Why Kenya’s Co-operative Movement is on upward trajectory

BySacco Review

Aug 21, 2020
Mr Geoffrey Njang’ombe Commissioner for Co-operatives during a past event.
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By Geoffrey Njang’ombe

The Co-operative Movement in Kenya has mobilized savings to the tune of Sh776 billion and commands an asset base of Sh1 Trillion. It has granted members loans to the tune of Sh742 billion. This is big achievements for our country and we will continue providing a conducive environment for the growth of the co-operative through enacting enabling legislations.

 We are aware of the challenges being experienced by some co-operatives in the country which include poor governance and misappropriation of members’ savings, investment in non-core activities by some Saccos, high levels of external borrowings, high non-performing loans, obsolete technology and cybercrime, non – remittance amongst others.  I wish to let you know that the State Department for Cooperatives (SDC) has finalized National Co-operative Development Policy that aims at addressing and curbing the deficiencies in the co-operative movement.

In order to enhance safety of members deposits, the government formulated regulations to bring on board saccos with deposits of over 100 million shillings to be regulated by the Sacco Societies Regulatory Authority (SASRA) in addition to the 178 deposit taking saccos.

Good corporate governance is a core element for the growth and development of any institution.  This makes it imperative for all co-operative societies to institutionalize ethics and good governance principles in their operations. This will include effective monitoring mechanisms; adherence to the code of ethics; promotion of integrity in societies’ leadership; and entrenching team work and professionalism in Co-operative Management.

This practice will promote savings culture; facilitate fair credit administration, enhance competitiveness, elimination of loan delinquency and protection of members’ deposits and assets.

The Department for co-operatives will continue to create a conducive environment for the co-operative sector through appropriate policy, legal framework, standards and strategies that will help the movement to participate effectively in the delivery of the National Government’s Big Four Agenda.

In this regard, the co-operatives have been identified as key partners for delivering the Big 4 agenda of the National Government. The Ministry will continue to strengthen farmers based co-operatives to carry out value addition with a view to increase their competitiveness and returns to members. Co-operatives are encouraged to provide auxiliary services like warehousing, transport, distribution, and market linkages.

Housing co-operatives are expected to provide 25% of the 500,000 houses required across the country under the Low Cost Affordable Homes (LCAH) program.

My Department has engaged other implementing government agencies and private developers including financial institutions and manufacturers of building materials to enable co-operative societies to come up with appropriate delivery framework and action plan. This creates an important window for Saccos to develop relevant mortgage products to finance members interested in purchasing or constructing their own houses under the LCAH programme.

In order to facilitate faster growth in Savings Mobilization, the Ministry has been promoting Saccos for Kenyans in the Diaspora. This is aimed at tapping the huge potential from this group and to channel the said savings for investment and Socio-economic development in a structured manner. So far we have registered 19 such societies. In order to make these co-operatives more effective, the government has converted these co-operatives from saccos to investment co-operatives to enable Kenyans in the diaspora to invest in Kenya through these co-operatives.

The State Department for Co-operatives is now under the Ministry of Agriculture, Livestock, Fisheries and Co-operatives.

As a department, we have made strides in digitizing co-operative data in order to improve efficiency and effectiveness and by doing so create an enabling environment and platform upon which the co-operative movement can blossom.

We have been able to implement the Co-operative Management and Information System (CMIS) and we are nearing completion of the pilot program currently running in Nairobi County. The system will enable the State Department for Co-operatives to offer online services that include but are not limited to registration of co-operative societies, registration of amendments, carrying out of official searches and registration of charges and debentures among others services.

Currently, training on CMIS system is ongoing at the county levels to ensure better service delivery right from the county level.

Co-operatives today are one of the most important engines in the fight against the vice of corruption. The State Department for Co-operatives and the Ethics and Anti-Corruption Commission (EACC) on 25th March, 2019 came up with a Memorandum of Understanding purposed towards developing and expanding the scope of cooperation between the two agencies in combating and prevention of corruption, economic crime and unethical conduct in the co-operative sector.

The two agencies have undertaken to cooperate closely and consult each other on a regular basis on the following law enforcement areas: investigations, lifestyle audits, integrity testing, prosecution of cases, review and strengthening of the legal framework, exchange of Information, disclosure and corruption prevention.

The State Department for co-operatives will continue to provide an enabling environment to co-operative to fully participate in realizing the Government Big four agenda.

Mr Njang’ombe is the Co-operatives Commissioner

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