Leadership in Co-operatives

Leadership plays an important role in the management of the co-operative societies. It is the quality of leadership that usually determines the failures and success of a business organization. It has been observed that most of the failures of co-operative societies have because of ineffective leadership.

Meaning of leadership.

Leadership has different meaning to different people. It is the ability to influence people to strive willingly for mutual objectives. It is the ability of a person to make people work in harmony and confidence towards the achievement of the individual, organization and community goals. Some people believe that leaders are born. Others believe that leaders are made through learning experience. Both beliefs are true to some extent. A combination of the two beliefs makes even better leaders. In co-operative societies the committee is the governing authority and is subject to any directions from a general meeting and by-laws of the society.

leaderLeadership styles

There are four different leadership practices which may be classified according to the philosophy of the leaders towards their followers.

  1. Autocratic leader- This type of leader centralizes authority and decision-making himself or herself. There is no participation by the subordinates. They have to do what they are told. The leader takes full authority and assumes full responsibility. This type of leader is usually negative because followers are uninformed, insecure and afraid of the leaders’ authority. Unlike the dictatorial leadership he motivates the subordinates by providing their need satisfaction if they do what they are told to do (I will help you members if you obey me.)
  2. Democratic leader-This type of leader decentralizes authority. He invites the subordinates to participate in tackling problems. This happens in such a way that the group and the leader act as a social unit. The leader hold consultations with the subordinates regarding all problems and adopts and suggestions made by them if they are of use. It is for this reason that the members of the group have regard for the leader (Do you members agree with my views?)
  3. Free reign leader-This type of leader depend largely upon the group to establish its own goals and work out its own problems. The group members provide their own motivation. The leader is passive and the initiative is with the subordinates. This type of leader can produce good and quick results if the subordinates are highly educated and brilliant people. They should also have sincere desire to go ahead and perform their roles with responsibility (What do members think we should do?)
  4. Dictatorial leader-In this type of leadership followers do their work out of fear. They do what they are told. Such a leader threatens the subordinates with penalties and punishment. As a temporary measure such leadership get results but in the long run it fails. This is because it leads to the dissatisfaction of the followers (Your members must do what I say!)

Qualities of a good leader

The characteristics of a good leader in co-operatives cannot be sharply defined but can only be generalized as:

  1. Self confidence – A good leader must have self-confidence based on self-knowledge. This enables the leader to win the confidence of the members.
  2. Ability to communicate- A leader should have the ability to communicate instructions and views to others. One may have good ideas unless he or she can communicate effectively then the members cannot gain from such a leader.
  3. Integrity- Leadership functions best when it is founded on integrity and sincerity. It is more than just being honest. It requires one to have moral soundness and uprightness.
  4. Ability to inspire-A leader should have the ability to exert influence upon his/her followers. Whatever the issue should be for the good of the members.
  5. Intelligence- A good leader should have high intelligence than his or her followers. This should however not be too much higher than that of the members. It is said that the members prefer to be led by the people they can understand.
  6. Courage-A leader must also have courage to do things which he or she believes are right. This means that the leaders should be in a position of making decisions and standing by them.
  7. Flexibility of mind-With a lot of changes taking place in the country socially and economically, it s desirable that a leader should have flexibility of mind. The leader should be in position of changing with circumstances.
  8. Good Judgement-A good leader should have ability to make good judgement and have wisdom to look into the future. This should be for the good of the members and the co-operative society as a whole.
  9. Age-Age to some extent plays an important factor. It is presumed that those that have lived longer have earned experience. It is also quite possible that a young person may assume leadership because of his or her talent/trade.
  10. Time for public service-The most important qualification of a leader is that he or she must have spare time for the co-operative society. A person, who is too busy and does not have enough time to get the problems of the members solved, is not recognized as a good leader.

Matatu Saccos Fiasco..how its fueled and propagated.

The new National Transport and Safety Authority Regulations had an axe to grind with matatu owners just recently. It ineptly, just like its many regulations and directives, said that matatu owners wishing to participate in matatu business, had to hand over their vehicles to Saccos/Companies. Handing over of the matatus to the Saccos under a contract or franchise agreements by the owners to be managed by the Sacco as seen in the draft of the regulations, was a death trap but thanks God it was removed or is it deleted? This industry is full of cartels and corruption plus immorality for your property to land on anyone’s  hands or is it pockets, let alone the Sacco. Why am I negative here and I am all about co-operatives? Probably the good question is, how is all these fiasco in matatu industry fueled and propagated?

1. Most matatu Saccos have two faces. One is the Sacco and another is the Welfare/Self-Help Group. Sacco collects members’ contributions i.e. deposits. Welfare collects what they call ”service fees”. The members’ deposits belongs to the members and the same is refunded when one leaves the Sacco (for well run Saccos otherwise forget it) and is also used to secure loans from the society. The ‘service fees’ is used to pay route inspectors and those guys who make noise on the stage whatever we refer them to. Sometimes this money also pays for sitting allowance of the management committees/board of directors and to bribe various councils to allocate them  parking space “shimo” or where they pick passengers. This money is also used to bribe the police, that’s why some Saccos never stop at a police roadblock even when overloaded or when “battered,” battered here meaning a wreck. Of course you know those matatus that are not roadworthy and you have that feeling that it could just break into pieces while at 120 km/h!! :-) . Sometimes back I had sat between the driver and and the other passenger and there was so much heat coming from the engine that I literally felt my ‘fundamentols’ getting fried bila mafuta!!

2. Most Matatu Saccos did not wake up and say “lets form a Sacco”. They were FORCED to. We all remember the directive of forming a company or a Sacco if you wanted to invest in this industry. This is totally, my opinion, against the Constitution Chapter Four-Bill of Rights that states: 36. (1) Every person has the right to freedom of association, which includes the right to form, join or participate in the activities of an association of any kind. (2) A person shall not be compelled to join an association of any kind.

The constitution also states: 40. (1) Subject to Article 65, every person has the right, either individually or in association with others, to acquire and own property––(a) of any description; and (b) in any part of Kenya. (2) Parliament shall not enact a law that permits the State or any person— (a) to arbitrarily deprive a person of property of any description or of any interest in, or right over, any property of any description; or (b) to limit, or in any way restrict the enjoyment of any right under this Article on the basis of any of the grounds specified or contemplated in Article 27 (4).

But here we are and we cannot enjoy our properties as individuals but do enjoy though grudgingly through Saccos and companies. Co-operatives work well where its members have voluntarily and openly joined them and where members (read matatu owners) saw the need to form the Saccos. You cannot tell people that “you have to be in a group so that this and this can happen…..” where are the group dynamics, the trust, the willingness to participate fully in cash and ideas, the commitment, the faith, etc. I find the directive lazy and assuming too many things. It is like they sat down and said…okay Saccos have really worked well for so and so, so we can replicate the same and we might even end up not having work to do but sit and reap!!

3. And let us admit, Saccos after the directive were haphazardly registered. I remember meeting one where the chairman did not even own a matatu and some Saccos had the membership of below ten contrary to the Co-operative Societies Act Cap 490 Section 5(a). Also the matatu cartels registered Saccos and most of those fronting for registration did not own matatus or were the “route” owners!! Yes, people/cartels own routes and you have to part with a lot of money if you wanted your vehicle/s to operate on the routes.

4. Regulation 5 of the National Transport and Safety Authority (Operations of Public Service Vehicles) Regulations states: 5(1) A person desirous of operating public service vehicles shall be a member of a body corporate which shall (a) be licensed to operate if the body corporate owns a minimum of thirty serviceable vehicles registered as public service vehicles or in respect to which an application for a license has been or is to be lodged with the Authority.

This regulation forgot what Section 5(a) of the Co-operative Societies Act states…For a society to be registered under this Act, it must—(a) in the case of a primary society, consist of at least ten persons all of whom shall be qualified for membership of the co-operative society under section 14. This means ten people cannot form a matatu Sacco even if they have 29 matatus!! These Regulations were made by Cabinet Secretary for Transport and Infrastructure in consultation with the Authority (i.e. National Transport and Safety Authority). The Co-operative Societies Act  Cap 490 is an act of Parliament!! Your verdict is as good as mine!!! :-) Pecking order HAS ALWAYS BEEN-The Constitution of Kenya-Acts of Parliament/s-Regulations/Rules not the other way round. Regulations DO NOT TAKE PRECEDENCE OVER an Act of Parliament.

This tells you that National Transport and Safety Authority is at fault of not engaging all stakeholders and this only propagates the mess in this sector.

5. Police. A backache in this industry. Loose cannon. Reeks incompetence. No more words here.

6. Kenyans. Passengers. We are just there…….then accidents happens and we make noise and pray then we revert to just being there. I have never understood why we still enter a full matatu and still pay the same fare everybody else sitting comfortably is paying. I have never understood why saying NO is so difficult when an injustice is being propagated by driver and his conductor. I tried once making noise when the conductor demanded fare from a six year old who had been accompanied by a 13-year-old or so sister arguing that the kid had sat down. Mind you, the back seat where they were had three people plus the kid!!! I was almost dropped off and the painful thing is everybody kept mum!! I have never understood why when the conductor says “tusaidiane hapo” and passengers make “space” where there is none for another 120 kg plus human being!! I have never understood why we never say to the driver, stop overtaking on the wrong side or over-speeding or picking a call when he/she is driving.

Matatu Sacco management know this and fully exploit it. They know we cannot do anything. They know that we Kenyans feel that we are being given favour by them!! And they know we are always in a hurry and that we can sit anywhere there is space for a small-sized rat.

Police also know that we Kenyans cannot do anything. One, they have allowed not so roadworthy vehicles to operate as matatus therefore most likely they don’t have seat-belts and therefore we feel relieved when the police just checks us out and lets the matatu go when he/she gets the Ksh. 50. Two, the police own the vehicles too. Three, they implement the law, they starve…they have gotten so used to bribes that is part of their salaries and the good thing is that this is not taxed!! Four, we all like when police stops a vehicle and smiles or makes a joke, we are that easy :-)

Good day.

Managing Change in Co-operatives

The economic environment is dynamic and keeps on changing globally. It is therefore imperative for co-operative societies to keep abreast of the global changes or risk being irrelevant. Change is sweeping in nature and non response to change leads to being obsolete.

managing change is saccosIn order for co-operatives to manage change as it occurs the following factors need to be put in place:-

1. Awareness

It is of utmost importance for members of the co-operative to be aware of the changes affecting the economy as a whole i.e. potential socio-economical, technological including information technology and their effect on modern living. To do this the co-operative are required to set aside adequate funds for training and education not only for committee members but also for the general membership. It is the general membership that provides the leadership of the co-operatives and also an enlightened membership is an asset to the society.

2. Amendment of the co-operative society By-Laws

The current liberalized economy requires that co-operatives can rise up to the challenges and pressures of everyday living. The Co-operative Societies Act Cap 490 has made provisions for the amendment of the By-Laws of co-operative societies so that they can incorporate the changes that are occurring to suit current members needs.

3. Professionalism in the management of the co-operative societies

Co-operative societies are essentially business entities with various different products and services, but they are not alone in that line of business. There are other players in their diversified fields competing for the same business. It thus important that co-operatives are managed with utmost professionalism in this age of liberalization in order for them to survive. Other competitors are professional in approach and functioning. They employ the best professionals in their fields found in the open market, they adopt the most economical, cost effective methods and strive for the maximum profit in the market.

4. Marketing strategy as a manner of change in co-operatives

Marketing research is vital to all stages of the marketing plan:-

  • For decisions on the marketing mix, for example product research, pricing research, advertising research, etc.
  • For the implementation and control of the marketing plan, and
  • For assessing the extent to which objectives have been achieved.

Marketing research gives the following information inputs from the market:-

a) Environment audit

This reviews the organizations position in relation to changes in the external environment i.e. social, political, cultural, legal, economical and technological. The audit provides information which directly affects the setting of co-operative objectives. The market place is by definition, part of the “environment” and is a source of revenue and profit.

b) The Competitor audit

Provides competitor intelligence, competitor response models and so on, which again influence the co-operative objectives, strategy and contingency planning.

c) The customer audit

Assesses the existing and potential customer bases to provide information as to whether to develop new markets.

d) Product portfolio

This analysis provides inputs for decisions on whether or not to drop certain products and or add new ones.

e) Provides the basis for all other functional activities as well as marketing.

Information inputs from marketing to the co-operative society planning decisions perform a double duty, apart from planning they also provide objectives and strategies.

From the foregoing discussions, it is apparent that in order to manage change awareness, preparedness and implementation not to forget continuous market research are necessary components that cannot be ignored.

NEW PRODUCT DEVELOPMENT IN SACCO SOCIETIES

new

In view of the changing economic role of the co-operative societies, there is need to properly formulate investment policies for maximum returns to the members.

Prior to liberalization of the co-operative movement and the economy at large, our co-operatives had been too complacent and lacked innovative approaches in performance improvement.

These co-operatives have tended to operate under policies which have led to;

a)      Lack of creative innovation

b)      Reluctance to embrace change

c)       Over-reliance on traditional customer and products

d)      Inward looking policies, etc.

Co-operatives must strictly and urgently address their operational deficiencies. This involves;

a)      Improving service delivery

b)      Focusing on core customer needs

c)       Reducing on waste

Co-operative members are becoming more demanding and knowledgeable. This means that the management cannot assume that its products will be well received forgetting that the members have a wide choice. The co-operative therefore must offer its customers additional services and customised products. This can be achieved if:

-          There exist well thought out investment strategies

-          There is proper implementation of those strategies

Developing a new product

In developing a new product, the society needs to address the following aspects.

-          What product needs to be developed?

-          Who are the targeted customers?

-          What benefits will be derived from the consumption of the product?

-          How will the product be financed?

-          How will the product compare with existing products and harmonizes with the existing market structure?

-          What is the technical capability of the society in implementing the investment/product?

-          Will the implementation be in harmony with the existing legislative and regulatory controls?

In addressing the above the society shall move in the following direction:-

  1. Identify the most important service the members need;
  2. Identify the extend of the market for such need;
  3. Identify the sources of finance of the society;
  4. Conduct a cost benefit analysis to find out if the project/investment is justified and;
  5. Prepare the following:

a)      The staff skills;

b)      The system of implementation;

c)       Structure of the scheme and;

d)      System of evaluation and control.

Target market selection

The following guidelines should be followed by the Sacco when selecting target markets:

i)                    The target should be consistent or at least compatible with Sacco’s goals and image;

ii)                   The Sacco should seek markets that are consistent with its resources and;

iii)                 The Sacco should seek markets that will generate profitable volume of trade.

 

 

LOAN PROCESSING AND APPRAISAL

LOAN

What is loan processing?

Loan processing refers to the inter-related activities undertaken from time to time the prospective loanee applies for the loan up to the time the loan is approved, agreement signed and loan secured.

The following are the main steps in the process:-

i)  Loan application

ii) Loan appraisal

iii) Loan approval

iv) Loan collateralisation and documentation

 

  1. 1.       Loan application

The loan application starts with the formal expression by the borrower that he/she needs a loan. Some Saccos provide members with free loan application forms while others sell the forms at a small fee.

  1. 2.       Loan appraisal

Loan appraisal is one of the most technical areas in the lending process and any mistake made here could translate itself into cases of default and delinquency. All the principles of good lending should be adhered to. The process should also be as thorough as possible without resulting into unnecessary delays on loan processing.

Objectives in credit appraisal

a)      To determine the type of loan, loan purpose and whether it is confirming with the credit policy and procedures of the Sacco;

b)      To determine the credit risk of lending to the applicant;

c)       To determine the loanee’s plan to repay the loan and if she/he has other sources of income and;

d)      To determine whether the loanee meets the security or collateralization requirements.

What is a good loan?

A loan given:-

i) To a reliable borrower

ii) For an approved good purpose

iii) Against an acceptable security

iv) At a profit to the lender

Main issues which must be addressed when appraising loans

  1. A.      Conformity with policies and procedures

a)      Whether applicant followed all the requirements stipulated in the credit policies of the Sacco contained in the By-Laws or other policy documents

b)      Verification of whether the applicants’ information given is correct.

  1. B.      Addressing the issue of credit risk

This is normally looked at in form of the 5Cs of assessing credit risk

i) Character- Behaviour history of the borrower

ii) Capacity- Ability to repay the loan

iii) Capital- What financial ability does the borrower have?

iv) Conditions- Has the member fulfilled all the required conditions?

v)  Collateral (Security) – Guarantee required for the loan.

  1. C.      Where money borrowed is for starting a business

The credit committee should address the following issues. Ideally the committee should require the borrower to prepare a detailed business plan. This is the standard practice in all financial institutions that lend money to business people. The business plan should have the following details:-

a)      Financial viability

b)      Marketing feasibility

c)       Technical feasibility

d)      Management and organizational capability

The main concern for the Sacco should be whether given the above assessment, the intended business can run profitably and help repay the loan successfully.

Checklist for loan appraisal

The following information should be thoroughly addressed when appraising loan applications:-

a)      General particulars (name, address, family details) by the credit committee

b)      Loan amount and purpose for the loan requested

c)       Technical feasibility when a loan is for a business project

d)      Marketing feasibility

e)      Financial viability

f)       Management and organization of the business

g)      Loan repayment arrangements- mode of repayment

h)      Collateral arrangement for the loan

Does and donts of lending

Dos

a)      Be fair to both the sacco and the applicant

b)      Listen to the borrower carefully

c)       Try to have the member clarify all issues that may be unclear before you make a decision on the loan

d)      Decide firmly and convey the decision truthfully to the member

Donts

a)      Go by opinions. Verify all facts before making decisions

b)      Pretend to have the knowledge which you don’t have

c)       Have biases against the member

d)      Reject a loan application before studying it thoroughly

  1. 3.       Loan approval

Usually an approval is conveyed through a formal letter called loan approval advice. The advice apart from conveying the approval decision asks the borrower to communicate the he/she has accepted the loan and the terms and conditions attached to the loan.

  1. 4.       Loan collateralization

Loan collateralization refers to the loan security arrangements. In most Saccos loans are secured using members shares and savings in the Sacco. However some Saccos especially those that serve members from the informal sector ask for other assets for guarantee of loans.

To make sure that the loan security arrangement is properly done, Sacco officials should make such members have signed loan guarantee forms with guarantors stating clearly that they are prepared to repay the loan in case of default by the borrower.

After the final loan approval, the borrower should sign a formal loan agreement form, which clearly states the terms and conditions of the loan.

Problems faced by Saccos in their lending activities

a)      Lack of good credit policies

b)      High loan default mainly due to retrenchments

c)       Excess demand for loans that outstrip available resources

d)      Inadequate loans appraisal skills by credit committees

e)      Borrowing expensive money for lending to members at non-competitive interest rates.

 

 

CREDIT APPRAISAL/MONITORING IN SACCO SOCIETIES

APPRAISAL

APPRAISAL

Every credit programme must be appraised before disbursement of loan. The important objectives of appraisal are:

i) That the member meets all conditions necessary to participate in a credit programme

ii) That the lender minimizes the risk of recovering the whole loan.

Appraisal areas: whether;

a)      One is actually a member;

b)      The member loan application meets what is required by the policies and procedures;

c)       The risk can be there when approving the loan and;

d)      How the loan is going to be utilised and the returns will be positive.

Monitoring

Monitoring is the routine collection, analysis, and use of information about how well the project is going. It aims at provision of information on progress.

Monitoring can be continuous or periodic review by management at every level of the hierarchy of implementation of an activity to ensure that input deliveries, work schedules, targeted outputs, and other required actions are proceeding according to plan.

Mode of monitoring

i) Actual site visits (observation)

ii) Interview with loanee

iii) Reports

iv) Repayment records

v) Environmental factor analysis

Importance of monitoring

i) Helps both lender and loanee. Make decision to improve the project.

ii) Allows lender to decide what effect or impact the project is having on loanee

iii) Ensure accountability

iv) Ensure judgement to be made on personal and institutional performance.

Consideration for a good credit programme

A good loan programme should be one that not only enhances the welfare of the member but also repays itself fully (principle + interest).

To the lender the following features are important;

a)      The loanee is well trained to not only utilize but also understand the implications of being a loanee

b)      The loan amount is sufficient (never under lend, never over lend)

c)       The security provided is good

d)      It is adequate (value to cover the entire loan and still leave a good margin).

e)      It is realizable, should be easy to dispose of, to sell

f)       One that appreciates in value with time

g)      Repayment period is adhered to

h)      The shorter the repayment period the less risk the venture and the more liquid the society would remain

i)        Mark-up, prefer to lend to higher mark-up borrower

 

CREDIT ADMINISTRATION IN SACCO SOCIETIES

One of the fundamental objectives of a Sacco is to provide credit to its members. Indeed the continued survival of the Sacco is highly dependent on the fulfilment of this mission. That being the case it is important for each Sacco to endeavour to formulate lending policies that address members varied needs. In other words Saccos should no longer rely on the standard loaning policy.

creditA dynamic lending policy can be described as one that strives to satisfy members credit demands taking into account the society’s liquidity position and the security of the loans so granted. It should also ensure that loans are promptly processed and recovered at liberalised rates of interest. In addition a dynamic lending policy provides incentives for members to increase their savings thereby availing more loanable funds.

  1. A.      Lending requirements

i) Budgeting for loan should be a pre-requisite to granting of loans. Adequate plans should be made for periods of excessive loan demands.

ii) Books of accounts should be accurate and up to date.

iii) The society should operate for a number of months before granting of loans (six months or more).

iv)  Minimum period of membership and minimum amount of shares/deposits before granting of loans should be part of the loan policy.

v) The member should undertake to pay the loan with interest until it is cleared.

vi) All applications for loans should be on prescribed forms showing savings, amount applied for, purpose, terms of repayment and type of security provided, proof of members repayment ability is also required.

vii) Once a loan is granted it should be recorded in the relevant books of accounts and documents.

viii) Disbursement of funds should be done as soon as possible to avoid any inconvenience to the member and to ensure prompt recovery.

  1. B.      Loan repayments

Sacco loans are normally classified as normal, school fees and emergency. Normal loans should be recovered within 48 months. School fees should be recovered within a calendar year and emergency should be recovered within 12 months.

To ensure prompt repayment t of loans, the member should not suffer total deductions in excess of 2/3 of his/her basic salary. The employer should be advised to make the necessary deductions in good time on a monthly basis to avoid liquidity problems for the Sacco.

  1. C.      Loan delinquency

One of the major setbacks for the Sacco lending activity is loan defaulting. Among the major causes are:-

over

i)  Overburdening of loanee with credit

ii) Ignoring the loaning policy

iii) Death of a member

iv) Bad investment by a member

v) Redundancies

vi) Non-remittance of society funds by the employer

vii) Misuse of loan funds

viii)  Inadequate security

ix) Delays in reviver of loans

x) Interference with recoveries

The majority of these problems can be solved by management if proper safeguards are put in place. These includes:-

a)      Ensuring that correct lending procedures are adhered to

b)      Educating the ,members on loan policy and the need to borrow wisely

c)       Inform the guarantors on their obligation to pay in case of defaults

  1. Additional safeguards

For a Sacco to maintain liquidity it should practice the following financial disciplines:-

loaned

a)      Loan granted should not exceed 90% of members savings

b)      No member should be given a loan in excess of 5% of share capital and deposits

c)       The balance sheet should show the following ratios

ASSETS LIABILITIES
Cash 2% Members deposits 80%
Liquidity 18% Share capital 10%
Loans to members 75% Reserves 10%
Fixed assets 5%
100% 100%

d)      The society should always ensure that delinquent loans do not exceed 2% of the toal outstanding loan. This is known as the delinquent measure.

e)      Provision for bad loans should be based on duration for example

100% for delinquent loans over 1 year

75% between 9-12 months

50% between 6-8 months

25% between 3-5 months

f)       Ensuring that the members loans are ensured by a comprehensive risk management programme.

As a result of liberalization and other global changes, Sacco societies are finding it increasingly difficult to satisfy their members ‘financial needs and maintain adequate liquidity levels. This kind of scenario calls for dynamic lending policies to be formulated by the Sacco leadership. The following strategic approaches are recommended:-

i) Introduction of Front Office Services to provide more loaning facilities to members especially short term advances

ii) Liberalise the interest rates

iii) Introduce micro-enterprise culture to members

iv) Reward both the saver and the borrower alike

v) Encourage corporate membership

Conclusion

A sound credit policy should at all times aim at a Sacco’s own funds rather than borrowing.

It must address carefully the issue of credit collection and formulate policies for the same. Finally a good credit policy must endeavour to practice fairness in granting of loans.

Co-operative Corporate Governance

CO-OPERATIVE REGISTRATION PROCEDURES

registHOW TO REGISTER A CO-OPERATIVE
The co-operative Societies Act, Chapter 490 of the Laws of Kenya, states that for a society to be registered with or without limited liability, it has to have its object as the promotion of the welfare and economic interest of its members and has incorporated in its by-laws the following co-operative principles:
(i) voluntary and open membership;
(ii) democratic member control;
(iii) economic participation by members;
(iv) autonomy and independence;
(v) education, training and information;
(vi) co-operation among co-operatives; and
(vii) concern for community in general,
may be registered by the Commissioner as a co- operative society under this Act with or without limited liability. Provided that a co-operative union or an apex society shall not be registered except with limited liability.

HOW TO REGISTER A CO-OPERATIVE
Essentials for registration of co-operative societies.
For a society to be registered under the Act, it must in the case of the primary society, consist of at least ten persons all of whom shall be qualified for membership of the co-operative society in the case of a co-operative union, it consists of two or more registered primary societies in the case of an apex society, consist of two or more secondary societies.

REGISTRATION PROCEDURES
When a member of the public visits a District Co-operative Office with an intention to register a Co-operative Society, he is advised, to make a formal request in writing. This request should include the following:
1. Name of the proposed society,
2. Names of a minimum of ten proposed members (including copies of their ID card, telephone number, physical address, occupation and age).

DOCUMENTS TO BE ATTACHED
1. For formerly employed persons, a letter of confirmation from the employer.
2. For religious based common bond, a copy of certificate of incorporation of the organization accompanied by a letter of approval from the presiding clergy.
3. For Matatu/Transport Societies, copies of at least ten log books of the proposed members vehicles
4. For business people, copies of certificate of incorporation,/business licenses from at least ten proposed members
5. For marketing societies, introductory letter from the area chief to confirm the common bond and expected production
6. For welfare and self-help groups intending to convert to co-operatives, a copy of certificate of registration from relevant ministry.
7. For other informal organizations, a letter of introduction from the area Chief.

PRE CO-OPERATIVE MEETING
Upon receipt of the above documents, the officer shall convene a meeting within a week with the proposed members. The quorum of this meeting (Pre Co-operative Meeting) shall be ten members. The main agenda of the meeting shall be pre co- operative education. During the meeting; the promoters shall appoint interim officials for purpose of overseeing registration.

REQUIREMENTS FOR REGISTRATION

  1. Apart from above documents the following will be required:-
  2. The proposed by-laws in four copies
  3. Filled application for registration form in four copies
  4. Supplementary information form in four copies (if any)
  5. Economic appraisal in four copies
  6. In case of salaried workers, a letter from the employer is needed agreeing check off.
  7. Minutes of the pre co-operative meeting
  8. Bankers cheque of Kshs 3,700 being application and registration fees

After successful registration, the newly registered society to convene the first general meeting within a month after receipt of the certificate by the interim officials.
Failure to do so, the co-operative officer should recommend to the CCD immediate cancellation of the certificate of registration.

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Licensing of Saccos by Sasra

1. Introduction

The Sacco Societies Regulatory Authority (SASRA) is empowered to license, regulate and supervise deposit taking Sacco Societies under the Sacco Societies Act 2008 (the Act), and the Regulations issued there under. The Act requires all Sacco Societies carrying out deposit taking business to apply for licenses from SASRA (Section 23 of the Act and Regulations 4). Deposit taking Sacco societies in the context of the Act refers to the Sacco Societies operating Front Office Savings Activity (FOSA).

2. Who should apply for license?

With effect from 18th June 2010, the date of publication of the Sacco Societies (Deposit Taking Sacco Business) Regulations, 2010:

All Sacco Societies intending to operate FOSA shall apply for license from SASRA (section 23 of the Act and regulation 4(2)); and

All Sacco Societies already operating FOSAs are required to apply for license from SASRA by 17th June 2011.
3. What are the licensing Procedures?

The licensing procedures are detailed in Section 24 of the Act and Section 4 of the Regulations. These procedures are split into five main stages as explained below.

3.1 First stage: Application for License

Duly complete and submit the “APPLICATION FORM FOR A LICENCE” coded SASRA 1/001) in the regulations for SACCO Societies (Deposit Taking Business) to SASRA. This form is available here. The completed application form should be accompanied by supporting documentation including:

a) a certified copy of the Sacco society’s registration certificate, issued under the Co-operative Societies Act [Cap 490] Laws of Kenya.

b) a verified official notification of the Sacco society’s registered head office and branches, if any;.

c) a certified copy of the Sacco society’s bylaws.

d) a certified extract of minutes of the general meeting resolution authorizing the application for deposit taking license. This requirement applies to Sacco Societies seeking to commence FOSA operations.

e) name of the proposed chief executive officer.

f) Certified copies of the financial statements for the last three years

g) Evidence that the Sacco society has adequate capital by completing and submitting the Capital Adequacy Return (downloadable from http://www.sasra.go.ke) as set out in Form 1 in the second schedule to the Sacco Societies (DT) Regulations, 2010. Refer to the guidance notes on capital adequacy for capital requirements at the point of making the application for license.

h) Business plan and Feasibility study available here

A Sacco Society must prepare and submit a comprehensive four year business plan in line with the transitional provisions (and feasibility study for a Sacco Society making the application to commence FOSA operations) detailing:

1. the vision and mission;
2. Scope and nature of business operations;
3. Economic and financial environment;
4. Organizational structure and management;
5. Financial and risks analysis;
6. Projected financial statements and analysis using the format provided in the regulations. The projections should show how the institution will meet the prudential standards within the plan period, namely:
1.
Capital adequacy – indicate sources of capital over the plan period.
Loans quality and provisioning – Evaluate the loan portfolio, age the delinquency and make provisions as appropriate.
Liquidity – plans on liquidity management in full compliance with regulatory requirements.
Investment – divesting to comply with regulation 48 (limits on property, equipment and financial assets).
Sustaining the asset structure and quality

1. Control measures and monitoring procedures

The financial projections are based on the business plan and hence should assist in monitoring the strategic goals of the Sacco Society and therefore an implementation plan and monitoring framework should be included.

Note: Where the Sacco Society has a current business plan, the same should be reviewed in the light of the regulatory requirements and the four years transitional period.

h) Fit and Proper forms

Duly complete and submit the “Fit and Proper test” form (SASRA 01/002) with the application for license. The form should be completed by all persons proposed as directors and senior management as defined in the form. This form is available here.

3.2 Second Stage: Letter of Intent

SASRA will assess the application for fulfillment of the requirements in the first stage and if satisfied issue a Letter of Intent to the Sacco Society to put the following in place:

3.2.1 Institutional Infrastructure or business premises appropriate for deposit taking Sacco business. This includes but not limited to:

A banking hall;

A adequate working space;

Physical security measures; and

Strong room and safe.

3.2.2. Management Information System

The Sacco Society’s Information Management System must be capable of performing and accounting for all transactions and providing the minimum reports required by the Authority in an accurate and timely manner. The system should be operationally integrated and provide adequate security including data back up.

3.2.3 Risk Management policies and internal control systems

Sacco Societies face constant risks in the course of their business including credit, liquidity, interest rate, operational, reputation and regulatory risks. The Authority will require the Sacco Society to develop risk management policy framework addressing each of the risk identified. The risk management framework must address the following key considerations.

a. Clear definition of roles and responsibility of the Board and management in development, implementation and review of the risk management systems;

b. Adequate policies, procedures and limits;

c. Risk monitoring and information system;

d. Adequate internal controls and audit specific to each risk area.

3.3 Third stage: Onsite inspection

Upon completion of all the requirements specified in the Letter of Intent, the Sacco shall notify SASRA so that an independent on site inspection can be conducted to ascertain compliance. The inspection will be carried out within 30days from date of notification.

3.4 Fourth stage: Letter of Compliance

Upon completion of on-site inspection, if SASRA is satisfied that the Sacco Society has complied with all the conditions as stated in the letter of intent, it shall issue a compliance letter allowing the Sacco Society to pay the license fees within 30days.

3.5 Fifth stage: Issuance of a License

SASRA shall issue a license to the applicant Sacco Society upon payment of license fee of Ksh.50,000 (fifty thousand shillings) for head office and Ksh.20,000 (twenty thousand shillings) for each branch. The license shall be issued within 14days from the date of payment of the license fees.

4. What happens if a Sacco Society operating a FOSA at the commencement of the Regulations does not apply for license within the twelve months provided?

In line with Section 23(1), such a Sacco Society is in contravention of the law and the officers liable to the actions stipulated in section 23(2) of the Act among others.

5. Other matters

5.1 What happens after licensing of a Sacco Society?

a. The Authority shall within fourteen days from date of licensing publish in the Kenya gazette particulars of any newly licensed Sacco society.

b. At the beginning of each year and not later than 31st January, the Authority shall publish in at least one newspaper of national circulation particulars of licensed Sacco societies.

5.2 When is renewal of a license due?

A licensed Sacco Society will be required to apply for renewal of a license at least ninety (90) days before the expiry of its operating license in respect of its head office and any other place of business. The expiry date for all licenses will be 31st December.

 

Guarantorship in Sacco Societies

The objects for which an investment co-operative society is established…..

a) To invest members’ contributions in prudently identified ventures in order to maximize the return on their investment.

MONEYb) To acquire, lease, or otherwise dispose of the society’s building(s) and other fixed properties as necessary.

c) To purchase, take on lease or exchange, hire or otherwise acquire any movable or immovable property of any kind of any interest therein any right or privileges which the management committee of the society may think necessary or convenient for the purpose of or in connection with Society’s business or which may enhance the value of any other property of the society.

d) To improve, manage, develop, and turn to account, grant rights or privileges in respect of or otherwise deal with any of the property, rights and privileges of the society.

e) To acquire and undertake the whole of any part of the business, assets and liabilities of any person or Society carrying on or proposing to carry on any business which the society is authorized to carry on or which can be carried on in conjunction with any business of the Society or which is possessed of property suitable for the purpose of the Society.

f)  To pay out the funds of the society, all expenses which the society may lawfully pay for or in connection with the formation and registration of the society.

g) To amalgamate, enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint ventures, reciprocal concession, limiting competition or otherwise, with any person of society carrying on or engage in or can be carried on in conjunction with any business of the society or which is capable of being conducted so as to benefit the society, directly or indirectly.

h) To borrow money or receive money or deposit either with or without security or secured by debentures, mortgages or other security charged on the undertaking or on all or any of the assets of the society.

i) To subscribe for, underwriter, buy, hold, sell and deal (either on or off a stock exchange, and either as principles, agents or trustees) in every description, to advice on investment of all kinds, to advice on, assist and deal with issues, offers for sale, and generally to carry on the business of stock and share brokers.

j) To remunerate any person or company either in cash or by allotment of shares credited as fully or partly paid up, for services rendered or to be rendered in placing or assisting to place or guaranteeing the placing of any of the shares in the Society’s capital of any debentures, debentures stock or other securities of the society or in or about the formation or promotion of the society of the conduct or development of its business and to pay out of the funds of the society all expenses and incidentals to its formation and registration.

For the attainment of the above objects, the society may do acts and things that are permissible under the Act, rules and these By- laws including but not limited to power to purchase, hold, sell exchange, mortgage, rent, lease, sub-lease, surrender and accept surrender of land or buildings and construct buildings and doing all such other things as are incidental or consequential to the economic enhancement of its members interests provided such act is approved by the members in a general meeting.

Download the MODEL BY-LAWS FOR INVESTMENT CO-OPERATIVE

 

EXAMPLE OF LENDING REQUIREMENTS IN A SACCO SOCIETY

EXAMPLE OF A SWOT ANALYSIS OF A SACCO SOCIETY

Did you know that…

a) No management or Supervisory Committee member is allowed to receive from the society any payment apart from sitting allowance, and travelling and subsistence allowance, except an honorarium from the net surplus as allowed in the By-Laws.

juab) The Management and Supervisory Committee members, and employees of the society hold in the strictest confidence all transactions of the society with its members.

c) When any Committee member is disqualified or unable to perform his duties, the Committee can co-opt a member or members of the society to serve on the Committee until the next general meeting if the number falls below five.

d)  No member of the management or Supervisory Committee shall in any manner participate in the deliberations and determination of any question affecting his/her financial interest. In the event of any disqualification, the remaining qualified Committee members present at the meeting, if constituting a quorum with the disqualified person may exercise, with respect to the matter, all powers of the Committee.

f) A copy of the By-Laws is to be furnished to every member who joins the society or on request upon payment of a fee not exceeding its actual cost to the society.

 

HOW CAN SACCOs COMPETE WITH OTHER FINANCIAL INSTITUTIONS?

By now, am sure we all know definition of a co-operative society and that a Sacco is a co-operative. Just to remind you of the definition; “a co-operative is an autonomous association of people who have gathered in a voluntary way in order to satisfy their economic needs as well as, social and cultural aspirations by means of a jointly owned and democratically-managed venture” International Co-operative Alliance. Therefore in short, co-operatives derive their advantage from their nature as seen in the definition.

competitionBanks and micro-finance institutions are profit oriented/driven in every sense. They are doing well, when they make millions for the shareholders. We can say banks and micro-finance institutions are associations of capital. Co-operatives are not profit oriented, they are socio-economic ventures owned solely by the members. Co-operatives are association of people. The goal of a co-operative is “to promote thrift among its members by affording them an opportunity for accumulating their savings and deposits and create thereby a source of funds from which loans can be given to them exclusively for provident and productive purposes, at fair and reasonable rates of interest; thereby enabling them to use and control their money for their mutual benefit.”

So what are some of the main advantages that give Saccos competitive advantage?

  1. Offering fair and reasonable interest rates. Saccos remain the source of cheapest credit to date in the country. No bank or micro-finance gives rate of interest like Saccos do. NONE! Therefore Saccos need to maintain these interest rates and use allowed procedures/structures to increase or reduce.
  2. Saccos have ‘cost advantage’ meaning that the cost of undertaking Sacco ‘business’ and creating value in the business are less than that of its competitors. Look at what banks pay as interest on deposit/dividends and what Saccos pay given interest they charge loans!! Banks are miserly here! This cost advantage is difficult for other businesses to replicate. But can Saccos sustain these?
  3. Saccos are democratically governed. The supreme authority is the general meeting. The interest rate, minimum shares, entrance/registration fees, etc. are proposed by management committee and discussed then approved or otherwise by membership in the general meetings. Banks and other financial institutions do not seek authority of all shareholders but this is done through a board of directors or such other body/interests. It is therefore very easy for Saccos to encourage and enhance member loyalty unlike banks.
  4. The terms and conditions of Saccos loans/savings are in black and white, easily understandable. There are no ‘threats’ like interests rate is subject to change without ANY notice like with the banks! This can be a competitive edge since what you see is what you get, nobody will call or not call you when they want to reschedule/restructure your loan!

What do Saccos need to do to compete effectively?

Improve services. Some Saccos offer poor services to its members. Sometimes loan disbursement is delayed and a member is not communicated to. Staffs are usually rude and even some are outright abusive. Therefore co-operatives need a proactive management committee/board of directors of good standing who will put up measures that will ensure effectiveness and efficiency of the Sacco business. It never helps to hire a relative who is or not qualified. Professionalism must be maintained at all times and reprimanding someone hired on basis of tribe, nepotism, etc is difficult.

Service delivery is cornerstone of any business. Saccos cannot afford to lose business because of inefficiency and lack of structures and process that can effectively and efficiently address any of the anomalies. The fact that policy implementation can delay due to the requirement that the management committee/board of directors need approval from membership, is not sufficient to further deteriorate service delivery. Hiring, firing, promotion, etc of employees should be transparent and pre-understood. Getting the right persons on-board is as important as maintaining them as a knowledgeable workforce is a valuable commodity.

proactiveSaccos also need the ‘power to add, change, evolve, or self-organize system structure’ (Donella Meadows-Leverage Points-Places to intervene in a system). As I have noted earlier, the process of putting up policies and having them operational, sometimes delay and the advantages that could have been gained by having them in/on time, are lost. Saccos therefore are required to be pro-active and envisage situations or plan through strategic plans, business plans, etc. Information technology especially the internet has not been fully utilized by Saccos. I believe there is no single Sacco where a member can access his/her account online and transfer savings from one account to another or pay loans online through use of Visa Cards, etc. Is there? “Any system, biological, economic, or social, that becomes so encrusted that it cannot self-evolve, a system that systematically scorns experimentation and wipes out the raw material of innovation, is doomed over the long term on this highly variable planet” Donella Meadows.

Leadership is another area of great import for Saccos to effectively compete with other financial institutions. Leadership is a process of social influence, which maximizes the efforts of others, towards the achievement of a goal. It is said that leadership stems from social influence, not authority or power. Co-operatives elect their leadership from the membership. Sometimes elected leaders are not elected solely based on the quality of leadership they offer the society but other attributes like tribalism, nepotism, etc. Membership should be sensitize on importance of electing credible, accountable, honest, etc. leaders and be reminded of what is at stake when things go wrong because of the leadership they elected.

…………………………………………………….TO BE CONTINUED……………………………………………………..

I AM A SACCO MEMBER AND I CAN’T GET GUARANTORS

The issue of members who qualify for loans and not being able to get guarantors within the society membership is emerging as one of the most challenging issue faced by Sacco Societies. It follows that such members are sorryfrustrated and withdraw their membership from the society as they cannot get loans when they apply for them. Membership withdrawal affects society’s cash flow and other operations and consequently profitability.

This problem is now being faced by Saccos with check-off-systems as it was/is mostly reported in Saccos that do not have check-off-system. Saccos with check-off-systems are Saccos that receive the members’ monthly contributions/loan repayments/interest/savings from the employer(s) through a single cheque paid to the Sacco Society’s account. Saccos without check-off-systems, are Saccos that do not have a common bond as a single employer or more than one employer and these Saccos are mainly formed by business people, farmers, matatu operators, church members, women groups and youth groups. They are sometimes referred to as Rural Saccos and those with check-off-systems are called Urban Saccos.

The rural Saccos and some Urban Saccos have circumvented this challenge through the formation of “cells” within the society. These cells are groups of between 10-30 members. The members in a cell guarantee one another and are all responsible for loans advanced by the society to individual members within the cells. This means that, if there are 20 members in a cell, then an individual taking a loan has to be guaranteed by 20 guarantors! It also means that if one or more members in a cell defaults on his/her obligations, then the whole cell is taken to account.

How are these cells formed, managed and grown?

If a society has each cell with minimum of 15 members, the cell is allowed to recruit new members until the cell membership reaches 30 where it is split into two. The split cells now will have 15 members each and allowed to recruit more members and the cycle continues. Cells are formed and given names like Nairobi, Nakuru, Pamoja, Tumaini, etc. Each cell has a cell coordinator and a cell secretary where all issues are discussed, recorded and some solved within the cell and those that need the attention of management committee are presented to them by the various coordinators. All members of the society must belong to a cell for them to qualify for a loan. The normal loan application process applies.

Another important aspect of these cells is that of membership recruitment. All new members of the society, must be endorsed by the cells for them to be accepted by the society. New members are introduced into the cells by a member and supported by two witnesses who attest that they know him/her. The person is interviewed by the cell and if by majority votes they agree, then that member is endorsed. The management committee then will accept the new member after ensuring that he/she meets all other qualifications for membership.

Through meetings of the cells, which can be every month or when need arises, members socialize with one another and therefore it becomes easier to accept guaranteeing new members of the society. This is unlike where cells are not available, where one is not able to attend annual delegates meeting or any other meetings organised by the society. Also societies hold one or two general meetings in a year which is not sufficient for members of the society to socialize and know one another sufficiently so as to act as guarantors.

CELLSOne of the major challenge of cells is that management committee/board of directors and supervisory committee have to belong to the cells and therefore act as guarantors and therefore contradicting the policy that states “No executive officer, management and supervisory committee member shall act as endorser, guarantors for borrowers from the society.” In cells, the management committee/board of directors and supervisory committee are not allowed to be coordinators or secretaries of the cells. They are in the cells as members of the society and not management committee/board of directors or supervisory committee members. It will be difficult for these committee members to be guaranteed within the cell given the cell rules if this policy was to be enforced. It is therefore important that these committees members be allowed to act as endorsers or guarantors only through the cells.

It is high time Saccos must become innovative and introduce cells or come up with other ways of assisting their members access their products. It will be useless for one to belong to a Sacco and not being able to get a loan more that his/her shares and deposits. I am a member of a Sacco and I went through this and I almost immediately withdrew my membership and move to another Sacco within my “area of operation” where I know I could get guarantors easily. It is a world of competition out here, you can no longer sit in your cocoons offer the same services the same way and expect to grow in membership and surplus. IT CAN’T HAPPEN.

Ask yourselves, what happens when I am transferred to another region where I am not known? What happens when I am the only member of the society in a whole sub-county/district? Can society allow me to scan my filled loan application form to members of the society that I know who can act as guarantors and who can send to Sacco the forms on my behalf or send me back for me to forward to the Sacco? These must be answered….probably :-)

If Saccos are wondering why their membership is not growing, then look no further.

 

GUARANTORSHIP/LOAN SECURITY IN SACCO SOCIETIES

 

Most of us are aware of the following in our various Sacco Societies concerning loan security:

  1. GuarantorAll loans must be secured by at least three guarantors. All guarantors should be members of the society, must have a good track record of repaying their own loans and not be guarantors of another outstanding loan which is in default.
  2. The total deposits of the guarantors should be equal to or more than the loan applied for.
  3. A borrower or guarantor may apply to the credit committee for a change of guarantors.
  4. The obligation of the guarantors shall cease when the loan granted has been repaid to equal or less than the loanees total deposits.
  5. The obligation of the guarantor may also cease upon alternate guarantors acceptable to the society being substituted.
  6. No executive officer, management and supervisory committee member shall act as endorser, guarantors for borrowers from the society.
  7. The committee may refuse to accept as a guarantor a person who is himself in receipt of a loan, and may decline to grant a loan subsequently to a member while he remains liable as a guarantor.
  8. Other than the usual deposits of a member, certain loan categories or loan amounts shall be secured from pledges in form of articles as share certificates, land title deeds or insurance policy up to their surrender value may be accepted.  The Society must deposit such articles in a bank for safe custody but must be handed back to the members immediately the loan balance equals the deposits.  Confirmation as regards the validity of the articles so pledged from the issuing authority must be obtained before such documents can be admitted as security for the loan.  Mortgage in real estate can be taken as a security for a loan not exceeding two thirds of the mortgage value.
  9. Upon the death of a guarantor, the loanee is required to find a replacement within a period of 30 days.
  10. Loanees who do not contribute their deposits through check-off system shall seek guarantors from members within the check-off system. However, where the loanee fails to get guarantors and the loan applied for is below his or her deposits, the loan shall be granted.
  11. A member’s deposits pledged as security for another member’s loan shall not be surrendered to offset his/her outstanding loan unless the former provides and alternative guarantors.

So what happens when you cannot get guarantors for one reason or another?

 

CUSTOMER SERVICE IN SACCO SOCIETIES

What is customer service?

CUSTOMERThis is a broad term which refers to those activities which are deliberately undertaken by the service or goods provider with the objective of satisfying the current customers and also attracting potential customers.

Generally it is a concept which explains all those activities undertaken by an organization to satisfy a customer.

The customer can only be satisfied if their perceived expectations of needs and wants are met by the organization.

Reasons for customer service in co-operative societies:

  • a customer who is cared for and satisfied will always become a loyal customer
  • a customer who is satisfied will tell other people
  • a satisfied customer will become your agent recruiting others
  • to be able to cope with competition
  • the customer makes the organization survive
  • the customer is the organization’s life
  • the customer is the voice of the organization
  • the customer makes the organization become proud of its business
  • the customer is the organization’s future
  • a dissatisfied customer will tell other people about his dissatisfaction and this will spoil the image of your Sacco.

Employees of Sacco Societies must possess the following qualities for effective customer service:

  • Communication skills. It calls for the use of right word when talking to a customer. Avoid phrases that may be offensive to the customer.
  • Personal presentation. You must be clean and appropriately dressed (in all ways). Avoid talking to a customer when smoking or eating unless you know him/her.
  • You should have an idea of the type of customer you are dealing with. These are his/her requirements, needs and priorities, his concerns, etc.
  • Product knowledge. You must have a sound (technical) knowledge of the type of product/service you are offering. The is only way you can confidently answer a customer.
  • Respect. Respect a customer for what he/she is. He/she may appear boring, proud, poor, uneducated, etc, but you must respect him/her. If you respect a customer, he will value you and will be ready to listen to you.
  • Mental ability. This is the ability to think quickly, to handle questions quickly and to respond with sensible answer.
  • Dependability and honesty. You must keep promises. Keep appointments. If you cannot, explain this in advance.
  • Self-Control. Avoid showing irritation, impatience, temper, open rudeness, fear, hesitation and other such negative behavior.
  • Sociability. Be a sociable and cheerful person. Leave your troubles at home but do not take them to your customers. It is necessary to know the names of the customers you are dealing with.
  • Courage, determination and perseverance. Have confidence in yourself and the value of the services you are offering.

How can your Sacco participate in customer service?

  • offering quality services to the existing customers
  • efficient handling of customer inquiries
  • quick and effective handling of customer complaints
  • professionalism when dealing with customers, both current and potential
  • competitive pricing of your service or product
  • seeing the customer as an integral (and indispensable) part of you business
  • greet the customer with enthusiasm and smile
  • thank the customer for transacting business with your Sacco and invite him/her back
  • heighten his/her wish to return soon
  • be positive.

In conclusion the customers’ perceived expectations must be met by your organization in order to have a satisfied customer. Customer care is not responsibility of one individual but everybody in the organization must participate. The customer is the king and he/she pays your salaries and must therefore be taken care of. A customer is not an outsider, but part of the business.

 

CO-OPERATIVES SOCIETIES ACT ON AMENDMENT OF BY-LAWS

Co-operative Societies Act CAP 490 Section 8 states:
(1) A co-operative society may, subject to this Act, amend its by-laws, including the by-law which declares the name of the society.
(2) No amendment of the by-laws of a co-operative society shall be valid until the amendment has been registered under this Act, for which purpose a copy of the amendment shall be forwarded to the Commissioner in the prescribed manner.
(3) If the Commissioner is satisfied that any amendment of the by-laws of the Co-operative society is not contrary to this Act and any rules made thereunder, he may register the amendment.
(3A) The Commissioner may, if he is satisfied that an amendment under this section was effected pursuant to a misrepresentation or concealment of a material fact by the person applying for registration, cancel the amendment.
(4) An amendment which changes the name of a co-operative society shall not affect any right or obligation of that society or any of its members, and any legal proceedings pending may be continued by or against the society under its new name.
(5) When the Commissioner registers an amendment of the by-laws of a cooperative society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence of the fact that the amendment has been duly registered.
(6) In this section, “amendment” includes the making of a new by-law and the variation or revocation of a by-law, but excludes the variation of the registered address of a co-operative society where this forms a part of the bylaws of such a society.

 

CO-OPERATIVE REGISTRATION PROCEDURE

Download the power point here: CO-OPERATIVE REGISTRATION PROCEDURE

QUALITIES OF GOOD INFORMATION SYSTEM-SACCOs

Good information system should possess the following qualities:

characteristics-of-informationThe co-operative should provide relevant information. Relevance is determined by the user of the information and therefore the management of the co-operative should first define the objectives of the various reports to be produced. Based on the user, the system should generate the following:-

  • Detailed daily operational/transactional reports that are accurate for use by supervisors.
  • Summarized current and projected information, regardless of whether internally or externally sourced, that is likely to affect performance for use by the managers.
  • Highly processed information for strategic planning and management control, obtained from within the co-operative for use by directors and the CEO.

The system should also be designed to generate exceptional reports.

The information should be timely for it to be acted upon. The officer in charge of ICT should review the system constantly to assess its speed and recommend upgrading or replacement.

Information should be free from errors and the user should be notified of any assumptions or estimates.

The co-operative should obtain information from authoritative sources only.

(Excerpt from Chapter 4: Co-operative Society Management and Prudential Guidelines Manual Template-Developed by VAS Consultants Ltd for Department of Co-operatives).

 

 

GUIDELINE ON MARKETING-CO-OPERATIVES

marketPURPOSE

The marketing management guideline provide minimum standards that co-operative societies should have in order to create or change the perception of a product or service in the eyes of the target audience by making use of research and communication media. Each co-operative should however, formulate its own detailed marketing policies that take into account its special needs and circumstances.

SCOPE

The guidelines provides practices in marketing management.

RESPONSIBILITY

It is the responsibility of the board to ensure that the co-operative society develops policies that would lead to best practice in marketing function. Marketing policies include areas such as:

MARKETING RESEARCH

Co-operative societies require detailed and objective understanding of their own business and market in which they operate, in order to make fact based decisions regarding their operations. This means that the co-operative societies need to invest in research to collect the data required to perform accurate market analysis. As the marketers employ a variety of techniques to conduct market research, the small co-operatives should pool resources to enjoy research benefits.

MARKETING STRATEGY

Co-operative should use information obtained from market research to make key strategic decisions and develop a marketing strategy designed to maximize the market share, revenues and profits. By selecting target segments the co-operative would subsequently allocate more resources to acquire and retain customers in the target segment(s). Some of the other innovative strategies that a co-operative could pursue include:-

Market Niche

The co-operative could identify market niches. A market niche is defined as an area of consumer need that is not being completely satisfied and is often too small for larger businesses to pursue. A co-operative could pursue niche opportunities in the area of:

  • Product differentiation and certification. The co-operative emphasizes the product/service’s characteristics which are different from competition such as organic, pesticides free, certified among others.
  • Value-added processing. The co-operative adds value to raw products to create new product or product use based on consumer demand.
  • Encourage partnership between the consumer and the co-operative. The partnership could take the form of contract for products and prepayments.

Promotion Strategies

The co-operative should adopt promotion strategies that ensure that it reaches the target consumers and develops relationships with them to encourage use of product or services. Some of the promotion strategies that a co-operative could apply include.

  • Purchasing media advertising (newspaper, radio, TV, yellow pages, etc.)
  • Organization direct mailing of announcement flyers, coupons, newsletters among others, to current consumers and other target consumers.
  • Posting signs or posters in areas frequented by target consumer.
  • Participation in or hosting community or regional special events.
  • Participation in public interest events- events with community groups which builds a relationship and reputation as a generous and involved community member.
  • Utilizing the internet

MARKETING PLAN

After the co-operative identifies its strategic objectives, selects the target market, determines the desired position for its product or brand, a marketing plan should be developed. The marketing plan specifies how the chosen strategy will be executed and the set objectives achieved. The content of marketing plan includes:

  • An executive summary.
  • Situation analysis to summarize facts and insights gained from market research and marketing analysis.
  • The co-operative’s mission statement or long-term strategic vision.
  • A statement of the co-operative’s key objectives, often sub-divided into marketing objectives and financial objectives.
  • The marketing strategy the business has chosen, specifying the target segments to be pursued and the competitive positioning achieved.
  • Implementation choices for each element of the marketing mix (4Ps).
  • A summary of required investments (in people, programs, ICT systems, etc.)
  • Financial analysis, projections and forecasted results.
  • A timeline or high-level project plan.
  • Metrics, measurements and control processes.
  • A list of key risks and strategies for managing identified risks.

MARKETING INFORMATION SYSTEM

The co-operative will need to design marketing management system that provides cross-functional leadership for various marketing activities. This system should provide pertinent information for decision making, feedback and monitoring and evaluation.

FEEDBACK AND CONTROL SYSTEMS

The co-operative society shall design various control systems, such as sales forecasts, sales force and reseller incentive programs, sales force management systems, and customer relationship management (CRM) tools to measure progress against objectives. It is the responsibility of marketing managers to ensure that the execution of marketing programs achieves the desired objectives and does in a cost-efficient manner.

(Excerpt from Chapter 7: Co-operative Society Management and Prudential Guidelines Manual Template-Developed by VAS Consultants Ltd)

SHORT HISTORY OF THE CO-OPERATIVE MOVEMENT IN KENYA

The co-operative movement in Kenya was found in the beginning of 20th Century. Africans were allowed to form co-operative societies in the 1950′s when they were permitted to grow cash crops. The attainment of independence in 1963 became the turning point in the movement. It has ever since grown in terms of societies membership and share capital/member deposits.

The firs Kenya co-operative society, Lumbwa Co-operative Society, was formed in 1908 by the European farmers with the main objective of purchasing fertilizer, chemicals, seeds and other farm inputs and then market their produce to take advantage of economies of scale. In 1930, Kenya Farmers Association was registered as a co-operative society to take over the role of supply of farm input played by Lumbwa Co-operative Society. The African smallholder farmers fought for formation of their own co-operatives and later in 1950′s they were allowed to promote and register co-operatives for cash crops like coffee and pyrethrum. Consequently at independence in 1963, there were 1,030 co-operatives societies with 655 being active with a total membership of 355,000.

 

Father Son Conversation

Once day, father was doing some work and his son came and asked, “Daddy, may I ask you a question?” Father said, “Yeah sure, what it is?” So his son asked, “Dad, how much do you make an hour?” Father got bit upset and said, “That’s none of your business. Why do you ask such a thing?” Son said, “I just want to know. Please tell me, how much do you make an hour?” So, father told him that “I make Ksh. 500 per hour.” “Oh”, the little boy replied, with his head down. Looking up, he said, “Dad, may I please borrow Ksh. 300?” The father furiously said, “if the only reason you asked about my pay is so that you can borrow some money to buy a silly toy or other nonsense, then march yourself to your room and go to bed. Think why you are being so selfish. I work hard every day and do not like this childish behavior.” The little boy quietly went to his room and shut the door. The man sat down and started to get even angrier about the little boy’s questions. How dare he ask such questions only to get some money? After about an hour or so, the man had calmed down, and started to think, “May be there was something he really needed to buy with that Ksh. 300 and he really didn’t ask for money very often!” The man went to the door of little boy’s room and opened the door. “Are you a sleep, son?” He asked. “No daddy, I’m awake,” replied the boy. “I’ve been thinking, maybe I was too hard on you earlier”, said the man. “It’s been a long day and I took out my aggravation on you, Here’s the Ksh. 300 you asked for”. The little boy sat straight up, smiling “oh thank you dad!” He yelled. Then, reaching under his pillow he pulled some crippled up notes. The man, seeing that the boy already had money, started to get angry again. The little boy slowly counted out his money, then looked up at his father. “Why do you want money if you already had some?” the father grumbled. “Because I didn’t have enough, but now I do,” the little boy replied. “Daddy I have Ksh. 500 now. Can I buy an hour of your time? Please come home early tomorrow. I would like to have dinner with you”. Father was dumbstruck. Moral: It’s just a short reminder to all of you working so hard in life! We should not let time slip through our fingers without having spent some time with those who really matter to us, those close to our hearts. If we die tomorrow, the company that we are working for could easily replace us in a matter of days. But the family & friends we leave behind will feel the loss for the rest of their lives. And come to think of it, we pour ourselves more into work than to our family.

Arthur Unknown?

Story of burned biscuits

When I was a kid, my Mom liked to make breakfast food for dinner every now and then. And I remember one night in particular when she had made dinner after a long, hard day at work. On that evening so long ago, my Mom placed a plate of eggs, sausage and extremely burned biscuits in front of my dad. I remember waiting to see if anyone noticed! Yet all dad did was reached for his biscuit, smile at my Mom and ask me how my day was at school. I don’t remember what I told him that night, but I do remember watching him smear butter and jelly on that biscuit and eat every bite!

love

When I got up from the table that evening, I remember hearing my Mom apologize to my dad for burning the biscuits. And I’ll never forget what he said: “Honey, I love burned biscuits.”

Later that night, I went to kiss Daddy good night and I asked him if he really liked his biscuits burned. He wrapped me in his arms and said, “Your Momma put in a hard day at work today and she’s real tired. And besides – a little burned biscuit never hurt anyone!”

Moral: Life is full of imperfect things and imperfect people. I’m not the best at hardly anything, and I forget birthdays and anniversaries just like everyone else. But what I’ve learned over the years is that learning to accept each others faults – and choosing to celebrate each others differences – is one of the most important keys to creating a healthy, growing, and lasting relationship.

Author Unknown??

OBLIGATION OF CO-OPERATIVE MOVEMENT

1)    To observe and operate within provisions of the Co-operative Societies Act, Rules, Society By-law and the various policy documents.

2)    Operate within the budget, and avail the Trial Balances and Economic reports to the respective Government offices.

3)    To provide efficient, timely and quality services to their members.

4)    The members have obligation to elect leaders who are transparent and accountable.

5)    Committee have obligation of providing minutes of Management, Special and Annual General Meetings to the Sub-County Co-operative Officer at all times.

6)    The committees have an obligation to invite the Co-operative Officers to all their meetings.

7)    The society has an obligation to provide accurate, timely and up to date information to the Sub-County Co-operative Officer.

8)    The society has an obligation to pay audit and supervision fee to the Ministry of Industrialization and Enterprise Development Department of Co-operative Development and Marketing.

 

16 Inspirational Quotes From the Late, Great Steve Jobs

 

According to ICA….

  • Worldwide more than 1 billion people are members of cooperatives.
  • Cooperatives provide 100 million jobs worldwide, 20% more than multinational enterprises.
  • The economic activity of the largest 300 cooperatives in the world equals the 10th largest national economy.
  • Money can't buy happiness, however it can rent it :-)

    Money can’t buy happiness, however it can rent it :-)

    In India and China combined, more than 400 million people are part of cooperatives.

  • In Germany and the United States, one in four people are cooperative members while in Canada that number is four in 10!
  • In Japan, 1 out of every 3 families is a member of a cooperatives.
  • In Indonesia, cooperatives provide jobs to 288,589 individuals.
  • In Kenya, 250,000 people are employed by cooperatives.
  • Canadian maple sugar cooperatives produce 35% of the world’s maple sugar production.
  • In Colombia, the 8,124 cooperatives were responsible for 4.96% of the GDP in 2009. They employ over 137,888 people – 46% of which are men and 54% women.
  • In Kenya, cooperatives are responsible for 45% of the GDP and 31% of national savings and deposits. They have 70% of the coffee market, 76% dairy, 90% pyrethrum, and 95% of cotton.
  • In Poland, dairy cooperatives are responsible for 75% of dairy production.
  • In the UK, the largest independent travel agency is a cooperative.
  • In Vietnam, cooperatives contribute 8.6% of the Gross Domestic Product (GDP).
  • Costa Rica counts over 10% of its population as members of cooperatives.
  • In Germany, 20 million people are members of cooperatives, 1 out of 4 people.
  • In Singapore, 50% of the population (1.6 million people) are members of a cooperative.

THE DEPARTMENT OF CO-OPERATIVE DEVELOPMENT AND MARKETING – RANGE OF SERVICES AT SUB-COUNTY (DISTRICTS)

(i) Education and Training

We will conduct education and training to members, management committees and staff of the movement in collaboration with stakeholders. We shall use resources allocated by the Government and the movement will Legislationchip in from education budgeted resources. We shall give other extension services pertaining to administration and management of Co-operatives.

(ii) Co-operative Policy and Implementation

We will attend leaders meetings, Special/Annual general meeting of Co-operative Societies and shall at all times give appropriate advice. We shall also articulate the Government policy on Co-operative management.

(iii) Co-operative Financial Policy

We will at all time advice the societies in prudent financing, Credit and Banking Services policy aimed at improving the welfare and interests of the members of the movement.

(iv) Co-operative Governance

We through Co-operative Education and Training will endeavor to insist on good management practices among the Co-operative leaders aimed at good Co-operate Governance. We shall also annually ask the Co-operative leaders to declare their assets and liabilities and file indemnity bonds as required by law.

(v) Settlement of Disputes

We will at all times arbitrate on co-operative disputes outside the court system and for those cases beyond, we will advice complainants to file disputes in the Co-operative Tribunal. The clients will be advised on the filing fees.

(vi) Co-operative College

We will advise the movement on courses offered by the Co-operative College and update them on regular basis.

(vii) Co-operative Marketing Including Value Addition Processing.

Save Money NowWe will at all times articulate the Government Policy on Marketing of Agricultural produce, value addition and other Co-operative ventures.

(viii) Promotion of Co-operative Ventures.

We will at all times advice the Co-operative movement on general aspects of investments to create wealth in Co-operatives.

(ix) Inquiries and Inspections.

We will advise on inquiry/inspection processes where necessary and we shall conduct inspections within the Sub-County as need arises. The inspections will be presented to management committee for appropriate action in accordance with the law.

(x) Surcharge

We will undertake to enforce surcharges and inquiry report as recommended by inquiry officers.

(xi) Rule of Law

We will at all times operate within the provisions of the Co-operative Societies Act, the Rules and the By-Laws of co-operative societies and policy documents issued from time to time by the Commissioner of Co-operative Development.

(xii) Audits

We shall ensure that audits are carried out and presented as stipulated in the Act in accordance with International Accounting Standards and Co-operative Societies Act.

(xiii) Monitoring and Evaluation.

To monitor and evaluate all Co-operative activities in the Sub-County.

(xiv) The Sub-County Co-Operative Officer will Advise and Support Co-Operative Officers.

To give advisory services to Co-operative officers and others staffs to enable them perform their duties efficiently.

(xv) Financial Resources

A thief broke into my house last night looking for money, so I woke up and started searching with him :-)

A thief broke into my house last night looking for money, so I woke up and started searching with him :-)

To ensure that all financial resources allocated to the Sub-County are utilized for intended purposes and in accordance with the Government accounting procedures and procurement regulations.

(xvi) Visitors and Delegations

To ensure that all delegations to the Sub-County Co-operative Office are attended to promptly.

DID YOU KNOW THE MANDATE OF THE DEPARTMENT OF CO-OP DEVELOPMENT AND MARKETING?

Logo Template - Logo_451The Mandate of the Ministry of Industrialization and Enterprise Development Department of Co-operative Development and Marketing is specified in the Presidential Circular No. 1/2005 on organization of the Government of the Republic of Kenya as follows:-

  • Co-operative Policy Implementation
  • Co-operative Legislation and Extension Services
  • Co-operative Education and Training
  • Co-operative Financing policy.
  • Co-operative Savings, Credit and Banking Services Policy
  • Co-operative Governance.
  • Co-operative Tribunal.
  • Co-operative College
  • Co-operative Marketing, including Value addition and processing.
  • Promotion of Co-operative Ventures.
  • New Kenya Co-operative Creameries.

Live and Work

Father was a hardworking man who delivered bread as a living to support his wife and three children. He spent all his evenings after work attending classes, hoping to improve himself so that he could one day find a better paying job. Except for Sundays, Father hardly ate a meal together with his family. He worked and studied very hard because he wanted to provide his family with the best money could buy.

Whenever the family complained that he was not spending enough time with them, he reasoned that he was doing all this for them. But he often yearned to spend more time with his family.

The day came when the examination results were announced. To his joy, Father passed, and with distinctions too! Soon after, he was offered a good job as a senior supervisor which paid handsomely.

Like a dream come true, Father could now afford to provide his family with life’s little luxuries like nice clothing, fine food and vacation abroad.

However, the family still did not get to see father for most of the week. He continued to work very hard, hoping to be promoted to the position of manager. In fact, to make himself a worthily candidate for the promotion, he enrolled for another course in the open university.

Again, whenever the family complained that he was not spending enough time with them, he reasoned that he was doing all this for them. But he often yearned to spend more time with his family.

Father’s hard work paid off and he was promoted. Jubilantly, he decided to hire a maid to relieve his wife from her domestic tasks. He also felt that their three-room flat was no longer big enough, it would be nice for his family to be able to enjoy the facilities and comfort of a condominium. Having experienced the rewards of his hard work many times before, Father resolved to further his studies and work at being promoted again. The family still did not get to see much of him. In fact, sometimes Father had to work on Sundays entertaining clients. Again, whenever the family complained that he was not spending enough time with them, he reasoned that he was doing all this for them. But he often yearned to spend more time with his family.

As expected, Father’s hard work paid off again and he bought a beautiful condominium overlooking the coast of Singapore. On the first Sunday evening at their new home, Father declared to his family that he decided not to take anymore courses or pursue any more promotions. From then on he was going to devote more time to his family.

Father did not wake up the next day.

The mother Giraffe makes her child Suffer…Find out why…

The mother giraffe gives birth standing up, so the first thing that happens to a new-born giraffe is a fall of about two metres.

GiraffeStill dazed, the baby tries to stand up on its four legs, but its mother behaves very strangely: she gives the baby giraffe a gentle kick which sends it sprawling. It tries to get up and is again knocked down.

This process is repeated several times, until the new-born giraffe is too exhausted to stand. At that point, the mother kicks it again, forcing it to get to its feet. After that, she does not push the baby giraffe over again.

The explanation is simple: in order to survive predators, the first lesson a giraffe must learn is to get to its feet quickly.

The mother’s apparent cruelty finds support in an Arabic proverb: “Sometimes, in order to teach something good, you have to be a little rough.”

By Paulo Coelho

 

Lord Or No Lord?

Praise LordA religious woman upon waking up each morning would open her front door stand on the porch and scream, “Praise the lord.” This infuriated her atheist neighbor who would always make sure to counter back, “there is no Lord.” One morning the atheist neighbor overheard his neighbor praying for food, thinking it would be funny, he went and bought her all sorts of groceries and left them on her porch. The next morning the lady screamed, “praise the Lord, who gave me this food.” The neighbor laughing so hard he could barely get the words out screamed “It wasn’t the Lord, it was me.” The lady without missing a beat screamed “Praise the Lord for not only giving me food but making the atheist pay for it!!

Read more: Lord Or No Lord? – Atheist Jokes http://www.greatcleanjokes.com/1106/lord-or-no-lord/#ixzz2cVkj1HHH

Investment by SACCO Societies

The core business of a SACCO society is to receive savings contributions from members and to provide them with credit facilities.  This is in form of revolving fund from the members’ savings. The law does not encourage co-operative societies to invest funds in non-core business.

If money don't grow on trees, why do banks then have branches? :-)

If money doesn’t grow on trees, why do banks have branches? :-)

The first investment that a SACCO Society should invest its funds in is in its members in the form of loans.  Here, the society can introduce as many loan products as is practicable.  Members should be able to apply and utilize as many loan products as they may qualify for.  This should be subject to the regulations in place for loans in general, and for each loan products.

When the members’ loan demand has been fully met and there are no pending loan applications due to inadequate funds for lending, the society can invest any surplus funds in financial instruments. this is because the funds can be recalled within short notice when the need arises.

The probable areas that SACCO Societies can invest surplus funds in include; purchase of shares in companies and other institutions, investing in Government treasury bills, putting money in fixed deposit accounts. Surplus funds should first be determined and should be invested in institutional funds or other SACCO.

Before the officials decide to invest any surplus funds and where, they should properly analyze the funds position and ensure the excess liquidity is not temporary and that the core business will not be affected.

Any investment of society funds outside the core business should be able to conform with and promote the basic goals and objectives of the society.  the society should be able to get maximum return on the investment for the benefit of the members.

For SACCO Societies that qualify and are able to open and operate Front office Service Activity (FOSA), surplus funds can be invested in that activity and be utilized by members through various products that may not be offered through the back office.  Such products include short term loans and advances and loan clearing for the back office.  These products have become very popular with members and are a good source of income for SACCO Societies.

Where a society wants to invest in a building for own accommodation, or enter into long term investment, then it should use institutional capital and not members funds.   Where a society invests in real estate other than for its own accommodation, it shall not hold more than 20% of the equity in the investment.  It should also not expend a sum exceeding 25% of its share capital in such venture.

SACCO Societies should not enter into the business of acquiring land or buildings for members. Members can form separate housing co-operatives for such activities.   Members should also be sensitized and encouraged to get individual loans from their societies and join with like minded friends to acquire property.  they can later decide on what to do with the property jointly acquired.

Any involvement in non-core business should get the approval of the Commissioner and general meeting through a special resolution.

How can mobilization of member funds be improved?

Cooperatives need to find ways to increase member funding, since this provides the lowest cost, lowest risk form of capital for operations and investment. As government and donor support continues to decline, increasingly this also becomes the only practical source of funding for cooperatives. Even where outside support is still available, the advantage of increased reliance on member funding is that it gives greater autonomy to the cooperative and lowers the risk of eventual withdrawal of outside funding.
The strategy for increasing member funding depends on the particular circumstances of the cooperative, the type of activity it is engaged in and its scale of operation. Among the strategies to consider are:
Improving operating efficiency
Improving efficiency can be important for the mobilization of funds. It enables a cooperative to offer more competitive prices, securing and keeping member loyalty.
Funding and efficiency are related. Cooperatives with sufficient funds are able to invest in training and technology to reduce costs, and to increase or improve production. Well managed, technologically efficient cooperatives are generally more likely to accumulate capital.
Promoting patronage
The more members use the cooperative’s services – that is by taking loans and saving with the the cooperative – the more funds the cooperative will receive. It is therefore important for the cooperative to promote patronage. This is most easily achieved when cooperatives provide services valued by members, offer competitive interest rates and prompt payments.
Giving priority to mobilizing member funds
Most cooperatives will have to rely on member generated funds to finance their operations. Members’ financial stakes in the cooperative enforce greater accountability of the cooperative to members, build member participation in decision making and strengthen cooperative financial self-reliance and operational autonomy.
There are a number of ways in which member funds are obtained. In many cases, increased levels of funding can be achieved through adjusting these methods:
· Non-refundable membership fees upon joining/entrance/registartion fees
These fees are often small, but they need not necessarily be so if new members are buying into a successful business that provides valuable services.
·          Member shares
All members are required to purchase shares, which are usually the primary source of member capital. Shares purchased should earn dividends and are transferable to other members upon withdrawal from membership or given to his/her heirs in the event of the member’s death.
·         Member deposits
Co-operatives can also consider increasing minimum monthly contributions.
Products
     Other than loan products, co-operatives can introduce saving products e.g. holiday savings, withdrawable savings scheme, etc. Major source of affordable loans/credit. Why?
1)      Core objective and best form of saving
2)      Prerequisite for investment
3)      Saving for retirement
4)      Members earn GOOD returns at the end of the year
·          Retention of surplus.
Surplus can either be retained by the cooperative as institutional capital, or paid out in patronage refunds to members following the close of each year. In practice, cooperatives often offer interest rates more favourable than those prevailing in the market, creating little surplus and making it impossible to offer patronage refunds. Whenever possible, these practices should be altered either to build up