Uncertainty as Rivatex fires 3000 employees

By the time services of nearly 3,000 workers at the loss-making Rivatex East Africa were terminated last month, the state-owned firm had suffered for years.

From salary delays to scaled-down operations and to huge losses, the textile company once again became a pale shadow of its former self.

It’s among several state-owned and government-linked firms listed for privatisation in 2023.

In the last three years, delayed salaries and mounting of debts rocked the apparel manufacturer.

The company’s management attributed the challenges to shortage of cotton – the main raw material.

But last month, workers of the most sought-after company of the 1980s and 1990s, were clinging on hope of retaining their jobs but woke up to a redundancy notice.

Workers whose contracts were ending in August were informed that they would not be renewed while those who were employed on permanent and pensionable terms were clearly told that their employment would be terminated at the end of September.

“Following the ongoing restructuring of Rivatex East Africa SEZ Limited under the leasing framework and in accordance with section 40 of the Employment Act 200, the company hereby issues notice of termination of your services on account of termination,” the notice of redundancy read in part.

Rivatex East Africa acting Managing Director Stanley Bett wrote: “You are all required to clear with the human resource division as per your respective employment terms to facilitate the release of your dues and the issuance of certificate of service.”

The MD thanked all the employees for years of service and wished them success in their future endeavors.

Workers said the termination of employment paves the way for a new investor who is said to have acquired the firm recently.

“All workers including the MD have been fired. There was no assurance that the new investor will employ the sacked staff,” an immediate former employee said yesterday.

Between 2017 and 2019, Moi University which owns the enterprise pumped Sh5 billion to revive it.

Nandi Woman representative Cynthia Muge told the National Assembly on Wednesday during a debate on the Privatization Bill that Moi University got a raw deal in the Rivatex privatization move.

“The prime land that Rivatex sits on is owned by Moi University. The proceeds of the privatization has disadvantaged the institution. Rivatex was undervalued in the privatization deal and if a proper valuation was done, Moi University wouldn’t be begging the national government for Sh2 billion for bailouts,” Muge told the house.

She said all the employees at Rivatex are jobless and expressed confidence that the Privatization Bill sought to promote a better public participation before privatization is undertaken.

Muge further said that Kenya Cooperative Creameries (KCC) which was also listed for privatisation has not paid farmers for milk deliveries in the last four months, blaming it on poor management of some government-owned firms.

Auditor General Nancy Gathungu in her recent report found that Rivatex made cumulative losses amounting to Sh3 billion by 2023.

“The statement of profit or loss and other comprehensive income reflects a net loss of Shs347,592,549 and the statement of financial position reflects accumulated loss balance of Kshs.3,041,471,831 as at 30 June, 2023,” the auditor general said in her report.

The audit report further stated: “The Management (of Rivatex) attributes the poor performance to constant lack of raw materials such as cotton, high cost of inputs such as labour, electricity and water, fuel, spares and consumables, repairs and maintenance that had hindered the Company’s ability to produce and supply its products on time.”

The 2024 Budget Policy Statement listed 11 entities proposed for inclusion in the 2023/2024 privatization program in line with the Privatization Act 2023.

Treasury Principal Secretary Chris Kiptoo told MPs in 2023 that Rivatex East Africa, Kenya Literature Bureau (KLB), Kenya International Convention Centre (KICC), National Oil Corporation of Kenya (NOCK), Mwea Rice Mills, Western Kenya Rice Mills Ltd, Kenya Pipeline Company Ltd, New KCC, Numerical Machining Complex, and Kenya Vehicle Manufacturers Ltd had been listed for privatization.

In 2019, Rivatex said it had a processing capacity of 40 tons of cotton but processed only 12,000 kilograms.

Former MD Prof Thomas Kipkurgat said at the time that Rivatex imported cotton from neighbouring Uganda and Tanzania after the textile industry faced collapse for decades.

However, after signing cotton growing deals with 24 counties in the Rift Valley, Eastern and Nyanza regions to minimize importation of raw materials, the company failed to thrive.

Among counties that the textile manufacturer has partnered with include Elgeyo Marakwet, West Pokot, Baringo, Kitui and Busia among others.

New spinning, weaving and preparation machines were installed in the Sh5 billion modernization plan directed by the government in 2017.

Before it began making huge losses in 2021, Rivatex East Africa primed itself as the producer of the material and designer of retired President Uhuru Kenyatta’s attention-catching shirts.

The former head of state became the company’s apparel-making poster boy.

Managers, factory workers, machine operators, sales persons, drivers, tailors and cleaners among others were fired to pave way for the restructuring.