Greenland Fedha rates slash sees increased credit uptake to Ksh.2.7 billion
Greenland Fedha Limited, a Kenya Tea Development Authority (KTDA) subsidiary, reduced farmers’ loans lending rate from 21 percent to 8 percent in December.
This has resulted in an increase of the amount of loan disbursed by the lending arm to ksh 2.75 billion.
KTDA Managing Director Wilson Muthaura said Ksh.2.75 billion loan has been accumulated in November 2021 to January 2022 compared to the period between July 2021 and November 2021 in which farmers borrowed Ksh.1.5 billion.
“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 Wilson Muthaura.
Before the reduction of the lending rates, farmers said they had difficulties repaying the loans and some even opted to borrow loans from commercial banks which offered 12 percent interest rate.
“During our agitation for reforms in the tea sector, we expressed concern that credit to farmers was too expensive, making it inaccessible. The existing debt burden is a great threat to empowerment of the farmers and, therefore, unsustainable,” said KTDA Holdings Chairman David Ichoho.
The reduction of lending rate was implemented as part of reforms that the Ministry of Agriculture put in place to improve farmers’ incomes.
Earlier this week the government announced that tea farmers will benefit from a Ksh.19.5 billion price stabilization fund which seeks to safeguard earnings in the event the price of commodities drops significantly.
“The fund shall consist of monies appropriated by the National Assembly, tea levy, a source approved by the board and through grants and donations made to the board. The fund shall be administered in accordance with the Tea Price Stabilization Fund Regulations, 2021,” said Agricultre CS Munya.
Tea is a major cash crop in Kenya. According to the Tea Board, Kenya produces over 450 kilograms of tea annually, out of which 91 percent is exported and 9 percent is consumed locally.