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Small-scale farmers affiliated to Kenya Tea Development Agency (KTDA) saved more than Sh400 million between June and December 31, 2022 after the review of interest rate from 21 per cent to 8 per cent.

The farmers who borrow money from the agency microfinance deposit institution -Greenland Fedha Limited benefited from the interest rate reduction a situation that also led to increase in cumulative loan they were advanced  during the review period.

Financial year

The institution’s general manager Dickson Waitueka said  for the last six months farmers borrowed Sh6.8 billion compared to Sh5.1billion borrowed during the entire 2021/22 financial year.

‘If the company continued charging its loan at 21per cent it could have earned the Sh400M as interest income. With the tea reforms and review of interest rate charged these benefits were passed over to the farmer. How, they now pay less charges on their borrowings,” said. Mr. Waitueka.  He added, “The reduction in interest rates seems to have enhanced the farmers’ appetite to borrow money from the institution to finance their tea farming as well as other development in their homes.  Currently, the loan book is impressive compared to previous year. This is a demonstration of a wide acceptance by the farmers that Greenland Fedha Ltd is really offering affordable credit of the CBR plus 1. Also the company is farmer centric in all its operations.”

In December 1, 2021,  Greenland Fedha Limited, reduced the interest rate on loans to smallholder tea farmers to 8 per cent, down from 21 per cent to enhance access to credit.  

Before December 2021 farmers were getting different types of loans from the subsidiary at an interest rate of 14 percent, which is higher than the 12.09 percent that commercial banks charge.

Greenland Fedha is a non-deposit taking microfinance institution managed by KTDA Limited.

In a performance report to media houses Waitueka  explained that as at June 2022, number of farmers who applied for loans increased to 264,173 compared to 265,698 recorded during the 2021/22 fiscal year.