Managements of Savings and Credit Cooperative Societies (SACCOS) have been warned against an over-obsession with huge end-of-year dividends at the expense of their core mandate of issuing low-interest loans to members.
Symon Mburia, the Assistant Commissioner for Cooperatives Development, director at the Hustler Fund, and a leading authority in the cooperative movement, challenged Saccos to concentrate on loan issuance instead of over-concentrating on amassing revenues.
The unswerving pursuit of dividends, Mburia warned, could eventually cause the collapse of many Saccos. For decades, these institutions have performed exceptionally well by providing credit through which members’ investments, incomes, and financial stability were improved.
Addressing guests during the Ushirika Day festivities at Siakago Primary School in Embu County, the Assistant Commissioner noted that since the law allowed qualified Saccos to operate like commercial banks, the majority had lost direction, relegating affordable, share-guaranteed loans downwards.
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Mburia, who was commended for helping revive some of the most prosperous entities in Embu County, including Winas and Nawiri Saccos when the two were in financial doldrums decades ago, called for a spirit of economic revival and vibrancy through the cooperative movement.
The economic vibrancy associated with the Sacco sector, Mburia said, resonated with this year’s Ushirika Day celebrations theme of promoting peace, noting that financial stability leads to peaceful co-existence at the community level.
Embu County, Mburia added, is one of the most vibrant regions in the country, especially regarding cooperatives in the coffee industry, highlighting the need for unity among entrepreneurs across various sectors.
The Commissioner suggested that unified economic diversification among investors in different Saccos within Embu County would open new avenues of commerce and income generation. This, in turn, would strengthen the regional economy and eventually lead to financially stronger Saccos.
Noting that cooperatives remain key drivers of education, agriculture, transport, commerce and other sectors of the economy, Mr. Mburia challenged Sacco managements in the county to look at the bigger picture and identify new sources of income.
Kenyans, he said, should not ignore the immense potential available within cooperatives, pointing out that Saccos currently control over Ksh1.3 trillion, while the assets held under these entities stand at more than Ksh1 trillion.
“These huge resources should be utilized by Saccos to venture into more vibrant investments with potential for guaranteed profits,” said Mburia, adding that the transport sector, especially, has the potential for interested Saccos to venture into the commercial and cargo aviation industry.
He noted that the government views cooperatives with great respect and that its role is not to interfere with the entities, but to create laws and rules that lead to lawful investments and the protection of members’ finances through reforms.
Mburia admitted that past laws governing cooperatives had become archaic, hence the government’s decision to undertake a recent raft of reforms, the enactments of which are presently in the final stages.
The expert assured stakeholders that the new laws and rules are not meant to disrupt the cooperative movement, but to ensure that those in management handle members’ resources with integrity to prevent losses.
Unlike in the past, Mburia assured that if a Sacco faces a financial crisis and collapses today, members’ monies remain protected, just like in commercial banks, which is a major plus for the government’s reforms.
He disclosed that although the youth currently do not widely embrace involvement and investment in Saccos, the soon-to-be-enacted reforms will make it mandatory to balance age, gender and physical and mental challenges, among other conditions, in membership.
“In the future, it will be mandatory for all Kenyans to be covered in Sacco membership, with the youth, all genders, and marginalized groups all being included,” said Mburia.
Furthermore, Mburia insisted that although most small-scale Saccos prefer to operate individually, there is a need for such units to come together to improve their capital bases and reach more members through loans.
The cooperative expert noted that larger entities created through the amalgamation of smaller Saccos would gain the financial capacity to acquire digital hardware and software, which remain highly capital-intensive investments.
He finally challenged Saccos in the agricultural sector to adopt robust digital platforms, mainly propelled by the digitally suave Gen Zs, as well as vigorous value addition for their products, instead of selling them raw and compromising their maximum profit potential on international markets.
By Robert Nyagah
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