The disclosure followed a report from the Office of the Auditor General for the fiscal year ending June 2024 which highlighted significant concerns. Nyabihu Potato Company received Frw 180 million from NIRDA but continued to report losses.
Rwamagana Banana Wine, which had already been allocated Frw 1.4 billion, also failed to turn a profit, with the agency still investing additional funds into its operations.
In the 2024/2025 financial year alone, NIRDA disbursed over Frw 430 million into companies where it holds equity, in an attempt to cover recurring costs such as salaries, raw materials, utilities, and general upkeep.
Speaking before the Public Accounts Committee (PAC) on July 15, 2025, NIRDA Director General Dr. Christian Sekomo Birame admitted that the factories were performing far below expectations.
He said Nyabihu Potato Company is operating at less than 10 percent of its installed capacity, Rwamagana Banana Wine at roughly 20 percent, and Rutsiro Honey somewhere between 30 and 40 percent.
Dr. Birame said that Nyabihu Potato Company, which was originally designed to produce a range of potato-based products, only processes French fries.
He noted that the factory has struggled due to a key machine that was supposed to handle peeled, roasted, and raw fries but never operated properly. At the close of the 2023/2024 fiscal year, the factory was still in the process of working with the equipment supplier to conduct training and installation.
Although the agency maintains that production is ongoing, the Auditor General's report indicated that the factory had not been operational. Dr. Birame clarified that it only functions intermittently, often just two days at a time, because the products cannot be stored indefinitely.
Once a batch of fries is processed and packaged, production halts until the stock is sold. He emphasized that this cautious approach is intended to prevent waste and further loss.
Recognizing the consistent underperformance of the factories, Dr. Birame said that the government's continued financial involvement is unsustainable and not yielding results. He stressed that these facilities would be better off under private ownership, where there is greater incentive and capacity to run them efficiently.
Efforts to privatize the factories are not new. NIRDA was instructed five years ago to begin divesting its shares to private investors. However, just as some promising negotiations were nearing conclusionâ€"such as one with a local beekeeping cooperative and another with a Chinese investorâ€"the process was interrupted.
The disruption occurred following the creation of the Ministry of State-Owned Investments (Mininvest), which temporarily halted the privatization push in favor of injecting more funds to stabilize the factories before any sale could proceed.
According to Dr. Birame, this change in direction brought several advanced discussions to an abrupt end. In the case of Rutsiro Honey, where there was a viable cooperative ready to take over, conversations facilitated by the Rwanda Development Board (RDB) were suddenly stopped. The same happened with a Chinese investor who had shown interest. These missed opportunities, he noted, resulted in the loss of potentially committed buyers.
Even before this policy shift, earlier negotiations with other prospective investors had also failed to yield results. In the case of Rwamagana Banana Wine, technical issues remain unresolved, further delaying the possibility of a smooth transfer to private ownership.
NIRDA has since notified the Ministry of Finance and Economic Planning that there is no foreseeable path to make these factories fully functional under public management. Dr. Birame said that continuing to fund them only adds to government losses, and privatization is the most practical and urgent solution.
He emphasized that while the factories are not completely dysfunctional, their output is so limited that no return on investment can be expected in the current form. The most responsible move, he added, is to sell them 'as-is' rather than continue draining public funds.
By the end of July 2025, the Ministry of Finance is expected to convene shareholders of the three factories to ask whether they are willing or able to purchase the government's shares. If they cannot, the shares will be placed on the open market.
Commenting on the broader issue of state-run businesses, economic analyst Straton Habyarimana recently told IGIHE that governments rarely succeed when they try to run commercial enterprises directly.
He explained that public officials tend to manage state companies as administrators, not entrepreneurs. Without a profit-driven mindset, accountability suffers and so does efficiency.
He added that while private investors treat businesses as personal assets, public managers often behave like caretakers of public property, which significantly affects performance.
Rwanda boasts more than 1,300 factories, including 85 large-scale agro-processing plants.
IGIHE
Source : https://en.igihe.com/news/article/three-agro-processing-enterprises-set-for-possible-privatization
