Kenyan govt to invest US$26M in modernizing state-owned coffee giant NKPCU as coffee sector reforms gain momentum
KENYA – The Kenyan government has revealed plans to allocate Ksh 4 billion (approximately US$26.42 million) to revamp and modernize the New Kenya Planters Cooperative Union (NKPCU).
Simon Chelugui, the Cabinet Secretary for Cooperatives, announced that these funds will be channelled towards the revitalization of the NKPCU’s milling plant, cupping lab, and warehouses.
During a meeting with stakeholders in Nairobi, CS Chelugui emphasized the government’s commitment to expediting the restructuring of the Kenya Planters Cooperative Union (NKPCU) to transform it into a State Corporation.
“As we look forward, our top priorities include expediting measures related to the NKPCU, finalizing the liquidation process, and drafting an Act of Parliament to reestablish the NKPCU as a State corporation,” remarked CS Chelugui.
KPCU came under the control of the Kenya Commercial Bank (KCB) in 2015 due to a non-performing loan of Ksh 85 million, in addition to other debts owed to coffee suppliers amounting to Ksh 50 million.
In a concerted effort to rescue the coffee sector, the government cleared the outstanding debts and appointed a liquidator to compile and develop a liquidation scheme aimed at optimizing assets and rejuvenating the NKPCU.
The NKPCU commenced its operations in June 2020 after the liquidator assumed control from the KCB receivers.
CS Chelugui affirmed the government’s full dedication to completing ongoing reforms and pursuing additional initiatives and investments to reinvigorate the coffee sub-sector.
He disclosed that the government has authorized an additional Ksh 4 billion for the Coffee Cherry Advance Revolving Fund, designed to facilitate farmers’ access to financing, with management overseen by the NKPCU.
“In my ministry, we are at the forefront of ensuring that coffee productivity surges from a meager 2 kilograms per tree to an impressive 15 kilograms, ultimately raising production from the current 51,000 tonnes to over 200,000 tonnes within the next five years,” he stated.
This initiative, forming part of a broader sector reform plan, seeks to breathe new life into the country’s coffee cultivation and processing, ultimately enhancing the livelihoods of thousands of coffee growers.
Other reform measures include the restructuring of operations at the Nairobi Coffee Exchange (NCE), enabling coffee farmers, through their cooperatives, to directly participate in auction trading.
The NCE, now under the jurisdiction of the Capital Markets Authority, has also greenlit the Direct Settlement System, anticipated to expedite and bring transparency to the clearing and settlement of coffee sale proceeds for the benefit of coffee farmers.
Under the leadership of Deputy President Kenya, Rigathi Gachagua, the government has actively pursued direct coffee sales agreements with prominent global coffee companies, such as Starbucks and the Belgium-based Java Coffee Company, in a concerted effort to bypass intermediaries and bolster income for farmers.
