Kenya tea farmers, manufacturers turn to Chinese financing to expand

World Today

Kenya is the world’s largest exporter of black tea, but various restrictions prevent greater profit gains from tea. Manufacturers are now turning to support from Chinese companies to add more value and focus on products that can fetch higher prices in the international market.

ReDiscovering AFRICA

Kenya is known for its black CTC tea, recognized for its unique process that produces a rich red-brown colour.

While 95 percent of tea produced in Kenya is exported, the industry is heavily reliant on a few multinational export partners that maintain great control over production and pricing. Indigenous tea farmers and manufacturers have lost a good share of the profits.

CCTV’s Liu Xinqing reports.

Kenya tea farmers, manufacturers turn to Chinese financing to expand

Kenya tea farmers, manufacturers turn to Chinese financing to expand

Kenya is the world's largest exporter of black tea, but various restrictions prevent greater profit gains from tea. Manufacturers are now turning to support from Chinese companies to add more value and focus on products that can fetch higher prices in the international market.

The Ngorongo Tea Factory is a Kenyan black tea factory that has been around for almost 50 years. Its owners realized that its failure to diversify has left it vulnerable to market changes.

“Over time, this country is more reliant on black CTC tea. Over the past two years, there has been an over-production of black CTC tea in this country. That has serious adverse impact on the prices. The prices declined by almost 50 percent,” said George Omuga of the Ngorongo Tea Factory.

The company is working to diversify its products and export markets, and make their tea more affordable to domestic customers, Omuga said.

Local tea farmers are also aspiring to expand their scale of production.

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Product diversification and expanding production are goals for farmers and manufacturers alike, but that type of investment needs money. Enter the China Development Bank, which is working to be more involved in Kenya’s tea industry.

“The factory is one potential customer of our bank. They are going to expand business in China and they are planning to expand production capacity. We think it meets the requirement to support the grassroots growth of this country, to support the farmers and workers,” Zou Gang of the China Development Bank said.

With increasing exchanges and broader areas of cooperation between China and Africa, Chinese banks also helping to link local tea farmers and factories with a larger market in China.