Stanbic Bank Kenya has been tapped to process payments to coffee farmers, joining Co-operative Bank of Kenya, which had been the sole Direct Settlement System Provider (DSS) for the Nairobi Coffee Exchange (NCE) since August 2023.
The Capital Markets Authority (CMA) on Thursday approved the appointment of Stanbic as the second DSS provider, putting it in a strong position to benefit from increased deposits, higher payment volumes and improved customer relationships in a sector that has long been a major foreign exchange earner for Kenya.
The CMA also granted two additional coffee broker licences to Ahadi Coffee Limited and Cafforra Coffee Company Limited in a move aimed at increasing competition and efficiency in the coffee trading sector.
“The Capital Markets Authority has granted two more Coffee Broker licences and approved the appointment of Stanbic Bank Kenya Limited as a Direct Settlement System Provider (DSS) for the Nairobi Coffee Exchange,” said the CMA in a statement.
“Stanbic Bank is the second DSS provider coming after Cooperative Bank, which has been the sole DSS service provider since August 2023.”
The DSS system facilitates the clearing and settlement of coffee proceeds at the auction, ensuring that funds remitted by coffee buyers are settled to service providers and ultimately to coffee growers in a timely and transparent manner.
Banks offering DSS services earn money primarily through transaction charges, float income from deposits held temporarily in the settlement accounts and broader banking relationships created with coffee cooperatives, millers and farmers.
The system also gives banks access to low-cost deposits from cooperative societies and farmers’ savings, strengthening liquidity and opening opportunities for cross-selling loans, insurance and mobile banking products.
Stanbic’s entry comes at a time when Co-operative Bank had been granted an extension to continue processing payments to coffee farmers through the DSS platform following the postponement of the transition to direct payments into individual farmers’ accounts.
The government had initially planned to migrate from the DSS model beginning July 1, 2025, with proceeds being remitted directly to farmers. However, the transition was suspended after resistance from coffee unions and co-operative societies.
The planned shift had sparked mixed reactions across the sector, with unions pushing for at least a one-year postponement to allow consultations and the resolution of operational concerns surrounding the new payment framework.
The onboarding of Stanbic now signals that the government could retain the DSS arrangement for longer than initially planned.
The NCE has historically served as the central marketplace where Kenya’s coffee is traded through weekly auctions involving licensed brokers, millers, dealers and exporters.
Coffee trading at the exchange dates back decades and was designed to promote price discovery, transparency and competitive bidding for Kenya’s premium coffee.
Under the auction system, coffee farmers deliver cherries to factories and cooperatives before the beans are processed by millers and presented for sale at the exchange, where international buyers bid for the produce.
The coffee sector remains one of Kenya’s key foreign exchange earners despite years of declining production and governance disputes over farmer payments and marketing reforms.
