The government will inject Sh25 billion into infrastructure modernisation in the coffee sector by tapping private capital as Kenya targets to increase production, Cooperatives and MSMEs CS Wycliffe Oparanya has said.
This is in addition to the Sh500 million that the government committed in the 2024-25 budget, Sh2 billion that has been proposed for the Coffee Cherry Revolving Fund in the 2025-26 financial year and Sh2billion for coffee debt waivers, with further allocations planned.
According to Oparanya, the move is part of government-led reforms in the sector, which seek to triple coffee production from 51,000 metric tonnes to over 150,000 metric tonnes within three years.
The Sh25 billion will be unveiled under a Coffee Investment Framework which is part of an eleven strategic pillars being spearheaded by the ministry to drive transformation in the sector.
Others are expanding production by recovering idle land, introducing resilient varieties and raising yields from two kilos to 10 kilogrammes per tree.
Oparanya also indicated the government will enhance input support by scaling the Coffee Cherry Advance Fund beyond Sh10 billion, boost digital advisory services and equip Coffee Training Centres where today, only 12 per cent of farmers receive regular support.
The ministry is also leading a campaign to revamp cooperatives and promote professional, transparent organisations that ensure traceability and better post-harvest handling.
The government also wants the country to retain more value by local value addition. Currently, Kenya earns only five to eight per cent of a cup sold abroad.
To broaden market access, the ministry wants to expand direct trade and tap into growing markets such as China and the Gulf where it wants to pursue niche certifications.
Digitisation of the value chain, including the Direct Settlement System and national digital coffee platform, has ensured traceability and prompt payment to farmers, the CS affirmed.
“On institutional reform, the country is keen to fast-track the Coffee and Cooperative Bills, and introduce a Reform Dashboard to monitor progress,” Oparanya said in a speech read by Commissioner for Co-operatives Development David Obonyo during an industry sector forum in Nairobi.
The forum was organised by the United Nations Industrial Development Organisation (UNIDO), the Food and Agriculture Organization (FAO) and the United Nations Capital Development Fund (UNCDF).
The coffee industry has over 800,000 smallholder farmers, supporting more than five million Kenyans.
Obonyo named declining yields from aging trees, now averaging over 30 years, as among the major challenges the sector is facing.
Other challenges include encroachment on coffee land, especially in peri-urban area, fragmented governance and limited farmer financing, where only 10 per cent report access to adequate credit, and high export of raw coffee (over 90%) which limits value capture.
There is also increased vulnerability to climate change and volatile markets.
To turn around the sector, the government has so far issued 780,000 seedlings with a target of five million by year-end and 20 million next year.
“County-level sensitisation is underway across 33 counties, including those with coffee-growing potential,” Obonyo said.
A high-level meeting with governors will be held to deepen alignment, including on compliance with the EU Deforestation Regulation (EUDR), amid collaboration with development partners and the private sector to grow the industry.
This, as the government commits to empower youth and women by establishing innovation funds and expand access to land, finance and training. While women do 70 per cent of labour, they earn less than 10 per cent, according to industry data.
“Coffee in Kenya currently contributes to 30% of the labour force employed in agriculture. However, following a decline in economic viability and productivity, labour force engagement with the sector has decreased.
High input costs, reliance on global market trends, convoluted regulations and asymmetric information access across the value chain are all factors that have stifled development in the sector,” UNIDO said in a report.
This, coupled with the historic marginalisation of women and youth, has not helped address the high unemployment rates, particularly in rural coffee-growing areas.
Despite this, the coffee sector retains its potential to provide productive and sustainable livelihoods, to catalyse new business models and innovation, and to support the inclusion of youth and women, according to the United Nations entity.
Kenya earned Sh38.4 billion from coffee (unroasted) exports last year, the Economic Survey 2025 indicates, with tea bringing in Sh189.1 billion while Sh203.6 billion was earned from horticulture exports.
“In 2024, tea, milk, sugarcane, and coffee production increased, driven by favourable weather, while maize output fell due to erratic rains. Fresh horticultural exports dropped 14.1 per cent over EU rejections,” Kenya National Bureau of Statistics says in the survey.
