Co-op Bank remits Sh51m to farmers through DSS plan

Co-operative Bank of Kenya appointed a month ago as the provider of Direct Settlement System (DSS) services to coffee value chain players has so far remitted Sh51.7 million to farmers through the system.

A preliminary report seen by Business Hub prepared by the Nairobi Coffee Exchange (NCE) management indicates that out of the clean coffee beans offered for sale on the inaugural auction on Aug 15, farmers received $352,646.48 (Sh51.7 million) out of the total value $356,629.50 (Sh52.3 million).

The proceeds were realised during the Sale 30 conducted on August 15 when the auction was opened after six weeks suspension over permit issuance delay.

Since then only two other auction sessions have been conducted owing to low volumes of clean beans being offered.

Value chain players

Nairobi Coffee Exchange management appointed Co-op Bank on August 8, 2023 as the provider of DSS to coffee value chain players. The bank won the bid to provide the services as its systems were ready and thus beat several other commercial banks that had applied to be appointed as DSS provider.

Co-op Bank, which is majority-owned by the cooperative societies, has strong ties to the agricultural sector will offer the DSS technology that facilitates payment of coffee growers’ proceeds as well as the recovery of other commitments the producer owes service providers.

The other banks will still qualify once they put the required structures in place.
NCE secretariat explained that DSS is a technology platform on which coffee trading will henceforth be conducted as provided for in the new coffee trading regime supervised by the Capital Markets Authority (CMA).

“The Direct Settlement System successfully facilitated the coffee trading event, Sale 30, held on August 15, 2023. This sale involved the participation of four brokers – Meru County Coffee Union, New KPCU, United Eastern, and Kipkelion,” the exchange notes in the report.

The total value of coffee traded during the sale, NCE notes, amounted to $356, 629.50 (Sh52.3 million), demonstrating the efficiency and effectiveness of the DSS in handling financial transactions related to coffee trading.

“As of the prompt date, payments worth $352,646.48 have been processed through the system, which represents an impressive payment completion rate of 98.88 per cent. This high payment percentage indicates the DSS’s reliability and ability to ensure prompt and accurate financial settlements within the coffee trading ecosystem,” it added.

According to NCE, the money earned has so far been remitted to the dollar accounts of farmers’ coffee co-operative societies with the management of the societies expected to pay farmers based on their produce delivered.

Deducted expenses

Contacted, NCE acting Chief executive Lisper Ndung’u confirmed that payments have been made to the relevant value chain players.

“Before the money has been released to the farmers through their societies, the DSS provider has deducted expenses farmers incurred inform of milling, brokerage and warehousing. The providers of the services have equally been sorted out,” she said.

NCE, Ndung’u said has so far inducted coffee market users – Coffee Brokers, traders, warehousemen, coffee farmers and other service providers on the workings of DSS.