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Mombasa tycoon’s Sh249m tea factory takes on multinationals

Mombasa-based businessman David Lagat is setting up a Sh249 million tea factory in Nandi, stepping up competition for the green leaf in the region which is dominated by the Kenya Tea Development Agency (KTDA) and multinational companies.

The factory, which will process CTC black tea, will have one production line with allowance for future expansion.

The plant will be a subsidiary of the DL Group owned by Mr Lagat who has other tea processing companies in Kericho.

KTDA and multinationals such as George Williamson control a big share of the green leaves market in Nandi region. Multinationals have about 19 factories while KTDA has two.

Mr Lagat, who also has interests in shipping, owns Koisagat Tea Factory in Nandi.

Tea processors have been investing heavily and diversifying their products to compete with upcoming rivals.

For instance, KTDA is expanding three of its factories that process purple and orthodox tea which is in high demand and fetches more money compared with traditional black tea.

Tea farmers affiliated to the agency earned a record Sh84 billion from leaves delivered this season, marking the second year of improved earnings helped by a stable exchange rate and high pricing of the commodity in the world market.

READ: How KTDA arrives at tea ‘bonus’ prices

The record earnings placed Kenya at position one in terms of payments to farmers among major growing nations, having paid growers an overall average of Sh50 per kilogramme, followed by Sri-Lanka at Sh48.

In the 2015 ranking, Sri-Lanka was placed first having paid its farmers Sh49 per kilogramme compared to Kenya’s Sh41 for the same quantity, placing the country in position two.

Kenya is the leading exporter of the commodity in the world. It sells 95 per cent of its tea to the world market.

A National Environment Management Authority report says the proposed factory will have several positive impacts including provision of employment during construction and operational phases of the project.

Others are boosting the local economy, provision of market for construction material sellers, and source of revenue for both the central and county governments.

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