Cooperatives should be managed strictly within sector principles


The exponential growth of some Saccos can aptly be attributed to their decision to open their common bonds to attract persons from outside their original catchment areas.

Such moves are welcome as long as they are done in reasonable measures and do not

compromise the quality of services offered to members as Saccos embark on broadening the scope of their membership beyond their bylaws at the point of registration.

Having strong membership is both a con and a pro as it can help in the realization of economies of scale or easily dilute or erode members’ democratic control of Saccos.

One question that has bothered cooperators for long is whether ‘non-traditional members’ enjoy similar rights and privileges as ‘original members’?

Legislation governing qualifications for membership in any cooperative is found in Section 14 of the Cooperatives Societies Act Cap 490 as read together with Rule 7(1) (c) of the Cooperative Societies Rules, 2004.

Mwalimu National Sacco members follow proceedings at a past AGM

The seven cooperative principles as captured under Section 4 of the Act are very explicit on the democratic nature of cooperatives globally where members exercise equal (voting) rights irrespective of the number of shares held by each.

This is what distinguishes cooperatives from companies where leadership is determined by the level of shareholdings.

Put differently, cooperatives are associations of persons driven by certain values such as equity while companies are associations of capital.

This was affirmed during the 31st World Cooperative Congress, whose theme was Deepening Cooperative Identity, held in December 2021 in Seoul in South Korea.

It is therefore illegal for any Sacco to categorize its membership as either Class A or Class B.

It doesn’t matter whether such categorization is in the Sacco’s registered bylaws since bylaws are mostly subservient to both the Act and the Rules made thereunder.

Saccos amending bylaws to anchor or fix minimum thresholds in terms of shares/deposits for one to qualify to contest for vacancies in the committees/ boards is another unacceptable practice gaining momentum.

This is done purely for selfish interests in order to let certain persons perpetuate their stay in office!

What is the correlation between individual shareholding and the quality of leadership given?

How is this a factor yet members’ income aren’t uniform and they do not even join Saccos at the same time?

The missing link in some Saccos remains lack of effective member education that has ultimately reduced members’ role to mere recipients of services as ‘customers’ instead of determining the trajectory of their cooperatives. 

Stakeholders need to ponder over this going forward!

The Sacco sector is yearning for reforms where new members, including the youth, can be given 

space to participate in the leadership of the cooperatives thereby inject in the much-needed freshness to spur the cooperative sector as a whole to greater heights.

Every effort should be made to empower members to shape the destiny of their cooperatives in a free environment for the sector to play a more assertive and proactive role in the national economy as a whole. 

Kenyans are waiting with bated breath that the creation of a fully-fledged Ministry of Cooperatives and SME will restore the waning glory of the Sacco sector.

In conclusion, the various types of cooperatives should be managed strictly within the law guided by the universal cooperative principles which have been tested and found to stand the test of time.

By Fred Sitati

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