A seven-member task force set up by the government to validate debt owed to financial institutions by coffee farmers is expected to submit the report by today.
Speaking during a cooperatives’ leaders meeting in Naivasha last week, the Commissioner for Cooperatives David Obonyo said that to avoid duplication in payment, the Department of Cooperatives and the National Treasury and Planning constituted the taskforce to validate all the debts and the team is expected to submit an interim report.
“According to the claims by the counties, financiers’ and farmers’ cooperative societies accumulated debts stand at Sh9 billion. The figure might remain the same or reduce based on the authentication by the seven-member task force team,” Obonyo said.
The loan farmers had borrowed largely from banks and Saccos to finance coffee processing equipment among other needs had reached Sh6.8 billion in January, but a further scrutiny ended May saw it hit Sh9 billion.
Speaking at the forum, Cooperative and Micro Small and Medium Enterprises CS Wycliffe Oparanya confirmed that the government is committed to paying the accumulated debts on behalf of coffee growers, as part of boosting their morale to produce more beans.
“In the current financial year, the National Treasury and Planning Ministry extended Sh2 billion as part of money to clear the debts. This demonstrates government assurance to support the coffee industry which is currently struggling with low production and stiff competition from other beverages,” said Oparanya.
Oparanya regretted the coffee sub-sector, once a leading foreign exchange earner, is currently struggling with poor governance and grand corruption, a situation he said is denying farmers their hard-earned sweat.
“Government will ensure the legislations and regulations are fully implemented to ensure there is level playing ground. We have had cases in farmers’ coffee societies where directors and managers have been borrowing money to pay the growers high rate against income earned,” the CS noted.
He further said that farmers in these societies cannot meet their daily financial obligations and thus warned that the government will not tolerate corruption in the coffee industry, as it works towards restoring confidence in the sector.
This is the second phase of debt waiver by the government after the initial one that commenced in 2006 to 2019 saw at least Sh12 billion written off.
For instance, the state waived Sh5.8 billion Stabilization of Export Earnings to Cooperative Bank, money that had been granted by the European Union under a compensatory finance scheme to stabilise export earnings of the African, Caribbean and Pacific Group of States (ACP).
National Coffee Cooperative Union (NACCU) Limited chairman Francis Ngone hailed the goverment’s effort in supporting the sector, saying that the debt waiver programme will boost morale to the farmers and leading to high production.
According to Ngone, farmers have earned close to Sh10 billion through Direct Settlement System (DSS) between January and now for the coffee sold at Nairobi Coffee Exchange (NCE).
The payment of the impressive earnings follows aggressive implementation of reforms in the coffee industry initiated since 2016 making it easy for farmers to benefit from their hard-earned sweat.
“This year we have recorded a big milestone in terms of coffee payments and enhanced voice of the growers as they are now participating at the market arena,” said Ngone.
The settlement system developed
by the NCE and managed by the Cooperative Bank of Kenya in August last
year has contributed to improvement
of payments of proceeds to the farmers unlike before where the income
took long.
