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Simmering row between Tea Saccos, Green Fedha to be resolved soon

Agriculture, Livestock, Fisheries and Cooperatives Cabinet Secretary (CS), Peter Munya, has agreed to facilitate a meeting between Tea Sacco’s in the Cooperative movement and Greenland Fedha to unlock the quagmire that has been riddling the two institutions on matters lending.

Speaking Thursday on the sidelines of Cooperative Leaders meeting on the Cooperative Bill 2021, at Keekorok lodge in Maasai Mara, after leaders in the tea sector raised their concerns regarding the manner in which Greenland Fedha was operating, Munya said the government is looking to see how the tea cooperatives can be helped by aligning the two entities to work together.

Greenland Fedha Limited, is a non-deposit taking microfinance institution in Kenya and fully owned by KTDA that was established to provide credit to smallholder tea.

Tea savings and credit societies had decried the move, saying the introduction of loan scheme by the micro finance institutions, will lead to defaults on loans borrowed by farmers, since Greenland Fedha, would have an advantage over Sacco’s as they do hold tea farmers’ tea money.

Munya acknowledged that Green Fedha was initially started to kill the cooperative movement, but said government being a progressive body wants to see tea farmers benefit from both Sacco’s, thus will look at how best to align them for the benefit of the farmer.

“There has been a challenge with the Greenland Fedha, being a subsidiary of KTDA and therefore at an advantage position in relation to Sacco and this has undermined the tea Sacco’s,” he said, adding, “We want to align them to see how they can work together since they are servicing the same farmer.”

“Maybe Greenland Fedha should be lending through Sacco’s or there should be rules that if one is to borrow in Green Fedha, they have to be cleared by the Sacco’s, where they are a member. Things need to be aligned and that is why I have volunteered to do a joint meeting between the Sacco’s and KTDA,” CS said

The CS explained that people should not be facilitated to run away with Sacco’s money and there is need to ensure that those who borrow are able to pay, thus the two institutions will have to work together.

“We do not want to close the Greenland Fedha, he said, noting that currently the government has ensured that lending rates from the micro finance institutions have been brought down from 24 percent to 8 percent and as from 1st December, 2021 tea farmers will be enjoying this rate,” he noted.

The CS added that there has been a lot of reforms in the tea sector and with the Tea Act now in operation despite it being challenged in the courts, a regulatory tea board is also being operationalized that has seen monthly earning for tea farmers per kilogramme of green leaf increased from the initial Sh17 to the current Sh21 monthly.

“We have sorted the market issues and tea is doing very well, especially for the small holder tea under KTDA in the Mombasa Auction and we expect that by next year we will earn even better,” he said.

Cooperative Alliance of Kenya (CAK), CEO, Daniel Marube lauded Munya for the assurance of a joint meeting, saying it was long overdue.

“The intention of the CS is good but what we are saying here as cooperators is that let KTDA continue concentrating on its core mandate of processing and marketing tea, but matters of finances using farmer’s money to lend to the same farmer with the intention of killing the Sacco’s is not sustainable,” he said.

The CEO explained that it was wrong for KTDA who holds the farmers’ money to in turn use the same money through their own institution to lend to the farmers, yet they know every tea factory has its own Sacco owned by farmers, that provides them with their financial needs.

The farmers are the owners who bring their product to the factory. However, now we have found that since KTDA is holding the money, they use the same money to lend to the farmer, therefore the objective and the purpose of forming the Greenland Fedha was not good and their ulterior motive was to kill the Sacco’s,” he said.

As leaders in the cooperative movement, we are requesting the government to compel the Board of KTDA to close down the Greenland Fedha micro finance, because of conflict of interest, with farmers now taking loans from both Sacco’s, but since the Green Fedha has an upper hand, they redeem their loan as a check-off before they pay the bonuses.

On the contrary, Sacco’s find themselves in a dilemma as they do not have money to deduct from the farmers produce as it has been subtracted from the source which is KTDA, hence conflict of interest,” Marube said.

He emphasized on the need for KTDA to stand firm and let Sacco’s deal with the financial management of the farmer, saying that’s the appropriate thing to do.

If KTDA feels that they have a lot of money, let them give it wholesomely to the SACCOs so that they can lend, instead of two arms using the same money to lend to farmers, added the CEO.

Greenland and Sacco controversy has been brewing for the last 10 years, with the microfinance institutions under KTDA being accused of withholding deductions and delaying remittances as well as luring farmers to buy out their loans by issuing fresh credit facilities without any savings.

By Wangari Ndirangu


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