A 21-year lease has been granted to a private investor to run Rivatex East Africa Limited in an attempt to turn around the once-dominant textile giant, which has been making losses. The new investor will retain 118 employees only.The Ministry of Trade, Industry, and Investments formally handed over the Eldoret-based textile manufacturer to Arise IIP Limited, a company that operates textile processing plants in Togo, Benin, and other African nations. The transfer on Thursday, October 9, represents a significant step in resolving years of debt accumulation, operational inefficiencies, financial losses, and state reliance.
Why was Rivatex leased out? The new investor promised new funding, restructuring, and a more efficient workforce. Industrialisation Principal Secretary (PS) Juma Mukhwana said the investor is expected to provide funding to solve Rivatex’s operational and financial issues, such as accrued losses, excessive staffing, high energy expenses, and ineffective administrative procedures. “Even though the government and development partners have been investing billions, the financially distressed corporation has been operating at less than 10% capacity. Its electricity costs currently total KSh 180 million, and its staff have not received their salaries for months,” the PS disclosed. Mukhwana pointed out that as part of its early measures, which include a layoff procedure meant to streamline operations and revitalise Kenya’s textile and cotton industry, Arise IIP has already paid KSh 94 million in employee salaries. How many employees did Arise IIP fire?
The new investor fired 3,000 employees on permanent and contract terms, according to The Standard. READ ALSO Kenya borrows over KSh 95b in 5 months, public debt soars to KSh 12 trillion Mukhwana revealed that to guarantee quality, efficiency, and innovation, the investor will invest a significant amount of money and only retain 118 of the 625 permanent employees. George Olaka, the CEO of Arise IIP, stated that the company would pay the government through the National Treasury a set lease fee and cover all operating expenses, but he did not reveal the exact amount. “‘All existing Rivatex employees have been formally released through a redundancy process in accordance with labour laws to allow for a fresh and transparent staffing structure,” he said. Government officials meet with the new Rivatex investor Arise IIP.
How much was Rivatex’s loss? High energy prices, inadequate raw materials, and ineffective manufacturing techniques have caused Rivatex to struggle despite large investments, resulting in considerable losses. It reported a loss of KSh 347.6 million in the fiscal year that concluded in June 2023, bringing its total losses to more than KSh 3 billion. The enterprise produced 15.73 million meters of fabric annually before being placed under receivership in 2000 as a result of financial and administrative mismanagement. Despite implementing cost-cutting initiatives in recent years, such as recycling 32,800 kg of fibre waste valued at Sh9.8 million to create yarn for school uniforms, Rivatex is still operating below capacity.
By Japhet Ruto
