- Cooperatives urged to embrace technology and strengthen governance.
- Leaders warned to improve risk management following KUSCCO’s liquidation.
- Tax gaps, cybersecurity and climate change emerge as key concerns.
Cooperative societies have been urged to embrace technology, strengthen governance and continuously improve their skills to remain competitive in a rapidly changing business environment.
Institute of Directors Kenya (IODK) Chief Executive Officer Prof. Charles Mayaka said traditional ways of running cooperatives were no longer enough, as technology, climate change, economic pressures and changing consumer needs continue to reshape the sector.
Mayaka challenged cooperative directors and senior managers to identify emerging risks early and prepare their institutions before such challenges affect their operations. “Change is the only constant, and unless the leaders are well prepared and able to anticipate the changes, they will be overtaken by events,” said Mayaka.
He was speaking in Naivasha during a three day leadership forum organised by the Co-operative Alliance of Kenya (CAK). The forum brought together board members, supervisory committee members and chief executive officers from dairy, coffee, financial and youth cooperatives.
AI can help, but shouldn’t replace human judgement
Mayaka said artificial intelligence (AI) and digital technology could help cooperatives improve efficiency and reduce operational costs. However, he cautioned leaders against allowing technology to replace human decision making.
“We cannot remove the person in the loop because ultimately the responsibility for the decision remains with the manager, CEO, or director,” he said. He also called on cooperative boards to develop clear governance frameworks for emerging technologies, particularly to address cybersecurity and other risks.
Lessons from the KUSCCO liquidation
CAK Chief Executive Officer Daniel Marube said the liquidation of the Kenya Union of Savings and Credit Co-operative Societies (KUSCCO) had provided important lessons for the cooperative movement.
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Marube urged cooperatives to strengthen governance, auditing and risk management to protect members’ funds and prevent financial losses. “We need to learn from the mistakes of the past and move forward by adopting more technology, strengthening audits, and giving audit committees greater responsibility,” he said.
He further urged cooperative leaders to identify risks such as fraud, cybercrime, poor financial reporting and failure to meet tax obligations.
Tax gaps flagged as a growing concern
Tax Advisor Ann Magondu said taxation had become an increasing concern as cooperatives adopt new business models and their membership structures change. She said Saccos were facing challenges arising from gaps between modern cooperative operations and existing tax provisions, with some disputes reaching the Tax Appeals Tribunal and courts.
Magondu said poor tax planning could affect cooperatives’ cash flow and ultimately reduce the benefits returned to members. “Tax is about cash flow. If you don’t do it right, you do away with your cash flow, which in the end has an implication in terms of what you distribute back to the members,” she said.
She called for greater cooperation between cooperatives, the Kenya Revenue Authority (KRA), Parliament and the National Treasury to ensure tax policies keep pace with changes in the sector.
The forum, held under the theme “Leading Future-Ready Cooperatives and Saccos: Governance, Digital Transformation and Sustainability in a Disruptive World,” also highlighted climate change, inflation and changing consumer behaviour as key issues requiring cooperative leaders to rethink their business models.
By Bernard Magada
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