Kenya urges KTDA to access US$28.7M loan for tea factory modernization

KENYA – Tea farmers under the Kenya Tea Development Agency (KTDA) have been urged to utilize a Kes 3.7 billion (US$28.7M) loan facility established by the government to modernize tea factories and enhance value addition. 

Speaking during the handover of Kes 7 billion (US$54.3M) in deposits recovered from the collapsed Chase Bank and Imperial Bank to KTDA, President William Ruto said the facility will be disbursed through the Kenya Development Corporation (KDC).  

He emphasized that modern equipment would enable factories to increase production capacity as the government pursues additional markets for Kenyan tea. 

“Some of the equipment being used by factories is old and needs modernization,” President Ruto said, adding that KDC will provide loans at a reduced interest rate of 5% compared to commercial banks’ 18%. 

The President noted that government-led reforms in the tea sector have boosted farmer earnings and national revenues.

He cited an increase in average prices from Kes 51 per kilo of green tea in 2022 to Kes 64 (US$0.50) currently. Export earnings also grew from Kes 138 billion to Kes 215 billion (US$1.7B), with the government targeting US$2.1B – US$2.2B by 2027. 

Ruto also urged KTDA to accelerate production of orthodox tea, which has been gaining traction in international markets. He pointed out that Kenya’s orthodox tea output had risen from 1.2 million kilos to 13 million kilos and called on factory managers to further scale up production. 

Kenya is working to expand its tea export markets after securing trade deals with China, which lifted tariffs on Kenyan produce. Negotiations with Japan are also underway to lower tariffs and provide greater market access for locally produced agricultural goods. 

In addition, the government pledged to clear at least Kes 2 billion owed to tea farmers by December 2025 to strengthen the sector further. 

Despite the positive outlook, Kenya’s tea export earnings fell 12.5% in the first half of 2025 to Kes 90.12 billion (US$699.5M), down from Kes 102.47 billion (US$793.1M) in the same period last year. 

Export volumes declined 1.72% to 315,036 tonnes from 320,564 tonnes in 2024, with average prices at the Mombasa Tea Auction weakening during the review period, according to the Kenya National Bureau of Statistics. 

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