More than 7,000 shareholders face uncertainty as DFCU Bank prepares to auction the factory’s assets on November 6, while farmers seek government intervention and a new board.
Igara Growers Tea Factory in southwestern Uganda faces the sale of its assets on November 6 as DFCU Bank seeks to recover a loan of about Shs5 billion, prompting shareholders and tea farmers to appeal for government intervention.
The factory, which has more than 7,000 shareholders, has been out of operation for about seven months amid mounting debts, unpaid workers and farmers, and disputes over its leadership.
Farmers fear the sale could further disrupt tea production and threaten their incomes. They are seeking to raise money to settle the bank’s claim while pursuing political and legal avenues to prevent the auction.
Loan dispute and mounting liabilities
The factory’s board obtained a $1 million loan from DFCU Bank in 2024 to support operations and purchase fertiliser intended for tea farmers. The loan was equivalent to about Shs4 billion at the time.
Some farmers allege that the board failed to pay the fertiliser supplier even as farmers were required 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 tea farmer.
The factory’s financial difficulties have been compounded by management disputes, shortages of operational capital and repeated strikes by farmers and workers.
The company reportedly owes more than Shs14 billion to other creditors, including the National Social Security Fund (NSSF), suppliers, employees, tea farmers and the Uganda Revenue Authority (URA).
The figures cited by farmers and other stakeholders point to a broader financial crisis extending beyond the DFCU loan. Daily Monitor reported in October that shareholders had alleged total liabilities of about Shs21.1 billion, including unpaid payments to growers, salary arrears and unremitted pension contributions. The figures had not been independently audited at the time of the report.
Bank moves to enforce mortgage
On April 2, 2026, the factory reportedly asked DFCU for a three-week moratorium to clear its loan arrears. The bank accepted the request on April 9, according to reporting by Daily Monitor, but the company subsequently failed to meet the revised repayment terms.
In May, the bank’s lawyers, S&L Advocates, issued a further demand for payment within 45 working days, warning that the mortgage could be enforced and the secured properties sold if the debt remained unpaid.
On October 9, the factory’s properties were advertised for sale, with November 6 set as the auction date.
The planned sale follows earlier reports of disputes over the company’s governance. In July, the Uganda Registration Services Bureau suspended the acceptance of further company filings by people claiming to be directors pending a High Court decision on the factory’s leadership. The dispute has complicated efforts to establish a clear governance structure as shareholders seek to address the financial crisis.
Farmers seek Museveni’s intervention
The auction notice has prompted farmers and shareholders to organise efforts to save the factory.
At a crisis meeting at Bushenyi Playground, participants agreed to establish a committee headed by tea farmer Eliab Muhoozi to seek President Yoweri Museveni‘s intervention.
They also resolved to petition court for permission to convene an extraordinary general meeting (EGM), where shareholders could elect an interim board to negotiate with the bank and address the factory’s financial difficulties.
“It’s a tough moment for us tea farmers,” Muhoozi said. “We will use all means possible to ensure that we rescue our factory because its closure is putting our crop at stake.”
Kakonge Apollo Lee, executive director of the Western Ankole Civil Society Forum, called on the government to intervene before the 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.
Ronald Rwankangi, a tea farmer, said the group intended to pursue both legal action and a direct appeal to the president.
“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,” he said.
“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.
The factory’s assets have been valued at Shs47 billion in the material supplied, although the basis and date of that valuation were not specified.
Established in 1969, Igara Growers Tea Factory is among Uganda’s early smallholder-owned tea-processing enterprises. Its financial and governance troubles have left thousands of growers uncertain about the future of a facility that has served tea-producing communities in southwestern Uganda for decades.
