Prime Minister Edouard Ngirente on Monday, March 28, officiated at the ceremony to hand over Mulindi Tea Factory – Rwanda’s largest tea factory – to 5,000 smallholder farmers in Gicumbi District, a move expected to help farmers get more profits from tea sales.
It becomes the first factory to be fully owned by smallholder farmers, according to information from the National Agricultural Export Development Board (NAEB).
The development was achieved after the Wood Foundation Africa and Gatsby Africa transferred their shares in the factory to Gicumbi-based smallholder tea cooperatives.
The two philanthropic investors had acquired the factory when it was privatised by the Government of Rwanda in 2012.
A partial view of the Gicumbi tea factory which is now fully owned by smallholder farmers in Gicumbi District, Northern Province, Monday, March 28, 2022 (Courtesy photo)
Following the privatisation of Mulindi Tea Factory in 2012, the Wood Foundation and the Gatsby Foundation through their regional philanthropy joint company, East Africa Tea Investments (EATI), acquired majority shares 55 percent in Mulindi Tea Factory.
Tea farmers owed 45 percent of the factory shares. The foundations said that over the last 10 years, they provided a combination of finance, technical, managerial and governance support to turn the factory business around.
Now, the factory is owned 100 percent by farmers, through two smallholder tea cooperatives – Cooperative du Thé Mulindi (COOPTHE) and Cooperative du Thé Villageois Mulindi (COOTHEVM) and their umbrella investment vehicle, Mulindi Tea Company (MTC).
Build on achievements
Ngirente told the farmers to build on the gains made in order to continue producing more and quality tea, thanking the Wood Foundation for its support through joining the Mulindi factory company since 2012.
“This noble initiative has improved the income, skills, knowledge and livelihoods of smallholder tea farmers of Mulindi region. The Government of Rwanda commends you for all the philanthropic activities in tea business in Rwanda,” he said.
Sir Ian Wood, Executive Chairman of The Wood Foundation said they are more interested in having farmers run succesful businesses and get increased income, Monday, March 28, 2022 in Gicumbi District (Courtesy photo
Since privatization ten years ago, the foundations have invested over $15 million to the Mulindi factory including to help increase its capacity, expand tea plantations and train farmers in tea farming and corporate governance.
Elysée Ntabwoba, Chairman of COOPTHE Mulindi Board said that the price given to farmers for their green tea leaves more than doubled from Rwf115 in 2012 to Rwf276 mainly thanks to the enhanced quality.
“We are happy that the charitable investors have signed over their shares to us without any profit on their venture after supporting us to get the required capacity. We assure you that the factory’s good performance will be maintained,” he said.
Sir Ian Wood, Executive Chairman of The Wood Foundation, who attended the ceremony on behalf of the philanthropic investors, said “we are very pleased to be handing over a well-established successful company and will continue to provide some support for an interim period”.
Prime Minister Edouard Ngirente flanked by other officials tour at Mulindi tea factory during the handover ceremony in Gicumbi District on March 28. Courtesy
The philanthropic investors said that they had recovered their share capital and they were handing over the [factory] business to farmers at no return.
“Nothing will give us greater pleasure than to have this business really succeed and to see the farmers making good money,” Wood observed.
About the factory and its impact
Commercial tea production in Gicumbi District began in 1960 with the construction of the Mulindi Factory Company. It is Rwanda’s oldest and largest factory in terms of production.
The factory produces up to 4 million kilogrammes of manufactured tea and generates revenues up to $9 million per annum, according to information from NAEB.
Gerardine Mukeshimana, Minister of Agriculture and Animal Resources indicated that Mulindi Tea Factory is the largest factory, contributing about 10 percent to Rwanda’s annual tea export revenue revenues – about Rwf9 billion annually.
She said that the negotiations [made to have farmers fully own the factory] were meant to ensure that such money further supports the development of tea farmers and improve their livelihoods.
Tea remains Rwanda’s top agricultural export revenue earner. In 2021, Rwanda earned more than $96 million from exporting over 35 million kilogrammes of tea compared to over 32 million kilogrammes sold for more than $90 million in 2020, according to data from NAEB.
The factory has improved the lives and livelihoods of those living in the Mulindi region through various achievements which were possible thanks to factors such as the factory processing capacity doubling from 60 tonnes to 120 tonnes of green leaf per day.
And, the average farmer annual gross income increased from $1,412 in 2013 to $2,881 in 2021.
Green leaf production increased from 13.5 million kilogrammes in 2013 to 18 million kilogrammes.
Also, more than 5,000 farmers have been trained on best practice tea management skills.
Meanwhile, Ngirente said “the Wood Foundation is currently involved in six tea factories. It plays a significant role in creating economic activities to empower rural communities through business development, capacity building and financing.”
Wood said that they have invested $140 million in Rwanda’s tea sector since 2014.