THE International Finance Corporation has extended a Sh1 billion loan to Kenya Tea Development Agency. KTDA will use the loan to build a 200,000 square feet warehouse in Mombasa, through its subsidiary, Chai Trading Company.

The new warehouse will increase Chai Trading Company's capacity to store more tea from KTDA's 65 factories across the country and eliminating the need to hire space.

The loan was signed by IFC's chief executive Jin Yong CAI, and KTDA chief executive Lerionka Tiampati at KTDA's head office in Nairobi.

Tiampati said KTDA warehouses in Mombasa currently handle about 300 million metric tonnes of made tea annually that is transported from the tea factories across the country.

"While this represents the bulk of our warehousing business, there is increasing demand for warehousing space from other clients". Tiampati said.

Tiampati pointed out that KTDA's business diversification strategy had seen it expand its investments along the value chain, to benefit over 560,000 smallholder farmers who supply tea leaf to the 54 factory companies which in turn own KTDA.

The new facility will also boost KTDA's business with others who provide packaging and transportation services.

"We are already witnessing increased demand for warehousing space and are planning ahead to accommodate this growth," Tiampati said.

Earnings by small-scale tea farmers affiliated to KTDA reached an all-time high this year with a payout of Sh45.3 billion, up from Sh40.5 billion paid to the farmers last year.

Cia said the agribusiness sector is a strategic priority for the IFC, in its policy to support sectors that employ large percentages of Africa's labor force, and has a strong impact on small and medium-sized enterprises. During fiscal year 2012, IFC invested $550 million in African agribusiness.