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Tycoon pays £7.5m for tea factories to help farmers

ONE of Scotland's most successful businessmen has spent £7.5 million via a family trust to buy a majority shareholding in two Rwandan tea factories.

WORK AHEAD: Tea farmers will be handed free ownership of the factories by Sir Ian Wood after seven years.
WORK AHEAD: Tea farmers will be handed free ownership of the factories by Sir Ian Wood after seven years.

The Wood Family Trust (WFT), founded by Sir Ian Wood, aims to support a country where nearly two-thirds of the population live below the poverty line by helping 12,000 smallhold farmers take control and more than double their incomes.

The country is still recovering from the genocide inflicted on it by warring tribes in 1994. Human rights groups believe upwards of 500,000 people died.

The trust, already active in East Africa, has spent £7.5m buying the Rwandan Government's majority stake in the tea factory in Mulindi and its 60% stake in the Shagasha plant.

After seven years the farmers, who have the minority shareholding, will be given ownership of the factories for free.

Aberdeen-based oil and gas tycoon Sir Ian, who stepped down as chairman of the Wood Group last year, said: "During that time we will ensure the farmers get into better shape in terms of running the factories and getting more involved in the governance of a business so they are ready to take over."

He said evidence from the tea industry elsewhere in East Africa showed tea farmers could expect to get 70% of the price of tea if they owned their own factories as opposed to 25% to 30% if they sell to a factory owned by a multinational.

Sir Ian said: "At the moment a farmer with half a hectare to a hectare is lucky if he is earning around $1.50 a day. It is absolutely disgraceful for a primary producer and means there is a lack of incentive.

"This represents an innovative philanthropic intervention. If further developed, it could transform the viability of smallholder tea farmers in Rwanda and pave the way for more smallholder farmers owning their factories across the region.

"This in turn will substantially increase the incomes of the smallholder farmer tea producers and their families."

The acquisition is a partnership project between the trust and the Gatsby Foundation, Lord David Sainsbury's philanthropic vehicle.

The two trusts have formed Rwanda Tea Investments (RTI), which has bought the shares. It is an extension to their existing joint £5.6m Imbarutso tea project in Rwanda and work in Tanzania, aimed at helping 60,000 smallholder tea farmers in the countries by bolstering their competitiveness.

Sir Ian refused to comment on whether the latest announcement was connected to the demise of the plans for the transformation of Union Terrace Gardens in Aberdeen, which he had said he would back by £50m.

He said: "I am not going to talk about Union Terrace Gardens. We have been planning this initiative in Rwanda for many years.

"I think the tea farmers see it is a major opportunity, but there is suspicion and apprehension.

"I am always hesitant in Africa, but this is quite an exciting development and if we can make this work I think it could be a template for a lot of smaller farmers elsewhere."

He admitted to pride in what he has achieved in Scotland, with the Youth and Philanthropy Initiative (YPI) remaining the trust's flagship programme.

Its aim is to engage young people in social change and it empowers them to participate in the growing of compassionate communities.

Sir Ian said that, during the 2012/13 academic year, YPI would be delivered in 81 schools across 10 councils. Trust investment in YPI since 2008 will total £1.1m by the end of this academic year.

The target for YPI is 150 secondary schools by 2016.

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