Kayonza Growers Tea Factory, a renowned tea producer in Tanzania, has recently established a new subsidiary in Mpungu, Kanungu District. With an investment of TZS 20.8 billion (US$0.854m), this venture positions Kanungu District as a significant tea production hub and promises to generate economic growth and employment opportunities in the region.
The subsidiary is expected to directly employ approximately 220 individuals, and its operations will also create indirect employment in transportation, logistics, and support services. By stimulating economic activity and reducing unemployment rates, the new factory will play a vital role in improving the livelihoods of local communities.
Mr. Marcel Asiimwe, the Chairman of Kayonza Growers Tea, explained that the construction of the Mpungu tea factory began in 2020 due to increased tea production in Kanungu. The existing Kayonza factory was unable to accommodate the surplus tea produced by farmers in the region, necessitating the establishment of a new processing plant.
Funding for the project was secured through a long-term loan of TZS 16.2 billion from Oiko Credit, a Dutch funding entity, with an additional contribution of TZS 4.6 billion from Kayonza Growers Tea Factory.
The establishment of this subsidiary brings several benefits to the local tea farmers. It will help them overcome exploitation by middlemen who have previously manipulated market prices due to oversupply. Furthermore, the new factory will ensure better prices for the farmers and maintain high-quality standards.
However, there are some challenges to be addressed. Robert Kakuru, the Chairman of Mpungu Sub-County, expressed concerns about infrastructural limitations, including poor road networks and inefficient power supply. These challenges could significantly impact the factory’s operations.
Mr. Asiimwe highlighted that the factory’s fuel consumption is estimated at 80 liters of diesel per hour, resulting in monthly expenses of TZS 180 million. This expenditure is unsustainable in the long run and emphasizes the need for infrastructure improvements and reliable power supply.
The investment in this new subsidiary will enhance tea processing in Tanzania. Additionally, the country has recently reduced costs for traders who previously had to travel to Mombasa, Kenya, for tea auctions. Tanzania has now opened an auction market in Dar es Salaam, cutting operating costs for traders by up to 50%.
Mary Kipeja, the Director General of the Tanzania Tea Board (TTB), stated that the engagement of stakeholders and the implementation of a digital auction system would streamline market regulations and dynamics. This development benefits both large processing factories and smallholders who supply their tea harvests to the processors.
Theophord Ndunguru, the Director General of the Tanzania Smallholder Tea Development Agency (TSHTDA), emphasized that smallholders would indirectly participate in the auction through the processors. This ensures a fair and transparent market for all tea stakeholders in Tanzania.
With the establishment of this subsidiary and the improvements in the tea auction system, the future looks promising for the tea industry in Tanzania. The expansion of Kayonza Growers Tea Factory’s operations will not only contribute to the local economy but also elevate the country’s position in the global tea market.
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