Team formed to address debt write-off for coffee farmers

Coffee Cooperative Societies’ creditors at Kenya Bankers Sacco holding a meeting with CS for Cooperatives Simon Chelugui. Photo by Obegi Malack

Cabinet Secretary for Cooperatives and Micro, Small and Medium Enterprises Development Simon Chelugui has said the government will form a multi-agency validation team to analyze the submitted debt waiver claims from cooperative societies and prepare a report to the National Treasury for release of funds.

The CS who was speaking during a consultative meeting with coffee cooperative societies’ creditors at Kenya Bankers Sacco hall on Tuesday June 18 said government had enhanced Cherry Advance Revolving Fund from KSh2.7 billion to KSh6.7 billion to enable increased payment to farmers from KSh20 a kilo to KSh80 per kilo.

He said the validation exercise calls for honesty and openness on the part of the cooperative leaders and their creditors while preparing the debts and avoid exaggeration. Noting that any falsification may lead to prosecution of those found culpable.

The validation team will be guided by the following parameters:

The loans in question must have been processed through cooperative societies and not individual walk-in members.

The loan must also have been fixed and approved by members in a duly convened general meeting.

In order to be approved the Commissioner for Cooperative Development must have approved the borrowing.

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A list of benefitting members in case of advances to members as loans or farm inputs or for cooperative society infrastructure or operating overheads.

For all loans given, there must be a proof that the farmers’ coffee was given as collateral (coffee hypothecation) for recovery from sale proceeds.

Loans will be considered outside the previous debt waiver. This means that for those cooperatives that benefitted from the previous waiver, any debt incurred during that period will not be considered.

The watershed for considering loans will be September 30, 2023. Any waiver claim after this debt must be submitted separately.

All creditors are requested to provide a detailed report of the loans and advances issued to cooperative societies to the Commissioner for Cooperative Development by Thursday 20 June 2024.

The coffee subsector in Kenya is vital to the country’s economy, providing livelihoods to 800,000 farmers, 5 million indirect beneficiaries and contributes significantly to export foreign currency earnings.

The executive order No. 2 of 2023 reaffirmed the Government commitment on coffee, tea and dairy reforms.  This has enabled the Government to address outstanding challenges through policy, legal, and administrative interventions.

The reforms include developed the Coffee Policy 2023, Coffee Bill 2023, and Cooperatives Bill 2023,

The governmentt restructured the Nairobi Stock Exchange that has enabled coffee cooperative unions to participate in the auction.

So far 15 Cooperative Unions have been licensed and participate at the weekly trading floor of the auction;

It operationalized the Direct Settlement System (DSS) which has addressed delayed payments to farmers; separation of multiplicity roles by coffee players including milling, marketing and brokerage; reformed licensing regime with various regulators dealing with specific licenses like AFA licensing Coffee dealers, County Government Licensing Millers while Capital Markets Authority licenses marketers at the NCE.

Enhanced Cherry Advance Revolving Fund from KSh 2.7 billion to KSh6.7 billion to enable increased payment to farmers from KSh20 per kilo to KSh80 per kilo and modernization of New KPCU as a miller and marketer of last resort.

By Obegi Malack

obegimalack@gmail.com

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