The State Department for Cooperatives is seeking Sh15.28 billion in the 2026/2027 financial year but has only been allocated Sh6.98 billion by the National Treasury, leaving a funding gap of Sh8.3 billion that could affect implementation of key programmes in the cooperative and coffee sectors.
Budget estimates presented before Parliament by Principal Secretary Patrick Kilemi show that the department requires more funding to support recurrent expenditure, development projects and implementation of government priorities under the Bottom-Up Economic Transformation Agenda (BETA).
According to the estimates, the department is seeking Sh9.41 billion for recurrent expenditure and Sh5.87 billion for development expenditure.
However, the Treasury allocated the State Department Sh5.45 billion for recurrent spending and Sh1.53 billion for development expenditure, creating shortfalls of Sh3.96 billion and Sh4.34 billion, respectively.
In the submitted budget document, PS Kilemi stated that the department’s total financial requirements remain far above the allocation approved by the Treasury.
Kilemi told Parliament that the “Totals in Shs required by the State Department stand at 15,284.79 million against gross estimates of 6,982.04 million, leaving a variance of 8,302.75 million.’’
The funding gap comes at a time when the government is relying on the cooperative sector to strengthen agricultural value chains, improve farmers’ earnings and expand access to affordable financing through SACCOs and cooperatives.
The PS explained that because of limited resources, the department had been forced to prioritise only key operations and critical programmes.
Kilemi stated in the report that, “Operations and Maintenance-Sh273,742,898.00 of which:” before outlining the specific activities and expenditures to be financed under the allocation.
According to the report, part of the money will go towards payment of rent, security services, coffee promotion activities and implementation of BETA value chain priorities.
The allocations listed, ‘’Rent and Rates-Non-Residential-Sh76,523,418.00, Contracted guards and cleaning services Sh12,528,617.00, BETA Value Chain Priorities-Sh67,580,399.00, Kenya Coffee Promotion-Sh40,200,000.00 and Balance for normal operations of the State Department, including for the Cabinet Secretary's office Sh76,910,464.00”
The State Department was also allocated Sh390.63 million for compensation of employees to cater for salaries and related personnel expenses.
At the same time, the Treasury allocated Sh2 billion for coffee waiver transfers and another Sh1.5 billion for the Coffee Cherry Fund, which are expected to support coffee farmers and ongoing reforms in the sector.
The Coffee Cherry Fund remains one of the government’s flagship programmes aimed at improving access to affordable credit for coffee farmers and cooperative societies while boosting productivity in the sector.
The budget estimates further indicate that the department expects to generate Sh1.267 billion through Appropriation in Aid (AIA) receipts from agencies and services under the ministry.
Kilemi stated that the projected collections will come from institutions including the Sacco Societies Regulatory Authority (SASRA), New Kenya Planters Cooperative Union (NKPCU), cooperative registration services and cooperative audit services.
The PS listed the projected collections as SASRA with Sh836,700,000, NKPCU Sh413,000,000, Cooperative Registration Services Sh6,000,000 and Cooperative Audit Services Sh12,030,000.
The department warned that the current allocation may slow implementation of planned programmes and projects across the country, especially those targeting farmers, SACCOs and cooperative societies.
Among the areas likely to be affected are cooperative development initiatives, value chain support programmes, coffee sector reforms and operational activities within the State Department.
Parliamentary committees are expected to continue scrutinising the estimates as ministries and state departments defend their proposed budgets for the 2026/2027 financial year.
The outcome of the budget review process will determine whether the State Department for Cooperatives secures additional funding to bridge the Sh8.3 billion deficit and fully implement its planned programmes.