A Kenyan state-owned firm operating in Rwanda is on the brink of collapse following years of debt owed by its primary customer – the Rwandan government.

 

The Kenya Seed Company Rwanda Ltd, a subsidiary of the Nairobi-based agricultural seed firm, is now operating at a negative shareholder funds of Ksh40.3 million ($311,966) after years of losses.

Yet the Rwanda Agriculture and Animal Resources Development Board (RAB), the state organ charged with strategy and development of the country’s agriculture industry, owes it Ksh108 million ($843,066).

Kenya’s Auditor-General Nancy Gathungu said the loans have been outstanding since 2016 and their recovery now seems impossible and the company may no longer be a going concern if support from Nairobi is withdrawn.“Review of the unpaid invoices and debtors ageing analysis revealed that the trade receivables from districts had not been settled since the year 2016,” said Ms Gathungu in the audit report of the company.“However, management has not documented the strategies put in place to ensure the debts are recovered. Under the circumstance, the recoverability of the receivables is in doubt.”In the year to June 2024, the company, which sells certified seeds primarily to Rwandan farmers and the government, made a loss of Ksh16 million ($123,841), a slight improvement from the Ksh33.8 million ($262,026) in 2023.

But its revenues for the year dwindled from Ksh51 million ($395,861) in 2023 to Ksh38.8 million ($300,345) in the year to June 2024, largely due to “lack of maize seeds for sale”.“If the turn-around strategy for production of maize seeds and other cereals is not monitored and evaluated for successful take-off, the company may face issues of going concern,” Ms Gathungu warned, adding that the company is relying on co-financing from its parent firm in Nairobi.

Already, the Rwandan subsidiary owes the parent firm about Ksh203 million ($1.6 million) for seeds supplied but not paid for, worsening its financial position and dependence on support from Nairobi to survive.

Kenya Seed Company Rwanda Ltd is one of the three regional subsidiaries that the Kenyan state-run firm started in its regional expansion drive in 2010, in an effort to widen its market and diversify revenue sources.

The others are the Simlaw Seed Company Uganda Ltd and Kibo Seed Company, which operates in Tanzania.

While the parent firm has remained profitable over the years, the subsidiaries have struggled to break even since their establishment, and the Kenyan government has long mulled their folding.

The Tanzanian unit, for instance, is currently operating at negative capital of Tsh5.4 billion ($2.4 million) and has already been declared technically insolvent by the auditor-general’s office, following years of losses.

Like the Rwandan unit, Kibo Seeds is struggling to recover debts it is owed, amounting to Tsh1.3 billion ($529,531), but its debtors have not been disclosed.

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