Igara Growers Tea Factory faces a November 6 auction over a Shs5 billion loan, as unpaid workers and farmers, outstanding statutory obligations and management disputes deepen the crisis at the Bushenyi-based facility.
DFCU Bank has set November 6 as the date for the auction of Igara Growers Tea Factory and its properties to recover an outstanding loan of about Shs5 billion, raising fears among shareholders and tea farmers about the future of the facility.
The planned sale follows the factory management and board of directors’ alleged failure to honour several requests for moratoriums to settle the outstanding debt.
The factory ceased operations about seven months ago following financial difficulties that left workers and tea farmers unpaid and National Social Security Fund (NSSF) contributions unremitted, among other operational challenges.
The impending auction has heightened anxiety among shareholders, many of whom are now seeking ways to raise money or secure government intervention before the sale.
In 2024, the factory’s board obtained a $1 million loan, equivalent to about Shs4 billion at the time, from DFCU Bank to support operations and purchase fertiliser intended for distribution to tea farmers.
However, some farmers allege that the board failed to pay the fertiliser supplier while requiring farmers to pay for the fertiliser they received.
“This factory is choking on a debt relating to about Shs21 billion. What bothers us most is that the board acquired the loan from DFCU entirely to buy fertiliser and give it to the farmers for free, but to our surprise, the board never even paid the supplier and he also took them to court,” said Agaba Godfrey, a disgruntled tea farmer.
The factory subsequently became embroiled in leadership and management disputes, which, alongside a lack of operational capital and repeated strikes by farmers and workers, contributed to its closure.
As interest on the outstanding loan accumulated, DFCU issued a notice of default demanding payment.
On April 2, 2026, the factory reportedly wrote to the bank seeking a three-week moratorium to clear its loan arrears, but failed to meet the proposed terms.
In May, the bank, through its lawyers, S&L Advocates, issued another notice demanding payment within 45 working days and warning that the mortgage could be enforced and the property sold if the factory failed to comply.
On October 9, DFCU advertised the factory and its properties for sale, setting November 6 as the auction date.
“It’s a tough moment for us tea farmers,” said Eliab Muhoozi, a prominent tea farmer in Kyamuhunga, Bushenyi District. “We will use all means possible to ensure that we rescue our factory because its closure is putting our crop at stake.”
Beyond the DFCU loan, the factory reportedly owes more than Shs14 billion to various creditors, including the NSSF, suppliers, workers, tea farmers and the Uganda Revenue Authority (URA).
The financial crisis has been compounded by persistent management and governance disputes.
Kakonge Apollo Lee, executive director of the Western Ankole Civil Society Forum, urged the government to intervene to prevent the factory’s sale.
“What needs to be done is that government must now reign in and save this factory. The Ministry of Finance, Agriculture and Trade should issue letters of comfort to DFCU asking them to halt the sale of this factory as they look for money to bail it out,” he said.
The factory, valued at Shs47 billion according to the draft, has become the focus of efforts by farmers to prevent the auction and restore operations.
At a crisis meeting held at Bushenyi Playground, farmers agreed to establish a committee headed by Muhoozi to seek President Museveni’s intervention.
They also resolved to petition court for permission to convene an extraordinary general meeting (EGM) at which shareholders could elect an interim board to lead negotiations with the bank.
“The period that DFCU advertised for the sale of our factory is fast running, so we have to do whatever we have to do in these remaining days to secure this factory,” said Ronald Rwankangi, a tea farmer.
“Immediately, we are going to prepare and go to court because we need an EGM to elect a board, but we also want the select committee to run to the President with immediate effect,” he added.
Igara Growers Tea Factory is one of the oldest tea-processing facilities in southwestern Uganda and has more than 7,000 shareholders.