Relief for tea farmers as KTDA unit cuts lending rates


Workers pick tea leaves at a farm in Nyeri town on February 8, 2021. PHOTO | JOSEPH KANYI | NMG

Tea farmers will, from today (Wednesday) access loans at eight percent interest rate from the Greenland Fedha, a fully owned subsidiary of Kenya Tea Development Agency (KTDA).

Growers have been getting loans from microfinance at interest rates of up to 21 percent, which is higher than the 12 percent that commercial banks charge.

The high interests have seen farmers and the government raise concern, questioning how growers can be charged exorbitant rates when borrowing money from their entity. Greenland Fedha is a non-deposit taking microfinance institution managed by KTDA Limited.

KTDA says low rates will help smallholder farmers access much-needed credit with ease and lighten their debt burden.

“During our agitation for reforms in the tea sector, we expressed concern that credit to farmers was too expensive, making it inaccessible. The existing debt burden is a great threat to the empowerment of the farmers and therefore unsustainable,” said KTDA Board chairman David Ichoho.

The move is a relief to more than 225,000 tea growers who borrow from the microfinance. Greenland Fedha uses farmers’ green leaf as collateral to issue loans.

Mr Ichoho said KTDA would also support farmers to diversify their revenue streams.

“We want to encourage our farmers to additionally increase viable income-generating activities such as livestock, poultry and avocado farming. Together with the KTDA Foundation, we have rolled out a comprehensive financial literacy programme to empower our farmers on how to manage and grow their income, not just from tea, but from other ventures,” he said.