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Kenya: Coffee societies get reprieve as Sh4bn debt to be waived

The waiver also comes at a time when some societies in Central Kenya have appealed to the government to assist them due to destruction of part of this season’s crop by coffee berry disease. (Photo: Courtesy of Sunday Nation)

By Mwaniki Wahome
Sunday Nation

November 7, 2010

The Kenyan Government will waive a Sh4 billion [apprx. $50 million] debt owed by coffee societies in the country, giving a fresh lease of life to the sector, which has been struggling to regain its footing.

Co-operative and Marketing minister, Joseph Nyagah, said the matter had been agreed on and the Finance minister, Uhuru Kenyatta, will soon effect it.

“The government will waive over Sh4 billion in debt and Uhuru will be making the announcement soon,” he said on Thursday.

The debt waiver will be a relief to coffee societies, which have been struggling to clean their balance sheets after going through lean times in the 1990s, when the sector nearly collapsed.

In the 1970s and 80s, coffee was a top foreign exchange earner, but has over the years been overtaken by tourism, tea and horticulture.

The waiver also comes at a time when some societies in Central Kenya have appealed to the government to assist them due to destruction of part of this season’s crop by coffee berry disease.

Speaking at the Co-operative College, the minister said the debt waiver will further boost recovery of the sector, which has been receiving attention from the government since 2003.

Coffee production plummeted from 130,000 metric tonnes in 1988 to an average of 50,000 in recent years, due to various reasons that include poor handling of liberalisation and collapse of the international market.

The government has in the past waived a Sh5.8 billion debt owed by co-operatives through the stabilisation of exchange (stabex). It also established the Coffee Development Fund to enable the farmers access cheaper credit.

Coffee prices have dramatically improved in recent years, with farmers earning three times more, against the backdrop of declining production in key global sources due to climate change coupled with increased consumption.

International Coffee Organisation has projected that the prices will remain high for many years.
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Contact the reporter, Mwaniki Wahome, at jwahome@ke.nationmedia.com

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