By Azael Masese
Former President Uhuru Kenyatta has asked Cooperative societies to invest in Government Bonds to lend the government the much needed cash to undertake long term development projects instead of relying on expensive external debt.
Speaking during the 100th Ushirika Day celebrations at the KICC, the president said Cooperatives can be major players in the development of social infrastructure as well.
“There is no reason why Cooperatives savings cannot be used to build roads,” he said.
The President stated that the interest paid on the foreign debt can instead be retained in the local economy.
With over 32 per cent of the national savings in the Cooperative sector, the President said that the funding can effectively wean the economy on its overreliance on foreign debts.
“This truly is the way to transform Societies through equitable, sustainable and positive growth. We have tried all we can to have the necessary legal framework for Cooperatives to grow,” he said.
Saccos have emerged as key sources of financing for small and middle enterprises in the country.
However, the president feels that they should play a bigger role at a time the country is struggling to raise capital.
In the recent past, Kenya’s external debt has been identified as a burden and questions have been raised on the country’s ability to repay.
Data indicates that Kenya’s external debt stands at about Ksh4.243 trillion as at April 2022 and this is ballooning as the government continues to borrow to meet its rising demand for money.
Due to a sluggish economy, largely brought about by Covid-19, the economy has been struggling to raise the necessary funding to undertake development projects.
As a result, the government has resorted to the costly foreign loans, forcing it to spend larger amounts of income generated to repayment.
The government has over time tried to streamline efforts aimed at making the Cooperative sector, notably Saccos, key sources of funding for the country’s long term development projects.
Another proposal aimed at making Saccos major players in the financial sector was to allow them trade at the Nairobi Securities Exchange (NSE). Doing so enables the entities to raise capital through trade of shares such as the Initial Public Offers (IPOs).