit a snag after the parties disagreed on a working strategy as was exclusively reported by The New Times earlier this week.
After reaching the decision to resume separate operations, it means that Noguchi Holdings will fully operate the factory while the district will operate the Agakiriro.
Ghislain Ibariza, the board chair of the Noguchi, told The New Times on Tuesday that the decision was reached after a high level meeting involving Rwanda Development Board (RDB), the Ministry of Local Government, the Ministry of Trade and Industry, as well as the two parties involved.
“We had started operating the factory as a joint venture. However, we realised in the process that the model that the district was using wasn’t working for us as private investors and we decided to separate,” he explained.
“We wanted to operate a modern industrial unit but later we established that all citizens we were going to work with were not ready and did not qualify to work for a modern factory. We decided to dissolve the shareholding and each party takes a share of the business, which later attracted disagreements,” he added.
The factory has nine blocks and Jean Marie Niyonzima, the chief executive officer of the garment factory, said that they decided to split them so that each party takes some of them.
The district has 48 per cent in the venture.
According to Niyonzima, the structures that were allocated to the district are valued at Rwf210m which is equivalent to 50 per cent of their shareholding.
The other 24 per cent will be paid in monetary terms by Noguchi to the district, to ensure the former fully takes over the plant.
The district mayor, Florence Uwambajemariya, noted that while the factory was operating under a public private partnership model, it became clear that the model the private company wanted to use was not matching with the one that the district uses to drive the craft production centres.
“You would, for instance, find that some workers have limited skills to operate in a modern factory, and this would hamper the operations of the factory, the factory that sought to function at a high standard,” she said.
Uwambajemariya, however, said that the district will incur no losses as the main objective was to facilitate the operation of a company that would create jobs for the communities, which she said will still be met even after the split.
“The company will still operate and the craft production centre will continue to operate. The goal was to facilitate investments that would lead to job creation for our people, and this will still be met.
“The biggest problem would have been the company closing down completely,” she noted.
She said that it was exciting that they were able to finally resolve the disputes that they had for some time, and that they see more opportunities available for the youth and women in the district as operations resume.
Company officials said the factory will continue operations with its target of promoting the Made-in-Rwanda drive and contributing to job creation.
They said that they will be producing cotton fabrics, jeans, underwear and shirts, and that they seek to create nearly 600 jobs.