By Roy Hezron
Professionals in the Cooperative sector have called upon the government to regulate dividend payment, especially in the Savings and Credit Co-operatives (Sacco) sub-sector, to separate success from dividends.
Through the Kenya Society of Professional Co-operators (KSPC), the sector elites felt that the success of cooperatives should not be measured by the rate of dividends or interest on savings.
During a recent Cooperative professional growth and policy analysis forum, which was organised by KSPC to among other issues discuss Cooperative policy gaps and chart a policy advisory, the participants noted that cooperatives, especially Saccos, sharply compete on the basis of dividend payment at the expense of members’ socio-economic welfare.
According to the body’s acting Chief Executive Officer (CEO) Symon Mburia, the Cooperative model advocates for maximum member service at near zero cost, meaning that the measure of success would be the best member service at the lowest possible cost.
“For companies, multinationals and small businesses, the participants were unanimous that maximum profits and high dividends to the shareholders and business owners were the driving force behind their establishment. Is it the same for cooperative organisations? Are high dividends, huge profits, high rise office buildings, huge membership, high asset levels, high loan portfolio, large number of branches a measure of a successful Cooperative?” wondered Mburia.
He observed that the objective of forming a Cooperative is to promote the socioeconomic welfare of members, meaning a Cooperative that has not met this objective is a failure.
KSPC members also fronted that Society by-laws, the cooperative law and regulations, and interpretation of accounting documents should be incorporated in member education days since a knowledgeable member depicts a successful Cooperative society.
They observed that since governance is central to the success of any business organisation, the level of involvement or engagement of members in the management of their Cooperative determines its success, and that improved member engagement leads to better understanding of Society programmes and services by members in an environment devoid of conflict.
According to KSPC, education and training, which is one of the Cooperative principles, is a necessity for all organs. Therefore, product marketing should not be presumed to be education for stakeholders.
“With many Cooperatives opening their common bonds and widening their area of operations, it has become necessary to adopt a delegate system of representation. However, this system introduces an extra layer in the governance structure of a Cooperative,” added Mburia.
KSPC noted that member participation is the basis of vibrant business, since the member is also the customer. This principle becomes the foundation of business in a Co-operative society.
“Poor member participation means poor business for the Cooperative organisation. A Society where a member consistently saves, borrows and pays or delivers his produce is a progressive Cooperative. An increasing high average savings, large per capita loans that are affordably priced, and low default rates denote a successful Society,” said Mburia.
The participants also observed that under the principal no. 7, a Cooperative society should benefit the area under which it operates. They urged the implementation of eco-social audit and value for money audit, saying the impact of a Cooperative on members should be observable and differentiable.
KSPC urged its members to observe the seven Cooperative principles and values, adding that the model is comparably more superior and more resilient.
The 7 principles are; open and voluntary membership, democratic member control, members’ economic participation, autonomy and independence, education, training, and Information, cooperation among Cooperatives, and concern for community.
KSPC was registered in 2017 by the Registrar of Societies as a non-profit making member-based organization, an industry-led initiative to promote professionalism, Cooperative philosophy and practice in the Cooperative movement.
Some of its objectives include promoting Cooperative management as a profession, registering persons who meet the required professional and ethical standards and issuing certificates, as well as monitoring standards of professional competence and practice amongst members.
