Tea farmers appeal for debt relief

Workers in plucking tea leaves at Gisakura farm in Nyamasheke District. / Sam Ngendahimana

Tea farmers’ cooperatives have appealed for a waiver of billions of loans they acquired from Development Bank of Rwanda (BRD), citing poor yields and post-harvest losses occasioned by the lack of ready market. 

Encouraged to engage in tea growing by the National Agriculture Board (NAEB), the farmers’ cooperatives acquired the loans in 2010.


The cooperatives were advised to get loans that would be repaid through sales from their harvests.


The management of COTHEMUKI, a Nyaruguru District based cooperative, said that they were promised a tea processing factory in the area, which was constructed five years later. 


With this delay, they said, they incurred losses as they lacked ready market for their tea leaves, hence hurting the fortunes of more than 1,100 people who make up the cooperative. 

COTHEMUKI now owes BRD over Rwf3 billion with more than Rwf1 billion having resulted from loan interests that accrued over time, according to Jean de Dieu Furaha, its accountant.

The cooperative has so far managed to pay only Rwf94 million, he disclosed.

Aloys Ndashimye, the president of COTHEMUKI, said that the total loan is projected to rise to rise Rwf8 billion including accrued interest rates.

The cooperative is required to make a monthly payment of Rwf3 million.

“The loan is too huge for us to pay off, it is a heavy burden for us,” Ndashimye said, expressing concern that some farmers may be discouraged from growing tea due to losses.

Their losses were worsened by harsh weather conditions characterized by drought and floods, which ravaged their plantations in separate seasons, he added.

Volatile interest rates

The other most challenging issue for the cooperatives is high-interest rates on the loans.

The loans were issued in three instalments at an interest rate of 8 per cent for the first batch and 16 per cent for the last installment. 

In addition to the unstable rates, the farmers are penalized for the delayed payment, which increases the loan burden. 

“Our suggestion is that at least the Bank exempt us from paying the increasing interests that keep the loan overwhelming for us. The farmers won’t be able to pay back and are being the victims,” Ndashimye added.

The cooperative has accused the Bank for charging fines for delayed payment before their first harvest, which happened three years form the first planting. 

COTHEGAB, a cooperative that operates in Nyamagabe District, owes the Bank more than 739 million. It pays an interest rate of 19 per cent, management said.

“The farmers are almost getting nothing from production because it is paid back to the bank. If they removed all the interests that keep increasing, we can manage to pay - if they don’t, we won’t be able to meet the 2029 payback deadline,” Habanabakize Jean Baptiste, the president of COTHEGAB told The New Times.

Successful operation? 

Eric Rutabana, Chief Executive Officer of BRD, says that although there were issues in farm production, which affected the farmers’ ability to service the loan in the beginning, the project has, overall, had a positive impact on the lives of beneficiaries.

“We are committed to partnering in finding a solution to the problem, such as supporting them [farmers] with the overdue loan interests,” Ruterana observed.

Despite the governments strengthen agriculture cooperatives, some challenges have persisted, sometimes derailing their progress.

A report presented in the parliament on August 5, by a parliamentary committee set up to conduct an inquiry into issues affecting the agriculture sector in Rwanda revealed that more tea growing cooperatives are facing similar problems.

They cited COTHEGA in Nyamasheke District whose loans amount to Rwf2 billion.

According to recent figures from NAEB, tea is grown on over 26,000ha by about 43,000 farmers across 12 districts.

Its production has increased significantly over the years from 14,500 tons in 2000 to 25,128 tons in 2017.

Between July 2016 to June 2017, Rwanda exported 824 metric tons worth $74.5 million.


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