Rwanda Development Board (RDB) on Friday signed an agreement with Pink Mango C&D, a Chinese firm, to establish a "modern" garment factory in Kigali, capital city of Rwanda.

The factory to be located in Kigali Special Economic zone will produce garments for both the domestic and export market, the Rwandan government department said in a statement.

The Chinese firm is expected to provide 7,500 jobs for Rwandans by the fifth year and create cumulative export earnings of 20 million U.S. dollars over the next five years, said the statement.

It is also expected to build capacity and skills transfer to 500 workers of local garment cooperatives, who will also benefit from some of supply contracts through an outsourcing model, it said.

The investment of the Chinese firm will upskill Rwandans, giving them access to productive jobs and hence ensuring them to have a better standard of living, RDB deputy CEO and Chief Operating Officer Emmanuel Hategeka said in the statement.

The investment will not only enable the central African country to increase its exports but also reduce imports of clothing as the country has been using fiscal measures to progressively discourage the importation of second-hand clothes, said Hategeka.

The importation of second-hand clothes was hurting the growth of the domestic textile and garment industry, according to him.

The Rwandan government said in June last year that it maintained its stand that the country would stick to the decision to discourage imports of used clothes, in order to promote "Made in Rwanda" products, after the United States suspended duty-free status for Rwandan apparel products under the African Growth and Opportunity Act.