By financing new production lines of Orthodox tea in the four factories and the expansion of a fifth plant (Boito), Proparco will contribute to improving the productivity of the more than 50,000 smallholder producers supplying teas to these factories by opening up new export markets and, ultimately increasing the profitability of their farms.
The four processing plants are Kimunye (Kirinyaga), Gitugi (Murang’a), Imenti (Meru) and Thumaita (Kirinyaga); while the fifth that processes black CTC tea is Boito.
The new orthodox processing lines are a strategic move KTDA to reduce overreliance on CTCs teas, while enabling farmers to earn more money through product diversification. Already, three other KTDA-managed factories – Itumbe, Michimikuru and Kangaita - are producing orthodox teas.
Orthodox tea is sold mainly to buyers from Russia, Iran, Germany and the Middle East, and often fetches a higher price than CTC tea.
Orthodox teas are whole leaf teas processed using a delicate method of gradually rolling and drying green leaf into smaller particles of different twists and styles.
In contrast, the more commonly consumed black granular teas are processed using the simpler Crush, Tear and Curl (CTC) process of manufacture that produces black granular particles. CTC tea, the tea traditionally produced in Kenya, is sold mostly to international buyers from Pakistan, Egypt and the UK.
A new illustration of Proparco’s long-term relationship with KTDA
This new funding is Proparco’s fourth facility with KTDA in 17 years. Proparco’s first loans to KTDA, in 2001 and 2004, led to the construction of four tea processing plants – Kionyo, Gachege, Tegat/Toror and Kapset/Rorok.
In 2015, a new US$15 million loan (KES 1.5 billion) was granted for the construction of seven small hydropower plants to supply power to 24 factories managed by KTDA. The hydropower plants will reduce energy costs for the tea factories, which is expected to improve farmers’ earnings.
These ‘run-off-the-river’ hydroelectric plants operate without any water holding, which limits their impact on the environment and ensures continuous water flow and energy production. Connected to the electricity grid, they also participate in the national electricity generation and therefore benefit the local communities.
The continuous funding support to KTDA illustrates Proparco’s long-term commitment to Kenya and the region’s development. Over the past 10 years only, more than $1.1 billion (KES 110 billion) have been committed by Proparco to the East African private sector, including $546 million (KES 55 billion) in Kenya.
Tea, a major contributor to Kenya’s economy
Kenya is the world's largest exporter of tea and the third largest producer. Consequently, tea is one of the key sectors in the Kenyan economy, the country’s main source of foreign exchange and supports the livelihoods of over five million Kenyans today.
In the last financial year 2016-2017, smallholder tea farmers under KTDA earned Kshs 78 billion from the sale of tea, demonstrating the importance of the sector to the economy.