Daniel Chemno, KPCU Chair. File by Sacco Review
Coffee cooperatives across the country will now be required to seek approval from the National Treasury before borrowing from any financial institution. This is part of a new set of measures introduced by the government to address decades of financial mismanagement and reckless borrowing that have crippled the country’s once-thriving coffee sector.
According to the New Kenya Planters Cooperative Union (New KPCU) Chairperson, Daniel Chemno, the move aims to instill financial discipline among coffee societies and prevent the recurrence of huge debts that have weighed down farmers for years.
He announced that the government has agreed to waive KSh6.5 billion of the KSh9 billion debt presented by various coffee cooperatives, giving a much-needed relief to struggling societies and farmers.
“The government has taken this bold step to restore the financial health of coffee cooperatives and protect farmers from the burden of historical debts,” said Chemno. “However, this will be the last debt waiver. Any future borrowing by coffee societies will have to be sanctioned by the National Treasury to ensure accountability.”
The debt waiver, Chemno explained, is part of the broader government plan to revive the coffee industry, which has suffered years of neglect, mismanagement, and poor leadership. Once a major foreign exchange earner for the country, Kenya’s coffee sector has been reduced to a shadow of its former self, with thousands of smallholder farmers struggling to stay afloat.
To further strengthen the financial position of coffee cooperatives, Chemno noted that the government will maintain the 20 per cent deduction on total coffee sales, despite opposition from some societies. He said this deduction helps manage cooperative obligations and clear outstanding debts.
“Some cooperatives have been including debts arising from operational costs, which has eroded their fiscal soundness,” he noted. “We want to ensure that borrowing is done prudently and only for productive purposes.”
In addition, the National Treasury has released KSh5 billion for onward lending to coffee cooperatives at lower interest rates, a move expected to reduce their reliance on expensive commercial loans. The affordable financing facility will enable cooperatives to access credit without plunging into unsustainable debt.
Chemno also urged coffee farmers to open dollar accounts to take full advantage of the direct settlement system, which ensures farmers receive payment directly and benefit from global coffee market prices.
“These reforms mark a new chapter for the coffee sector,” Chemno said. “With prudent financial management, access to affordable credit, and government oversight, we can restore the profitability and global reputation of Kenya’s coffee industry.”