Rubaya-Nyabihu Tea Company Ltd.

Debt : March 2017

BIO has granted a USD 4 M loan to Rubaya-Nyabihu Tea Company Ltd., a Rwandan tea plantation.

Amount

€ 3,674,000.00

Type of investment

Debt

Development impacts

Local economic growth
Food security & rural development

Beneficiary locations

Sub-Saharan Africa: Rwanda

Investment field

Enterprises

Activity

Agribusiness - Tea

Organisation

Rubaya-Nyabihu Tea Company Ltd.

Website

https://www.rwandamountaintea.com/

Domicile

Rwanda

RNTC is expanding its tea production volume (+56% over the coming 10 years) through:

Expanding its industrial plantations: RNTC secured 300 additional hectares and is in the process of converting the land into industrial plantations. Outstanding land preparation and planting represent an estimated investment cost of USD 1.1 M.
Expanding its processing capacities (transformation of green leaf into tea): In order to keep pace with the expected growing volume of green leaf production (in-house and/or through out-growers), RNTC has to increase its processing capacities i.e. expand Rubaya and Nyabihu factories. These investments mainly relate to machinery and facility investments for a total of USD 3.1 M.

Through these expansions, BIO’s loan will have significant positive developmental impacts as it should:

Lead to the creation more than 2,000 jobs;
Reinforce the economic empowerment of more 1,600 out-growers;
Strengthen/institutionalise RNTC’s environmental and social practices; and
Generate significant and much needed foreign currency revenue for Rwanda.

It is worth to note that in parallel to our loan, RNTC will partly fund (USD 1.6 M) a blending and packaging company through internal cash flows (host legal structure still to be defined). This is in line with RNTC/RMT strategy i.e. moving down the value chain towards the final consumer. Our loan therefore also enables RNTC to participate in this project as our loan releases internal cash flows that would have been consumed for the above-mentioned expansions.

RNTC is located in the North-West region of Rwanda, near Goma in DRC and the Lake Kivu. It operates on two different premises in the Rubaya and Nyabihu district. The Rubaya tea factory is about 140km from Kigali and 20km from the Nyabihu factory.

Development impacts

Local economic growth
Employment effects at investee company:
1. Industrial tea plantation expansion (300ha in Nyabihu) implies significant jobs creation. Tea plantations require 3-4 full-time-equivalent per hectare to maintain and pluck the green leaves.
2. The combined effect of RNTC's expansion and modernisation of its processing capacity will maintain the number of jobs in the processing facilities.
3. Expansion of the processing capacity is also a prerequisite to be able to process the additional green leaves that should be produced by RNTC's out-growers' plantation expansions

Indirect employment effects (upstream/downstream):
RNTC's out-growers intend to expand their plantation by 350 hectares (150 at Nyabihu and 200 hectares at Rubaya). This implies the creation of additional >1,000jobs.

Increase of the value of the country's exports:
Tea exports is the 3rd biggest source of tax income for Rwanda. Expanding tea production will directly contribute to an increase in taxes and Rwanda exports (as >90% of the tea is exported).
Food security & rural development
Improved economic opportunities for farmers:
According to cooperatives and RNTC, green leaves (input to produce tea) is a very attractive cash crop as production/harvest occurs through out the year and, once planted, does not need significant efforts (revenue/profits per hectares is higher than alternative food crops). RNTC supports outgrowers by providing them with tea bushes from their nursery, payment facilities for fertilizers and technical assistance on how to manage plantations.

Employment creation in rural areas
Tea plantations are located in rural area which have low level of income (mainly based on subsistence farming) and high unemployment rate. Job creation in these areas has a particularly strong spillover effect on local communities.