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Government of Rwanda plans to sell Nyabihu potato factory to boost production

January 12 2018
News image of the African potato platform

The Government is in the process of privatising the Nyabihu District-based potato processing plant amid tight market and low production capacity, The New Times has learnt.

The decision comes as part of efforts to turn around the factory production capacity, which is currently low, according to government officials familiar with the situation.

The factory lacks proper management to optimise its productivity and its products have failed to penetrate the local market, officials said. 

Operating under the brand “Nyabihu Potato Company”, the factory has capacity to process about six tonnes of potatoes per day, but it produces only about two tonnes per week, the factory’s new manager, Sammy Mutabazi, told The New Times.

The over Rwf1 billion-factory makes products from Irish potatoes including chips, French fries, peeled potatoes (that are supplied to hotels and supermarkets,) as well as washed fresh potatoes. It uses potatoes of ‘Kinigi’ variety – with violet-reddish skin whose quality is ideal for making crisps.

Nyabihu District Executive Secretary, James Ngabo, said that the factory was intended to, through value addition, provide ready market for Irish potato farmers whose produce lacked buyers and could be sold at giveaway prices.

It was built under the “Uruganda iwacu” programme, an initiative seeking to develop rural areas through establishment and utilisation of community processing centres.

Mutabazi revealed that in contrast to urban areas like in Kigali, Musanze and Rubavu, the chips brand has failed to penetrate countryside market which calls for more awareness to increase consumption for the thin deep fried or baked sliced potatoes, which are commonly served as snack or side dish.

According to the Minister for Trade and Industry, Vincent Munyeshyaka, the factory has been operating at about 10 per cent of its capacity.

The minister noted that the factory was supposed to tap farmers’ cooperatives so as to optimise its productivity, and help farmers in the area get a ready market for their produce.

He said that the government is mulling to privatise the plant to revitalise it, and the plans are in advanced stages.

The president of Nyabihu Irish potato farmers cooperatives, Jean Damascene Ntawushobora, told The New Times that farmers in the area produce about 300 tonnes daily on average, of which 18 tonnes are of Kinigi variety.

But, he said, the factory buys only about 1 per cent of it. Other potatoes are supplied to Kigali, and other parts of the country for sale, he said.

He said that the plant buys their produce based on the prices on the market, noting that, in general, a kilogramme of Kinigi is Rwf177, while that of other varieties is at about Rwf147 in Nyabihu.

Improving innovation

The factory started working in 2015, and was officially launched in March 2016. But, until now, it has been making potato chips only because of lack of some equipment. “We can buy large quantities of Irish potatoes from farmers, but they can rot because we cannot process them without potential buyers. That is a loss. We cannot produce large quantity without matching demand,” Mutabazi observed. “Producing peeled potatoes requires a system that will ensure that they safely reach the customer, which necessitates special transportation equipment,” Mutabazi told The New Times.

Going forward, Mutabazi said, the factory management has started putting emphasis on innovations, and looking for market for its products both within and outside of the country. “We are promoting innovations, including producing vinegar-flavoured and chili-flavoured crisps. Also, we have carried out consumer survey and realised that most customers like chips that are packaged in 50-gramme piece, instead of the current 100-gramme pieces. So we will design the pieces to respond to their needs,” he said. Kampeta Sayinzoga, the National Industrial Research and Development Agency (NIRDA) director general, disclosed that, a new board of directors, and manager of the factory were elected recently (last month), and will start working by end this month to make sure that the factory management is improved, and ease work for the interested investors in the factory.

Privatisation

The privatisation, Kampeta said, intends to maximise the factory’s production capacity. She observed that the privatisation model has been proven to be effective for various projects. Ngabo said that the decision for the privatisation of the factory was agreed upon during a recent meeting of the factory stakeholders, but noted that the cooperatives of farmers should have majority of shares for it to benefit them in line [rural] community development.

But Kampeta said “NIRDA will continue to monitor the factory’s operations to ensure that the socio-economic objective of the factory – including of adding value to potato produce through advanced technologies to improve their livelihoods is realised.” Currently, the majority shareholders in the factory are NIRDA, and Business Development Fund (BDF). Other shareholders are Nyabihu District and some farmers’ cooperatives (who are the minority shareholders).

Document relevant to the topics: Processing techniques and technologies
Document relevant to the regions and countries: Rwanda
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