DFCU Bank Sets November Auction for Igara Tea Factory Over Shs5 Billion Debt

DFCU Bank has scheduled a public auction for November 6 to sell off the Igara Growers Tea Factory and its assets in Bushenyi District. The drastic step comes as the factory struggles to clear an outstanding loan of approximately Shs5 billion, sparking intense panic among the facility’s thousands of shareholders and local tea farmers.

The financial crisis at one of southwestern Uganda’s oldest tea-processing plants stems from a 2024 loan equivalent to about Shs4 billion, originally secured to support operations and purchase fertilizer for farmers. However, internal management disputes, unpaid suppliers, and mounting debt plunged the facility into turmoil. The factory officially ceased operations roughly seven months ago, leaving workers unpaid and unremitted statutory obligations, including contributions to the National Social Security Fund (NSSF).

Beyond the DFCU liability, the factory reportedly accumulated total debts exceeding Shs14 billion, involving various creditors such as the Uganda Revenue Authority, unpaid workers, and frustrated suppliers. Although management previously attempted to secure moratoriums to restructure the loan, failing to meet repayment terms prompted DFCU’s legal representatives, S&L Advocates, to issue final default notices before advertising the property for sale.

Faced with the imminent loss of their primary economic lifeline, shareholders and local farmers have mobilized. During a crisis meeting at the Bushenyi Playground, stakeholders established a special committee led by prominent farmer Eliab Muhoozi to seek urgent intervention from President Museveni. Additionally, farmers are pursuing court approval to convene an extraordinary general meeting to elect an interim board capable of negotiating directly with the bank.

Civil society leaders, including Kakonge Apollo Lee of the Western Ankole Civil Society Forum, have also called upon ministries such as Finance, Agriculture, and Trade to issue letters of comfort to halt the auction and arrange a government bailout. For more details on this unfolding crisis, read the original report on Nile Post.