February 8, 2023

Sacco Review|The Leading Newspaper for Co-operative Movement in Kenya

The Leading Newspaper for Co-operative Movement in Kenya

Change beckons as KUSCCO boss hints at coops forming federations

George Ototo, KUSSCO Managing Director

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By George Otieno

All Cooperatives will in future become federations and subscribe to an apex body, group managing director of the Kenya Union of Savings and Credit Cooperatives (KUSCCO) George Ototo has hinted.

A restructured Cooperative sector will ensure sustainability and viability as it will solely depend on the subscription of the cooperative members.

Ototo revealed this while addressing over 350 delegates during the fifth annual KUSCCO conference in Mombasa converged to dissect Sacco matters, especially issues of sustainability, innovation and inclusion.

“The economic participation of our business model is critical such that whenever we establish Cooperatives, they need to be sustainable,” he said.

He added that it was the responsibility of the cooperators to understand and identify with the Cooperative model, invariably charging that the breach and misunderstanding of the model had led to many cooperatives going astray into unplanned diversification.

The economic development of cooperatives, Ototo added, remained critical despite Saccos being social institutions because as cooperatives, they still had obligations to the government.

The formation and growth of the Cooperative sector, Mr. Ototo said, are attributed to the efforts and contributions of early leaders such as the late President Mwai Kibaki and Tom Mboya, who aspired to anchor development on cooperatives.

Thus, he encouraged the sector not to see mobile lenders as competitors but instead concentrate on what they were doing differently and adapt.

One such way is investing in production, value addition and marketing.

“In other worlds, the producer cooperatives are stronger than the financial cooperatives where financial cooperatives only provided finances to facilitate production,” he observed.

Mr. Ototo added that Saccos should encourage their members to get into production through lending or having value addition loans, advising delegates to create businesses that outlive them.

The Cooperative policy and the Cooperative Bill 2021, Ototo stated, will be implemented by the county governments once passed because it is a devolved function.

SASRA chief executive (CEO) Peter Njuguna said that Saccos and cooperatives were a legal creation, thus had to be constantly aware of new laws to continuously adjust and remain compliant.

He said it was the reason cooperatives established compliance controls and processes, accountability levels and focal points of managerial yardsticks that are accessible to all players.

While doing so, Njuguna urged Sacco players to engage professionals to help across functional units on aspects such as finance, risk management, legal matters, ICT, operations, among others, to make business better.

“You also need to invest in a well-trained and informed team on compliance, as well as a structured Board and staff training guided by identified needs,” he advised.

The SASRA boss further added that delegates and members need to be trained to ensure legitimate expectations are met, and the institution’s culture and ethical boundaries are understood.

He said cooperatives also need to develop a risk management culture across all cadres, from the Board down to the junior staff as risk management functions are collective.

Part of this is identifying, scoring and reporting high priority risks to enable them capture, aggregate and centralize them based on standards, controls and measures.

Accurate and timely communication, he emphasized, was another way that cooperatives could use to remain compliant as this enhanced transparency and accountability to members and other stakeholders.

As cooperative institutions, he urged the leaders to embrace consistent communication with members using credible and authoritative platforms to stem misinformation and disinformation. Such effective communication across ranks helps maintain the cooperative ideals.