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> Coffee sector: Why Rwandex was shut down
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> BY GERTRUDE MAJYAMBERE> Rwandex, the country's leading coffee processing and exporting
company was preparing to celebrate its 44th anniversary when its
management abruptly suspended operations, terminated its contracts
with suppliers and laid off 300 administrative employees.
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> The reason: financial woes.
> The company which also deals in hides and skins faces
liquidation. Local banks are up in arms demanding management of the
coffee firn pays back the Frw3 billion borrowed from different
banks for recapitalization the company some years back.
> Bank de Kigali (BK) is demanding Frw1.8 Banque Populaire du
Rwanda Frw650m and COGEBAQUE Frw450m.
> BK has already assembled a strong legal team to try recover
its money from Rwandex.
> "The next move will be announced after studying the file," a
senior Banque de Kigali source said.
> After government sold its stake to one of the shareholders in
the coffee company, Hasson Robert, a son of the founder took over
Rwandex. As he was trying to settle and restrategise the company in
the competitive coffee sector, financial woes weighed in. The
company started making losses. Roberts with experience in hotels
and airline businesses, was forced to suspend the coffee business
towards the end of February this year as he looks for money to pay
off creditors and recapitalise the company.
> Best plan
> Robert had promised to invest billions of francs to turn
around the coffee sector in the country which would latter boost
household incomes.
> According to the business plan, he presented to the
privatisation unit, the investor was to build several washing
stations countrywide to ensure quality coffee is exported, so that
he earns premium revenue.
> He told government that he would invest $300, 000 (about
Frw163m) in roasted coffee and also $150,000 (about Frw81m) in
improving the quality of green berries, with a total investment
plan of over US$1.4m (about Frw762m) in four years.
> But by press time, Alex Kanyankole Executive Director Ocir
Caf�, Rwanda coffee authority said there was nothing yet on ground.
> "Our policy is to export high value product that could reap
high value on the market. Rwandex had not yet met this priority,"
Kanyankore said.
> Government is promoting the production of roasted and instant
coffee.
> Before closing, Rwandex was exporting between 5,000 to 7,000
tonnes of ordinary coffee fetching between $9 million to $10
million respectively.
> This was after the company's export volumes dropped from 50
percent in 2003 to 15 per cent in 2004 when the coffee sector was
liberalised allowing in more players.
> Govt won't intervene
> Though Rwandex has bee paying Frw50m annually as Pay As You
Earn, VAT other duties and employing thousands of Rwandans
indirectly and directly, government says it won't bail out the
company.
> "As government we cannot get involved," said James Musoni,
Finance and Economic Planning.
> By the time of sale, Rwandex was worth $2.7m (about Frw1.4
billion). Government 51 per cent shareholding was valued over
Frw576m.
> Struggling
> Rwandex, a company where government had a 51 per cent stake
through Ocir Caf� and Ocir The, was not in very good books with
Rwanda Revenue Authority. The tax body auditors once unearthed the
company had accumulated Frw450 million in tax arrears. They had
to clear the arrears before the company was fully privatised.
> The shutting down of Rwandex comes at a time Rwanda coffee
sector is promising. In 2006, $54 million was earned from 26,000MT
of the national total coffee production including 3,000MT of fully
washed coffee beans.
> But the total production decreased in 2007, the country earned
only $30.2., however it is expected to increase this year In 2010-
11, the country targets a base of 40,000 tonnes for export and at
least 70 per cent of it should be fully washed and 30 per cent
ordinary coffee beans.
> The country has 134 coffee washing stations, which costs about
Frw60 million for each to be set up. About, Frw300 million is
spent on improving the quality of coffee among coffee farmers
nationwide.
> Government established the agricultural grantee fund in the
Rwanda Development Bank (BRD) to help potential local investors to
secure loans where 50 per cent is paid by the government.
> Today, the cultivation of coffee involves more than 500,000
families and covers about 33,000 hectares, with approximately 80
million coffee plants.
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Jean-Louis Kayitenkore
kayisa@gmail.com
Procurement Consultant
Gsm: +250-08470205
Home: +250-55014140
P.O. Box 3867
Kigali - RWANDA
East AFRICA
Blog: http://www.cepgl.blogspot.com
kayisa@gmail.com
Procurement Consultant
Gsm: +250-08470205
Home: +250-55014140
P.O. Box 3867
Kigali - RWANDA
East AFRICA
Blog: http://www.cepgl.blogspot.com
Skype ID: kayisa66
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