The Cooperative Bank of Kenya (Co-op Bank) has received regulatory approval to continue processing coffee payments, providing relief to thousands of farmers and cooperatives amidst recent policy uncertainty in the sector.
The approval, confirmed on Thursday by the Ministry of Agriculture and the Coffee Sub-Sector Implementation Standing Committee (CSISC), comes as part of ongoing reforms aimed at streamlining Kenya’s coffee value chain. Co-op Bank had faced potential disruption following a directive that centralized coffee sales and payments through the Nairobi Coffee Exchange (NCE) and the Direct Settlement System (DSS), overseen by the Capital Markets Authority (CMA).
In a statement, the CSISC said the bank had demonstrated compliance with the new regulatory framework and was thus authorized to resume payment processing services for coffee farmers. The decision follows intense lobbying from cooperatives and stakeholders who cited Co-op Bank’s longstanding relationship with the coffee sector and its role in ensuring timely payments.
“We are committed to implementing reforms without causing unnecessary disruption to farmers. Co-op Bank has proven its capacity to support the new system while protecting farmer interests,” said CSISC Chairperson Prof. Joseph Kieyah.
Co-op Bank is the primary banker for over 80% of coffee cooperatives in the country. Its continued participation is seen as vital for maintaining liquidity and ensuring confidence among smallholder farmers during the ongoing transition.
The approval allows the bank to operate within the DSS while ensuring that all payments pass through the central system, which is designed to enhance transparency and accountability in the industry.
Reacting to the news, Co-op Bank CEO Gideon Muriuki welcomed the decision, saying it reaffirmed the bank’s commitment to supporting Kenya’s agricultural sector.
“We are pleased to continue serving the coffee farming community. Our systems are aligned with the DSS, and we are fully committed to ensuring timely and secure payments to all our clients,” Muriuki said.
The decision is likely to ease tensions that had been building among cooperatives concerned about potential delays in payments and disruptions to longstanding banking relationships. Industry experts now urge all stakeholders to collaborate closely as the government continues implementing reforms intended to revive the once-thriving sector.
Kenya’s coffee industry, once a major foreign exchange earner, has faced years of decline due to mismanagement, underinvestment, and fluctuating global prices. The current reforms aim to restore its glory by ensuring farmers receive a fair share of earnings and are protected from exploitative middlemen.
