Before you vote: The truth about reviving KCC and Rivatex


Before you vote: The truth about reviving KCC and Rivatex

In March this year, Rivatex was producing 10,000 bales against a capacity of 70,000 bales, or about 14 per cent

“We hope that from today going forward, it (the milk factory) will benefit our farmers especially milk farmers…Even those who are talking about us, they should tell us what they did to revive this factory. Because, we’ve not gotten it from heaven. It was just here…from 1999, inactive. Now they’ll come and say they dreamt about it. Rivatex was also here. It is us who have come and revived it. And from next year, there will never be a bigger textile industry than Rivatex,”

-President Kenyatta while opening the New Kenya Co-operative Creameries (KCC) Milk Factory in Eldoret on June 12

Were KCC, Rivatex dormant before Jubilee revived them?

The Kenya Co-operative Creamery (KCC) Ltd was founded in 1925 with Hugh Cholmondoley as its chairman. The company later introduced the famous school milk programme, in 1979 which provided free milk to pupils in schools.

According to a report by the National Assembly published on April 8, 2003, the company was closed in 1999 due to financial mismanagement and placed under receivership on August 5, 1999.

However, in 2003, the Narc government, through the Ministry of Cooperatives, bought it back from KCC 2000 Ltd at a cost of Sh547 million and named it New KCC. From then the company was operating but not making profits.

In February 2009, the then managing director Francis Mwangi (currently Governor of Murang’a County Mwangi wa Iria) said that the company had recorded a turnover of Sh2.5 billion since its reopening and had paid Sh8 billion to farmers.

Deputy President William Ruto said during a tour of the firm that the government had set aside Sh500 million to pay the dues of milk farmers who had not been paid when the firm closed down in 1999, and also launched new machines which would boost the company’s productivity.

CEO Nixon Sigey had told the Business Daily in March this year that the move to pay the dues would motivate farmers "to have confidence in the processor". While the Jubilee government has indeed been making efforts to improve and modernise the factory, it is incorrect to state that the factory has been dormant since 1999.

SHORTAGE OF RAW MATERIALS

Rift Valley Textiles East Africa (Rivatex), then the only government-owned textile factory in Kenya, was incorporated in 1975 but was put under receivership and later closed in 2000. It was later bought by Moi University at a cost of Sh205 million under Vice-Chancellor Richard Mibey in 2007.

A Nation Newsplex check revealed that Rivatex, although not closed, has been operating under various challenges such as shortage of raw materials and funding. Managing Director Thomas Kipkurgat told Business Daily on March 13 this year that the factory was producing 10,000 bales against a capacity of 70,000 bales, or about 14 per cent.

A report of the Auditor-General on the financial statements of Rivatex for the year ended June 30, 2015 provides a glimpse into the firm’s performance. Turnover increased from Sh55.7 million in 2013/2014 to Sh122.7 million, a rise of 116 per cent. Its net loss that year decreased 48 per cent from Sh161.8 million to Sh109.2 million.

DEVELOPMENT ESTIMATES

Speaking at the 29th graduation ceremony at Moi University on September 19, 2013, President Kenyatta said that the government had secured a government-to-government grant of Sh8.6 billion from India to finance power generation at the university and modernise Rivatex.

On July 23, 2015, Deputy President William Ruto stated that the government had set aside Sh680 million to revive the company. The 2015/2016 budget development estimates showed a Sh500 million allocation and it is not immediately clear to Newpslex where the other Sh180 million came from.

While presenting the budget for the financial year 2017-2018, Treasury Cabinet Cabinet Secretary Henry Rotich announced that the government had set aside Sh450 million for “modernisation of Rivatex”, as well as an export credit facility from India of Sh3 billion ($30 million) to further equip the industry.

While the Jubilee government gave money to modernise the company and expand its capacity, the claim that the factory has been dormant is incorrect.

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