Rwanda: Govt Sells Burera Diary Ltd to Zimbabwean Investor

15 January 2020

The government has found a buyer for Burera Diary Limited which was floated into the market in September last year.

The government held 98.03 per cent stake in the firm which was established in 2016 at a cost of Rwf488 million to boost dairyfarming in the area.

Government stake was last week sold to African Solutions Private Ltd (Afrisol), a Zimbabwean firm which has been investing in the country over the past two years.

Sources say that the firm was sold at around Rwf 270 million. None of the parties involved agreed to disclose the figure.

The facility was handed over to its new owners on January 14.

The new owners say that they intend to boost the milk-processing industry and buy milk from farmers, train them on best practices, as well as work with farmers in availing animal, feeds to boost productivity in both quality and quantity.

National Industrial Research and Development Agency (NIRDA) Public Relations officer, Jean d'Amour Mbonyishuti, told Business Times that during the handover, the firm committed to invest about Rwf 1.5 billion over the next 5 years to turn around operations.

Afrisol already has a presence in Rwanda based in Rwamagana Industrial Park and has been involved in animal feed production and technical farmer support and training. The firm said that the services and products will be extended to farmers in Burera District.

Afrisol Chief Executive, Ruvimbo Chikwava, told Business Times that they are aware that some farmers in Burera District have reduced involvement in diary production following the closure of the facility.

He said that going forward, they will be involved in training farmers on aspects such as best ways to take care of their cows, best ways to milk and handle milk among other ways.

Considering that they already have investments in animal feed production, he said that they will avail feeds to farmers up front to increase the productivity and quality of their produce.

With six milk collection centres in the area, the firm said that they will prioritise produce from the area before buying from other parts of the country.

Operations are expected to begin in February with some products expected to hit the market thereafter. More products are expected to debut the market over time. The firm's products will be traded under 'Burera Diary' brand name.

He said between Rwf 1B and Rwf 2 billion, which will be invested over the next five years go into improving the capacity of the plant, repairing and revamping the plant, establishing new product lines, working capital as well as ensuring prompt payments to farmers.

The acquisition is a huge relief to farmers in the area as the firm has been marred by various challenges, which have led to the halting of operations, hurting the fortunes of dairy farmers in the region.

Last year, during a visit by President Paul Kagame to Burera District, officials from National Industrial Research and Development Agency (NIRDA), Rwanda Development Board and the Business Development Fund (BDF) were at pains to explain why operations had stalled operations.

Among the challenges that emerged during the interaction was that the firm was grappling with mismanagement.

Claire Mukeshimana, the acting Director-General of NIRDA, said that the government's expectations are that the company will boost the milk processing industry and create more jobs.

"We expect that the new company will boost milk processing industry, create more jobs to locals as well as improving smallholder farmers' lives as sit will be buying milk production at a better price," she said.

She said that the move to privatise the facility is aimed at improving efficiency and productivity.

"Multiple firms expressed interest, only two were shortlisted. Afrisol has committed to operationalise the dairy, support milk collection centers, develop technical skills to its employees as well as to the farmers that will be supplying milk to the factory,"

"In addition to the purchase price which is under confidentiality, Afrisol has committed to invest more than Rwf1.5 billion in capital investments to expand the dairy over the next five years. The investor has also committed to support farmers by providing quality animal feeds to increase the production of raw milk in the region, this will help farmers increase their revenues," Doreen Karake, Transactions Structuring and Support (TSS) Division Manager at the Rwanda Development Board

Burera Diary Ltd was one of three public firms, all in agribusiness, put up for sale by the government in 2019 alongside Nyabihu Potato Company and Rutsiro Honey Ltd.

cmwai@newtimesrwanda.com

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