Kenyan tea farmers capture World Bank’s climate change deal
Monday, March 18, 2019
Kenyan tea farmers capture World Bank’s climate change deal

The Exchange – Africa’s Investment Gateway

Kenyan tea farmers stand to gain from a deal announced at the just concluded One Planet Summit held under the patronage of Kenya’s President Uhuru Kenyatta and French President Emmanuel Macron.

The World Bank – as trustee of the Carbon Initiative for Development (Ci-Dev) trust fund – and Kenya Tea Development Agency Power Company Ltd. (KTDA Power) signed an Emission Reductions Purchase Agreement (ERPA).

The agreement was signed by KTDA CEO Lerionka Tiampati and World Bank Group Senior Director for Climate Change, John Roome in an event also attended by the UK High Commissioner to Kenya Nic Hailey.

The contract purchases carbon credits from small hydro-power plants, providing power to 350,000 smallholder tea farmers and 39 of their regional tea factories in Kenya. The new ERPA brings the Ci-Dev portfolio to more than $73 million in implementation.

IFC syndicated a loan for KTDA, and the carbon revenues from Ci-Dev helped increase the project’s debt service coverage ratio and improved the bank-ability of the project. KTDA is a long-standing private sector partner of IFC.

In addition to the hydropower project, IFC invested in a Mombasa warehouse project and supported KTDA with various advisory activities such as financial literacy training for farmers, soil testing for productivity improvement and as the development of a wood sourcing strategy among others.

The UK is providing £49 million to Ci-Dev to deliver CMF. Ci-Dev will invest in low carbon technologies that deliver community and household level benefits, particularly focused on improving poor peoples’ access to clean energy.

Carbon Market Finance (CMF) has been developed jointly by the UK’s Department of Energy & Climate Change and the Department for International Development. In total, the UK is contributing £50 million over 2013 to 2025 to build capacity and develop tools and methodologies that will help least developed countries, especially in Sub-Saharan Africa, to access finance from the carbon market.

KTDA with funding from the French government is making great strides to ensure that tea factories have access to alternative renewable forms of energy that will reduce operational costs in factories.