Tea farmers are reaping big from the recent government privatisation strategy that encourages farmers to own shares, alongside strategic investors, in privatised factories and estates.
While the strategy aims to ensure that the factories are better managed in the hands of private investors, it looks set to boost farmers’ incomes and increase their influence in the factories.
Mulindi and Shagasha, which are set to be taken over by UK based-Rwanda Tea Investment Limited, are the latest tea factories to be privatised where farmers will own some shares.
According to Dr. Daniel Ufitikirezi, the head of assets and business management department at the Rwanda Development Board, government sold 55 per cent of the Mulindi Tea Factory to Rwanda Tea Investment Ltd and offered the remaining 45 per cent to outgrowers.
In Shagasha Tea Factory, which is based in the Southern Province, Rwanda Tea Investment Ltd will own 60 per cent of the entity while farmers and government will own 30 per cent and 10 per cent, respectively.
The investment by Rwanda Tea Investments Ltd aims to build the capacity of farmers in the next seven years with a view to ultimately handover the factories’ entire shareholding to respective out growers.
“One of the great contributions to the Rwanda Tea Investment deal is that they will operate the estates for seven years while building capacity and thereafter hand them over to farmers,” Ufitikirezi said.
The deal could also bolster the country’s tea exports to UK and European markets.
Rwanda generates revenues by selling its standard CTC teas in bulk form through the Mombasa Tea Auction market, where prices are highly volatile.
The company has promised to invest in technology and improve the quality of tea produced thus improving prices fetched by farmers and workers’ salaries.
Ufitikirezi said government is divesting from tea factories as its bureaucracy hinders effective operations of the business.
Under the arrangement, the estate workers will retain their jobs and the investor will work towards increasing the number of employees and their salaries.
The two factories have a combined annual output of 6,000 tonnes of tea. The investor targets to raise production by more than two-fold.