A wheat farm in Uwinkingi Sector, Nyamagabe District. File. For the past few months, Nyamagabe district farmers have been grappling with low prices for wheat owing to the fact that the only available wheat processing facility in the area halted its operations.
The stalled wheat factory, Gitare Mills, is the largest in the region. The factory is co-owned by Société Mutuelle de Garantie et de Financement (SMGF) and a private investor, Venant Kabandana.
The biggest concern currently is that smallholder farmers are unable to sell their produce to national or regional markets.
Majority sell their grains to rural traders who usually offer prices well below the prevailing market rate.
The New Times has learnt that the owners of the factory are saddled with debt.
The company which operates the factory acquired a loan from Ecobank Rwanda to conduct its other businesses, but staked the assets of Gitare Mills as collateral.
The firm failed to honour its obligation and is now involved in a court battle with Ecobank to salvage Gitare Mills from possible auction.
Emmanuel Ndahimana, the Chairperson of Gitare Mills and the Managing Director of SMGF, confirmed that they defaulted on Ecobank loan, which halted the operations of the factory.
“It is true that Ecobank took over the factory after we failed to pay the loan that we had borrowed from the bank,” he said in agreement.
SMGF, which owns 43 per cent stake in the factory was charged with managing the operations of the factory.
Even though Kabandana owned majority shares in the factory, couldn’t oversee the management of the mill as SMGF had given him a loan, surrendering the right manage its operations.Kabandana told The New Times that SMGF promised to inject more capital in the miller and that they wished to run its management.“When I entered an agreement with them [SMGF], they requested me to run the management of the factory and because they were investing more money in operations, I did not deny them that right,” he said.Kabandana, however, said that he had no clue that the factory had been staked in the bank as collateral because he was not involved in its daily management.SMGF is a licensed local financial institution whose business line includes microfinance, trade finance and venture capital.They have been financing everything from SACCOs, energy projects and small and medium-sized businesses.Ndahimana claimed that the failure to continue operating the factory was beyond the loan default and largely a result of […]