Cooperative Bank beat stiff competition from eight other banks to win the bid to provide the Direct Settlement System (DSS) technology platform for coffee trading at the Nairobi Coffee Exchange.
This is under a new coffee trading regime that will see buying and selling of the produce at the Nairobi Coffee Exchange supervised by the Capital Markets Authority.
The Nairobi Coffee Exchange is next week expected to reopen and operate under the new coffee regulatory framework.
“Capital Markets Authority has been entrenched as the regulator of the Nairobi Coffee Exchange where we expect that they will oversight a transparent and efficient price discovery process.
“The Nairobi Coffee Exchange has appointed, and Capital Markets Authority approved the Direct Settlement System which will lead to speedy and transparent clearing and settlement of the coffee sale proceeds to the coffee farmers. This will help improve the accountability and governance of our Co-operative Societies,” Cooperatives, Principal Secretary, Patrick Kilemi, told a training session for coffee brokers, traders, warehousemen, farmers and other service providers on the workings of DSS, at a Nairobi hotel on Wednesday.
So far, 11 coffee co-operative unions have been licensed to sell coffee directly at the Nairobi Coffee Exchange and overseas thereby eliminating the need for middleman between the farmer and the buyer.
“Five other unions will be licensed before end of August leading to a total of 16 Unions representing coffee farmers across the coffee growing zones,” said Kilemi.
Kenya Coffee Producers Association, Chairperson, Peter Gekonyo welcomed reforms being in the coffee value-chain noting that there is need to remove barriers that have traditionally hindered transparency and fair pricing.
“The direct settlement system will mark a significant step towards a more equitable and transparent future for coffee farmers,” said Gekonyo.
The DSS user training is part of preparation for, and a countdown towards the historic launch of coffee trading at the Nairobi Coffee Exchange by the newly-licensed coffee trading firms wholly-owned by coffee societies on 15th August 2023.
He says the government is keen on ensuring fair play in the coffee value chain by eliminating conflict of interest among players as county governments, the Capital Markets Authority and Agriculture & Food Authority will license milling, brokers and buyers respectively.
“By having three distinct licensing authorities, there will be checks and balances along the value chain for the best interest of the Kenyan coffee farmer,” said Cooperatives Principal Secretary.
Kilemi said the government targets to increase coffee production from the current 51,000 metric tones to 81,000 metric tones next year, then progressively to 260,000 metric tones by 2027. This is by lowering the cost of production bysubsidizing farm inputs, revamping the coffee research and working with County Governments to strengthen the extension services to boost coffee production.
Coffee production in Kenya has reduced from a high of 129,637 metric tones in the 1988 to a low 36,867 metric tonesin 2020.