Green Fedha Limited, a subsidiary of KTDA that lends to farmers cut the lending rate from the previous 21 percent to eight percent at the moment, leading to an 83.3 percent uptake of loans.
KTDA managing director Wilson Muthaura said between July and November 2021, farmers had borrowed Sh1.5 billion compared with Sh2.75 billion that was advanced to growers in the three months to February.
The value of loans disbursed by Kenya Tea Development Authority (KTDA) lending arm grew to Sh2.75 billion in the three months to February this year, nearly double the amount lent in five months between July and November last year on the back of low interest rates.
Green Fedha Limited, a subsidiary of KTDA that lends to farmers cut the lending rate from the previous 21 percent to eight percent at the moment, leading to an 83.3 percent uptake of loans.
The interest was reduced in December as part of the reforms that the Ministry of Agriculture introduced in a raft of measures aimed at streamlining the tea sector in the country to improve farmers’ incomes.
KTDA managing director Wilson Muthaura said between July and November 2021, farmers had borrowed Sh1.5 billion compared with Sh2.75 billion that was advanced to growers in the three months to February.
“We have seen a significant growth in the amount of money that farmers have borrowed from us in the last two months compared with what we issued out last year between July and November,” said Mr Muthaura.
Mr Muthaura said they expect to advance Sh2 billion more by end of June to make a total of Sh6 billion this financial year, which is higher than the Sh4 billion that was disbursed in the 2020/2021 period.
The previous high-interest rate had seen farmers and the government raise concerns, questioning how growers can be charged exorbitant rates when borrowing money from their company.
The high-interest rate saw thousands of farmers default in repaying their loans while others opted to borrow from commercial banks.
Agriculture Cabinet Secretary Peter Munya asked Green Fedha to consider buying the expensive loans that the farmers had borrowed from other financial institutions.
“I wish to urge Greenland Fedha to consider and buy off some of the expensive loans that farmers had borrowed from other lending institutions,” said Mr Munya.
Farmers have been borrowing from the agency for projects, paying schools fees and meeting their daily needs.
