Story by MWANIKI WAHOME
Publication Date: 6/28/2008
The Coffee Development Fund intends to set up a credit reference bureau to bring down default rates among farmers who borrow from it.
Speaking during the release of five-year strategic plan at the Kenya Institute of Education, the fund’s managing trustee, Mr George Ooko, said the strategy includes plans to bring all financiers of the coffee sector under one umbrella.
“To reduce overall indebtedness of the coffee farmer, we shall partner with Coffee Board of Kenya to set up the registry. In addition, we shall also lobby to stop marketing agents from giving cherry and partchment advances to coffee farmers,” he said.
The problem of indebtedness has plagued the coffee industry beginning mid-1990s following liberalisation that led to some farmers shifting to new players, hence defaulting on loan repayments.
Kenya Planters Co-operative Union is among coffee institutions labouring under the weight of debts and last week, asked the government to bail it out with an injection of Sh1 billion.
Mr Ooko said CoDF would strive to enhance loan repayments and expand funding to post-harvest activities that are currently handled by marketing agents.
He said Sh428 million had been given to farmers in form of advances and credit for rehabilitation out of the Sh600 million provided by the government. He said Sh11 million had already been repaid.
The Coffee Development Fund was set up by the government two years ago to provide sustainable and affordable credit and advances to farmers.
The fund charges a discounted interest rate at 10 per cent per year on a declining balance, and has a one-year grace period before repayment starts.