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IFC Invests in Kenya Tea Development Agency to Support Smallholder Farmers

Nairobi, Kenya, October 4, 2012 — IFC, a member of the World Bank Group, today announced an investment of $12 million (about Ksh1 billion) to support the operations of Kenya Tea Development Agency [Holdings] Ltd. KTDA will use the loan to build a 200,000-square-foot warehouse to store tea and other commodities in Mombasa.  
The new warehouse will increase the capacity of Chai Trading Company, a subsidiary of KTDA, to store more tea from KTDA’s 65 factories across the country, while eliminating the need to hire additional space.
The loan was signed by Jin-Yong Cai, IFC’s Executive Vice President and CEO, and KTDA [Holdings] CEO Lerionka Tiampati, at KTDA’s head office in Nairobi.
Cai said, “IFC’s investment in KTDA will not only optimize business for KTDA, but will increase revenues and living standards for the smallholder farmers, whom the company represents. The new warehouse in Mombasa will also create employment opportunities for KTDA’s local suppliers and distributors.”
Tiampati said KTDA warehouses in Mombasa currently handle about 300 million metric tons of made tea annually that is transported from the tea factories across the country.
“While this represents the bulk of our warehousing business, there is increasing demand for warehousing space from other clients. This has necessitated an expansion of our existing 600,000 square foot of warehousing space by an additional 200,000 square foot that will be built through IFC funding,” Tiampati said.
The new facility will enable Chai Trading Company to expand its warehousing business, thereby increasing the return to the farmer. The more than 560,000 smallholder farmers who supply tea leaf to the factories are also shareholders in the 54 factory companies which own KTDA [Holdings] Ltd, and therefore any profitable business venture ultimately benefits them.
Tiampati pointed out that KTDA’s business diversification strategy had seen it expand its investments along the value chain, which has now received a major boost from the IFC.
Cai said IFC is committed to investing in local companies like KTDA which will help develop Africa’s agribusiness value chain.  The new facility will also boost KTDA’s business with other entrepreneurs who provide packaging and transportation services.
 Tiampati noted that as KTDA’s varied businesses grow and farmers produce more tea, the demand for warehousing space will increase. “We are already witnessing increased demand for warehousing space and are planning ahead to accommodate this growth,” he said.
The ultra-modern warehouse will maximize on the utilization of space and meet all international warehousing standards for storage of food products and other commodities, Tiampati said.  IFC will support KTDA on adopting innovative green building standards in the warehouses.
Tea exports contribute over $1 billion annually to foreign exchange earnings for Kenya and benefits over 4 million people, or 10% of the Kenyan population.  
Earnings by small-scale tea farmers affiliated to KTDA reached an all-time high this year with a payout of $533 million (Ksh45.3 Billion), up from $477 million (Ksh40.5 Billion) paid to the farmers last year.
The agribusiness sector is a key strategic priority for the IFC, as it employs a large percentage of Africa’s labor force, and has a strong impact on small and medium-sized enterprises.  During fiscal year 2012, IFC invested $550 million in African agribusinesses.  
About the KTDA Group
KTDA (Holdings) Ltd is a private enterprise that manages a total of 65 tea processing factories located across all of Kenya’s tea growing counties, through its subsidiary, the KTDA (Management Services) Ltd. The factories are owned by 54 Tea Factory Companies, whose shareholders are the more than 560,000 small-scale tea farmers who are also the suppliers of the leaf.
KTDA [Holdings] Ltd has the following subsidiaries: KTDA (Management Services) Ltd, Chai Trading Company Ltd, Majani Insurance Brokers, Greenland Fedha Ltd, and a microfinance company, KTDA Power Company Ltd, Kenya Tea Packers (KETEPA) Ltd and the KTDA Foundation.
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About IFC
IFC, a member of the World Bank Group is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit .
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