In it for the long haul

In 2012, The Wood Foundation Africa (TWFA) and Gatsby Africa (GA) purchased majority stakes in two tea factories in Rwanda through a privatisation programme, becoming co-owners with farmer cooperatives that supplied the factories.

This work involves direct investment in brownfield tea factories and greenfield farmer services companies; and the establishment of a sector development programme called Imbarutso.

Intervention description

This report describes the evolution of the initiative and its transformation, from an MSD mindset to an impact investment one.

After bringing on board an in-house management team of tea professionals to oversee the factories and support smallholders in the field, performance has changed dramatically. Improvements in volume, quality and prices have resulted in an average 60 per cent increase in farmers’ income per hectare across both factories – translating to improved livelihoods and lives in local communities.

More recently, TWFA and GA have applied a new model to support the Government of Rwanda’s planting targets for the sector, focused on creating farmer service companies. In this model, the service companies act as intermediaries that provide patient capital, tea planting services, agronomic advice and production logistics such as weighing and transport of green leaf from smallholders to factories built and run by Unilever and Luxmi. The service companies are yet to reach scale or their full impact, but early signs - in terms of farmer engagement, meeting planting targets and early production - are positive.

Alongside these more direct interventions, TWFA and GA have supported a number of activities in the wider sector. These include engaging in discussions on a government mandated pricing mechanism, catalysing electronic weighing and payment systems in the industry, providing training schemes for workers, and contributing to the initial development of a proposed e-auction system.

Evidence methodology

The report does not explain how the evidence was produced. However, the data is abundant and the analysis is coherent and cogent. Most data was produced by the team´s own monitoring processes.