By Jackson Okoth
The State Department for Co-operatives has received increased funding in the financial year 2019/2020, to enable it finalize review of the National Cooperative Policy, Cooperative Societies Act and provide support for the coffee and dairy industry.
The Department is expected to build capacity of County Governments to ensure it handles the Co-operatives docket, which has since been devolved.
In the 2019/20 National Budget estimates, the Co-operatives department has been allocated Sh732, 900,000 to cover its Recurrent Expenditure for the financial year ending 30th June, 2020. This is in addition to Sh 3,840,500,000 required by the Co-operatives Department for Development expenditure during this fiscal year.
The Department will spend Sh 407.5 million in the acquisition of equipment and machinery for New KCC, and Sh 5 million for development of SASRA Risk-based Supervision System.
National Treasury has already floated and awarded the tender for Consultancy to Review ICT requirements for a Risk- Based Supervision System at SASRA.
It was also allocated Sh 160 million on a Cooperative Management Information System, Sh 230 million on Coffee Industry Revitalization, Sh 300 million for Cherry Coffee Revolving Fund and Sh 38 million as Support to Improvement of Added Value to Coffee.
Treasury cut funding to several previous capital projects including setting up a Cooperative Share Trading Platform at the NSE, Dairy Processing of Powdered Milk and Modernization of Cotton Ginneries and Handloom Weaving.
This is after the Parliamentary Budget Office in its Budget Policy Paper (BPS), dated February 2019, indicated that while the State intended to support modernization 6 cotton cooperative ginneries in 2019/20, it was not clear if there are any investments in harvesting methods, defoliation techniques, quality of equipment used in ginneries. It is even not clear how many cotton ginneries exist with only twelve cooperative ginneries targeted for modernization over the medium term.
On the Recurrent Expenditure side, National Treasury has allocated Sh 31.3 million to the Ethics Commission for Co-operative Societies, Sh 98.1 million for administrative expenses of the department, Sh 35.8 million for Co-operative Financing and Marketing and Sh 421 million to the Office of Commissioner for Co-operative Development. The State Department will also spend Sh 46.6 million on Co-operative Finance Management Services and Sh 10.3 million on the Central Planning Unit.
The Department targets to audit 4,600 registered Saccos in 2019/20, register 1,700 co-operative societies and also undertake audit of coffee co-operative societies in 28 counties and operationalize access to the Cherry Coffee Revolving Fund. It also aims to increase coffee production by 25 per cent in 31 coffee growing counties relative to financial year 2018/19.
Statistics show that the State Department for Co-operatives was allocated Sh1.34 billion in the 2017/18 financial year. This comprised of Sh 789.5 million and Sh 555 million for current and capital expenditures respectively.
During the 2015/16 to 2017/18 financial years, the State Department disbursed Sh 700 million for settlement of debts owed to coffee cooperatives, Sh 1.7 billion coffee STABEX Fund owed to Cooperative Bank and Sh 442 million owed to dairy farmers by thedefunct Kenya Co-operative Creameries (KCC).
National Treasury also allocated Sh 323.5 million owed by STEGRO, Bunyala and Kipkelion cooperatives, disbursed Sh 957.5 million to facilitate modernizationof New Kenya Co-operative Creameries (New KCC), Sh155 million to SASRA for the development and implementation of the Risk Based Supervision system and also embarked on digitization of cooperative services at a cost of Sh 30 million.
The State Department also reviewed the Co-operative National Development Policy, facilitated increase of cooperative savings from Sh600 million during the 2015/16 financial year to Sh 690 million as at June, 2017. The department also recovered outstanding remittances amounting to Sh 911 million.
During this financial year and in the medium term, the State Department will finalize modernization of the New KCC and increase its Dairy Processing capacity from 600,000 to 1,000,000 litres per day.
While it had plans to digitize all cooperative services and operationalize Cooperative Share Trading segment at the NSE, these capital expenditures programmes have been withdrawn. The State Department has also shelved plans to modernize several Cooperative Cotton Ginneries.