Audit cuts coffee co-operatives’ debt claim to Sh6.8bn

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A government-led verification of claims submitted by coffee cooperatives, financial institutions and other stakeholders reduced the reported sector debt from Sh11 billion to Sh6.8 billion, Commissioner for Co-operatives Development, David Obonyo, has said.

Mr Obonyo added that the difference of Sh4.2 billion was not necessarily an indication of fraudulent claims, but resulted from the government process of validating debts to establish whether they were supported by records and confirmed by the institutions involved.

“The total claims that were submitted to the commission were about Sh11 billion. However, the government usually conducts verification before settlement. We have to ascertain if they are genuine and valid,” Mr Obonyo told the Business Daily.

The clarification by the Commissioner for Co-operatives Development comes days after Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development Cabinet Secretary Wycliffe Oparanya announced a plan by the government to clear the Sh6.8 billion verified amount owed by coffee cooperatives.

The minister, however, did not disclose how the audit arrived at the figure from the previously reported Sh11 billion.

The huge disparity had raised questions of whether some farmers or their cooperatives submitted fake claims.

Mr Oparanya said the audit was conducted jointly by his ministry, the National Treasury, the Office of the Auditor-General and the Ministry of Agriculture and Livestock Development to establish the actual amount owed before the government committed to settling the debt.

Mr Obonyo explained that the verification involved matching claims from coffee cooperative societies with records from creditors, including commercial banks and other financial institutions that had extended loans to the sector.

“If, for instance, a society claims that it owes a commercial bank Sh200 million, you also have to ask the financier to prove the claim. That is why the figure went down,” Mr Obonyo added.

The verification paved the way for the government to begin clearing the Sh6.8 billion validated amount owed by coffee cooperatives to financial institutions, with the Ministry of Co-operatives and Micro, Small and Medium Enterprises Development now working to settle the balance.

The Cabinet Secretary said Sh2 billion of the verified debt has already been settled.

“The government has cleared about Sh2 billion owed to state institutions, including the Commodities Fund, the New KPCU and Cooperative Bank,” Mr Oparanya said.

Another Sh2 billion has been allocated in the current 2026/27 financial year to settle money owed to other financial institutions, while a further Sh2.8 billion is expected through the supplementary budget to clear the remaining amount.

The reduction of the debt figure followed an audit and verification, which sought to examine claims submitted by stakeholders in the local coffee value chain.

According to Mr Obonyo, the verification followed concerns raised by farmers over financial challenges affecting the sector.

“When the current administration came into power four years ago, there was an appeal from coffee producers to the government over challenges affecting the sector,” the commissioner said.

He added that enhancing the financial value chain to increase productivity is among the priorities of the government, with coffee identified as one of the strategic value chains requiring immediate intervention.

Reporting originally appeared via Business Daily. Read the full source for additional context.