Component Description and Activities

Co-financing and Other Financial Arrangements

The Private Investor will hold 70% of the shares of the Nshili Tea Company and will also bring the long-term financial resources required for the construction of the tea processing plant in the form of long-term loans. The estimated total cost for the factory and the company of USD 6 million will be financed through share capital (1/3 of the total amount i.e. USD 2 million) and long-term borrowed funds (2/3 of the total amount i.e. USD 4 million). MIG Investment company will hold 15% of the share capital (i.e. USD 0.3 million)^[1] and the Smallholders’ Financial Holding will hold the remaining 15% (i.e. USD 0.3 million).

The contribution of the Government includes: (a) costs related to the connection of the tea factory to the national electric grid for an amount of USD 2 million and, (b) duties and taxes (USD million). The cost of connecting the factory to the electric national grid still needs to be finalized.

The contribution of beneficiaries is twofold: (a) contribution in the form of labor for the development and extension of tea plantations in their home gardens (valued at USD 0.61 million), (b) contribution in the form of labor for the development and extension of woodlots (valued at USD 0.1 million) and, (c) cash contribution to the smallholders’ local associations and to the smallholders’ financial holding (representing USD 0.46 million). Contributions to smallholders’ local associations have been considered for smallholders from the Gikongoro province while cash contributions to SFH have been considered from smallholder tea growers nationwide.

The contribution of the commercial bank relates to the financing of training courses for SFH elected members of its governing bodies.

^[1]MIG is a limited company registered in 2004 with 1,600 shareholders of whom around 400 are natives from the Gikongoro region but living elsewhere and the remaining 1,200 are mostly farmers living in Gikongoro province. MIG FRW 400 million share capital includes individuals, associations, companies (such as UBP local branches), cooperatives (share value is FRW 10,000). Its Board is composed of 12 members of whom 3 represent the 1,200 members from Gikongoro (1 individual and 2 representatives from UBP branches). MIG seeks the socio-economical development of the Gikongoro province through investment (minor shareholder) and capacity building of locals. Thereby, MIG shares the same objectives as IFAD in terms of rural development of the Province and could become the adequate partner in the Nshili project. MIG has already invested in several coffee washing stations and in the promotion of provincial honey production. In the near future, MIG is also interested in investing in Mata and Kitabi tea factories (OCIR-Thé factories to be privatized) up to a maximum of 30% in the share capital. Finally, MIG benefits from a yearly financial commitment of the government amounting to FRW 60 millions during 3 years to cover running costs.