During the period between June and December last year, tea farmers associated with the Kenya Tea Development Agency (KTDA) experienced a 35% increase in borrowing, with the amount borrowed rising from Sh5.1bn to Sh6.8bn. This growth in borrowing occurred against the backdrop of tea reforms.
The increase in borrowing was mainly due to loans from Greenland Fedha, a subsidiary of KTDA. The growth is attributed to recent reforms that reduced the interest rate on loans from 21 per cent to 8 per cent in a bid to provide small-scale tea farmers and others who join the microfinance institution with access to affordable credit, thereby enabling them to improve their farming activities and alleviate existing debt pressures.
“The reforms have greatly contributed to this as well as good and affordable credit offered to the tea farmers of CBR plus one for six months period unlike the previous year where it was only for two months November and December 2021,” said Greenland Fedha director Dickson Waitueka as quoted by Nation.
During the period, payment of loans improved by 1.26 per cent, from 5.46 per cent in June to 4.2 per cent on the performing loans ratio.
“We have employed a strategy to bring this down by ensuring applying strong business rules where customers borrow on their payment capability guided by their productivity,” said Mr Waitueka, noting that the growth of the loan book has contributed to the drop in this ratio.
Greenland Fedha uses farmers’ green leaf as collateral to issue loans. Previously, the fund was inaccessible to a majority of farmers distributed across the 57 tea factories affiliated with KTDA due to high-interest rate.
Read also; KTDA Disburses KES 5.5 Billion to Smallholders Tea Farmers.
