New investor to pump Sh2.6b into Rivatex, hire more workers

The private firm that has taken over operations at Rivatex East Africa had promised to pump up to Sh2.6 billion ($20 million) in a bid to revitalise the facility, even as it dispelled reports of massive job cuts at one of the country's oldest clothes makers in the country.

Arise Integrated Industrial Platforms (IIP), which in August this year took over management of a state-owned firm under a 21-year lease, said even though they intend to revive and bring back the lost glory of the factory, it has no plans of retrenching the current employees; instead, they intend to absorb all qualified employees of Rivatex.

The firm noted that while the facility has about 600 employees, it plans to increase the number to about 5,0000 workers.

Rivatex, established in the late 1970s with the government as a key shareholder, has been struggling following the economic liberalisation of the 1990s. After its acquisition by Moi University in 2007, the facility was expected to turn around and reinvent itself, something it has failed to do, owing to high production costs and lack of readily available raw materials that have rendered its products uncompetitive against cheap imports.

The government has, in recent years, tried to revive the facility and had Moi University take it over as a research facility in 200,7, but also invested in new equipment. Its performance has, however, remained subpar, operating at below 10 per cent of its capacity.

George Olaka, the Chief Executive of Arise IIP, said the company is looking at making the textile producer the centre of the clothes, textile and apparel sector in the country.

"We are looking at a holistic solution to revive the clothes, textile and apparel sector. As an investor, there is value for money," he said, adding that Rivatex and other textile manufacturers in the country have continued to face the challenge of access to raw materials, forcing them to rely on imports. Also, the high cost of doing business, including the cost of power, has been a major challenge facing the sector, according to Olaka.

He, however, said some of the challenges have been addressed, including listing Rivatex as a special economic zone (SE, Z) which will see it benefit from a special power tariff for SEZs.

Olaka said the firm had distributed 1,560 tonnes of cotton seeds to kickstart the growing of cotton, with Rivatex expected to be the offtaker for the cotton that will be produced.

"In the next five years, Rivatex will be a profitable company. We are using it as a base case, as a proof of concept, for bigger industries to come into the country and establish proper integrated textile plants," he said.

"Rivatex output is in the region of $20 (Sh258 million) to $25 million (Sh323 million), because it's a relatively small plant. But if that concept can be proven ttoit can work for Kenya, then we are looking at a much bigger investment scale coming into the country than just Rivatex." Olaka said the plan was to improve on what Moi University has done, including relooking at the equipment and the people, with the vision of getting it to operate at 100 per cent capacity.

On the reports on massive layoffs, Olaka said all the permanent and pensionable employees are expected to be handled by the government in accordance with labour laws.