Nyaruguru tea farmers coop in Rwf3bn loan repayment limbo

Farmers grouped in COOTHEMUKI – a cooperative of tea growers in Muganza and Kivu sectors of Nyaruguru District – are grappling with repaying a Rwf3 billion loan that they owe the Development Bank of Rwanda (BRD).

Through the cooperative, 816 farmers were given Rwf1.5 billion from BRD in 2010, to grow tea in the area after it was discovered the infertile soil there would only be suitable for tea and no other crop.


The loan was disbursed in three installments at an average interest of 12 per cent, according to Aloys Ndashimye, the cooperative’s president.


According to him, whereas the cooperative was the guarantor, farmers are supposed to shoulder the burden because each farmer was separately appropriated money depending on the size of the land and inputs they needed.


However, the cooperative has expressed concern that some of its members who got loans have since abandoned their tea farms while others have already sold them.

Shouldering the burden

Ndashimye told The New Times that 224 farmers have abandoned their farms estimated at 167.2 hectares in size, adding that five sold their farms slightly equivalent to more than 20 hectares.

Abandoning or selling farms, according to Ndashimye, was a result of the delay in the construction of a factory in the area which made farmers incur losses as they had no ready market for their produce.

This also led to their defaulting on the loan.

The tea that the coop members planted in 2010 started being harvested in 2013, but the factory was competed in 2015, Ndashimye said, which implies that they struggled to get market for their tea leaves for two years.

He said that a farmer would make over 100 kilometres to take their tea leaves to the market, and often time, it would get to the market when it was already gone bad because they lacked proper means of transport.

According to Ndashimye, currently, the farmers that remain in tea growing now have to shoulder the burden on behalf of their colleagues who left, which he says makes it much more difficult for them.

“Currently, the cooperative pays Rwf3 million every month in paying off the loan. For us to meet that loan agreement, a farmer is deducted Rwf43 per a kilogramme of tea leaves they sell,” he said.

To put this into context, a farmer is paid Rw216 per every kilogramme delivered to the factory.

So far, the farmers have paid back around Rwf100 million.

“The abandoned and sold farms are a challenge for us because they are not productive. This makes our loan repayment harder than when they would all be productive, because then the money paid per kilogramme would reduce,” Ndashimye said.

The BRD loan was to be used to grow tea on an estimated 1,200 hectares.

However, Ndashimye said that such acreage was larger than the actual land that the cooperative members owned – 850 hectares.

The mismatch in the land size, Ndashimye explained, was caused by substandard measurement that was used before compared to the GPS technology which was deployed later.

In addition, he added, production is very minimal because they failed to use implements like fertilisers, because of lack of funding.

Loan repayment deadline revised

Eric Rutabana, Chief Executive Officer of BRD told The New Times that the initial period for the repayment of the loan was 15 years, but explained that the bank later expanded the repayment deadline to 30 years to facilitate the farmers.

According to Ndashimye, the loan repayment agreement between the cooperative and BRD was revised on March 27, 2019, setting the deadline at 2048.

“Tea is a crop that can be harvested for up to 100 years, that is why in a bid to facilitate the farmers to repay the loan, we gave them a long period of time,” Rutabana said.

He pointed out that if some farmers are not supporting the cooperative to repay the loans, the cooperative can pursue them. 

"The bank worked with the cooperative to which it gave loan. The distribution of the loans among cooperative members was an arrangement of the cooperative," Rutabana said.

"However, we are working with them such that the loan does not become a burden to the farmers, so that it does not destablise their lives," he said.

Government pledges support

Ndashimye said that the cooperative harvests about 1.7 tonnes of tea leaves per hectare per year, which far lower than the average 6.2 tonnes of tea leaves registered at national level in 2018/2019, according to National Agricultural Export Development Bank (NAEB).

Issa Nkurunziza, Traditional Commodities Division Manager at NAEB said that the institution is supporting the farmers to get tea seedlings as well as fertilisers so that they can increase yields and be able to easily pay off the loan.

“We will give them technical support so as to increase the quantity and quality of tea produced,” he said, adding that the farms that are not productive will have been planted with tea seedlings by February next year.

“There is also a fertiliser revolving scheme consisting of $450,000 (about Rwf410 million) that we started this year to help the farmers in this cooperative easily get fertilisers,” he said.  

It is not just COOTHEMUKI that is grappling with the BRD loan and neither is it the first time they appeal for help.

In August, this cooperative together with COTHEGAB another tea growers’ cooperative based in Nyamagabe, had appealed for a debt relief according to an assessment made by a parliamentary committee that inspected the performance of tea growing cooperatives in the country earlier this year.


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