Mergers will bring stability in co-ops, says Commissioner

Geoffrey Njang'ombe, Commissioner for cooperatives award delegate from Muranga who recruited 42 members into Hazina Sacco. Photo/File

By Roy Hezron

Smaller co-operatives have been encouraged to come together to enable them enjoy economies of scale.

Commissioner for Co-operatives Geoffrey Njang’ombe told Sacco Review in a recent interview that Sacco mergers is nothing new, saying it is anchored in the law. 

“We encourage small entities to merge in order to expand their horizon and become more profitable and efficient in providing services to members,” Njang’ombe said.

Njang’ombe observed that it would be ideal that in the near future, there will be large Saccos with membership drawn from a certain profession, trade or area of operations.

“Being a larger Sacco, you enjoy the economies of scale. We can just have in a certain profession or area just one large Sacco. It is better to have one Sacco in one county or a Sacco dealing with one commodity,” stated Njang’ombe.

Njang’ombe said the new cooperatives policy will come up with regulations that encourage and enable saccos to merge.  

“The law on mergers is there but the desire to merge should come from members. We will take those who want to come together through the process,” he said.

Njang’ombe said small entities should learn from big Saccos that enjoy large membership and have branches countrywide.

“We always go by good practices. You need to compare what you need to do while you are a small entity and what you can do when you are a larger entity,” said Njang’ombe.

This comes at a time when many saccos are facing liquidity crisis and other problems linked to the Covid-19 pandemic.

Because of the outbreak of the disease, most Saccos did not hold their annual general meetings.

Saccos are also grappling with a higher rate of loan payment defaults as many members lose source of income due to job losses or failed businesses.

The 2018 audited accounts of various saccos reveal that 9,000 saccos out of the total 24,000 are active.

Despite a large number of co-operatives being dormant, Njang’ombe says an average of 1,500 co-operatives are registered every year.  

The Cooperative Societies (Amendment) Bill, 2020 seeks to compel the Ministry of Industry, Trade and Cooperatives to tame Saccos which are causing anxiety in the industry.

The Bill, which is sponsored by nominated Senator Agnes Zani, states that both the national and county governments shall put in place measures to promote the development of the cooperative sector and the effective management of Saccos.

The Bill, which has passed its first reading, stipulates that counties will be required to promote, facilitate and register primary cooperatives societies and promote and facilitate value addition.

“They will also perform such other functions as may be necessary for the fulfillment of the mandate of the county government under this Act and for the betterment of the cooperatives sector,” the Bill says.

The Bill further states that the Cabinet Secretary responsible for to cooperatives should formulate a national policy framework and standards for the development and growth of cooperative societies.

“The Cabinet Secretary will maintain a register of approved audit firms in the cooperatives sector and formulate management standards for cooperative societies,” it adds.

Further, the CS is required to develop and coordinate the implementation of an intergovernmental relations mechanism in the cooperatives sector.

In July last year, President Uhuru Kenyatta directed the ministry to fast-track the formulation of the National Cooperative Policy and operationalise the proposed Sacco Societies Fraud Investigation Unit within the Sacco Societies Regulatory Authority (Sasra).

“The government will increase policy interventions to fix loopholes in the sector,” said the President.

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