Tap into SME market, stop over-reliance on employees, Co-op boss challenges Saccos


By George Otieno

Cooperative Commissioner David Obonyo has called for a paradigm shift on how Saccos conduct their businesses, warning that relying on the check off system is no longer tenable.

Most Saccos, Obonyo stated, were employee based Saccos that depended on a check off at the end of the month to give loans that did not focus on a bigger percentage of Kenyans in informal employment.

“The population of Kenyans in formal employment is less than five percent and depending on it translates to serving only a small percentage of the Kenyan population,” he said.

Obonyo identified the youth made up of more than thirty five percent of Kenyan earners hence the need to bring them on board.

He was addressing delegates during the leaders’ forum organised by the Kenya Union of Savings and Credit Cooperatives (KUSCCO) meeting in Mombasa recently.

Majority of Saccos have opened the common, allowing the business community to join and enjoy the benefits that come along with the membership.

He said that the rebranding and opening their common bond to accommodate a bigger community wasn’t enough and they needed to target where the population was.

“What are we doing to improve the lives and the income of the members that join our Saccos?” he posed.

He called on the need for Saccos to come up with products that are SME oriented and facilitate the growth of the businesses.

He added that Saccos that had not yet fully embraced the use of technology in their businesses to establish mechanisms that would help them transit into modern ways of running businesses or face extinction.

He however discouraged the cooperative leaders from using technology as an excuse to embezzle or misuse members’ funds.

Since the ‘Hustler Fund’ is heavily dependent on technology, Obonyo encouraged Saccos to adequately prepare their systems for the funds.

If well managed through elaborate, efficient and strong technological systems, the fund could enrich the Sacco business model.

“We must strive to positively impact the lives of our members who aspire to have homes of their own, making it our responsibility to come up with mortgage products that will enable members to achieve these dreams,” he advised.

Cooperatives, he said, were in the business of changing the lives of the people and necessarily not making money.

“We need to ensure members live in decent homes, are able to meet the cost of education of their children and address their daily needs in life were the core business of Saccos,” he said.

He however discouraged Sacco leaders from opening several offices throughout the country and giving out numerous loans that did not perform, ending up hurting the Saccos.

Though it is appropriate to continuously keep looking for new available opportunities, Obonyo however reminded them to first carry out due diligence before allowing new members in.

As a devolved function, Obonyo challenged the leaders to strove and take the sector to the next level.

“At the county level, the County Government has deployed officers to support the cooperative functions, making the cooperative environment so conducive for business and growth,” he said.

Consequently, cooperative leaders and industry players should stop comparing themselves with Africa but instead with Europe and the Western economies so they can serve the people in a much better way.

He identified the creation of the standalone Ministry of Cooperative and SME as a critical investment aimed at creating an enabling environment, giving policy direction, legal framework and investment that will enable cooperatives realize their aspirations.

Obonyo said skilled students from TVETS and colleges can be brought together to form a worker cooperative and make it easy for them to acquire jobs from the government and other institutions and additionally be able to save into Saccos.

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