The Star (Nairobi)

Kenya: Pay Debts, Don't Start New Projects


RIVATEX textile factory in Eldoret is to be revived by government with a Sh4 billion loan from India's Exim Bank ( see P17). Just like reviving PanPaper, this proposal is a mistake. We all want a successful manufacturing sector but we have to accept realities.

Rivatex has been limping for many years, suffering from a shortage of cotton and old machines. Moi University bought the factory in 2007 after it went bankrupt due to 'mismanagement'. There was no mismanagement as such. After East Africa countries lifted tariffs, most textile factories collapsed under a wave of cheap Asian imports and mitumba.

Unless protection is reintroduced, Rivatex can never succeed commercially, even with the best management. Nor will Rivatex ever be able to access cheap cotton. It is already buying Ugandan cotton but why should cotton ginners sell it to Rivatex below the world price? There is no cheap cotton available in East Africa.

Government has committed itself to slashing its support to parastatals. It should also not support loss-making private enterprises. The best way to get the economy moving would be for government to clear its massive outstanding debts that are crippling the private sector, rather than throwing money into projects that are unlikely to take off.

Quote of the day: "Music is a higher revelation than all wisdom and philosophy ." - Composer Ludwig van Beethoven was born on December 17, 1770.

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