KTDA Chairman dismisses claims tea factories borrow loans to pay farmers’ bonuses
KTDA Chairman Enos Njeru says factory borrowing is largely linked to operations, investments and expansion, while financial needs vary across the tea sector.
KENYA – Kenya Tea Development Agency (KTDA) National Chairman Enos Njeru has dismissed claims that tea factories have borrowed loans specifically to finance farmers’ bonus payments.
Speaking at Kithare in Runyenjes Subcounty, Njeru said tea factories borrow for various purposes, including operations, capital investments and expansion projects, and that such loans should not automatically be linked to farmers’ bonuses.
He said it was misleading to claim that factories had borrowed money to pay farmers, noting that the financial position and borrowing requirements of individual factories differ.
Njeru explained that some factories, particularly those in the West of the Rift, may occasionally require financing to bridge cash-flow gaps caused by low tea absorption at the auction and weaker tea prices.
However, he maintained that such circumstances should not be generalised across the sector.
He cited Rukuriri Tea Factory as an example, saying it secured a Kes 150 million loan to facilitate the installation of orthodox tea processing machinery.
Njeru dismissed claims that Rukuriri had a Kes 300 million loan, saying the Kes 150 million facility was almost fully repaid.
He said most factories in the East of the Rift have stronger financial capacity to meet operational costs and farmers’ payments while investing in projects intended to improve efficiency and increase returns to growers.
The remarks come amid claims that farmers could receive lower bonus payments because some factories were allegedly still servicing loans taken during the previous payout.
Njeru insisted that factory borrowing should not automatically be interpreted as borrowing to finance farmers’ bonuses.
“Should not automatically be interpreted as borrowing to pay farmers’ bonuses,” Njeru said, reiterating that each factory’s financial position should be assessed according to its circumstances.
He also called for patience as investigations into the Ksh322 million fertiliser transaction continue, saying the Directorate of Criminal Investigations (DCI) probe would establish the facts surrounding the matter.
Njeru reiterated KTDA’s commitment to transparency, sound governance and safeguarding the interests of tea farmers.
The comments come as Kenya implements tea-sector reforms aimed at improving governance, operational efficiency and farmer earnings.
Recently, the government granted 10 KTDA-managed factories autonomy from their parent companies under the reforms. Seven additional factories are expected to receive autonomy from the Tea Board of Kenya within the next two months.
The reforms affect a tea sector supporting more than 700,000 smallholder farmers across the country.
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