Ministry result

The Ministry of Public Investments will reduce losses – Auditor General | The new times

Auditor General Alexis Kamuhire has backed the creation of the new Ministry of Public Investments and Privatization, saying it will benefit Rwandans by ensuring that government enterprises produce expected returns.

He made the observation Thursday, August 4, during an exclusive interview with The new times.

On July 30, Rwanda announced the creation of the Ministry of Public Investments and Privatization with Eric Rwigamba as minister. Prior to this appointment, Rwigamba was Director General in charge of Financial Sector Development at the Ministry of Finance.

The new ministry will focus on for-profit public investments, according to a memo released after the announcement.

Its main responsibilities include, among others; identify public investment opportunities, monitor the performance of existing public investments in various enterprises and implement the privatization of public investments if necessary.

Kamuhire said there are areas where the government has made investments with the aim of making profit, and for Rwandans in general to benefit from such ventures.

“As His Excellency (President Paul Kagame) said, ideally the government’s responsibility is generally not to do business; the government makes investments and then privatizes them so that the private sector can use them more. So the ministry will help in that regard,” he said.

He added that the development will address many issues related to public investments, including conducting studies before committing public funds and monitoring.

Avoid losses

Regarding the areas on which the new ministry should focus in terms of efficiency and cost-effectiveness of public investments, he said that there are [public] entities that the Office of the Auditor General has audited and found to have incurred losses, suggesting that such losses should be avoided.

“I think it would be a good opportunity to reflect on what to do to deal with such losses. This ministry will follow that,” he said.

“If there is an area where a loss has been suffered, what is the cause? Should we bring in the private sector for a joint venture, or should we continue to work on it alone as a government,” he said of possible issues the ministry should consider.

Normally, he said, the government’s responsibility is not to do business, but rather to support investors.

“So I would say it’s more about helping the private sector invest in for-profit companies and making decisions about privatizing companies that the government has invested in but that aren’t performing well so that investors can manage them on a private sectoral basis,” he observed.

There are cases of public companies that are not performing well, and the government has decided to privatize them, sometimes losing money in the process.

One of them is the Burera dairy. According to the report of the Office of the Auditor General for the financial year 2019-2020, the Ministry of Finance and Economic Planning approved on March 21, 2018 the privatization of all government shares held in Burera Dairy – located in Burera district . The previtization, according to the Auditor General’s report, was due to the failure to operationalize this dairy.

As part of the implementation of this decision, on December 18, 2019, the National Industrial Research Development Agency (NIRDA) and the Business Development Fund (BDF) sold their 548,970 shares – of a initial value of more than 548.9 million Frw – to an investor for 270 Frw. million.

The investor is African Solutions Private Ltd (Afrisol), a Zimbabwean agro-industrial company.

This, according to the report, resulted in a loss of more than 278 million Rwandan francs.

Meanwhile, the Ministry of Trade and Industry told Parliament in October 2021 that after this factory sale, its performance has improved from processing 500 liters of milk per day to 2,000 liters per day, which implies that he has quadrupled his production.

The ministry pledged to help struggling Community Treatment Centers (CPCs) with business plans and marketing strategies to turn around their declining fortunes before they were privatized.

In order to stimulate rural economic growth, the government has invested some 4 billion Rwandan francs in the establishment of six CPCs in six districts.

They include Nyabihu Potato CPC in Nyabihu District, Burera Dairy in Burera District, Rwamagana Banana Wine in Rwamagana District, Nyanza Ceramics in Nyanza District, Rutsiro Honey in Rutsiro District and Gatsibo Leather in Gatsibo.

The audits revealed that the CPCs were established without carrying out a needs assessment and a business plan, as well as a study on the technology and equipment required.

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