Mr Vincent Marangu presentation - Coffee Financing

1. G-25 AFRICA COFFEE SUMMIT
25 – 28 MAY 2022
COFFEE
FINANCING

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ABOUT US
Founded in 1968 by farmers through their co-operative
societies.
Listed in the Nairobi Securities Exchange (NSE) in December
2008.
Shares previously held by the Co-operative Societies and
unions were ring-fenced under Co-op Holdings Co-operative
Society Limited which became the strategic investor in the
Bank with a 64.56% stake.
3rd largest bank in Kenya by asset base
Total Assets – Kes 580 Billion
Loan Book – Kes 310 Billion
Deposits – Kes 409 Billion
Branch Network – 178 (present in all coffee growing regions)

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Co-operative Bank Support to the Coffee Value Chain
Digitization
Access to Credit by Coffee Farmers
Facilitation of Coffee Trade
Consultancy and Capacity Building

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ACCESS TO CREDIT BY COFFEE
FARMERS

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1. FACTORY ESTABLISHMENT – STABEX CAPEX
 Capital Expense financing through STABEX
CAPEX facility to support societies in:
• Establishment of new/additional pulping
stations/factories
• Upgrade of infrastructure e.g. drying beds
• Establishment of coffee nurseries
2. FARM INPUTS – STABEX FILS
 Inputs financing through STABEX – FILs Facility to support societies procure farm
inputs i.e. Crop Nutrition (fertilizers), Crop Protection (chemicals), soil testing
A. PRODUCTION LEVEL

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1. SOCIETY WORKING CAPITAL
 Working Capital financing to support the society with:
• Repair and maintenance of machines and drying beds
• Processing materials at the factory level
• Payment of wages and salaries
• Payment of utilities (power, water etc)
B. PROCESSING LEVEL

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1. STABEX CHERRY ADVANCE PAYMENT (CAPS)
 Farmers advance payment facility to support farmers pay for
labour during harvesting. It also supports them cater for
household expenses before they receive coffee proceeds at the
end of the season.
C. HARVESTING LEVEL

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MANAGING FARMER
PAYMENTS
COFFEE TRACEABILITY
DIGITIZATION

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COFFEE MANAGEMENT SYSTEM (CMS)
Co-operative Society
Commercial Miller / Agent
Grower Miller / Broker
Nairobi Coffee
Exchange
Coffee Management
System
Buyer
KEY
Flow of coffee
Flow of money
COFFEE TRACEABILITY
1) Farmer harvests cherry and delivers to the Co-operative Society.
2) Co-operative updates cherry records against each farmer in the CMS
3) Society does primary processing of cherry into parchment. Parchment is delivered to
miller
4) The miller updates parchment records against each society in the CMS and then
processes parchment into clean coffee. Clean coffee grades and weights are updated
in the CMS against each society
5) The agent prepares a catalogue of the clean coffee for sale and updates in the CMS
6) The Broker / Agent sell coffee through the Nairobi Coffee Exchange (Auction) or
Direct Sale to the Buyer
FARMER PAYMENTS
1) Buyer pays for coffee bought into the CMS Settlement Account
2) The CMS system will automatically recover service providers fees (Warehouse,
Miller, Agent, Broker) and Statutory fees from money received.
3) The system is able to track back the coffee and settle the net amount to the grower
(Society)
4) The system is integrated with Co-operative Bank online payment solution Pay2Fosa
which allows payment directly to the farmer through their bank account, savings and
credit society account or mobile wallet account e.g. M-Pesa
Farmer
Co-operative Society
Service Providers
(e.g. Warehouse)

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TRADE FACILITATION

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Facilitation Of Export - TRADE FINANCE
1. Export Letter of Credit – LC – Guaranteed Payment
i. Co-operative Union signs a contract with buyer with following details;
a) Description of coffee e.g. Grade & Cup profile
b) Number of coffee bags
c) Price per bag of Kg
d) Required accompanying documents
e) Preferred port of delivery
f) Terms of trade i.e. FOB/ CIF /CFR etc
g) Expected date of shipment/ delivery
h) Preferred Korean Bank
ii. The Co-operative Union will deliver documents to confirm the above to the
bank
iii. The bank sends the documents to the importer’s (buyer) bank
Applicable export docs
i. Certificate of Origin (CO)
ii. Phytosanitary Certificate -
Kenya Plant Health
Inspectorate Services
(KEPHIS)
iii. Certificate of Conformity -
Inspection by SGS
iv. Certificate of Weight
v. Packing List
vi. Bill of lading
vii. Stuffing Certificate

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Process Flow - Letters of Credit
Buyers Bank Seller’s Bank
3. Bank Issues LC
6. Documents
Buyer Seller
1. Contact agreement
4. Ship Goods
2.
Buyer
request
for
LC
3.
Bank
advices
LC
5.
Shipping
documents
7. Payment
8.
Payment
8.
Documents
Definition of words
• Seller - Coffee Exporter also known as
Beneficiary
• Buyer -Coffee Importer also know as
Applicant
• Documents - Documents called for in
a letter of Credit; Invoice, Bill of Lading,
Packing List, Phytosanitary Certificate
etc
• Payment is triggered by document and
is guaranteed as long as the documents
are compliant

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Facilitation Of Export - TRADE FINANCE
2. Documentary Collection
3. Open Account
53 Correspondent Banks
across the globe
Korea
• KEB Hana bank
• Standard Chartered Korea
• Citi Bank
• Deutsche Bank
US
• Citi Bank
• Standard Chartered Bank
• Deutsche Bank
How the Bank will Facilitate
1. Advisory services – Document checking
2. Pre-export finance
3. Commodity financing

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CONSULTANCY &
CAPACITY BUILDING

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CO-OP CONSULTANCY &
BANCASSURANCE INTERMEDIARY LTD
Co-op Consultancy & Insurance Agency (CCBI) Limited, a fully owned subsidiary of Cooperative Bank of
Kenya, is an advisory firm that specializes in advising the Cooperative Societies on a wide range of areas.

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