Kenya’s state-run tea factories are staggering under 26.06 billion shillings ($200 million) in debt after years of loans taken without proper board approval, inflated collateral and diverted project funds, the country’s tea regulator said Monday.
A Tea Board of Kenya audit, presented to lawmakers last week, documented widespread violations at factories managed by the Kenya Tea Development Agency (KTDA), which handles output from roughly 700,000 small-scale farmers.
Western Kenya bears the brunt
Factories west of the Great Rift Valley — primarily in Kericho, Bomet, Nyamira, Kisii and Nandi counties — accounted for 21.61 billion shillings of the debt as of June 2025. Eastern factories owed just 4.45 billion shillings.
The audit found that 10.36 billion shillings in inter-factory loans were arranged centrally by KTDA headquarters with no local board minutes or repayment policy. Many factories, hit by cash shortages, have missed the one-year repayment deadline.
KTDA ended the inter-factory lending system last month and told factories to borrow from commercial banks instead.
Overvalued stocks and inflated equipment costs
Regulators said 12.8 billion shillings in commodity loans, supposedly secured against tea stocks to pay farmer bonuses in October 2024, were backed by sharply overvalued inventories — especially in western Kenya — and were spent on day-to-day operations instead.
Another 2.59 billion shillings in asset-backed loans saw factories exceed approved limits and pay inflated prices for machinery. Equipment delivered to Kambaa and Sanganyi factories, for example, cost far more than identical items supplied elsewhere.
Three factories — Kebirigo, Ragati and Chinga — borrowed 300 million shillings for capital upgrades such as new withering bays and orthodox tea lines but used the money for unrelated purposes.
The government also owes KTDA 4.67 billion shillings in unpaid fertilizer subsidy refunds dating back to 2023, adding to the liquidity squeeze.
Prices plunge for western growers
The financial turmoil comes as farmers west of the Rift suffer a 16.3% price collapse. Tea from the region averaged 226.17 shillings per kilogram at the Mombasa auction in the first nine months of 2025, down from 270.11 shillings a year earlier.
Eastern Kenya tea fetched 379.96 shillings per kilogram, down only 2%, widening a regional gap that has triggered protests over low bonus payments.
Calls for forensic audit
The Tea Board demanded an immediate forensic investigation into all KTDA loans since July 2021, physical checks on equipment bought with borrowed money and an end to using new debt to pay year-end farmer bonuses.
“Future payments must reflect real earnings and cash on hand, not borrowings propped up by inflated stock values,” the regulator said.
KTDA has not yet responded to the findings.
Kenya remains one of the world’s top tea exporters, with annual earnings of about $1.3 billion.
