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A. LE FLOCH
From a bushy factory area to a now sprawling sugar factory, producing 150 tonnes of sugar per day, Kabuye Sugar Works is perhaps the best example of a successful privatisation process.
The factory, which at the time of sale in 1997 was dilapidated was first refurbished and the cane farms worked on have since expanded from 5000 tonnes of crushed cane per day at the time of privatisation to 75,000 tonnes today. The factory which employs about 4000 employees and another 5000 farm labourers and engages another 1000 out growers who produce about 50 percent of the cane crushed at the factory further plans to expand its cane crushing capacity to 100,000 tonnes of crushed cane producing about 20,000 tonnes of sugar.
Mr B.V.M Rao is the man behind the rehabilitation and success of Kabuye Sugar Works. “When we bought this place, much of it was in ruins, but seeing the potential here, we invested a lot of energy, patience and money to turn it into the place you see here and given the good support we are enjoying from the market, we plan to put in more,” he says.
“Over the years we have continued to grow. We are much better than what we were and we have a potential of even becoming better because the market here is still huge,” he adds. He says there is even greater need to produce as they only now account for 35 percent of the market while other sugar is imported from Burundi, Zambia, and Swaziland. “We need to save our country from excessive outflow of foreign exchange,” he said. He says that as a result of the increased production at Kabuye an outflow of about $3.5million worth of sugar imports is saved.
Rao is full of praise for government support and commitment to the development of the sugar industry. “Government has been helpful even up to now. They gave us 3000 hectares and though land is a scarce resource here, government managed to avail the land by 2001, we had doubled the land under cane to about 2400 hectares,” he says. “We have realised that the government here is committed to us here as industrialists, but even as industrialists we have to find our own way out. It is through concerted effort that we can make it,” he adds. He says that though they do not receive any subsidies from government, government has granted them a 5 percent waiver on equipment imported.
Rao talks of future plans. He says that as a result of the increased sugar production, Kabuye Sugar Works is planning to generate its own power from bagasse (remains after cane crushing) in a project expected to cost about $2 million.
“Our aim is to be self reliant on power but also adopting environmental friendly methods of generating power and disposing of the bagasse.
This will not only save us the costs of buying power but will also free up more power to the national grid, since we shall be using our own power and no longer relying on the national grid,” he explains. He says that basic equipment has already been purchased and by the end of next year the power plant producing about 835 Kilowatts will be operational.
Kabuye’s role in economic reconstruction
Rao is proud of his company’s contributions to Rwanda’s economy and the people in general. He says that his company pays out about FRW30 million (Ushs90 million) monthly to the plantation workers and pays out FRW 225 (Ushs675 million) yearly to private cane transporters.
An additional FRW326 million (Ushs1billion) is paid out to the out growers a year. “This is on top of the millions we pay in taxes. This money was not there. It has surely made a difference and we hope with our expansion plans we shall even be more able to fetch even more and make a bigger difference in the people’s lives,” he says.
He says that they make an effort to pay good prices to the out growers so that they keep them motivated. “We make sure that they (growers) are part of the good and bad of the sugar industry. That way we share responsibility, we grow together,” he says. The Company also gives them free transport of their cane from their farms.
“I think we have played a tremendous role in getting this country back on the road to economic prosperity. We have done a great deal in improving the rural economy. We employ 5000 people in farm labour 50 percent of whom are women. We favour gender equity. Each of these employees have immediate family members whom they look after. We have made so much difference to these people and their families,” he says.
He also says that Kabuye Sugar Works has other spin off benefits to the economy employment generation, development of business opportunities, like transport and trading and revenue to the national coffers by way of direct and indirect taxes. Value Added Tax collected has increased from FRW15.311million in 1998 to a staggering FRW 264.103 million in 2002.
Income tax from employees has also risen from FRW 3.375m in 1998 to FRW9.840. “With our planned expansion this should double. This plus other direct and indirect backward and forward linkages have been of immense benefit to the growing economy,” he says.
Rao is also proud of another achievement, this time not financial. He says through a non-discriminatory employment policy, Kabuye, has been able to bring together the different people, something he says has played a great role in healing the wounds of 1994.
“We bring people together regardless of where you are from. There are no differences in the people we bring to work for us. Our employment policy does not discriminate on any grounds. We bring together a team of dedicated workers with one major aim of increasing production. Through this we bond the people from different backgrounds together and they develop a sense of oneness,” he says.
“Back then when we had just started, you could read from the peoples’ face that something was wrong. You could hardly see a cheer on any ones face. But the situation has since changed. The people are cheerful, so jovial. This is a symbol that the people have gotten over the tragedy of 1994 and are now a new people who are working together for the prosperity of their country,” he says.
He adds: “Even when you see the social life in and out of Kigali, no body would be out after dark, but now it is different. From my personal observations, there is a great change,” he says.
He says that the people have since adopted the ethic of hard work as the only tool to liberate them. “Much as there are not enough skills in the land, the people here are committed to hard work. Everybody wants to learn something new,”
Human Resource Development
He says that to fill the gap of skilled human resource created after the 1994 genocide, Kabuye has embarked on on-job training for its employees. The company also runs an exchange programme with Kakira Sugar Works in Uganda where employees are sent for further training in modern techniques of sugar production.
Future of the economy
“I can see the economy growing steadily,” he says. He adds: “There is political will and commitment from government to see the economy, especially the private sector to grow. They want something to happen. The government has also been successful in creating a corruption free environment.