Direct Settlement System · Kenyan coffee

What the Direct Settlement System means for your co-op's books

Coffee Act 2023 moves money fast — 80% of auction proceeds within 5 days. Here's what your records need before it lands.

What does Direct Settlement actually require?

Kenya's Coffee Act, 2023 rewired how auction proceeds move. Once a lot sells, the Direct Settlement System requires at least 80% of the proceeds to reach the farmer within 5 days of sale. Every deduction a co-op takes off the top — inputs, transport, levies — is capped at 10% combined. A separate Cherry Advance Fund lends co-ops KES 40 per kilogram of cherry delivered, so members get cash before the final auction settlement lands.

What a co-op needs on the ground before DSS pays out

None of that money moves correctly without records DSS can trust. Three things have to exist before the 5-day clock starts:

  • A verified member registry — every kilogram tied to one farmer, not a shared account
  • Graded intake at the buying centre — weight, quality grade, and date logged per delivery
  • An itemized per-member settlement — gross proceeds, deductions, advance already paid, net due

What MkulimaOS ships today

MkulimaOS is the Cooperative Operating System for Kenya's agriculture — member registry, graded intake, per-member settlement, and one-tap M-Pesa payout, live on a working Kenyan coffee estate today. A co-op running that chain already has the registry, the intake record, and the itemized settlement DSS requires, before a shilling moves under the 5-day rule.

Where DSS integration is headed

MkulimaOS does not connect to the Direct Settlement System's government rails today — no integration code exists yet. It's designed to plug into DSS (roadmap): the registry, intake, and settlement data already sit in the shape a future DSS connection would need. Until then, a co-op runs its own settlement chain on MkulimaOS and stays audit-ready for when that connection ships.

Is MkulimaOS integrated with the Direct Settlement System?

No — MkulimaOS is designed to plug into DSS, which is roadmap, not shipped. What ships today is the registry, graded intake, per-member settlement, and M-Pesa payout chain a co-op needs to operate under DSS rules.

How fast must co-ops pay farmers under the Coffee Act 2023?

Within 5 days of the auction sale, at least 80% of proceeds must reach the farmer, with total deductions capped at 10%.

What is the Cherry Advance Fund?

A government-backed facility that lends co-ops KES 40 per kilogram of cherry delivered, so farmers get an advance before the final auction settlement.

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