NAIROBI Kenya, Jun 13 – In a bid to boost Kenya’s tea industry, the Bank of Africa-Kenya has introduced an innovative credit facility that is expected to scale up farmers’ productivity.
The Chai Loan will provide short term financing to both small-scale and large-scale tea farmers, to support farming operations critical to increased yields and revenues.
It is also expected to play a part in boosting tea production by providing financing to farmers, in addition to collaborating with private tea processors to help support their out-growers.
The Managing Director of Bank of Africa-Kenya, Kwame Ahadzi, said 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,” Ahadzi added.
“Kenya is a major tea producer, ranked third globally.”
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, making tea one of Kenya’s foremost foreign exchange earners.
Under the Chai 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.
“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,” he stated.
Apart from the Chai Loan, Bank of Africa-Kenya has other targeted financial products for different segments of the market such as: ‘Mwanariadha Account’ for athletes, ‘Tiba Finance’ for medical services providers, ‘Goodwill Account’ for not-for-profit organisations, ‘Chama Account’ for informal groups.
The new product comes weeks after Bank of Africa-Kenya signed a Sh2 billion (US$25 million) loan agreement with Dutch Development Bank, FMO to support its lending business.
