By Munene Maina
Since 1908 when Kenya’s first co-operative society was formed, the sector has continued to grow becoming one of the most vibrant in the world.
Currently, ranked first in Africa and seventh internationally, the Co-operative movement has marked a major milestone.
In particular Savings and Credit Cooperatives Societies (Saccos), have been billed as the fastest growing subsector in the world by among others World Council of Credit Unions (WOCCU).
Co-operative enterprises have generated employment opportunities of over 500,000 people, and indirectly, for more than 3 million according to Ministry of Trade and Industrialisation statistics.
The Kenyan Deposit Taking Saccos call the shots as they have remained robust with regard to all the parameters on growth performance.
In a Saccos Societies Regulatory Authority (SASRA) report last year the total asset base of the DT-SACCOs grew in 2016 to reach Sh393.49 billion, as compared to Sh342.84 billion recorded in 2015. This represented a 14.8 per cent year to year growth rate, and was funded principally by members’ deposits which also grew by a similar percentage to reach Sh272.57 billion in 2016 from Sh237.44 billion recorded in the previous year.
The loans and advances constituted a huge portion of the total assets, accounting for 73.42 per cent of the total assets and which stood at Sh 288.92 billion in 2016 up from Sh251.08 in 2015. This represented a 15.1 per cent year to year growth rate.
The gross loans on the other hand stood at Sh297.6 billion in 2016, up from Sh 258.18 billion in 2015, representing a 15.3 per cent year to year growth rate.
The capital reserves by the DT-SACCO segment also grew to Sh61.26 billion from Sh50.83 billion registered in the previous year.
Such growth explains why Saccos are becoming increasingly popular in Kenya, providing an alternative to banks for low and middle-income earners who need financing.
With the interest rate capping introduced by government most banks are now avoiding advancing loans to small business enterprises owners and other low income earners who they consider risky.
Saccos remain the only option for this group as the scramble for borrowing between the government and ordinary Kenyans in banks intensifies.
Saccos model is designed to enable self-sustaining without government subsidies and they exist not for profit making, but for their service to members.
They provide loans at relatively low interest rates and this has attracted more members contributing to their growth across Kenya.
The terms and conditions for getting a loan through a Sacco are not hard; members guarantee each other, while a bank will require a title deed among other collateral and requirements which one may not have.
There is not so much pressure when making payments to the Sacco, but with a bank, when the time for repayment comes they want their money really fast as many co-operators attest through experience.
Besides members are the Sacco owners and net profits are shared between all members in the form of dividends, based on a member’s shareholding percentage. Members through annual general meetings are the supreme decision-making organ.
Research by the International Labour Organization indicates about seven percent of the African population is affiliated to some type of financing co-operative.
In Kenya, those co-operatives are giving a big boost to the country’s economy, through people who in all likelihood, could not get financing any other way.
Apart from the enactment of the Co-operative Societies Act No. 12 of 1997 that removed completely the Government’s role in the affairs of co-operative societies resulting in a near collapse of the entire co-operative movement in the country, the sector has remained firm and meteorically rising to be Africa’s top.
The Government has come up with a well laid governing and regulatory policies and bodies. Corrupt individuals in co-operatives have been put on spot.
These days it’s hard for members in registered and licensed cooperative societies to lose money as government continues to tighten the nut on management.
SaccoS have proven a great vehicle in poverty eradication and offer the best returns for members’ investments.