November 12, 2024

Tea Farmers Accuse UK-Funded Project of Unfair Loan Condition 


Trustworthy and indepth news stories are more important now than ever.
Support our newsroom by MAKING A CONTRIBUTION HERE
British multinational Unilever is among the funders of the project

Tea farmers in Nyaruguru, Southern Rwanda, are up in arms against SCON, a $77m UK-funded project which gives them loans but want to take back most of the money through various deductions. Campaigners speaking on behalf of the farmers accuse SCON of not consulting farmers.

SCON is “Services Company Outgrowers Nyaruguru Ltd”, a project co-funded by UK government in partnership with Unilever, the British multinational consumer goods company, the Wood Foundation (TWF), and UK firm Gatsby.

The project’s data say it gives small loans to over 5,000 tea farmers who are cultivating over a 3,400 hectares.

Everything has been going on well, untill recently when farmers noticed changes in the amount of money they would receive. Despite raising their concerns with the project, it appears they have been ignored.

In a document sent to The Chronicles, the farmers raise several serious issues.

1. Conflict Over Unapproved Changes to Farmer Contracts:

– Farmers in Nyaruguru District have expressed serious concerns about unilateral changes made by SCON, the company they work with, that contradict the terms of their original contract.

– Key issues include unauthorized increases in loan repayments and service fees, which have financially strained the farmers.

2. Increased Loan Repayments and Service Fees:

– SCON raised the loan repayment rate from 30% to 40% without consulting farmers, which violates their contract. This leaves farmers with only about 25% of their income after all deductions, making it difficult for them to sustain their tea farming and livelihoods.

– SCON also imposed an additional 0.9% service fee, claiming it was for VAT, although farmers argue this is illegal and request a refund.

3. Unexpected 5% Interest on Loans for Larger Farms:

– Farmers with tea farms over 1 hectare were unexpectedly charged a 5% interest rate on their loans. Farmers view this as a penalty and demand the removal of this interest, arguing it discourages farm expansion and contradicts the company’s commitment to support farmers.

4. Increase in Transportation Fees:

– SCON raised tea transportation fees from 10 RWF/kg to 16 RWF/kg without prior notice or explanation. Farmers are especially concerned since the processing facility is now closer, which should ideally reduce transportation costs.

5. Currency Exchange Issue Resolved:

– Farmers acknowledge and thank SCON for discontinuing the practice of adjusting loan repayments according to the USD exchange rate every three months, a practice that was reportedly against Rwandan law.

6. Farmers Demand Contractual Corrections and Equal Treatment:

– The farmers are requesting that SCON correct all the changes within 21 days, as per contract stipulations, and draft a new agreement that respects both parties’ interests.

– They urge SCON to treat all farmers equally, regardless of farm size, to foster good collaboration and ensure the sustainability of tea farming in the region.

We can't do quality journalism without your support

Perhaps it goes without saying — but producing quality journalism isn't cheap. At a time when newsroom resources and revenue are declining, The Chronicles remains committed to "Serving Your Right To Know The Truth". Stand with us as we document Rwanda's remarkable journey for you and the future generation. Do you value our journalism? We can't do it without you. Show us with your support by CONTRIBUTING HERE.
Email your news TIPS to info@chronicles.rw or WhatsApp +250788351327.
You can also find us on Signal

Leave a Reply

Your email address will not be published. Required fields are marked *