Kenya’s Coffee Union threatens to exit national exchange over payment dispute 

KENYA – Kenya’s National Coffee Cooperative Union (NACCU) has threatened to withdraw from the National Coffee Exchange following a standoff with the government over the Direct Settlement System (DSS). 

The DSS, introduced in 2023, requires coffee buyers to pay farmers within seven days of purchase through the Co-operative Bank. Initially, payments were made via farmers’ co-operative societies, which deducted management fees before remitting balances to members.  

However, in November 2024, Co-operatives Cabinet Secretary Wycliffe Oparanya directed that farmers’ details be submitted by June 2025 to enable direct mobile phone payments, bypassing co-operatives. 

The directive has triggered sharp opposition from the union. NACCU secretary general Bahama Muriithi said the government was being misled by technocrats unfamiliar with how the sector operates and how smallholder farmers survive. 

He dismissed claims by the Cabinet Secretary that co-operative managers were diverting farmers’ funds for personal gain. “If theft is taking place, aren’t there courts where culprits can be prosecuted? If our concerns are ignored, we will leave the National Coffee Exchange and establish our own markets,” Muriithi warned. 

The secretary general emphasized that coffee supports more than 800,000 smallholder farmers across 33 counties in Central, Western, Rift Valley, and Nyanza. He insisted that the union would act to protect their interests. 

NACCU chairperson Felix Mwai added that coffee production is a long process, taking six months to grow before undergoing factory processing for two more months, primarily under co-operative management. He argued that co-operatives remain central to the crop’s sustainability. 

Mwai urged the government to act against corrupt officials individually rather than undermine the co-operative movement, which he described as the backbone of the coffee sector.  

“Disrupting the system,” he warned, “could destabilize coffee farming and risk collapse of an industry vital to Kenya’s economy.” 

So far this year, the sector has generated Kes 49 billion (US$379.4M) from exports, remaining a key source of foreign exchange.  

Mwai noted that over 70 percent of the coffee sector is managed through co-operatives, with more than 1,000 such societies active nationwide. 

“If 99 percent of co-operatives are functioning well, why jeopardize the entire system because of a few rogue managers?” he asked, cautioning that blanket reforms could damage farmer livelihoods. 

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