Coffee farmers borrow over Sh4b from revolving fund
The government has advanced over Sh4 billion to coffee farmers, Co-operative and Co-operatives and Micro Small and Medium Enterprises Development Cabinet Secretary Simon Chelugui has confirmed.
He attributed the increased borrowing to the high confidence the farmers have on the ongoing reform agenda.
Chelugui said farmers’ appetite to borrow from the government revolving fund has increased by 258.9 per cent between mid-November 2023 and mid-April 2024.
“As at November 14, 2023, the farmers had borrowed Sh1.1 billion. My ministry and other related agencies embarked on sensitisation sessions with farmers countrywide on the importance of borrowing from the fund,” Chelugui told Business Hub in a phone interview.
He said that following the efforts in the last six months, the borrowing increased by Sh2.9 billion to over Sh4 billion.
The CS, however, explained that the fund’s advancement rate of three per cent is far much lower compared to current market rates being offered by various financial intermediaries.
The coffee agenda being spearheaded by Deputy President Rigathi Gachagua, Chelugui said has boosted farmers’ morale to vibrate the coffee industry.
“For example, farmers are happy in terms of the prompt payment system established – direct settlement system (DSS) and participation in the Nairobi Coffee Exchange (NCE of their own coffee brokers,” he added. During the 124th Session of International Coffee Organisation (ICO) at Kenyatta International Convention Centre in March 2019 former President Uhuru Kenyatta announced the establishment of a Sh3 billion cherry advance revolving fund as part of bigger plans to revive the struggling coffee subsector. The Kenya Kwanza government boosted the fund with Sh4 billion in December 2024 to accelerate recovery of the once country’s leading foreign exchange earner.
Coffee reform agenda
“The coffee reform agenda is designed to boost production, reduce the cost of processing and milling as well as transaction costs at the auction market. More efforts will be fast-tracked to improve the absorption of the fund to enable farmers to boost production,” Chelugui added.
During the review period, 316,865 farmers from 25 countries borrowed from the fund compared to 91,238 growers from 23 counties who had borrowed as at November 14, 2023. Ten counties drawn from Mt. Kenya region, Rift Valley and western regions have borrowed Sh3.7 billion, representing 92.5 per cent of the total amount borrowed in the last six months. Nyeri County is leading after 68,485 farmers borrowed Sh612.5 as at April 15, 2024 compared to 45,304 growers who had borrowed Sh300 Million as at mid-November 2023.
Farmers from Kirinyaga, Kericho and Kiambu counties borrowed Sh481.5 million, Sh477 million and Sh472 million compared to Sh41 million, Sh56 million and Sh93 million respectively they had borrowed as at mid-November 2023.
There is shift in coffee growing in the country with counties in Rift Valley region embracing the crop, for example, Uasin Gishu, Nandi and Transzoia.
Chelugui said government commitment is focused to enhance productivity to raise profile of Kenya in the global coffee map.
Government, he added, is verifying debts incurred in the recent decade. “We are scrutinising details of debts amounting to Sh4 billlion. We are scrutinising data from Co-op Bank, cooperative unions and commodity fund,” he added.
