Government bans use of tea farmers’ funds as collateral in sweeping KTDA transparency

The government has unveiled sweeping reforms at the Kenya Tea Development Agency (KTDA) aimed at protecting smallholder farmers from financial exploitation and restoring confidence in the tea sector.

Agriculture Principal Secretary Paul Ronoh announced that tea farmers’ funds will no longer be used as collateral for bank loans, saying the move is meant to shield growers from unnecessary financial risk and curb abuse by factory management. The ban forms part of a broader restructuring programme targeting transparency and accountability across KTDA operations.

As part of the reforms, KTDA has been directed to close multiple factory bank accounts and operate under a streamlined financial system to allow clearer tracking of income, expenditure and foreign exchange earnings. Ronoh said each factory will retain visibility over its own revenues while ensuring tighter oversight on operational costs.

The government has also launched lifestyle and forensic audits targeting both current and former tea factory directors following allegations of mismanagement and misuse of farmers’ money. Authorities say the audits will help recover lost funds and hold those responsible to account.

Additionally, the long-standing inter-factory loan system is being phased out, with KTDA shifting towards commercial bank financing. The move follows revelations that factories in the West Rift borrowed billions of shillings from their East Rift counterparts, with much of the money remaining unpaid.

Officials say the reforms are designed to safeguard the interests of over 680,000 smallholder tea farmers, stabilise bonus payments, and strengthen governance in one of Kenya’s most important agricultural sectors.