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KTDA stops inter-factory lending, favours commercial bank loans
Kenya Tea Development Agency (KTDA) Holdings Board National Vice Chairman James Omweno Ombasa addresses journalists at Acacia Premier Hotel, Kisumu, on November 3, 2025.
The Kenya Tea Development Agency (KTDA) is phasing out an inter-factory loan programme that has been running for decades in favour of commercial loans offered by banks.
The decision comes after a revelation that factories in the West of Rift had taken upto Sh 14 billion loans from those in the East of Rift over the years, with the credit facilities remaining unpaid.
The position has also been taken after the Principal Secretary for Agriculture Paul Kipronoh Ronoh directed the Tea Board of Kenya (TBK), the tea industry regulator to undertake audits on loans taken by KTDA factories.
The existing model was adopted to address short-term financial needs and ease the burden to the 700,000 small-scale tea growers supplying their produce to the KTDA factories from the effects of short and long-term commercial loans to finance operations.
As a result of the policy change, each of the 71 factories will from mid-November be able to access commercial loans from financial institutions in the country.
“KTDA is in the process of phasing out the inter-factory loan mode and the reconciliation of previously borrowed funds is ongoing and nearing completion to ensure full accountability,” KTDA said in a statement.
The agency allowed the inter-factory loans to finance operation costs, especially electricity costs, maintenance and repairs of machines and to cover shortfall in the annual bonus payment to farmers by factories that have cash flow challenges.
“Beginning mid this month (November), factories will be able to access financing directly from commercial banks ... a step that will enhance financial independence and strengthen stability across the tea sector,” KTDA Board members stated.
KTDA Board vice chairman Omweno Ombasa led the zonal directors –Samson Mosonik Menjo, Vincent Arisi, Francis Wanjau and Philiph Langat— to welcome calls for an audit of the loans portfolio in the factories, but said that the cost of the exercise should not be passed on to the small scale growers supplying their green leaf to the agency.
“We want to emphasise that we have nothing to hide and we welcome any lawful audit that promotes transparency and accountability. But the cost of such an audit should not be borne by farmers. Those calling for an audit should meet the associated expenses,” the directors stated.
Last week, KTDA directors from the East of Rift led by Mr Chege Kirundi (KTDA Board chairman) said that there was a need to embrace “innovation, improve efficiency, and strengthen the resilience of the tea sector so as to increase income to farmers”.
Mr Gabriel Kagombe, who is the Gatundu South Member of Parliament claimed that factories in the West of Rift owed those from the East of Rift over Sh 14 billion in loans.
“The loans were advanced by the East of Rift factories to those in the West of Rift to boost their operational capacities, pay bonuses and other financial demands. That is because factories in the Eastern region are doing well with farmers adopting high quality plucking of green leaf,” Mr Kagombe said.
Principal Secretary for Agriculture Paul Ronoh has come under attack from a section of stakeholders for ordering the Tea Board of Kenya (TBK) to conduct an audit on loans taken by KTDA factories.
Dr Ronoh directed TBK to establish the total amount borrowed by individual KTDA factories, how the loans were utilised, the terms and conditions under which the loans were acquired, and the current outstanding loans balances for each factory.
“The findings of this audit will enable the Ministry to evaluate the financial sustainability of the factories and appropriate operational measures aimed at addressing the challenges currently facing the tea sub sector,” Dr Ronoh stated in the memo dated October 22, 2025 and addressed to the TBK Chief Executive Officer Willy Mutai.
The PS directed the Tea Board of Kenya to hand in the audit report within 14 days from the time the directive was issued.
But the PS has come under a scathing attack by stakeholders for allegedly overstepping his mandate and seeking to police a private entity, issuing directives without consultation and introducing politics in the industry.
“The PS (Dr Ronoh) has issued illegal directive to moribund Tea Board of Kenya (TBK) to conduct an audit over a private company, (KTDA) which much as it has its accountability challenges, is far much better than some government institutions,” Nakuru-based advocate Benhard Kipkoech Ngetich said.
The KTDA directors have also called for an end to the increasing politicization of the tea sector challenges which have negative bearing on marketing of Kenya’s made tea in the global market.
“The tea industry thrives on professionalism, co-operation and stability and not on political contestation. We urge leaders to approach the matters with sobriety, consultation, and respect for institutional structures,” they said.
They added that “political interference (in the sector) only breeds confusion, drives away investors, and undermines market confidence, ultimately hurting the farmers we seek to serve.”
