By Chris Mugasha
BUSHENYI, Uganda: Shareholders of Igara Growers Tea Factory in Bushenyi District have appealed to President Yoweri Kaguta Museveni and the government to intervene and save the embattled tea-processing company from a looming auction of its mortgaged assets over an outstanding bank loan of approximately Shs5 billion. Other sources indicate that the factory is indebted to a tune of over Shs20billion.
The shareholders, who accuse the factory’s leadership of mismanagement and financial irregularities, want the government to intervene and stabilise its operations and restore confidence among tea farmers.
Their appeal follows an auction notice issued by DFCU Bank announcing the sale of the factory’s mortgaged properties after the failure to repay the loan.
The assets reportedly include the main Igara Tea Factory, Igara-Buhweju Tea Factory, tea estates and forest plantations.
Igara Tea Factory crisis sparks urgent government appeal
During an emergency meeting held at Bushenyi Stadium on Monday, shareholders described the situation as critical, warning that the auction could undermine the livelihoods of thousands of smallholder tea farmers across southwestern Uganda.
The meeting was convened by factory elders led by Mzee Eliab Muhoozi, a prominent tea farmer in Kyamuhunga Sub-county.
Speaker after speaker called for government intervention, arguing that a temporary takeover could help protect the factory’s assets, resolve leadership disputes and facilitate an independent forensic audit of its finances.
Igara Tea Factory has more than 7,000 shareholders drawn from Bushenyi, Sheema, Buhweju, Mitooma and parts of Rubirizi districts.
Despite its extensive assets and longstanding role in the regional tea industry, the factory has experienced serious operational difficulties, with several processing lines reportedly shut down, leaving farmers uncertain about where to sell their green tea leaves and when they will receive payment.
Shareholders raise concerns over loan repayment
During the meeting, shareholders expressed concern over information presented to them indicating that the factory’s leadership had not deposited any loan repayments into DFCU Bank’s account since March this year.
They said the alleged failure to make repayments had contributed to the bank’s decision to move towards auctioning the mortgaged properties.
“The deal to collapse Igara Tea Factory started a long time ago, and when we started to advocate for a forensic audit, the leadership started to blackmail us. But now you can see where we are,” said Agaba Turikwendera, a shareholder.
Willis Bashaasha a shareholder/tea farmer who has been at the helm of restoring sanity at the factory said, “who ever tries to inquire on issues of accountability and governance they label him/her a politician and this is where we are now.” Bashaasha who is also the Director for Manifesto Implementation Unit in the President’s office explained that their efforts to demand for a special annual general meeting has always hit a snag.
The shareholders accused current and former board members of mismanaging the factory’s finances and resources. Some alleged that land purchases were accompanied by inflated costs and that financial reports presented at annual general meetings did not adequately reflect the company’s true financial position as board members wanted to cover up their deals by blindfolding the shareholders with fake/doctored profits.
These allegations require independent investigation and verification.
The shareholders want a forensic audit to establish how the borrowed funds were utilised, determine the factory’s outstanding obligations and identify those responsible for any financial misconduct, if established.
Farmers demand accountability over unpaid earnings
The factory’s financial troubles have also affected farmers who depend on tea sales for their household income.
Alfred Musiime, a tea farmer, said he had gone five months without receiving payment, highlighting the financial pressure facing growers who supply green tea leaves to the factory.
“The people we expected to be educated are the ones that have let us down. But we saw how many of them were bribing to be voted to join the factory’s Board of Directors,” Musiime said, alleging irregularities in the election of board members.
Another farmer, Ronald Monday, called for accountability over the loan.
“The board members need to be arrested and account for how this borrowed money was utilised,” he said.
The claims and calls for criminal accountability reflect the shareholders’ concerns and have not, in themselves, established individual wrongdoing.
Former minister blames leadership choices
Former minister Prof. Tarsis Kabwegyere expressed regret over the factory’s predicament, arguing that entrusting its leadership to people who were not tea growers had contributed to the crisis.
“The President needs to know how the collapse of this factory started,” Kabwegyere said.
His remarks added to calls for the government to investigate the circumstances that led to the factory’s financial and operational difficulties.
Economic impact on tea-growing communities
The crisis has raised concerns about the wider economic consequences for communities that depend on Igara Tea Factory for employment, trade and agricultural income.
Butare, once a busy trading centre associated with the factory’s activities, has reportedly experienced a decline in business as factory operations have deteriorated.
Residents, particularly young people who previously worked at the facility, have been left with no option apart from engaging in activities like playing cards (matatu) as many were seen in groups.
The factory’s difficulties also threaten the income of smallholder farmers and businesses that depend on the tea value chain, including transporters, input suppliers and local traders.
Tea remains an important cash crop in southwestern Uganda, where many rural households depend on the sale of green leaf to meet expenses such as school fees, food, healthcare and other household needs.
Shareholders propose rescue plan
The shareholders resolved to establish a select committee to engage DFCU Bank in negotiations aimed at halting the auction and to petition the government, including President Museveni, for urgent intervention.
They argued that a temporary government takeover could provide an opportunity to restructure the factory’s leadership, conduct a forensic audit and develop a sustainable repayment plan.
Some shareholders also proposed selling one of the company’s properties, subject to the necessary approvals and a proper valuation, to help settle the outstanding loan while preserving the factory’s core operations.
One participant suggested that other assets and affiliated institutions could be considered as part of a broader recovery strategy.
“We have other establishments like Igara-Buhweju Tea Farmers’ (Igabu) SACCO, which is now in billions of money. We have an agricultural security company, and we have UTDL offices in Kampala. All these assets can help to sort out the emergency,” the member suggested.
The proposals would require careful financial, legal and ownership assessments to determine which assets could lawfully be used to support a recovery plan.
For the farmers, the immediate priorities are to prevent the loss of critical assets, restore production, secure payment for supplied tea and establish transparent management of the factory.
Attempts to get a comment and clarifications from the factory’s General Manager Robert Nayebare were futile as he could not respond to our repeated calls.
Both the Igara West MP Cohen Kyampene and the Bushenyi District woman MP Annet Mugisha said they are using all fronts to make sure that Igara Tea factory is saved from being auctioned.
Background: History of Igara Growers Tea Factory
Located in Bushenyi District in southwestern Uganda, Igara Growers Tea Factory was established in 1969 by the government under the Uganda Tea Growers Corporation (UTGC).
The factory was later privatised in 1995 and transferred to smallholder tea farmers, who gained full ownership in 2000. Its shareholder base subsequently grew to more than 7,000 farmers across several districts in the region.
To reduce the distances farmers had to travel to deliver their green tea leaves, Igara established a second factory in Buhweju District, which began operations in 2012.
The region’s high-altitude tea-growing areas, reportedly ranging from 5,000 to 7,000 feet above sea level, have supported the production of tea valued for its quality.
By 2008, the factory’s reported processing capacity had expanded from handling 16.8 million kilogrammes of green leaf to more than 40million kilogrammes.
Igara’s core mandate has been to collect green tea leaves from farmers, process them into black tea and market the finished product in bulk or under branded packaging.
Over the years, the factory has also supported farmers through agricultural extension services, the provision of high-yielding tea seedlings and other inputs on credit, advocacy for government assistance and initiatives intended to help tea-growing communities benefit from Fairtrade funds. Some schools have reportedly benefited from such community support.
Igara Growers Tea Factory has long been regarded as an important player in Uganda’s tea industry. Its current crisis has therefore raised urgent questions about the future of smallholder tea farming, rural employment and the protection of farmer-owned agricultural enterprises.
The shareholders are now looking to government intervention, negotiations with DFCU Bank and an independent financial investigation to help determine whether the factory can be rescued before its assets are sold. End.
