The Bank of Africa-Kenya Is To Finance Tea Growers
To boost Kenyan tea industry, the Bank of Africa-Kenya is to finance tea growers by introducing an innovative credit facility that is expected to scale up farmers’ productivity. The facility, called The Chai Loan, will be a source of short term financing to both small-scale and large-scale tea farmers, to support farming operations critical to increased yields and revenues. Their program will also be providing financing to farmers,also collaborating with private tea processors to help support their out-growers.
The Managing Director of Bank of Africa-Kenya, Kwame Ahadzi, says that the new ‘Chai Loan’, seeks to address financing challenges in the tea farming,
“Growing of tea is an important economic activity for Kenya that is driven mainly by small-scale farmers who face challenges in accessing support to improve their productivity. This is the reason why we have introduced the Chai Loan product to support the tea growers and enable them to improve their livelihoods and make a much more significant contribution to the economy…These short loans are repayable at a rate of two percent per month, making the Chai Loan’s proposition one of the most competitive in the banking sector. The repayment is flexible – monthly, periodically, or upon payment of annual bonus – but within 12 months of disbursement,”
According to the recently released Economic Survey 2013, tea production last year stood at 369,400 tonnes, compared to 377,900 tonnes in 2011. The crop earned the country Sh127.1 billion in 2012, meaning that tea is one of Kenya’s foremost foreign exchange earners. Using this loan, tea farmers can access between Sh20,000 and Sh500,000 on an unsecured basis, and between Sh500,000 and Sh5 million on a secured basis.
This will help encourage the production of tea and Kenya’s tea output even more so than it is already. This will help tea growers, whether on small farms on large farms. Who knows, maybe other countries will take on this model, maybe not – either way this ‘Chai Loan’ is something to raise a cuppa to.