REACTIVE LEADERSHIP IN COUNTRYWIDE SACCOs A NAGGING BUG!!

I will refer to this article Will Saccos Die in the Devolved Governments Era I wrote here sometimes back and how the leadership of countrywide Saccos have failed their membership despite the impending difficulties. I had said that remittance could pose a challenge, and it sure did and is still an ongoing challenge. We all read these story Ukulima Sacco freezes staff loans on Daily Nation and you wonder how comes the leadership of Ukulima and other countrywide Saccos did not anticipate this problem and come up with measures to safeguard their members funds beforehand. 

The leadership of co-operatives in Kenya are sometimes laden with incompetence beyond your imagination. Yes, you can see buildings with names of co-operatives written on them and see suited men and women looking important heading to board meetings. But the truth is, most don’t measure to the task. They are ineligible even to attend a baraza in a village.

Devolution was coming. Staffs of certain sectors were to be devolved. We all knew this. News were full of these information. But the leadership just sat there and opted to be reactive. The sane thing to do was to visit all 47 counties and establish a rapport with the salary sections. Provide them with Sacco details and make sure to get contacts of all the 47 counties so that whenever the monies are not deducted as provided for in the deduction list or remitted within the stipulated time as per Section 35 of the Co-operative Societies Act, then you know who to contact and not just sit down and telling your members that you are waiting!!! Get realistic what are you waiting for? Your Saccos to collapse due to impending financial challenges?

GHRISIt is a high time the leadership of the co-operative movement embraced technology. The government through GHRIS (Government Human Resource Information System) has provided (is it functional? Doubt it!!) an online platform where third parties e.g. Banks, MFI, Saccos, etc can login and access their members details. It would have been a relief if they could have used the system to provide deduction list or access individual members and have deductions posted for that particular month. This would have made it easier for county governments who in return would have paid the net salaries to its staffs and paid the various societies their members’ contributions within stipulated time. Things would have been easier and efficient instead of sending deduction lists to the 47 counties……this is where I start thinking if there is anyone out there who matters and has read what I have put here hehehe :-) Anyway, that is they way of the future. Cheers.

 

Co-operatives are Endangered

I think the lobby groups that are required to champion for the rights of co-operatives in the country are sleeping and have been doing so for a very long time. Now with the devolution, county governments and the national government are making laws without proper consultation with the sector.

danger1We all remember the Finance Act that introduced 10% excise duty to Saccos with FOSAs. The Finance Act 2013 talked of “Saccos registered under Sacco Act 2008″ which contradicts the Sacco Act 2008. The Sacco Act 2008 provides for licensing, regulation and promotion of certain Sacco societies to establish Sacco Societies Regulatory Authority and for connected purpose and not registration. Registration is the function of Co-operative Societies Act Cap 490. Now county governments are coming up with licenses or permit fees to be charged co-operatives in their respective bills/acts.

Here is an excerpt of Kiambu Government Finance Bill that touches on Co-operative Societies:

The following permit/licence fees shall be charged on the business listed in first column at the rate specified in either in the second, third or fourth column depending on categories of the urban zone

BUSINESS Major Urban Zone Medium Urban Zone Small Urban Zone
Large financial services including Saccos and cooperative societies with over 25 employees & / or premises over 300 sq.m 45000 25000 15000
Medium financial services including Saccos and co-operative societies with 6 – 24 employees & / or premises of 100 – 300 sq.m 25000 15000 7000
Small financial services including Saccos and cooperative societies with up to 5 employees & / or premises up to 100 sq.m 15000 7000 5000

Well the Kiambu Finance Bill seems to have not realized that Saccos are co-operatives by saying “financial services including Saccos and co-operative societies.” Sacco stands for “Savings and Credit Co-operative Society.”

Seems also the Bill targets the permit/license fees based on number of employees and or premises where they do business. I bet many Saccos do not have employees nor offices although they are required to. Many co-operatives officials usually store their documents at home or within the companies/institutions where they work so how will the Kiambu Government implement this?

Co-operatives are not profit oriented and some have small membership and cannot afford to employ or rent offices/places of business. The advantage of being under the national government is that this was understandable even the county councils and municipal councils were instructed not to charge co-operatives license fees or permit fees and this lead to growth of the sector hence being number one in the continent.

The Bill should have specified what does “small, medium or large financial services” specifically means. Not only based it on premises size and numbers of employees. Is the fees (license/permit) charged per business or premises of every branch and the main branch? Many co-operatives have branches in Kiambu County and therefore this is going to be costly bearing in mind the license fees charged by Sacco Society Regulatory Authority (SASRA) on the main branch and sub-branches. Also is the number of employees per branch on a particular premise or is it the Sacco or that particular business total number of employees? The Bill also should have specified between the premises size and number of employees what takes precedence. A business could be occupying a bigger space but has two employees and a business with a small space with more than 10 employees for example.

For co-operatives license/permit fees should have been based on membership or share capital irrespective of whether they are in the major, medium or small urban zones. The reason is, many Saccos are in major urban zones and smaller co-operatives in the major urban zones will suffer if this bill becomes an act and is implemented as it is.

NOTES

Major urban zones includes Thika Sub-County, Kiambu Sub-County, Ruiru Sub-County, Githunguri Sub-County and Limuru Sub-County.
Medium urban zones includes Juja Sub-County, Kikuyu-Sub County, Lari Sub-County and Kabete Sub-County.
Small urban zones includes Gatundu North Sub-County, Gatundu South Sub-County and Kiambaa Sub-County.

 

WILL SACCOs DIE IN THE DEVOLVED GOVERNMENTS ERA?

We are still in a situation where the National Government has halted a crisis from occurring by stating that they will continue with the function of paying civil servants salaries. This is until such a time when County Governments have put up the necessary infrastructure and systems that will handle salary payments. The National Government has just saved Saccos!!!!

Backwards?

Backwards?

Saccos under the various Ministries otherwise referred to as countrywide Saccos, functioned effectively under the National Government. These Saccos they all received employees deductions from the main line ministries not from numerous fragmented sources read County Governments, as it is going to be. These Ministries remitted the same to Saccos within seven days as required by the Co-operative Societies Act Cap 490 Section 35. This particular section give us clue when sums deducted should be remitted and the consequences of not doing so within the stipulated time. In the 90’s, many Saccos under the Local Authorities i.e. the county councils and municipal councils, collapsed or were rendered almost incapable of providing services to their members. The various councils and municipalities, used to deduct from salaries of their employees and never remitted to their respective Saccos. Instead these municipalities and county councils used the monies (which are salaries) to carry out other activities of those municipalities and county councils!! Some of the membership of these Saccos have not been refunded their Sacco contributions to date!!

Tick Tock Tick Tock!!

Will it work with Saccos?

Will it work with Saccos?

All Saccos that are under Ministries of Health, Co-operatives Development and Marketing, Agriculture, Environment etc or any devolved “Ministry” may be affected. The main line Ministries all made sure that Saccos received members contributions together with loan repayments and the interests due within stipulated period. Will County Governments deduct and remit the same within the period required? Will instances like one viewed in some Counties e.g. Kiambu (missing a deadline!!) affect and ultimately kill these Saccos? What would be the situation like where County Governments will be required to deduct from employees salaries and remit monies to hundreds of Saccos within stipulated time given some counties are far removed from some services e.g. certain banks? Should the membership of these Saccos start withdrawing membership and seek refunds before things go haywire?

Tick Tock Tick Tock!!

Let us paint a picture here. In a County Government, their would be members of various countrywide Saccos (Wakulima Sacco, Shirika Sacco, Afya Sacco, Jamii Sacco, etc.). These County Governments would have of course budgeted for recurrent expenditure though probably despite the politics and greed like we just witnessed. The salaries would be paid through the County Governments to civil servants who work in the devolved systems. Also deductions will have to be effected by the County Governments from these workers to be remitted to their respective Saccos within seven days. There would be hundreds of Saccos waiting for their members deductions. Cheques will be written and deposited to these Saccos accounts or send all the way from ManderaLodwar, West Pokot, etc. The magnitude of these activities are overwhelming to say the least. Some County Governments probably will view this activity (deducting and remitting) as not a “priority”. It will be a disaster too if salaries will delay, if County priorities will be as we just witnessed, if certain activities in a county have been underfunded and employees deductions seem easy way out, if corruption will intensify,etc.

Tick Tock Tick Tock!!

More information is needed!!

More information is needed!!

Then again are these Saccos placed to collect their members deductions from the 47 Counties? Do these Saccos know where their members are and how many are to be affected? Do these Saccos have a way of monitoring remitted deductions and notifying its membership of any failure by County Governments to do so? Will the Ministry or department at County Government responsible for co-operative societies have the muscles to effectively enforce Section 35 or shoot itself? Under which County will be these countrywide Saccos be? Nairobi? Will Nairobi County (if it is) have the manpower and even the mandate to enforce Section 35 to a County or Counties that failed to remit sums deducted?

We all know most people that have been employed by the County Governments are political or were employed for political reasons or tribal, nepotism, etc reasons. What will prevent them from doing shoddy jobs? What will motivate them to ensure Saccos don’t die? What will prevent them from punishing members of a certain Ministry within the County by holding their deductions and even salaries?

Tick Tock Tick Tock!!

Transcend your reality.

Transcend your reality.

I say that co-operatives should have never been devolved. Devolve health, agriculture etc. but not co-operatives. Co-operatives have political bearing as they have elections and sometimes these elections are highly contested and attract politicians who influence it their way. What motivation will a co-operative officer have to stop such interference? What motivation will a co-operative officer have to enforce Co-operative Societies Act despite it being unpopular and being against County Government officials?

Tick Tock Tick Tock!!

 

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