By Nicholas Waitathu
Cooperative Bank of Kenya for the last three years has paid coffee farmers US$403,173,914.38 (Ksh 52 billion) through the Direct Settlement System (DSS), the state department of cooperative has confirmed.
Launched in August 2023 and Coop Bank appointed as the implementing agency – DSS has guaranteed transparency and accountability which for long has been lacking in the coffee value chain.
Cooperative principal secretary Patrick Kilemi says coffee buyers pay to the DSS account from where all disbursements including farmers’ payments are made.
“Initially payments were made to the marketer’s accounts and the marketer was responsible for disbursements. The Marketing agent word therefore became final. However, DSS currently pays to the growers including cooperative societies in foreign currency (dollars) and the cooperative society officials are responsible for the currency conversion into Kenya shillings and last mile payment to the individual farmers. The foreign exchange process and the payment rate determination are subjective to the decisions of the cooperative officials, this remains a grey area that needs to be addressed to improve transparency,” said Kilemi.
He confirmed the possibilities of expanding the facility to other providers.
Kilemi says: “Cooperative Bank currently offers the DSS services after winning a tender and going through a due diligence process that commenced with a recommendation from NCE after tendering, approval by CMA and letter of no objection by Central Bank of Kenya. Before Coop Bank was awarded the tender to provide DSS services other banks such as NCBA Bank, Stanbic Bank had also demonstrated their willingness to provide the DSS service but were required to improve on certain areas.”
DSS is a technology platform on which coffee trading is conducted as provided for in the new coffee trading regime supervised by the Capital Markets Authority (CMA).
Prof. Joseph Kieyah National Task Force on Coffee Sub-Sector Reforms established in 2016 by former President Uhuru Kenyatta recommended the establishment of DSS to ease payment of proceeds to farmers and other value chain players.
The DSS, Kilemi, stated has assisted in prompt recovery of loans advanced to farmers from the Cherry Advance revolving fund (CaRF) a kitty administered by the New Kenya Planters Cooperative Union (New KPCU).
A report by New KPCU indicates that 600, 488 farmers have borrowed Ksh 9,760,789,533 from CaRF. The fund was established by the Government in 2019, offering farmers timely and affordable financing to reduce exploitation by middlemen.
The fund advanced at three per cent was established by the Government in 2019 to offer farmers timely and affordable financing to reduce exploitation by middlemen
New KPCU Managing Director Timothy Mirugi in the report stated that farmers drawn from 30 counties out of the 33 counties that grow coffee have benefited from the revolving kitty.
“Success of the fund follows the ongoing reforms being championed by the Government and counties and therefore easing recovery of the loans with low interest rates and improved governance disbursement systems increasing borrowing appetite. As at sept 29, 2025 the loans advanced to farmers have increased to Sh9.7 billion compared to Sh1.1 billion advanced by Nov 14, 2023 accounting 781.8 per cent increase. Largely the increase has been motivated by reduction in paper work and awareness by the Government and improvement in prices at the Nairobi Coffee Exchange (NCE),” Mirugi said.
Nyeri County topped the list of beneficiaries with 106 445 coffee growers who have borrowed Sh1.4billion followed by Kiambu where 34 623 farmers borrowed Sh1.3 billion as at end of September 2025.
In Machakos county 80,719 farmers have borrowed Sh1.1 billion while Sh1.067billion was borrowed by 106, 420 farmers from Kirinyaga County.
In Murang’a, Embu, Meru, and Tharaka Nithi counties, 121,484 farmers in total borrowed Ksh749.8m, Ksh690.2m, Ksh428.2 and Ksh71.4million respectively.
Other top borrowers include Kericho County where 40,429 farmers borrowed Ksh789.1 million, Bungoma County (Ksh621.9m) and Trans Nzoia county farmers applied for Ksh 623.1million.
“The increase in loan advancement has been prompted by lack of collateral conditionality apart from coffee and cherry required, no cumbersome paperwork like the financial institutions as long as you are proved to be a coffee farmer who is producing coffee in Kenya. Further introduction of the Direct Settlement System (DSS) as a payment system has motivated farmers’ morale,” said Mirugi.
He added, “Today, it takes less than 72 hours after applying for the loan unlike before where it could take five to 14 days and with huge paperwork. We can confirm that the ongoing reforms have immensely contributed to transparency and thus promoting farmers to borrow to meet their daily financial obligations, for example, paying school fees, buying farm inputs and funding their infrastructure development.”
Further according to the fund, there is high appetite of loans from the t new coffee counties frontiers -Mirugi observed that the increased borrowing the loans from non-traditional regions such as Uasin Gishu, Laikipia, Nyamira, Elgeyo Marakwet, Nandi, Migori, Kisumu, Baringo and Kisii.