Social investor Oikocredit funds Rwandan tea factories to produce 2M tea-seedlings

RWANDA – Global cooperative and social investor, Oikocredit International has penned a memorandum of understanding (MoU) with two Rwandan tea factories i.e. Karongi and Muganza Kivu, to produce two million seedlings to boost tea production.

Karongi Tea Factory and its sister factory Muganza-Kivu source, process and market the green tea leaves coming from farmer cooperatives Katecogro and Cothemuki.

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The two million seedlings, according to Oikocredit, will be distributed to 2,000 smallholder farmers who will be selected by the cooperatives.

Participants will be equipped with skills on the best practices in tea farming through farm-based demonstrations and other practical learning methodologies.

The funds for this two-year project, worth around € 140,000 (US$165m), were mostly raised through Oikocredit’s West German Support Association.

In the MoU, Karongi and Muganza Kivu tea factories will take the lead in tea seedling production.

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Oikocredit International Support Foundation on the other hand will cover the cost of production and capacity building activities which target smallholder tea farmers. Through capacity building, tea farmers will gain new skills in cultivating tea.

“Tea farming presents an opportunity to secure livelihoods not only in the short term, but for many years to come and we are proud to be associated with this project.’’

Elikanah Ng’ang’a – Oikocredit’s Social Performance and Capacity Building Officer for Africa

“Tea seedlings play a key role in the development of a tea plantation in its early stages and later to fill the gaps that occur after planting,” said Josiane Mutangana, Managing Director of Karongi and Muganza Kivu Tea Factories.

According to Josiane, due to its high cost of production and maintenance, farmer cooperatives cannot afford to plant new seedlings regularly on their own.

“In the past we have invested our own funds to develop tea seedlings which we have given to farmers, it is great to see Oikocredit joining us in this noble cause,” she added.

The two factories have already signed agreements with their respective cooperatives to buy all the tea leaves that will be produced through this project.

Oikocredit has 45 years of experience funding organisations active in financial inclusion, agriculture and renewable energy that focus on helping disadvantaged people to sustainably improve their income.

“We are pleased to have found such partners as Karongi and Muganza Kivu Tea Factories. Both organisations are running programmes that give back to the farmers and communities where they work,” said Ging Ledesma, Oikocredit’s Director of Social Performance Innovation.

“I also extend my gratitude to the investors who contributed to this project and ensured we can increase our social impact in the Rwandan tea sector,” added Ging.

Currently, many smallholder farmers and agricultural organisations are struggling with the effects of the coronavirus. Oikocredit continues to look for ways to support its partners during this difficult time and assist their long-term economic recovery.

Elikanah Ng’ang’a, Oikocredit’s Social Performance and Capacity Building Officer for Africa, highlighted that, “Even if we are doing this in times of a pandemic, it is great to look beyond Covid-19 and think how we will secure livelihoods in the future.

“Tea farming presents an opportunity to secure livelihoods not only in the short term, but for many years to come and we are proud to be associated with this project.’’

Oikocredit has financed close to 690 partners, with total outstanding capital of € 947 million (US$1.1 billion) as at 30 June 2020.

In the fiscal year 2019/2020, revenue of tea exports from Rwanda amounted to US$93 million, a 12% increase from US$83 million fetched in 2018/2019

In terms of volume, the exports rose by 7 percent from 30,500 tonnes in 2018/2019 to more than 32,600 tonnes in 2019/2020 attributed to new plantations which started to give yields.

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