Kenya targets higher coffee yields and stronger SACCO protections in new plan

Kenya’s cooperative sector is entering a new phase of tighter regulation as authorities move to strengthen governance, improve financial safeguards, and restore confidence in savings and credit societies while also pushing reforms in the coffee industry.

Speaking during a Radio Generation interview on Thursday, Principal Secretary Patrick Kilemi said different agencies together with county governments are working jointly to enforce stricter licensing, better oversight, and stronger accountability in SACCOs and coffee operations. He said the reforms are aimed at improving transparency, protecting members’ savings, and boosting production and exports.

Kilemi said the government is considering setting up a SACCO deposit guarantee fund to protect members’ money in case a cooperative collapses. He added that a liquidity support facility is also being explored to help SACCOs facing financial distress.

He explained that the plan would operate in a similar way to protections in the banking sector, including lender-of-last-resort support.

"We will be seeking Treasury support for this SACCO deposit guarantee fund so that it is able to cover our depositors. We are also calling for a SACCO liquidity fund to support SACCOs just in case a SACCO is in distress, so that we can have that lender-of-last-resort ability just like the Central Bank does," he highlighted.

On governance, he said regulators are also working on rules to stop individuals who have been linked to mismanagement from moving from one SACCO to another without consequences.

"If an MD of a SACCO has done something wrong, he ceases to have an appeal to be an MD of another SACCO. We are going to stop that export of bad manners," he stated.

Turning to the coffee sector, Kilemi noted that production has dropped sharply over the years, falling from about 150,000 metric tonnes in the mid-1980s to nearly 30,000 metric tonnes at its lowest point. He said this decline has reduced earnings from exports.

He explained that reforms in the coffee value chain are focusing on clear roles among institutions. County governments are responsible for registering farmers and millers, the coffee directorate licenses coffee buyers, while the Capital Markets Authority regulates coffee brokers.

"We defined the process. We said the players in the market must say who they are. The county governments are registering farmers and millers, the coffee directorate is licensing coffee buyers, and the Capital Markets Authority is licensing and regulating coffee brokers," he stated.

Kilemi said the Direct Settlement System has improved transparency in farmer payments, supported by government-funded coffee cherry advances. He added that more than Sh8 billion has been injected to support farmers through the system.

He noted that farmers are currently guaranteed a minimum of Sh80 per kilogramme of cherry, while some have earned up to Sh161 per kilogramme in recent harvests.

He further said Kenya has about 20 million coffee bushes, each producing an average of two kilogrammes, compared to up to seven kilogrammes per bush in countries like Ethiopia. The government is now targeting up to 20 kilogrammes per bush through improved farming practices.

Kilemi also said demand for coffee seedlings has increased, with between 20 million and 25 million planting holes already prepared across the country. He added that nearly Sh1 billion was allocated for coffee seedling distribution in the last financial year.

On value addition, he stressed the need for Kenya to reduce reliance on exporting raw coffee and instead expand roasting and packaging locally to increase earnings from the global coffee market, which he estimated at about Sh83.85 trillion annually.

"We need to sell more processed coffee and ready-to-drink coffee in the biggest markets in the world," he concluded.