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IFC, Partners Support Renewable Energy Project for Tea Factories in Kenya


In Nairobi
Neha Sud
Phone: +254720348499
E-mail: nsud@ifc.org


In Washington, D.C.

Elizabeth Price
Phone: +1 202 473-4645
E-mail: Eprice@ifc.org

Nairobi, Kenya, December 3, 2015—IFC, a member of the World Bank Group, today announced new financing to seven small hydropower plants that will generate power for tea factories affiliated with the Kenya Tea Development Agency. The $55 million loan is arranged by IFC in partnership with the Global Agriculture and Food Security Program, PROPARCO, and The Netherlands Development Finance Company FMO.  

KTDA operates 65 tea processing factories across Kenya, sourcing its tea leaves from 350,000 farmers, who are shareholders in the company, and co-own the factories. Energy accounts for over 30 percent of costs for the tea factories. The small hydropower plants developed by KTDA Power will supply 16MW of renewable, affordable power to the tea factories that will help reduce costs and increase savings for the farmers. The construction of the power plants is expected to create more than 2,000 jobs.  

KTDA CEO Lerionka Tiampati said “Construction of three hydropower projects in Gura, Chania and North Mathioya are at advanced stages, funded by an earlier credit line from AFD (French Agency for Development). With the funding that we have received today, construction works for Nyambunde, Kiringa, Kipsonoi and Nyamasege SHPs will commence in 2016.”

Oumar Seydi, IFC Director for Eastern and Southern Africa said, “Access to power is one of the key constraints for agriculture in Africa. KTDA is innovating to address power shortages by developing its own captive and renewable power supply. Reducing costs of processing will help make Kenya’s tea sector more competitive in a global marketplace and increase revenues for the 560,000 farmers who supply green leaf to the 66 KTDA-managed tea factories.”

Suzanne Gaboury, Director of Agribusiness at FMO said, “FMO is proud to play a part in financing this project that will enable the construction of seven small hydropower plants. After providing long-term finance to KTDA’s micr-finance company, Greenland Fedha, in 2014, FMO will now be involved in a project that can generate reliable and clean energy for KTDA’s tea processing factories. It should demonstrate the business case for small-scale renewable energy projects in the region.”

Amaury Mulliez, Chief Investment Officer of Proparco said “We are very pleased to partner with KTDA, a key player in the tea industry with a unique model based on half a million local farmers. It will further promote sustainability in the Kenyan agricultural sector. By providing reliable and clean energy to tea factories, this project will also reduce the carbon footprint of the country by an approximate 63,000a tons of CO2-equivalent per year.”

On average, individual tea factories spend approximately Ksh30 million ($290,000) to Ksh65 million annually on electricity, depending on factory size, crop level and the variable costs such as fuel cost adjustment and forex that are used by Kenya Power in the calculation of electricity bills.

About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence, to create opportunity where it’s needed most. In FY15, our long-term investments in developing countries rose to nearly $18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.

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About GAFSP
GAFSP is a global effort that pools donor resources to fund programs focused on increasing agricultural productivity as a way to reduce poverty and increase food and nutrition security. GAFSP targets countries with the highest rates of poverty and hunger. The public sector window helps governments with national agriculture and food security plans. The private sector window, managed by IFC, and supported by the governments of Australia, Canada, Japan, the Netherlands, the United Kingdom and the United States, provides long- and short-term loans, credit guarantees, and equity to private sector companies to improve productivity growth, deepen farmer’s links to markets, and increase capacity and technical skills. For more information, visit http://www.gafspfund.org.

About Proparco
Proparco is a subsidiary of the Agence Française de Développement (AFD) devoted to private sector funding, and has been supporting sustainable development for almost 40 years. It operates in 73 countries in Africa, Asia, Latin America and the Middle East and helps finance and support financial institutions and corporate private-sector projects. Today it has almost 400 clients worldwide. Proparco focuses on key development areas, such as renewable energy-based infrastructure, agribusiness, financial sector, health and education. Through its work, Proparco has a powerful impact on sustainable economic growth, job creation, access to essential goods and services and, more broadly, on poverty reduction and fighting climate change. With a balance sheet total of €4.6bn at December 31, 2014 Proparco is one of the leading European Development Finance Institutions which together spearhead a large number of joint programs. www.proparco.fr

About FMO
FMO is the Dutch development bank. FMO has invested in the private sector in developing countries and emerging markets for more than 45 years. Its mission is to empower entrepreneurs to build a better world. It invests in sectors where it believes its contribution can have the highest long-term impact: financial institutions, energy and agribusiness. Alongside partners, it invests in the infrastructure, manufacturing and services sectors. With an investment portfolio of EUR 8.8 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally. www.fmo.nl

About KTDA


The Kenya Tea Development Agency Limited (KTDA) was incorporated on 15th June 2000 as a private company under (CAP 486) of the laws of Kenya, becoming one of the largest private tea management agencies. The Agency currently manages 66 factories in the small-scale tea sub-sector in Kenya. The agency is mandated with promoting and fostering the growth and development of tea growing among the indigenous tea farmers. Its mandate is to oversee and enhance the end-to-end processes from the cultivation of tea, to the marketing of the same to local and international markets.