Division of a co-operative society entails several significant consequences and advantages, as well as potential disadvantages

Consequences of Division:

1. Division of Assets and Liabilities: The original co-operative society’s assets and liabilities are distributed among the new co-operative societies according to an agreed-upon division plan.
2. Change in Membership: Members of the original co-operative society must select which new co-operative society they wish to join.
3. Change in Management: Newly-formed co-operative societies need to elect or appoint their management.
4. Change in Operations: The operations of the new co-operative societies may differ from those of the original co-operative society.

Advantages of Division:

1. Increased Efficiency and Effectiveness: Division can create smaller, more focused co-operative societies that better cater to their members’ needs.
2. Improved Member Participation: It can enhance member involvement in co-operative society management.
3. Increased Competition: Division can stimulate competition among co-operative societies, providing members with more options and competitive prices.
4. Expansion into New Markets: It allows co-operative societies to explore new markets and attract new members.

Disadvantages of Division:

1. Increased Costs: Division can elevate operational costs, including administration and compliance expenses.
2. Loss of Economies of Scale: It may result in the loss of economies of scale, making it harder for co-operative societies to compete effectively.
3. Weakening of the Co-operative Movement: Division can weaken the co-operative movement by reducing the size and influence of co-operative societies.

In determining whether to divide a co-operative society, a case-specific approach should be adopted, considering the unique circumstances of the co-operative society and its members.

It’s crucial to emphasize that the division of a co-operative society is a intricate process that necessitates meticulous planning and execution. Fairness to all members and the future sustainability of the new co-operative societies should be paramount considerations throughout the division process.

House items to secure sacco loans in new law-Story by Business Daily 20 Nov 2020

Savings and credit co-operatives societies’ (Sacco) members will soon use household goods, livestock and office equipment as additional security for loans.

Business Registration Service (BRS) is in talks with the Saccos to join banks and expand their loans securities to include movable items.

This is thanks to the Movable Property Security Rights Act 2017 that has enabled banks to diversify collateral from the tradition of using immovable assets — primarily land and buildings — which are beyond the reach of most Kenyans.

“We have an engagement to sensitise and give them awareness on what needs to be done to come into this lending ecosystem,” BRS director general Kenneth Gathuma said.

The law and regulations created a single electronic registry for movable assets used as security for bank loans, which makes it easier for borrowers who do not own land or buildings to also access loans on strength of the movable properties.

Initially, ownership of collateral in the form of movable assets could easily be transferred without a bank’s knowledge, leaving it exposed in case of a default.

Banks have traditionally not accepted movable assets as collateral for loans because of lack of a central database they could log into and make a claim on an asset attached to a loan.

The BRS is the custodian of the movable security items.

Currently, saccos lending model use guarantors for issuance of credit. In case of default by the borrower, the amount guaranteed by the guarantor is used to cover part of the loan.

Tier 1 Saccos, with large assets such as Unaitas and Stima Sacco also accept the movable assets such as motor vehicles and title deeds and shares to give credit.

Sasra chief executive John Mwaka has said the move will have the societies amend their own Sacco by-laws for operationalisation, rather than the industry’s regulations.

“The decision will be on members to ratify their own regulations during annual general meetings and accommodate the changes in their business procedures,” Mr Mwaka said.

Borrowers will be required to register the assets as collaterals at the government online platform on eCitizen, under business registration service.

Mr Gathuma said the societies will act as creditors in order to register security rights of the assets issued by either members or the guarantors.

This would mean rise in interests in competing claims to the assets’ rights in case of default in repayment of loans.

The regulations allows that a borrower can access credit from multiple lenders with the same asset, but the first lender who registered the security right will have priority in event of default.

“The issue of Movable Properties Security Regulations is about priority rights. If they (saccos) register interest in movable asset registry, them it will give them priority among other lending institutions peers when they want to reclaim that particular interest,” he added.

Central Bank of Kenya data showed that Kenyans borrowed Sh43.56 billion from banks using household items, livestock and office equipment in the 12 months to August 2019, a third of the total loans issued by banks in the period.

Read it here https://www.businessdailyafrica.com/bd/economy/house-items-to-secure-sacco-loans-in-new-law-3204374

Agriculture CS Munya says bill proposing sweeping changes in coffee sector is ready

This story appeared in https://www.standardmedia.co.ke/farmkenya/crop/article/2001397723/agriculture-cs-munya-says-bill-proposing-sweeping-changes-in-coffee-sector-is-ready

Agriculture CS Peter Munya (pictured) has said the bill that proposes sweeping reforms in the coffee sector is ready and if implemented will improve farmers’ livelihoods and enhance its contribution to economic development.

Munya said the regulatory reforms are critical in revitalizing the sorry state in the coffee sub sector to ensure farmers get the value of their toil.

He said the government has already set aside Sh2 billion revolving fund to bail out coffee farmers amid challenges like market volatility, pests, diseases and negative impacts of climate change.

Munya said he had presented the bill to the government printer and will soon be tabled before the National Assembly for debate.

Addressing coffee farmers during a public participation exercise in Gatundu South, Munya said streamlining key value chains in the coffee sector is long overdue and asked MPs to support the master plan to revive the sector.

“The bill seeks to re-establish a coffee specific regulatory structure and a farmer-friendly legal framework providing an enabling ecosystem for development and growth,” Munya said.

According to the new coffee regulations as outlined in the Bill, a nine-member Coffee Board of Kenya with representatives drawn from all sectors including the county governments through the Council of Governors will be established to police the sector.

“Our target includes refurbishing coffee factories, infrastructure development and reorganization of farmer cooperatives. In the proposed changes factories are allowed to register as stand-alone and independent one factory societies if the farmers approve,” he said at Gathage grounds in Gatundu South.

The sweeping changes have outlawed millers and marketing agents from providing loans or advances to farmers at an interest and instead they can access the proposed cherry advance a 3 per cent interest rate.

“All millers shall make all disclosures necessary to enable farmers make an informed decision. This includes milling costs, handling and storage costs, other fees and charges and milling losses as a percentage,” he said.

According to the CS farmers will now be free to select millers and marketing agents of their choice.

This will be done at a farmers’ meeting at the factory where at least three millers shall pitch for their services.

The millers will have to disclose milling outcomes per grade of clean coffee, milling losses and prices per grade fetched in the market.

Read the rest here https://www.standardmedia.co.ke/farmkenya/crop/article/2001397723/agriculture-cs-munya-says-bill-proposing-sweeping-changes-in-coffee-sector-is-ready

State backed mortgage firm issues first Sh2.7bn credit to lenders

From The Star Business link https://www.the-star.co.ke/business/kenya/2020-12-18-state-backed-mortgage-firm-issues-first-sh27bn-credit-to-lenders/

The Kenya Mortgage Refinancing Company (KMRC) first tranche of credit to banks for onward lending to borrowers seeking long-term home loans at affordable rates is out. 

The National Treasury backed lender yesterday released Sh2.75 billion to KCB Bank, HF Bank, Stima Sacco and Tower Sacco which are the first beneficiaries among  primary mortgage lenders (PMLs). 

KCB received Sh2.13 billion, HF Bank Sh514 million, Stima Sacco h69 million while Tower Sacco received Sh29 million. 

This first disbursement is drawn from the World Bank line of credit.

The initial lending, provided at a fixed rate of five per cent per annum, will help mortgage lenders create new mortgages in the market on long-term-tenor within single digits rates.

According to KMRC chief executive officer  Johnstone Oltetia, the Sh2.75 billion is part of a Sh4.5 billion mortgage loan portfolio available for immediate refinancing to participating financial institutions.

”The four institutions made successful applications and demonstrated a re-financeable mortgage portfolio of 1,400 mortgages, which acts as the collateral for the funding,” Oltetia said.

He termed the disbursement of funds as a historic new dawn in affordable housing finance in Kenya saying that it illustrates the legal, structural and strategic foundations that have been put in place since inception for a fit-for-purpose mortgage refinance company.

In September, KMRC was cleared by the Central Bank of Kenya (CBK) to start issuing credit to local lenders. 

The Sh2.7 billion issued yesterday is part of the Sh35 billion worth of credit extended to the National Treasury by the World Bank and AfDB to support the country’s agenda on affordable housing. 

Read the rest here https://www.the-star.co.ke/business/kenya/2020-12-18-state-backed-mortgage-firm-issues-first-sh27bn-credit-to-lenders/

Sacco remittances halve to Sh900m-By Business Daily 14th Dec 2020

The amount of outstanding dues remitted to saccos halved to Sh900 million in the year to June compared to the similar period a year earlier, indicating the effect of liquidity challenges facing individuals and organisations in a tough economy.

Data from the National Treasury collated from the sector reports shows the amount has dropped from Sh1.8 billion the previous year.

Saccos usually rely on employer/institutions to directly make periodic deductions from members’ earnings and remit these directly to then.

However, some struggling entities make deductions such as monthly savings and loan repayments but fail to remit to saccos, leading to cash flow challenges.

“Amount of outstanding sacco remittances recovered in the financial year 2019/2020 was Sh900 million,” said the Treasury in the General Economic and Commercial Affairs sector report.

Delays in sacco remittances disrupts the financial base of the credit unions meaning that they may struggle to lend to members.

The economy has been battered by the Covid-19 pandemic this year, with tourism and small and medium-size businesses hit hardest.

County governments, parastatals, and institutions of higher learning are also among the top defaulters of employee deductions that also includes sacco dues.

The recovered remittances in the last financial year fell short of the Sh1 billion that had been targeted during the period.

Many saccos’ operations are hampered by the growing number of employers who deduct contributions from employees but fail to remit the money.

Read the rest here https://www.businessdailyafrica.com/bd/markets/capital-markets/sacco-remittances-halve-to-sh900m-3227544

EFFECTIVE TIME MANAGEMENT

TIME

• Time in an organization is constant and irreversible, and cannot be substituted.
• Time once wasted, it can never be regained. Therefore, for an organization to be efficient, time needs to be effectively managed.

Major Time – wasters

• Indecision – thinking about it, worrying about it and eventually putting it off
• Creating inefficiencies by implementing first instead of analyzing first
• Unanticipated interruptions that do not pay off
• Procrastination
• Making unrealistic time estimates
• Unnecessary errors (doing something just to get over with it)
• Crisis management
• Poor organization
• Ineffective meetings
• Micro-managing people and the entire organization (failing to let others perform and grow)
• Failure to delegate
• Doing urgent rather than important tasks
• Poor planning and lack of contingency plans
• Lack of priorities, standards, policies and procedures

Time Savers

• Managing the decision making process, not the decisions
• Concentrating on doing only one task at a time
• Establishing daily, short term, mid-term, and long term priorities
• Handling correspondence expeditiously with quick, short letters and memos
• Throwing unneeded things away
• Establishing personal deadlines and ones for the organization
• Not wasting other people’s time
• Ensuring all meetings have a purpose, time limit, and include only essential people
• Getting rid of busy work
• Maintaining accurate calendars; abide by them
• Knowing when to stop a task, policy or procedure
• Delegate everything possible and empower subordinates
• Keeping things simple
• Ensuring time is set aside to accomplish high priority tasks
• Setting aside time for reflection
• Using checklists and to-do-lists
• Adjusting priorities as a result of new tasks

Effective Time Management Tips

• Get started –Often as much time is wasted avoiding a project, as actually accomplishing the project.
• Get into a routine –   Choose a time to get certain tasks accomplished, such as answering email, signing documents, completing paperwork, e.t.c.; and then stick to it every day. Use a day-planning calendar.
• Do not say yes to too many things – this causes us to live to the priorities of others, rather than according to our own. Every time you agree to do something else, something else will not get done. Learn how to say no.
• Do not commit yourself to unimportant activities, no matter how far ahead they are – Often we agree to do something that is far ahead, when we would not normally do it if it was in the near future. No matter how far it is , it will still take the same amount of your time.
• Divide large tasks – create small manageable tasks from a large tasks to be able to fit it into your hectic schedule.
• Do not put unneeded effort into a project – not every project needs perfectionism, hence save it for the tasks that need it.
• Deal with it once and for all – avoid starting a task unless you are ready to go through with it.
• Set start and stop times – when this is done, one is able to estimate timing and hence helps one to better schedule your activities. Also learn to shave off some time off your schedule to make it more efficient.
• Plan your activities – schedule a regular time to plan your activities. If time is important to you, then you will allow time to plan it wisely.

CONDUCT OF MEETINGS

• All legal meetings are guided by the law (Act, Rules and By-laws).
• They are classified according to power they exercise, function and duration.
• Types;……

AGMs

CMCs

SCMs

SGMs

Before a meeting starts, it must ensure that:

• A quorum is present
• A chair and other officers are selected
• An attendance book/paper is passed round for registration/record
• There is an agenda/motion
• Members must always address the chair when they want to contribute in the meeting or before leaving
• Matters are discussed, motions amended or voted upon.

Dealing with people in meetings

• List all late arrivals in the minutes and do not allow them to take you back
• Seat people where you have eye contact with everybody
• Watch body language, who is for or against
• Control trouble makers, they never mind
• Draw out the reserved
• Protect the weak
• Encourage clash of ideas; conflicts stimulates but don’t let it be a fight
• Show warmth to suggestions made
• Come to the most senior people last
• Close on a note of thanks

Order of Meetings

• Calling the meeting to order as soon as quorum is achieved
• Prayers (if accepted as a practice)
• Introductions (new members, co-opted, in-attendance or observers)
• Introduction and adoption of agenda
• Opening remarks if any (often by the chair)
• Reading and confirmation of minutes (if any)
• Matters arising from the minutes (reports)
• New business of the day (stated clearly, unambiguously, concisely and completely)

TIME WASTERS IN MEETINGS

• Taking a lot of time to discuss preliminary business at the expense of the business of the day
• Allowing members to read minutes during the meeting
• Engaging in technical tasks which could otherwise have been delegated to a sub-committee or staff
• Allowing extended debate on AOB
• Allowing members to engage in a lot of side shows deviating from business of the day
• A lot of consultations between the chair and the secretary during the meeting
• Carrying out logistical work during the meeting like photocopying or signing of documents
• Repeating debate on a motion which has already been agreed upon
• People not prepared
• Wandering/answering calls
• Too many points of order
• Poor chairmanship
• Ineffective secretariat
• Long breaks
• Briefing late members
• Un necessary interruptions like other meetings within a meeting or visitors not in agenda
• Repetitions such as members restating what others have said and the chair allows this
• Chair asking and insisting every member to give an AOB
• Generating agendas during the meeting
• Too many people talking at the same time

All credits accorded to the original author of the article.

Dairy society eyes new products for growth (Business Daily story)

When 31 disgruntled dairy farmers decided to contribute Sh1 each for every litre of milk sold and register a co-operative in 1961, there was no telling that they were laying the foundation for a multi-billion-shilling business.

The enterprise that became Githunguri Dairy Farmers Co-operative Society last year grossed Sh6 billion in annual turnover and has attracted a couple of buyout bids.

Originally, the idea was to find a lasting solution to the persistent milk price volatility. But the more they pushed on, the deeper they sank into financial difficulties, forcing them to increase their contributions from one to two shillings.

Although this did not unlock their expected success, it hardened their resolve to push on.

“At that time, our credit-worthiness was nearly zero and no bank was willing to finance our business plan. Nearly all our applications for loans were turned down,” says Charles Mukora, the society chairman.

“The problem with Kenyan banks is that they present themselves as very close to potential customers but, practically, are very far from that reality.”

Unbowed and with no clear capital outlay to set up a processing plant, the membership enrolment went up, as did milk supply.

The society decided that they would supply the milk to the then market leader — the Kenya Cooperative Creameries (KCC) — and a local hotel.

“It was a desperate move and we had to start working with what was readily available. The profits were not forthcoming yet this was the only source of livelihood for most members,” says Mr Mukora.

Then the worst happened when KCC collapsed in the early 1990s, sending the society back to the drawing board.

“This was our lowest moment and we decided to raise capital and set up our own milk plant,” says Mr Mukora, who became a member of Githunguri Dairy while a student at Kenyatta University.

“We had no collateral but successfully approached Oikocredit International for possible funding and got Sh90 million.”

Oikocredit is a global co-operative and social investor that provides funding to small and medium enterprises to enhance business growth and development.

In 2004, Githunguri Dairy Farmers Co-operative Society went commercial with the first processing plant that produced Fresha whole milk, its flagship product.

It produced 18,000 litres of milk daily, selling it in Nairobi and its environs. That capacity has since increased to 220,000 litres currently from a workforce of 8,000.

Read more here http://www.businessdailyafrica.com/Corporate-News/Githunguri-Dairy-plots-to-cement-its-place-in-big-league/-/539550/2383882/-/mibs19/-/index.html

Equality is the theme of the 2015 International Day of Co-operatives!!

In our globalizing world inequality is on the rise

The global income gap has continued to widen over the past years. A recent Credit Suisse report estimates that the top 1 percent of the globe’s population possesses nearly half of the world’s wealth, whereas the bottom half of world’s population holds less than 1 percent of its riches.

But inequality comes in a variety of shades. It can apply to ethnic, regional or locational characteristics, or personal features such as gender or age.

Preceding equal voting rights for men and women, gender equality has been a fundamental right in co-operatives, since their inception in the first half of the 19th century. Co-operatives’ typically flat hierarchy encourages a culture of teamwork, where talent is rewarded rather than competitiveness.

How inequality affects us all

Inequality matters because it influences our perceptions about self-worth and justice. All human beings are entitled to the same respect and dignity. Inequality however, has also serious negative socio-economic and security consequences.

• Bad for the economy – Inequality also slows GDP growth. It hinders human capital accumulation, hurts educational outcomes and long-term economic prospects for those on the lower end of the income ladder.

• Bad for our infrastructure – When excluded, people cannot participate in the institutions that build a society. Examples of this are medical capacity building, industry requiring schooled craftsmen, or credit and insurance.
• Bad for our safety – The social impacts of inequality include unemployment, violence, crime, humiliation, and deterioration of human capital and social exclusion. Inequality negatively affects democratic participation, it fosters corruption and civil conflict.
• Bad for democracy – Politically, inequality erodes the fairness of institutions. Inequality exacerbates the problem of holding governments accountable. Where social institutions are already fragile, inequality further discourages the civic and social life that underpins effective collective decision-making which is necessary for the functioning of healthy societies.

How co-operatives help

• All owners – By widening ownership, co-operatives are a proven force for economic and social inclusion. If the co-operative model continues to grow, inequality will be reduced.
• Open to all – Because a coop is open to all, anybody, man or woman, old or young can enter.
• Decision power not dependent on wealth – Because a coop has 1 vote regardless of the capital, all have equal decision power.
• Equality means also equal access to goods – The UN have recognized as a critical strategy, at the national level, that of ensuring universal access to good-quality, basic goods and services, the very purpose of a co-operative.

The United Nations state that it is important to ensure that provision actually reaches the sections of the population that are typically excluded. Co-ops focus on meeting the needs of their members rather than financial returns alone.

The co-operative movement, presents a unique combination of global reach and people based business conduct. We can play an important role in poverty reduction. Co-operatives help to reduce inequality by empowering people and by offering them a dignified and sustainable way to make a living.

Read more here

SCHEDULE OF LICENSED DEPOSIT-TAKING SACCO SOCIETIES FOR PERIOD ENDING DECEMBER 2014

#	NAME OF SOCIETY	POSTAL ADDRESS
1.	2NK SACCO SOCIETY LTD	P.O BOX 12196-10109, NYERI
2.	AFYA SACCO SOCIETY LTD	P.O BOX 11607-00400, NAIROBI
3.	AGRO-CHEM SACCO SOCIETY LTD	P.O BOX 94-40107, MUHORONI
4.	AINABKOI FARMERS SACCO SOCIETY LTD	P.O BOX 120-30101, AINABKOI
5.	AIRPORT SACCO SOCIETY LTD	P.O BOX 19001-00501, NAIROBI
6.	ALL CHURCHES SACCO SOCIETY LTD	P.O BOX 2036-0100, THIKA
7.	ARDHI SACCO SOCIETY LTD	P.O BOX 28782-00200, NAIROBI
8.	ASILI SACCO SOCIETY LTD	P.O BOX 49064-00100, NAIROBI
9.	BANANA HILL SACCO SOCIETY LTD	P.O BOX 333-00219, KARURI
10.	BANDARI SACCO SOCIETY LTD	P.O BOX 95011-80104,MOMBASA
11.	BARAKA SACCO SOCIETY LTD	P.O BOX 1548-10101, KARATINA
12.	BARATON UNIVERSITY SACCO SOCIETY LTD	P.O BOX 2500-30100, ELDORET.
13.	BIASHARA SACCO SOCIETY LTD	P.O BOX 1895-10100, NYERI.
14.	BINGWA SACCO SOCIETY LTD	P.O BOX 434-10300, KERUGOYA.
15.	BORESHA SACCO SOCIETY LTD	P.O BOX 80-20103, ELDAMA RAVINE
16.	BUSIA TESO TEACHERS SACCO SOCIETY LTD	P.O BOX 448-50400, BUSIA.
17.	CAPITAL SACCO SOCIETY LTD	P.O BOX 1479-60200, MERU
18.	CENTENARY SACCO SOCIETY LTD	P.O BOX 1207-60200, MERU
19.	CHAI SACCO SOCIETY LTD	P.O BOX 278-00200, NAIROBI.
20.	CHUNA SACCO SOCIETY LTD	P.O BOX 30197-00100, NAIROBI.
21.	COMOCO SACCO SOCIETY LTD	P.O BOX 30135-00100, NAIROBI.
22.	COSMOPOLITAN SACCO SOCIETY  LTD	P.O BOX 1931-20100, NAKURU.
23.	COUNTY SACCO SOCIETY LTD	P.O BOX 21-60103, RUNYENJES.
24.	DAIMA SACCO SOCIETY LTD	P.O BOX 2032-60100, EMBU
25.	DHABITI SACCO SOCIETY LTD	P.O BOX 353-60600, MAUA.
26.	DIMKES SACCO SOCIETY LTD	P.O BOX 886-00900, KIAMBU.
27.	DUMISHA SACCO SOCIETY LTD	P.O BOX 84-200600, MARALAL.
28.	ECO-PILLAR  SACCO SOCIETY LTD (formerly Kapenguria Teachers Sacco)	P.O BOX 48-30600, KAPENGURIA.
29.	EGERTON UNIVERSITY SACCO SOCIETY LTD	P.O BOX 178-20115, EGERTON.
30.	ELGON TEACHERS SACCO SOCIETY LTD	P.O BOX 27-50203, KAPSOKWONY.
31.	ELIMU SACCO SOCIETY LTD	P.O BOX 10073-00100, NAIROBI.
32.	ENEA SACCO SOCIETY LTD	P.O BOX 1836-10101, KARATINA.
33.	FARIJI SACCO SOCIETY LTD	P.O BOX 589-00216, GITHUNGURI.
34.	FORTUNE SACCO SOCIETY LTD	P.O BOX 559-10300, KERUGOYA.
35.	FUNDILIMA SACCO SOCIETY LTD	P.O BOX 62000-00200, NAIROBI.
36.	GASTAMECO SACCO SOCIETY LTD	P.O BOX 189-60101, MANYATTA.
37.	GITHUNGURI DAIRY & COMMUNITY  SACCO SOCIETY LTD	P.O BOX 896-00216, GITHUNGURI.
38.	GOODFAITH SACCO SOCIETY LTD	P.O BOX 224-00222, UPLANDS.
39.	GREEN HILLS COFFEE GROWERS SACCO SOCIETY LTD (formerly Chebosobon Sacco)	P.O BOX 59-20209, FORT TERNAN
40.	GUSII MWALIMU SACCO SOCIETY LTD	P.O BOX 1335-40200, KISII.
41.	HARAMBEE  SACCO SOCIETY LTD	P.O BOX 47815-00100, NAIROBI.
42.	HAZINA SACCO SOCIETY LTD	P.O BOX 59877-00200, NAIROBI.
43.	ILKISONKO RURAL FARMERS SACCO SOCIETY LTD	P.O BOX 91-00209, LOITOKITOK
44.	IMARIKA SACCO SOCIETY LTD	P.O BOX 712-80108, KILIFI.
45.	IMARISHA SACCO SOCIETY LTD	P.O BOX 682-20200, KERICHO.
46.	IMENTI SACCO SOCIETY LTD	P.O BOX 3192-60200, MERU.
47.	ISIOLO TEACHERS SACCO SOCIETY LTD	P.O BOX 105 – 60300, ISIOLO
48.	JACARANDA SACCO SOCIETY LTD	P.O BOX 4-00232, RUIRU.
49.	JAMII SACCO SOCIETY LTD	P.O BOX 57929-00200, NAIROBI.
50.	JIJENGE SACCO SOCIETY LTD	P.O BOX 6222-01000, THIKA.
51.	JITEGEMEE SACCO SOCIETY LTD	P.O BOX 86937-80100, MOMBASA
52.	JUMUIKA SACCO (Formerly Chemelil Sacco Society Ltd )	P.O BOX 14-40112, AWASI.
53.	KAIMOSI SACCO SOCIETY LTD	P.O BOX 153-50305, SIRWA.
54.	KAKAMEGA TEACHERS SACCO SOCIETY LTD	P.O BOX 1150-50100, KAKAMEGA.
55.	KATHERA RURAL SACCO SOCIETY LTD	P.O BOX 251-60202, NKUBU.
56.	KEIYO TEACHERS SACCO SOCIETY LTD	P.O BOX 512-30700, ITEN.
57.	KENPIPE SACCO SOCIETY LTD	P.O BOX 314-00507, NAIROBI.
58.	KENVERSITY SACCO SOCIETY LTD	P.O BOX 10263-00100, NAIROBI.
59.	KENYA ACHIEVAS SACCO SOCIETY LTD	P.O BOX 3080-40200, KISII
60.	KENYA BANKERS SACCO SOCIETY LTD	P.O BOX 73236-00200, NAIROBI.
61.	KENYA CANNERS SACCO SOCIETY LTD	P.O BOX 1124-01000, THIKA.
62.	KENYA HIGHLANDS SACCO SOCIETY LTD	P.O BOX 2085-002000, KERICHO.
63.	KENYA MIDLAND SACCO SOCIETY LTD	P.O BOX 287-20400, BOMET.
64.	KENYA POLICE SACCO SOCIETY LTD	P.O BOX 51042-00200, NAIROBI
65.	KIAMBAA DAIRY RURAL SACCO SOCIETY LTD	P.O BOX 669-00219, KARURI.
66.	KIMBILIO DAIMA SACCO SOCIETY LTD (formerly Chepsol Tea Sacco)	P.O BOX 81-20225, KIMULOT
67.	KINGDOM SACCO SOCIETY LTD	P.O BOX 8017-00300, NAIROBI.
68.	KIPSIGIS EDIS SACCO SOCIETY LTD	P.O BOX 228-20400, BOMET.
69.	KITE SACCO SOCIETY LTD	P.O BOX 2073-40100, KISUMU.
70.	KITUI TEACHERS SACCO SOCIETY LTD	P.O BOX 254-90200, KITUI.
71.	KMFRI SACCO SOCIETY LTD	P.O BOX 80862 80100, MOMBASA.
72.	KOLENGE TEA SACCO SOCIETY LTD	P.O BOX 291-30301, NANDI HILLS
73.	KONOIN SACCO SOCIETY LTD	P.O BOX 83-20403, MOGOGOSIEK.
74.	KORU SACCO SOCIETY LTD	P.O BOX Private Bag- 40104, KORU.
75.	K-UNITY SACCO SOCIETY LTD	P.O BOX 268-00900, KIAMBU.
76.	KWALE TEACHERS SACCO SOCIETY LTD	P.O BOX 123-80403, KWALE.
77.	LAMU TEACHERS SACCO SOCIETY LTD	P.O BOX 110-80100, LAMU.
78.	LENGO  SACCO SOCIETY LTD	P.O BOX 371-80200, MALINDI
79.	MAGADI SACCO SOCIETY LTD	P.O BOX 13-00205, MAGADI.
80.	MAGEREZA SACCO SOCIETY LTD	P.O BOX 53131-00200, NAIROBI.
81.	MAISHA BORA SACCO SOCIETY LTD	P.O BOX 30062-00100, NAIROBI.
82.	MAONO DAIMA SACCO SOCIETY LTD (formerly Mulot FSA Sacco)	P.O BOX 41-20424, BOMET.
83.	MARAKWET  TEACHERS SACCO SOCIETY LTD	P.O BOX 118-30705, KAPSOWAR.
84.	MARSABIT TEACHERS SACCO SOCIETY LTD	P.O BOX 90-60500, MARSABIT.
85.	KWETU SACCO  (Formerly Masaku Teachers Sacco	P.O BOX 818-90100, MACHAKOS.
86.	MENTOR SACCO SOC IETY LTD	P.O BOX 789-10200, MURANG’A.
87.	METROPOLITAN SACCO SOCIETY LTD	P.O BOX 871-00900, KIAMBU.
88.	MILIKI SACCO SOCIETY LTD (formerly Orthodox Sacco)	P.O BOX 43582-00100, NAIROBI.
89.	MMH SACCO SOCIETY LTD	P.O BOX 469-60600, MAUA.
90.	MOI UNIVERSITY SACCO SOCIETY LTD	P.O BOX 23-30107, MOI UNIVERSITY.
91.	MOMBASA PORT SACCO SOCIETY LTD	P.O BOX 95372-80104, MOMBASA.
92.	MOMBASA TEACHERS SACCO SOCIETY LTD	P.O BOX 86515-80100, MOMBASA.
93.	MUDETE FACTORY TEA GROWERS SACCO SOCIETY LTD	P.O BOX 221-50104, KAKAMEGA.
94.	MUHIGIA SACCO SOCIETY LTD	P.O BOX 83-10300, KERUGOYA.
95.	MUKI SACCO SOCIETY LTD	P.O BOX 398, NORTH KINANGOP.
96.	MURATA  SACCO SOCIETY LTD	P.O BOX 816-10200, MURANG’A
97.	MWALIMU NATIONAL  SACCO SOCIETY LTD	P.O BOX 62641-00200, NAIROBI.
98.	MWEA RICE FARMERS SACCO SOCIETY LTD	P.O BOX 272-10303. WANGURU.
99.	MWIETHERI SACCO SOCIETY LTD	P.O BOX 2445-60100, EMBU.
100.	MWINGI MWALIMU SACCO SOCIETY LTD	P.O BOX 489-90400, MWINGI.
101.	MWITO SACCO SOCIETY LTD	P.O BOX 56763-00200, NAIROBI
102.	NACICO SACCO SOCIETY LTD	P.O BOX 34525-00100, NAIROBI.
103.	NAFAKA SACCO SOCIETY LTD	P.O BOX 30586-00100, NAIROBI.
104.	NAKU SACCO SOCIETY LTD	P.O BOX 78355-00507, NAIROBI.
105.	NANDI FARMERS SACCO SOCIETY LTD	P.O BOX 333-30301, NANDI HILLS.
106.	NANDI HEKIMA SACCO SOCIETY LTD	P.O BOX 211-30300, KAPSABET.
107.	NANDI TEACHERS SACCO SOCIETY LTD	P.O BOX 547-30300, KAPSABET.
108.	NECCO SACCO (Formerly Nanyuki Equator Sacco Society)	P.O BOX 1098-10400, NANYUKI.
109.	NAROK TEACHERS SACCO SOCIETY LTD	P.O BOX 158-20500, NAROK.
110.	NASSEFU SACCO SOCIETY LTD	P.O BOX 43338-00100, NAIROBI.
111.	NATION SACCO SOCIET Y LTD	P.O BOX 22022-00400, NAIROBI.
112.	NAWIRI SACCO SOCIETY LTD	P.O BOX 400-60100, EMBU.
113.	NDEGE CHAI SACCO SOCIETY LTD	P.O BOX 857-20200, KERICHO.
114.	NDOSHA SACCO SOCIETY LTD	P.O BOX 532-60401, CHOGORIA- MAARA
115.	NEST SACCO SOCIETY LTD	P.O BOX 14551-00800, NAIROBI.
116.	NG’ARISHA SACCO SOCIETY LTD  (formerly Bungoma Teachers Sacco)	P.O BOX 1199-50200, BUNGOMA.
117.	NITUNZE  SACCO SOCIETY	P.O BOX 295-50102, MUMIAS.
118.	NRS SACCO SOCIETY LTD	P.O BOX 575-00902, KIKUYU.
119.	NTIMINYAKIRU SACCO SOIETY LTD	P.O BOX 3213-60200, MERU.
120.	NUFAIKA SACCO SOCIETY LTD	P.O BOX 735-10300, KERUGOYA.
121.	NYAHURURU  UMOJA SACCO SOCIETY LTD	P.O BOX 2183-20300, NYAHURURU.
122.	NYALA  VISION SACCO SOCIETY LTD	P.O BOX 27-20306, NDARAGWA.
123.	NYAMBENE ARIMI SACCO SOCIETY LTD	P.O BOX 493-60600, MAUA.
124.	NYAMIRA TEA FARMERS SACCO SOCIETY LTD	P.O BOX 633-40500, NYAMIRA.
125.	NYERI TEACHERS SACCO SOCIETY LTD	P.O BOX 1939-10100, NYERI.
126.	OGEMBO TEA GROWERS  SACCO SOCIETY LTD	P.O BOX 88, KENYENYA.
127.	ORIENT SACCO SOCIETY LTD	P.O BOX 1842-01000, THIKA.
128.	PATNAS  SACCO SOCIETY LTD (formerly Bureti Sacco )	P.O BOX 601-20210, LITEN
129.	PUAN SACCO SOCIETY LTD	P.O BOX 404-20500, NAROK.
130.	RACHUONYO TEACHERS SACCO SOCIETY LTD	P.O BOX 14-4022, KOSELE.
131.	SAFARICOM SACCO SOCIETY LTD	P.O BOX 66827-00800, NAIROBI.
132.	SHERIA SACCO SOCIETY LTD	P.O BOX 34390-00100, NAIROBI.
133.	SIMBA CHAI SACCO SOCIETY LTD	P.O BOX 977-20200, KERICHO.
134.	SIRAJI SACCO SOCIETY LTD	P.O BOX PRIVATE BAG, TIMAU.
135.	SKYLINE SACCO SOCIETY LTD (formerly Baringo Farmers Sacco)	P.O BOX 660-20103, ELDAMA RAVINE.
136.	SMART CHAMPIONS SACCO SOCIETY LTD (formerly Githongo Majani Sacco)	P.O BOX 64-60205, GITHONGO.
137.	SOLUTION SACCO SOCIETY LTD	P.O BOX 1694-60200, MERU.
138.	SOTICO SACCO SOCIETY LTD	P.O BOX 959-20406, SOTIK.
139.	SOUTHERN STAR  SACCO SOCIETY LTD (Formerly Meru South Sacco)	P.O BOX 514-60400, CHUKA.
140.	STAKE KENYA SACCO SOCIETY LTD.(formerly Kuria Teachers Sacco)	P.O BOX 208-40413, KEHANCHA.
141.	STEGRO  SACCO SOCIETY LTD (formerly Sot Tea Growers Sacco)	P.O BOX 251-20400, BOMET.
142.	STIMA SACCO SOCIETY LTD	P.O BOX 75629-00100, NAIROBI.
143.	SUBA TEACHERS SACCO SOCIETY LTD	P.O BOX 237-40305, MBITA.
144.	SUKARI SACCO SOCIETY LTD.	P.O BOX 841-50102, MUMIAS.
145.	SUPA SACCO SOCIETY LTD (Formerly Samburu Traders Sacco)	P.O BOX 271-20600, MARALAL.
146.	TAI SACCO SOCIETY LTD	P.O BOX 718-00216, GITHUNGURI.
147.	TAIFA SACCO SOCIETY LTD	P.O BOX 1649-10100, NYERI.
148.	TAITA TAVETA TEACHERS  SACCO SOCIETY LTD	P.O BOX 1186-80304, WUNDANYI.
149.	TARAJI SACCO SOCIETY LTD	P.O BOX 605-40600, SIAYA.
150.	TELEPOST SACCO SOCIETY LTD	P.O BOX 49557-00100, NAIROBI.
151.	TEMBO SACCO SOCIETTY LTD	P.O BOX 91-00618, RUARAKA.
152.	TENHOS SACCO SOCIETY LTD	P.O BOX 391-20400, BOMET.
153.	TESCOM SACCO SOCIETY LTD	P.O BOX 626-10300, KERUGOYA.
154.	THAMANI SACCO SOCIETY LTD	P.O BOX 467-60400, CHUKA.
155.	TIMES- U SACCO SOCIETY LTD	P.O BOX 310-60202, NKUBU.
156.	TOWER SACCO SOCIETY LTD	P.O BOX 259-20303, OL’KALOU.
157.	TRANS NATION  SACCO SOCIETY LTD (formerly  Tharaka Nithi  Teachers)	P.O BOX 15-60400, CHUKA.
158.	TRANSCOM SACCO SOCIETY LTD	P.O BOX 19579-00202, NAIROBI.
159.	TRANS-COUNTIES SACCO SOCIETY LTD	P.O BOX 2965-30200, KITALE.
160.	TRANS-NATIONAL TIMES SACCO SOCIETY LTD (formerly Trans-Nzoia Teachers Sacco)	P. O BOX 2274-30200, KITALE.
161.	UCHONGAJI SACCO SOCIETY LTD	P.O BOX 92503-80102, MOMBASA.
162.	UFANISI SACCO SOCIETY LTD	P.O  BOX 2973-00200, NAIROBI.
163.	UFUNDI SACCO SOCIETY LTD	P.O BOX 11705-001400, NAIROBI.
164.	UKRISTO NA UFANISI  WA ANGLICANA SACCO  SOCIETY LTD	P.O BOX 872-00605, NAIROBI.
165.	UKULIMA SACCO SOCIETY LTD	P.O BOX 44071-00100, NAIROBI.
166.	UNAITAS SACCO SOCIETY LTD	P.O BOX 1145-10200, MURANG’A.
167.	UNI-COUNTY SACCO SOCIETY LTD (formerly Tupendane Sacco)	P.O BOX 10132-20100, NAKURU.
168.	UNISON  SACCO SOCIETY LTD (formerly Laikipia Teachers Sacco)	P.O BOX 414-10400, NANYUKI.
169.	UNITED NATION SACCO SOCIETY LTD	P.O BOX 30552-00100, NAIROBI.
170.	UNIVERSAL TRADERS SACCO SOCIETY LTD	P.O BOX 2119-90100, MACHAKOS.
171.	VIHIGA COUNTY FARMERS SACCO SOCIETY LTD	P.O BOX 309-50317, CHAVAKALI.
172.	VISION AFRICA SACCO SOCIETY LTD	P.O BOX 18263-20100, NAKURU.
173.	VISION POINT SACCO SOCIETY LTD (formerly Borabu Farmers Sacco)	P.O BOX 42-40502, NYANSIONGO.
174.	WAKENYA PAMOJA SACCO SOCIETY LTD	P.O BOX 829-40200, KISII.
175.	WAKULIMA  COMMERCIAL SACCO SOCIETY LTD	P.O BOX 232-10103, NYERI.
176.	WANA-ANGA SACCO SOCIETY LTD	P.O BOX 34680-00501, NAIROBI.
177.	WANANCHI SACCO SOCIETY LTD	P.O BOX 910-10106, OTHAYA.
178.	WANANDEGE SACCO SOCIETY LTD	P.O BOX 19074-00501, NAIROBI.
179.	WARENG TEACHERS SACCO SOCIETY LTD	P.O BOX 3466-30100, ELDORET.
180.	WASHA SACCO SOCIETY LTD	P.O BOX 83256-80100, MOMBASA.
181.	WAUMINI SACCO SOCIETY LTD	P.O BOX 66121-00800, NAIROBI.
182.	WEVARSITY SACCO SOCIETY LTD	P.O BOX 873-50100, KAKAMEGA.
183.	WINAS SACCO SOCIETY LTD	P.O BOX 696-60100, EMBU.
184.	YETU SACCO SOCIETY LTD	P.O BOX 511-60202, NKUBU.

Member Participation

The AGM being the supreme organ of the Sacco members should be facilitated by the board to fully participate in the AGM and other meetings of the Sacco including timely receipt of notice and documentation of the meeting including annual financial statements, corporate governance reports and other matters of importance to the members.
Prior to the AGM members should be encouraged to enhance their contributions to deliberations at the AGM through vigorous engagement at Zonal or branch meetings as well as Delegates pre-AGM briefings and conferences to ensure alignment of views and positions.
At the AGM, members should be given ample opportunity to raise any concerns they may have regarding the performance of the Sacco, as well as its governance, and to receive satisfactory answers to their enquiries. Voting at the AGM should be conducted in accordance with by-laws and the minutes of the AGM should be circulated to members as soon thereafter as possible.
Members should also be facilitated by management with easy access to information relating to the Sacco including internal regulations, registers, minutes of the general meetings, supervisory committee meetings and all regulations in force.
Other rights of participation by members include:
(a) A right to share in the surplus of the society by way of dividend or bonus
(b) Enjoyment of all the services provided by the Sacco including savings and credit facilities
(c) The right to submit projects or initiatives on improvement of the Sacco services for consideration by the Board.
(d) The opportunity to appoint nominees

PREVENTIVE CONTROL MEASURES IN A CO-OPERATIVE

The following categories of preventive controls can be adopted to guard against possibility of fraud occurring in the Sacco.

1. The society should maintain excellent portfolio quality
2. There is need for simplicity and transparency of systems and procedures
3. Fraud- preventive human resource policies
4. Client education and awareness
5. Strict, transparent policies and procedures of write –offs and rescheduling loans
6. Policy for custody and handling collateral
7. Credit committee- Credit committee not only play an important role in reducing credit risk, but also are an essential element of an operational integrity and fraud prevention strategy.
8. Cash handling policy-Basic controls recommended to mitigate the risk of misappropriation for the society include;

• Use of standardized, pre-printed, pre-numbered loan/membership application forms.
• The society should prepare loan agreements in quadruplicate.
• The society should include all vital details in the loan agreements, to reduce manipulation.
• The society also needs to restrict access to blank loan agreements.
• The society staff should do a final pre-disbursement vetting and verification of compliance for each loan and in case of anomalies should report to management committee.
• Additional mandatory checks should be done by the staff before disbursing.
• The society should elaborately document the disbursement process e.g. by making sure cheque or cash collections are recorded.
• The society should retain one copy of the disbursement receipt and give the other to the payee.
• In disbursing funds directly to the borrower, the staff should check for evidence that the person accepting funds is the real borrower.
• An accountant or someone else should compare payee disbursement request and loan agreement signatures.

 

Policy for custody and handling collateral

Currently many Saccos are vulnerable to potential irregularities or fraud in the collection, storage and return of collateral. The assigned staff/management or any person may collect collateral but not deposit it in the designated storage area, or collect the wrong type of collateral, or neglect to collect it at all. It is important that co-operative societies should mitigate the risk associated with collateral through the following steps:

1. The co-operative societies must have policies and procedures on when to require collateral, when to assume custody of collateral versus allowing borrower to maintain custody, where to deposit and store collateral, and how to value collateral.
2. The co-operative societies should have clear guidelines to their staffs on how to verify the authenticity of the particular collateral e.g. land title verification, vehicles logbooks, etc.
3. If the borrower maintains collateral, the co-operative societies should periodically inspect the collateral for impairment. The loan agreement should include a detailed description of the collateral and serial number or other identifying number of the property, and require that collateral must not be sold without prior notice to the society.
4. Procedures must be clearly stated for returning collateral to the borrower upon full repayment of the loan. The Saccos should maintain a proper register for all members’ collateral so that whenever it is being moved or transferred to any other party, it is properly signed for.
5. Procedures should be recommended to improve the chances that liquidation of collateral is done at the best available price, and that proceeds from liquidation are deposited intact into the bank.

2014 in review

The WordPress.com stats helper monkeys prepared a 2014 annual report for this blog.

Here’s an excerpt:

The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 44,000 times in 2014. If it were a concert at Sydney Opera House, it would take about 16 sold-out performances for that many people to see it.

Click here to see the complete report.

Letter from Standard Chartered Bank to Co-operatives and other Financial Institutions

These are words of a letter written by SCB to co-operatives and other financial institutions titled “Closure of Financial Institutions’ Accounts.”

“Standard Chartered Bank Group (“SCB”) has, as part of a comprehensive strategic review of its business and client segments in multiple countries, taken a strategic decision to discontinue banking relationships with certain client categories managed within its Commercial and Business Clients segments formerly SME Segment. One of the affected client categories is Financial Institutions (FI), within which you are classified as one.

The decision to cease banking the affected client categories in Commercial and Business Clients, including FI, has resulted from increased burden of complying with regulatory requirements for banking such clients. Key regulators under whose supervision SCB falls requires higher levels of client due diligence to be conducted on such clients, both at the time of commencing the banking relationship and on an ongoing basis. Satisfying the regulatory requirements for such clients imposes a significant cost and compliance burden on SCB.

In line with the above, we regret to inform you of our intention to close your account(s) with us effective 15th December, 2014. This notice is to enable you make alternative arrangements for your banking needs and minimize any disruption to your business.

We wish to state that this initiative has nothing to do with the standing or conduct of your operations. Upon closure, a bank draft for the balance in your account (if any) will be issued. Please pick up the draft at the branch where your account is domiciled. Cheques on the account(s) will not be honoured after the account closure. Do not hesitate to contact the undersigned for any assistance. “

We all remember when some banks locked out civil servants and teachers some years back through raising minimum account balance to 10 or 20k? Now those/that bank(s) are hawking loans in the streets and offices. Same story here. In this country people save and invest through co-operatives. By locking out these people, this bank is telling us Kenyans it does not need us. But thank God, we have banks that are still eager to serve everybody including co-operatives because they know wanjikus run this country however small their savings in co-operatives are!! Many of us will not have gone to schools/collages were it not for co-operatives which paid our school fees (school fees loans), they also provided homes we live in (development/normal loans) and paid medical bills whenever we were sick courtesy of emergency loans or even buried our dead through Benevolent Funds.

Banks should be investing in this sector instead of citing regulations and cost of complying with those regulations…it will be interesting to find out how much SCB spent on co-operatives in trying to satisfy the regulators given they posted 14% rise in 9-month pretax profit which is Kes 11.2B ($124.51 million).

Registering a Co-operative Society

There are so many people asking about co-operative registration. I have already put up information regarding co-operative registration on this blog. To summarize it all, the maximum number of people required to register a primary co-operative, is ten. Primary co-operatives are like Githunguri Dairy Farmers Co-operative Society, Stima Savings and Credit Co-operative Society Limited, Urithi Housing Co-operative Society, Safaricom Investment Co-operative Society Limited, etc. The secondary co-operatives are the co-operative unions like KUSCCO (Kenya Union of Savings and Credit Co-operatives), Meru Central Dairy Co-operative Union, etc and they require only two primary co-operatives to register them.

The ten people must qualify to be members i.e. they must have attained the age of eighteen years; their employment, occupation or profession falls within the category or description of those for which the co-operative society is formed; and they are residents within, or occupy land within, the society’s area of operation as described in the relevant by-law.

Preferably, start as a self help group and slowly build on the membership numbers and savings. This way it will be easier to convince the co-operative officer that your group is viable and can easily break even once registered. As a group, you would have interacted and known one another well before thinking of a co-operative. Its easier promoting a self-help group that has been existence for awhile to be registered as a co-operative than people who have just met. I am saying this because people expect miracles once their society is registered. If you cannot keep working on it, then expect membership withdrawals and subsequent death of the society.

There are people who have also been promised by politicians that they will be ‘helped’ once they form a co-operative. STOP. No money is free. Freebies will not take you anywhere. There is a story where a group of motorcycle operators were instructed to form a boda boda Sacco by a politician and as soon as they were given seed money, they distributed the money among themselves. Society became dormant.

A co-operative is about people not capital. Without people, there is no co-operative. The requirement of ten people aught to be amended if I was asked. The Co-operative Societies Act clearly states that if the membership of a co-operative society falls below ten, then its registration is cancelled.  A co-operative management committee has a minimum number of five and a maximum of nine members. A supervisory committee of a co-operative has three members. No executive officer of a co-operative society should be in the credit sub-committee. So, if you do the math, a ten member co-operative society will have difficulties in fulfilling the requirements of the Act.

Ushirika Day 2014 Ruiru

Societies displaying the banners during this year’s Ushirika Day Celebrations in Ruiru

Types of Co-operatives in Kenya

a) Savings and Credit Co-operative Societies

These are formed to provide financial support to members. They accept deposits to members and grant them loans at reasonable interest rates in times of need.

The objects of a Sacco are:

1. 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.
2. To ensure personal growth through the introduction of new products and services that will promote the economic base of the members.
3. To ensure progress of members and society through continuous education programs on proper use of credit, reduction of poverty, human dignity and co-operation.
4. To apply the co-operative principle of co-operation among co-operatives in order to promote members’ interests. In furtherance to the objects the society shall affiliate to the relevant National Co-operative Union and the Apex society.

b) Housing co-operatives Societies

These are co-operative societies formed to provide residential houses to members. They purchase land, develop it and construct houses or flats and allot the same to members. Some societies also provide loans at low rates of interest to members to construct their own houses.

The objects of housing co-operatives are:

• contracting for loans from non–members by issuing debentures or mortgaging its property or by any other means up to a maximum amount to be decided by the General Meeting.
• Lend money to members for the purpose of;

(a)  Acquisition of living accommodation for themselves,

(b)  For income generating purposes on such terms and with such security as the Management Committee may from time to time determine or guarantee loans and advances to members for similar purpose.

(iii)Undertake building operations by such means either directly or indirectly as the committee may decide.

(iv) Acquire supplies of building and similar materials and machinery of all kinds including household furniture and equipment for use in building or for sale or hire to members.

• Acquire and relinquish lands, buildings and rights over land and buildings by purchase, lease or any other means as may be necessary for the attainment of these objects.
• Employ architect, builders, contractors, issue plans negotiate and contract for services for light and power, water drainage, roads, and generally do all such things as are necessary and customary for the acquisition of land and its development for housing purposes.
• Enter into contracts with members for the sale or lease of land and building acquired by the society in pursuance of its objects on such terms and conditions as may from time to time be determined.
• Ensure progress of members and society through continuous education programmes on proper use of credit, reduction of poverty, human dignity and co-operation.
• To apply the co-operative principle of cooperation among cooperatives in order to promote members’ interests and in furtherance to the objects of the society affiliate to the relevant National Co-operative union and the Apex society.

c) Consumer Co-operatives Societies

These societies are formed to protect the interest of general consumers by making consumer goods available at reasonable price. They buy goods directly from the producers or manufactures and thereby eliminate the middlemen in the process of distribution.

d) Agriculture/Farmers Co-operative Societies

These are formed by small farmers to work jointly and thereby enjoy the benefits of large-scale farming.

e) Producer Co-operative Societies

These societies are formed to protect the interest of small producer by making available items of their need for production like raw materials, tools and equipment, machinery etc.

f) Marketing Co-operative Societies

These are formed by several producer and manufacturers who find it difficult to sell their products in their market. A good example is the Kenya Co-operative Creameries that deals with milk.

The objects of a marketing co-operative are:

1. To arrange for co-operative marketing, processing, grading, packaging and transporting the members produce and such other operations as may be necessary for the most profitable disposal of the produce.
2. To arrange for the purchase and resale of farm inputs and chemicals and other similar requirements of the members.
3. To take measures to control pests and diseases.
4. To foster education and training of members, committee members and employees.
5. To provide co-operation and good will between members and the society
6. To Co-operate with other co-operatives in order to promote members interests and in furtherance of the society’s objectives.
7. To apply the co-operative principle of co-operation among co-operatives in order to promote members’ interests. And in furtherance to the objects of the society affiliate to the relevant National Co-operative Union and the Apex society.

g) Investment Co-operative Societies

The objects of an investment co-operative are:

1. To invest members’ contributions in prudently identified ventures in order to maximize the return on their investment.
2. To acquire, lease, or otherwise dispose of the society’s building(s) and other fixed properties as necessary.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.

The Co-operative revolution

This article was written by James Wanzala August 6th 2014. I have edited it slightly to distinguish between investment co-operatives, housing co-operatives and a savings and credit co-operatives (Saccos). Many journalists confuse these types of co-operatives to them Saccos cover all types of co-operatives.

BY JAMES WANZALA Updated Wednesday, August 6th 2014 at 16:35 GMT +3
As industry players try to come up with various ways to address the high housing shortage in the country, Co-operatives are emerging as important stakeholders in housing provision. Currently, it is estimated that Kenya has an annual housing deficit of 200,000 units, with only 50,000 being constructed per year. Although still difficult to quantify, co-operatives are contributing significantly to the 50,000 units offloaded onto the market annually. While some of them are constructing houses for members at subsidised prices, a number of them are helping members to buy land to put up their own houses. Over the last few years, several co-operatives have come to be associated with the real estate sector in a big way. Below are some of the notable names shaking the sector:

Urithi Housing Co-operative

Urithi Housing Co-operative Society Ltd (UHCSL) is registered with the Ministry of Industrialisation and Enterprise Development “to address the housing challenges caused by the global recession that has constantly put a strain on majority to own assets like land and houses”. The co-operative acquires land at a low price and passes on the subsidised cost to the members. The profits realised from the sales to non-members is ploughed back to be earned by the members as dividends or/and value addition activities on the land. Urithi, Swahili word for inheritance, serves those who want to invest for the future, thereby giving inheritance to oneself as retirement package or to loved ones like spouses and children hence the slogan “Buy and Wait, Don’t Wait and Buy”. The objective of the co-operative is to help members get accommodation and live in a better environment where they also enjoy ancillary service such as roads, drainage, water and lighting at a reasonable price. Another objective is to provide facilities for physical and cultural recreation “and all such other matters as are usual, customary and desirous for building estates, blocks of flats or single dwellings”.
Some of its projects are Own-A-Room, Nakuru Olive Courts House and Kitengela Olive Ostrich. Own-A-Room is currently ongoing and will be completed by February 2015, with 308 investors benefiting from the studio houses being built.

Safaricom Investment Co-operative (SIC)

The co-operative was set up in February 2009, with less than 200 members, and a capital base of Sh 2 million. By last year, the co-operative was boasting of 1,400 members and a Sh308 million capital base. The co-operative was born out of the need by Safaricom staff to have a reliable channel through which they could pursue investments and acquire assets. In May last year, the co-operative launched the Blue Bells Garden Housing project in Mlolongo, its pioneer housing project. The Sh1 billion housing project is being put up on five hectares and will comprise 300 units – a mix of two- and three-bedroom units – to be built in two phases. The first phase will have 160 units while the second phase shall have 140 units. Enclosed within a gated community, the estate will provide spacious units with adequate spaces both within and outside, a recreational area where occupants will be able to relax, a playground for the children as well as a calm, conducive environment away from the city’s hustle and bustle. More than 50 per cent of the units have been sold off plan.

Airport Housing Co-operative Society

Airport Housing Co-operative Society was formed in 2007, with its registered offices being at the Jomo Kenyatta International Airport. The society has grown through the years and has over 500 active members and is still growing. Ninety nine per cent of its members are employees of the Kenya Airports Authority. Three hundred members of Airport Housing Co-operative Society Limited are set to build their own houses on 100-acre scheme in Kaputiei in Isinya, Kajiado County, and more schemes are on the way. Currently, its two projects are Malindi and Katani, which involve selling parcels of land to members. The society hasn’t started building houses yet, but it finances housing projects and is looking forward to start building houses and selling them at reasonable prices, according to vice-chairman Rodgers Manana. In this arrangement, members develop their own plots under controlled scheme. The society plans to have a presence in all the 47 counties.

Kamuthi Housing Co-operative

Kamuthi Housing has been buying large tracts of land in prime areas on the outskirts of Nairobi and selling to members who put up their own houses. This co-operative was originally called Kahawa Farmers Co-operative Society. It was registered in 1964 with the aim of purchasing land from a colonial settler. The land was located off Kamiti Road between Githurai 44 and present-day Kahawa West Estate.
One of its well-known housing projects is the Sh1.8 billion Buffalo Hills Leisure and Golf Village in Kilimambogo, Kiambu County. Co-operative members have bought land in the project with the aim of putting up their own houses.
Read more at: http://www.standardmedia.co.ke/business/article/2000130725/the-sacco-revolution?pageNo=4

Urithi Housing Co-operatives launches Sh1bn real estate scheme in Thika

By SIMON CIURI
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Kiambu-based Urithi Housing Cooperative Society has launched a Sh1 billion residential project in Kilimambogo on the outskirts of Thika town, targeting its 6,000 members. The venture, which will comprise 600 housing units, is funded through the society’s cash reserves, including financing from local banks.

Under the scheme, members contributed Sh355,000 to acquire the land and the sacco will help them secure building loans from local lenders.

Sacco chairman Samuel Maina told the Business Daily on phone that the project seeks to equip members with decent and affordable housing.

“The project stands on 100-acre piece of land. We started the groundwork last month and we have given the project a timeframe of two years to be complete. It will be named City Edge Project,” said Mr Maina.

He added: “Urithi Housing Co-operative Society will act as collateral to our members who want to acquire loans from the banks to develop their plots. We are in talks with Unaitas, K-Rep Bank and Equity Bank for the members to access loans.”

He said the first phase of the scheme is expected to cost Sh300 million and would be completed early next year. “The idea is to acquire more land through our members and start income generating projects that can accelerate the growth of the society,” he said.

Read More Here http://www.nation.co.ke/business/Sacco-launches-Sh1bn-real-estate-scheme-in-Thika/-/996/2395626/-/o6o661z/-/index.html

Parliament urged to probe Patrick Musyimi on Kenya Planters’ Co-operative Union woes

By MWANIKI WAHOME
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The Kenya Planters’ Co-operative Union board wants Parliament to institute an inquiry into the manner in which the Commissioner of Co-operatives, Mr Patrick Musyimi, has handled revival of the union.

KPCU chairman William Gatei called for the investigation on Monday moments after the commercial court in Milimani, Nairobi, presided by Mr Justice Weldon Korir, restrained aparallel board elected under the directive of the commissioner from taking office until a case filed against them is determined.

Mr Gatei accused the commissioner of instigating chaos through holding illegal elections that have brought back directors who presided over the collapse of KPCU, with the objective of having it driven under again.

“The commissioner sits on the board of Kenya Coffee Co-operative Exporters, which is in competition with KPCU for business. We had leased some facilities to KCCE, but we have declined to renew the contract. The commissioner is an interested party and is instigating the chaos to benefit KCCE,” Mr Gatei said on Monday after resuming office.

Some of those elected were barred from contesting elections by a parliamentary committee on agriculture, led by Mr John Mututho, in July 2012 over mismanagement of the union, leading to its placement under receivership.

He said the conduct of Mr Musyimi was suspicious as he had not offered any assistance in lifting KPCU’s receivership but had developed sudden interest in its affairs, leading to the current confusion.

On Friday, the directors forced their way into the union’s offices at Wakulima House, under heavy police guard in defiance of court orders restraining them from convening meetings or interfering with operations of the union.

Read More From: http://www.nation.co.ke/business/KPCU-Board-Chairman-William-Gatei-Court/-/996/2423352/-/cvhsv9z/-/index.html

Safaricom Investment Co-operative unveils Sh1 billion housing project in Mlolongo

Safaricom Investment Co-operative has unveiled Sh1 billion housing project on a five acre parcel of land in Mlolongo.  The 300 housing units dubbed, Blue Bells Garden will be constructed in two phases. They will be completed in 2015. The project will be financed through a partnership with Co-operative Bank Speaking during the ground breaking, Safaricom Chief Executive Officer Bob Collymore said the first phase will be ready in September 2014, while the second phase will be ready at the end of 2015. “SIC has planned to invest more than Sh1billion in the entire project with the first phase having 160 units and the second phase having 140 units,” said Collymore yesterday. “These houses will be a mix of two and three bedroom units and will contribute towards reducing the 150,000 housing deficit that the country experience annually.” The project will also accommodate a commercial centre to serve its residents.
Read more at: http://www.standardmedia.co.ke/business/article/2000083297/safaricom-sacco-unveils-sh1-billion-housing-project-in-mlolongo

Isiolo County gets first Shariah compliant Sacco

Isiolo County has launched the first Shariah compliant savings and co-operative society (Sacco) for women and youth. The initiative by the County Woman Representative Tiyah Galgalo on Saturday evening raised an initial Sh8.5 million. Ms Galgalo intends to raise Sh20 million for the 10 Wards in the County by October to jump start women and youth enterprise development. Dubbed Vuna (harvest) Sacco, the legislator said, the initiative aims to help youth start small but serious enterprises that will help them and families. Ms Galgalo was accompanied by Women Enterprise Fund Chief Executive Wainaina Wanjeri and Chairlady Mumina Gollo. She called on women to take advantage of the Women Enterprise Fund and Uwezo Fund to start small businesses.
Read more at: http://www.standardmedia.co.ke/business/article/2000126444/isiolo-county-gets-first-shariah-compliant-sacco

Sacco members reaping benefits of investment in land

Investing in land is proving an attractive option to members of Chai Savings and Credit Co-operative Society. Through its Chai Diamond Investment Limited subsidiary, the Sacco has provided opportunities for members to invest in land with Kitengela and Nakuru projects having been oversubscribed. The company purchased 20 acres at Kitengela in September 2013 and demarcated into one eighth of an acre plots. The plots were sold within one week and balloting was the following month. Due to overwhelming demand, an extra 20 acres were bought in the same area. All the plots were sold by close of the year. The processing of the titles for Kitengela Phase 1 is in progress. The company plans to invest in Nakuru, Bomet and Mombasa this year.
Read more at: http://www.standardmedia.co.ke/business/article/2000111009/sacco-members-reaping-benefits-of-investment-in-land

Stima Sacco celebrates 40th anniversary

Stima Sacco celebrated its existence for the last 40 years. The Sacco has employed over 30,000 employees nationwide since it was started in 1974.   During the celebrations, Dr. Chumo who is also the Kenya Power CEO said that 40 years is when life starts and the Sacco should become more aggressive and break new grounds. Stima Sacco, in his view, has reached a stage where it should explore partnerships with international institutions to help it increase facilities and benefits to a growing and diversifying membership. Acccording to the CEO Mr. Paul Wambua, the 40th anniversary presents an opportunity to reflect on the Sacco’s many milestones that include several firsts in the history of the movement in Kenya. He noted that the first Sacco ATM in Kenya was issued by Stima Sacco, they were the first to issue a cheque book despite Saccos not being part of the National Payment System, the first Sacco to do a rights issue and the first such business to be licensed by SASRA as a deposit-taking institution.
Read more at: http://www.standardmedia.co.ke/business/article/2000131862/stima-sacco-celebrates-40th-anniversary

SPEECH BY THE CABINET SECRETARY FOR INDUSTRIALIZATION AND ENTERPRISE DEVELOPMENT MR. ADAN MOHAMED, EBS DURING THE 92ND OCCASION OF THE USHIRIKA DAY CELEBRATIONS HELD AT KICC, NAIROBI ON SATURDAY, JULY 5, 2014

The Chairman of Ushirika Council Mr. Japheth Magomere, OGW

The Chairman of the Co-operative Alliance of Kenya Mr. Stanley Muchiri, EBS

Co-operative Leaders

Distinguished Guests

Ladies and Gentlemen

Today is an important day when we Kenyans join the rest of the world in marking the international co-operative day, better known in Kenya as ushirika day, which is marked on the first Saturday of July every year.

It is the day when cooperators look back and take stock of the achievements they have made and re-energize themselves to grow the movement to even higher levels.

It is very encouraging to note that Kenya’s cooperative sector has grown in leaps and bounds, recording remarkable achievements in economic growth and improving people’s standards of living.

At independence in 1963, Kenya had a mere 1,030 registered co-operative societies with a total share capital of Ksh.100,000. Todate, the number has grown to over 16,000 registered cooperative societies with a membership of over 13 million and a turn-over of over Ksh.100 Billion.

Distinguished Guests,

The movement is a key source of employment. Currently, cooperatives employ over 500,000 people directly. 63 per cent of the Kenyan population derives their livelihood directly from cooperative-based economic activities.

According to the International Co-operative Alliance (ICA), Kenya’s cooperative movement is the fastest growing in the world and is ranked the best in Africa and the 7^th best in the World.

The savings and credit cooperative societies (sacco) movement in Kenya was admitted to the league of the ten (10) most developed globally.  The members of the group of 10 are Kenya, Ireland, United States of America, Brazil, Mexico, Poland, Australia, Caribbean, Canada and Costa Rica.  Kenya is represented in the group of 10 by Kenya Union of Savings and Credit co-operatives Ltd (Kuscco).

It should further be noted that Kenya offers consultancy services on co-operatives to various countries in Africa including Rwanda, South Sudan and South Africa, among others.

This is not an achievement of mean repute. It has taken Kenyan co-operators effort and hard work to grow the movement. I take this opportunity to thank them for the achievement and challenge them to sustain this growth.

The government recognizes cooperatives as suitable vehicles for development and a key and integral part of the government’s economic strategy in poverty alleviation, employment creation, food security and equitable distribution of natural resources.

Due to its very nature of mobilizing communities into economic activities both in the urban and rural areas, the government has fully devolved supervision of the sector. My Ministry will continue to support the sector by providing conducive policy and legal framework.  Specifically, I would like to invite collaboration and partnership with the County Governments on the areas of value addition in all products and services which is the engine to drive Kenya into achieving Vision 2030.

Fellow Cooperators,

Activity profiles of co-operatives cut across all sectors of our economy, notably in agriculture, finance, housing, transport, building and construction, manufacturing and distributive trade.  The highest concentration of co-operative activities though, is within the financial services sector with a proportion of 49% while agriculture takes 38% and other industries constitute 13%.

In the agricultural sector, co-operatives are largely involved in the marketing of agricultural produce, while in manufacturing co-operatives involvement is confined to primary and secondary processing of agricultural produce.  In the financial sector co-operatives are mainly involved in the mobilization of funds and disbursement of credit to the members.

The sacco subsector is the most stable with over 5000 savings and credit co-operative societies (saccos) which have been successful in mobilizing over Ksh.420 billion as members’ savings for disbursement as loans and Ksh.500 billion asset base.

The cooperative movement has championed marketing of Kenya’s arabica coffee which is renowned worldwide for its high quality and due to this it is used for blending other coffee varieties from other parts of the world.

Coffee marketing is mainly done through the Kenya Co-operative Coffee Exporters (KCCE) Limited, a farmers’ organization registered to handle coffee from the co-operatives sector by minimizing the intermediaries along the coffee value chain.

Its entry into coffee marketing in 2009 triggered a price increase from Ksh.20 per kilo of cherry to Ksh.140 per kilogram of cherry in 2010. This was the highest price ever paid to coffee farmers.  I urge respective County Governments to build capacity in this subsector in order to ensure steady growth in price and quality of coffee.

The government has further set up the coffee development fund for financing the coffee sector and has instituted reforms to further streamline coffee marketing with a view to reducing costs thereby increasing the returns to coffee farmers.

Now turning to the youth, it is encouraging to note that Kenya has so far registered  over 200 registered youth co-operative societies which include Bunge Youth Saccos in the counties, Matatu Saccos and Youth Saccos in the informal sector.  The youth co-operative activities have been most pronounced in the transport sector where they operate matatus and boda bodas.

The recent establishment of the Uwezo Fund will indeed provide the much needed funds to finance various youth co-operative programmes in areas such as sports, cultural activities, trade, information and communication technology (ICT), matatus and film industry.  This will engage our young population in productive economic activities hence reducing incidences of insecurity in the country.

Ladies and Gentlemen

The government has been steadfast in encouraging the youth as well as women to start income generating activities. To this end, the Ministry will facilitate the promotion and development of youth and women cooperatives countrywide.

The government has also directed that at least 30 per cent of contracts be reserved for youth and women. I urge all the Kenyan youth to form or join existing co-operatives in order to access this facility.

Lastly Mr. Chairman, I wish now to take this opportunity to thank everyone for having found time to attend this occasion.  In particular I want to thank the National Council for Ushirika Day Celebrations for their tireless efforts towards perfecting the preparations to make this year’s Ushirika Day a truly memorable occasion.

Long live the co-operative movement.  Long live Kenya.

Message of the International Co-operative Alliance

92nd Alliance International Co-operative Day
20th UN International Day of Co-operatives
5th July 2014
“Co-operative enterprises achieve sustainable development for all.”
This year, International Co-operative Day, to be celebrated on 5 July, will have the
theme of “Co-operative enterprises achieve sustainable development for all.” Concern
for the community is one of the co-operative movement’s founding values and, as
such, the need to sustainably safeguard favourable living conditions for communities
underpins all co-operatives’ operations and vision.
In a general sense, sustainability is the capacity to support, maintain or endure. Since
the 1980s, the concept of sustainability has evolved to mean the integration of
environmental, economic and social dimensions. Co-operatives here again are the
forerunners of modern sustainability. By placing human need at their centre, they
respond to today’s crises of sustainability and deliver a distinctive form of “shared
value”.
One of the goals of the Blueprint for a Co-operative Decade is to “position cooperatives
as builders of sustainability.”1 The co-operative sector needs to explain and
show to the world that sustainability is part of its intrinsic nature, and that cooperative
enterprises make a positive contribution to sustainability.
As part of this, the Alliance commissioned a scan of co-operatives from different
sectors and regions around the world to see how closely linked they are to
sustainability. Launched at our global conference in Cape Town in November 2013, the
report concluded that co-operatives embed sustainability into their operating model
and values, and that the United Nations can and should recognise this. Indeed, in a
resolution adopted in December 2001, the UN urged governments to encourage and
facilitate “the establishment and development of co-operatives, including taking
measures aimed at enabling people living in poverty or belonging to vulnerable groups
to engage on a voluntary basis in the creation and development of co-operatives”.2
The United Nations is currently setting ambitious new targets for the period after 2015
and these will be called the Sustainable Development Goals. The co-operative
movement touches one billion people worldwide and through our vision of sustainable
development for all, we can be key partners in this.
We would like to urge co-operatives around the world to use 5 July to showcase how
co-operatives are the best-placed enterprise model to develop and build sustainability
in the 21st century.

Enabling Environment for effective financial management

Key areas that provide an enabling environment for effective financial management and therefore analysis include; good governance, good leadership, proper integration of staff with in the financial management
function and appropriate financial policies and procedures.
Governance
 The governance structure should be appropriate and the governing body active.
 The vision and mission should be clear and consistently stated, known and shared.
 The organisational core values should be clearly stated, known and shared.
 Clearly defined strategy that helps planning and implementing activities. Minutes of board and management meetings should be kept including action points which are followed up.
Leadership
 Board and management exercise effective leadership.
 The leadership should set priorities and provide a clear direction for the SACCO
 The leadership directs, motivates and manages staff well
 The organisational structure is clear and appropriate for effective leadership
 The SACCO should have adequate infrastructure, facilities and technology to carry out its activities
Financial policies and procedures
 The SACCO should have an appropriate and documented financial policy and procedures
 Staff should be aware of and comply with the stated policies and procedures

Objectives and Users of Financial Statements

The primary objective of Financial Statements is to communicate in general terms the financial performance and position of the institution and how well the institution is achieving its stated objectives. The following are the typical SACCOs‟ stakeholders and the broad areas of analysis that interests them:
 Board members: The board members would like to interpret /analyse financial statements and operational statistics to better
perform their key duty of monitoring management performance and steering the SACCO towards attaining its institutional objectives, which usually includes financial sustainability.
 Management: They measure their performance with a view to improving it. They would also like to study, identify and address areas of good, average and poor performance.
 Membership: These assess the prospects of receiving dividends and capital growth and the overall safety of their investment and savings in the SACCO.
 Regulatory bodies: These would like to be convinced that the SACCO is run professionally. They would also like to know whether
the institution is financially and operationally sound and that it is run in such away as to maintain the soundness and safety of assets, for continuity.
 Creditors: The creditors would like to be assured that the SACCO will be able to pay both interest and principal. They are concerned with short term liquidity (ability to meet current financial obligations as they become due) long term solvency (ability to generate enough cash to repay long term debts as they mature) as well as the levels of debt in relation to equity.
 Donors: The donors would like to know whether the SACCO will be able to provide the service on a sustainable basis and create impact while meeting grant or loan requirements and conditions.
Various SACCO stakeholders require information to assess the extent to which the institution objectives have been attained. Accounting through financial statements provides most of this information. Best practice in microfinance stipulates that good financial management and financial analysis is the basis for successful and sustainable microfinance operations.
The quality of financial analysis depends on the quality of the information that has been recorded for analysis and this information is derived largely from the accounting system.

If you find an excuse, don’t pick it up

When it comes to excuses, the world is full of amazing inventors. Don’t spend half your life telling what you are going to do and the other half explaining why you didn’t do it. An alibi is the supposed proof that you did what you didn’t do, so that others will think you didn’t do what you did.

Mistakes have hidden powers to help us, but they fail in their mission of helping us when we blame them on other people. When you use excuses, you give up your power to change and improve. You can fall down many times, but you won’t be a failure until you say that someone else pushed you. Edmund Gosse said, “Never mind whom you praise, but be very careful whom you blame.”

If you find an excuse, don’t pick it up. Failures are experts at making excuses. There are always enough excuses available if you are weak enough to use them. The world simply does not have enough crutches for all the lame excuses. It’s always easier to find excuses than time for the things that we don’t want to do.

From: John Mason Book “Imitation is Limitation.”

When God gives you a word, don’t make a paragraph out of it

There is a famous old story about a man who was sleeping at night in his cabin when suddenly his room was filled with light, and God appeared. The Lord told the man He had work for him to do, and showed him a large rock in front of the cabin. The Lord explained that the man was to push against the rock with all his might. So the man did, day after day.
For many years he toiled from sunup to sundown, his shoulders set squarely against the cold, massive surface of the unmoving rock, pushing with all of his might. Each night the man returned to his cabin sore and worn-out, feeling that his whole day had been spent in vain.
Since the man was showing discouragement, the adversary (Satan) decided to enter the picture by placing thoughts into his weary mind: “You’ve been pushing against the rock for a long time, and it hasn’t moved.” Thus, he gave the man the impression that the task was impossible and that he was a failure. These thoughts discouraged and disheartened the man. Satan said, “Why kill yourself over this? Just put in your time, giving just the minimum effort; that will be good enough.”
That’s what the fatigued man planned to do, but he still decided to make it a matter of prayer and take his trouble thoughts to God. “Lord,” he said, “I’ve labored long and hard in your services, putting all my strength to do what you have asked. Yet after all this time, I have not even budged that the rock by half a millimeter. What’s wrong? Why am I failing?”
The Lord responded compassionately, “My friend, when I asked you to serve Me you accepted, I told you that your task was to push against the rock with all of your strength, which you have done. Never once did I mention to you that I expected you to move it. Your task was to push.
“And now you come to Me with your strength spent, thinking that you have failed. But is that really so? Look at yourself. Your arms are strong and muscled, your back sinewy and brown; your hands are callused from constant pressure, your legs have become massive and hard. Through opposition you have grown much, and your abilities now surpass that which you used to have. True, you haven’t moved the rock. But your calling was to be obedient and to push and to exercise your faith and trust in My wisdom. That you have done. Now I, my friend, will move the rock.”

Lesson: When God gives you a word, don’t make a paragraph out of it. Usually our additions to what He says get us in trouble or cause delays. Yes, use the faith that moves mountains, but remember, it’s He who will actually do it.
From the Book “Imitation is Limitation” by John Mason.

Financial Management

Financial management for the SACCOs involves decisions on how the SACCOs‟ operations will be financed (sources of funds), how the funds are utilised (investment decisions) with the overall objective of achieving the SACCO mission and goals. Financial management thus focuses on the development of strategies to prudently manage the financial assets of the SACCOs as well as using tools and techniques for financial planning to achieve its organisational objectives.
Like all other microfinance institutions, the managers and board of the SACCOs have a fiduciary duty to prudently manage the financial resources of the SACCO. As part of this responsibility, the directors are legally required to prepare and present financial statements that show the financial performance and position of the SACCO over a specified period.
The information extracted from the financial statements is then used in assessing the stewardship of the board and management and to what extent the financial objectives have been achieved. The SACCO‟s financial objectives may include amongst others;
 Maximizing of capital growth
 Attaining financial Sustainability
 Prudently managing the assets and liabilities of the SACCO
The SACCOs‟ financial statements by themselves tell only a flat story. From a cursory look at the figures in the financial statements presented by the directors, and managers, one may not be able to decide whether the SACCO is doing well or badly, whether it is financially strong or vulnerable. To extract from them a meaningful story that relates to the SACCO‟s vision, mission, objectives and plans, and the extent to which these have been achieved, finance professionals have developed several tools and methods collectively referred to as Financial Analysis which collectively aid Financial Management.
The discipline of financial analysis, therefore, is one of extracting meaningful interpretation out of general financial statements. Financial analysis involves comparing one figure against another to produce ratios, and assessing whether the ratio indicates a weakness or strength. The comparison can be with other Institutions, or for the same institution but over different periods. Financial ratio analysis can be broadly grouped into the following categories;
 Profitability ratios
 Liquidity ratios
 Solvency ratios
 Portfolio quality ratios
 Efficiency ratios

Introduction to Planning in Co-operatives

What is planning?
Planning is the basic process of setting and selecting goals and determining how to achieve them. It is about pre-determining where you want to go and laying strategies of how to get there even before the journey starts.
Why do we plan?
Everybody in every organisation makes some kind of plan. In most cases, however, it is poor planning rather than lack of it that results into poor results. Organizations are established for various purposes and to achieve them, planning is necessary. They are
established with a view of making profits, meeting customer needs, providing employment, growing and serving a multiplicity of other objectives. Planning therefore helps one to reduce chances of failure and instead increase chances of success.
Organizations are set up in environments that differ and today, business environment is dynamic with socio-political and technological changes taking place fast. In such environments, setting stable goals or objectives becomes difficult. While setting goals is difficult, achieving them is even more difficult. Planning enables us to:
 Look into the uncertain future and map out ways to achieve our purpose using various planning techniques
 Set realistic goals that have been thought out properly
 Focus on those aspects that are vital and possible within constraints of the environment
 Forecast future trends to some degree (since planning involves looking ahead)
 Identify the factors that affect our intended goals and work out mitigation measures
 Determine in advance how we are going to do the things we have envisaged to do
 Examine our resources and their adequacy for planned activities/ outcomes
Plans are therefore a key function of management, and are generally based on pillars illustrated below:
Who Plans?
Planning takes place all the time at all levels in any organization, whether conscious or not. Everybody in the organization should plan his or her work on a day to day basis or longer. Normally lower level managers and staff involved in operations plan within the
framework of broader, longer term plans. Middle level managers also plan within the framework of broad overall plans.
Good management tends to plan for long periods (three to five years). This is normally referred strategic planning. The shorter term plans (one year or less) are referred to as operational or annual plans, Middle level management tends to focus on operational plans while top level management focuses on strategic planning.
Types of plans
A typical MFI has different types of plans. Broadly, plans are of the following types:
(i) Strategic/ Business plans – these are of a long time nature. They are usually 3 to 5 years. Strategic plans define broadly where the organization wants to be in future. Some organizations have plans for longer periods up to 10 years. Due to the volatile nature of the environment organizations operate in, longer period plans beyond five years are not advisable.
(ii) Operational plans – these are of a short term nature. Operational plans are derivative plans. They are derived from the strategic plans and give details of how specific objectives will be achieved by aligning shorter term activities to the strategic plan. These plans are usually for one year. They may however range from 6-18 months.
There is also another set of plans described as standing plans. These are standardized approaches for handling recurrent and predictable situations. These include:
Policies: These are general guidelines for decision making. They set the limits or boundaries for taking a decision. A policy channels the thinking of people in an organization so that they take decisions consistent with objectives. For example a microfinance institution may have a policy of not exceeding a loan amount of 10million.
Standard procedures: A procedure is a detailed set of instructions for performing a sequence of activities that occur regularly or very often. For example a microfinance institution has standard procedures of approving a loan. Standard procedures are the
means of carrying out a policy.
Rules/ Regulations: These are statements stipulating specific actions that must or must not be taken in a given situation. They are either dos or don’ts.
Overview of the planning process
Planning gives purpose and direction to the organization. It helps decide what, when, how and why we do certain activities or tasks. Planning goes through a process that involves scanning the environment, establishing goals, developing premises /assumptions, determining alternative courses of action, evaluating the various alternative courses, selecting a course of action, formulating derivative plans and quantifying the plans into budgets.
Scanning the environment
Whether it is a new or an on going business the first step in the planning process is to scan the internal and external environments. Managers should take a preliminary look at possible opportunities that can be taken advantage of in light of the organization’s
strengths and weaknesses. Scanning the environment also reveals the threats.
Setting goals and objectives
The second step in the planning process is to set goals and objectives. Having realized the internal strengths and weaknesses as well as external opportunities and threats the environment the institution is operating in offers, the manager(s) establish organizational
goals. These are broad aims or statements of purpose. The goals provide the basic sense of direction that forms the activities of the organization.
An organization’s mission is the “unique aim” for its existence. This unique aim sets it apart from other Organizations. No two organizations can have a similar mission, though the wording of a mission for two organizations may be similar.  The term goal refers to the organization’s grand or long term purpose, which is derived from its mission and which in turn determines mid and short term objectives. Goal is a broad term that states what is to be achieved as a result of all the organization’s activities.
Organizational objectives are specific targets derived from its goal, which in turn flows from its mission. Objectives are usually quantitative or otherwise objectively measurable. Good organizational objectives should be: Specific, Measurable, Achievable,
Realistic and Time-bound (SMART). Setting organizational goals is the process that defines what the organization plans to
achieve. This is very important since deployment of organizational resources will respond to this goal definition. For an existing organization, the goal setting process involves assessing whether the organization is achieving its existing goals or not. To do
this, management asks questions like – What are the gaps? What elements of the goal(s) are no longer relevant and what new perspectives should be introduced into the goal? What should be done to address the gaps and challenges? Is it necessary to review the goals, reduce them or amend them? Are the existing goals achievable, given the environmental factors and dynamism? These will help the organization make decisions on what to do with its existing goal(s).
For a new organization or one without existing goals, the goal setting process involves examining the mission and based on it, determining the organization’s grand, long term purpose. In both cases (whether goals are being adjusted or formulated), mid and shorter term objectives are then derived from the goals.
Premising / developing assumption
The third step in planning is to establish forecasts and assumptions from the environment about the events that will affect the objectives and their achievement. For instance, what will the sales be, how will competition evolve? What might the ongoing regulatory trends do to the sector? Which factors will affect demand and supply volumes in the future? What effect might some or all of these have on prices, wages, rates and other revenue/expenditure elements? This step also involves assessing the present situation both in terms of the organization and also the environmental conditions. Forecasts or projections can be made if the
environment is known. Having established the goals and objectives showing what we want to achieve, we must make assumptions about what is likely to happen. We may, for instance assume that inflation and interest rates will be at certain levels in the future. This then enables organization to determine the activities to be undertaken in order to tap opportunities while controlling risks. Forecasts are not only made about the external environment but also about the environment internal to the organisation.
Determining Alternative Courses of Action
This is a stage of analysis. It involves using various analytical tools and skills to generate the different courses of action. When goals have been selected/ formulated and we know what we require to achieve them, then the various ways of achieving the goals can be logically determined. These are the strategies, policies and tactics. Strategies are broad programmes to achieve goals. Policies are broad frameworks to guide thinking and action, while tactics are operational decisions aimed at efficient resource utilization.
Different courses of action may be adopted to take full range of opportunities available and to boost organizational health.
Evaluating the various Alternative Courses of action Having generated the different alternatives the next step is to analyze and evaluate each in light of the available resources and objectives. This involves anticipating, for each probable course of action, what would happen if you took one particular course of action. The necessary factors are examined and likely outcomes assessed. At this stage also, scanning the environment and forecasting will be done.
Selecting a Course of Action
This is the actual point of adopting a plan or selecting a strategy, the point of decision making. As already said, a plan is a predetermined course of action. It is a process of deciding by selecting one or a few alternatives among many. At this stage, you actually generate the strategic plan if this process is at top level. If it is at a lower level, you generate an operational plan.
Formulating Derivative Plans
Once the basic (broader) plan has been made, derivative plans to support it must be made. If the basic plan was strategic, the operational plans will have to be made. Plans for each sub-unit in the organizations like product development, finance, personnel will also have to be made. For an organisation with branches/sub-units, sub-plans are necessary for each department and branch. This Aids budgeting which is the final stage of the planning process.
Budgeting
Budgeting is the final step in the planning process. Budgets are the quantitative expression of a plan. Budgets give meaning to plans because they show how and where the financial commitment is to be made, and what financial results are expected from this.
A budget is an estimation or projection of the financial performance and condition of an organization for a future time period. Therefore put in another way, budgeting is translating ones plans in monetary terms.
Purpose of budgeting
Budgets have five general purposes:
 They put business strategy into operation
 They allocate resources
 They provide incentives to managers
 They help in the control of spending
 They communicate plans and expectations
(i) Putting business strategy into operation
This can be achieved through the planning process that involves many people creating mission statements, analyzing strengths, weaknesses, opportunities and threats (SWOT analysis), prioritizing initiatives, determining courses of action and allocating resources to produce a comprehensive strategic plan document.
Budgets innovatively reflect the organizations’ real strategy-whether that strategy is implicit or explicit. It shows what the organization thinks is going to happen and what initiatives it is going to take to harness its external environment, improve internal
environment and thus improve its performance.
In some cases, the budget is the place where funds are set aside for new programs, capital investments, and all types of enhanced resources. The budget may incorporate new goals for the organization or deepen/ broaden existing ones.
(ii) Resource allocation
Budgets presume resources are limited. The budget process forces the organization to take stock of its resources and to determine their limits. It must identify the sources of funds it can tap and how they will best be used. An organization can structure its
allocations on the basis of units or departments, programs, activities, or managers. In some cases, particular resources will be tied to particular units or programs, as in grants or restricted gifts.
(iii) Incentives
Every budget is governed by rules, stated or not stated. These rules encourage certain behaviours on the part of people in the organization. The behaviours encouraged by the budget process can benefit or harm the organization, depending in part on how well they were thought, although unintended effects occur in even the most carefully designed
system. An organization therefore needs to design rules that provide incentives for managers to make more careful spending decisions throughout the year.
(iv) Control
The traditional view of budgets considers them a tool for controlling spending. Departments receive budgets that tell them how much to spend, and the central offices do not let them spend more than what appears in their budget. The assumption here is that
spending will tend to be uncontrolled if it is not cut off and that managers or departments need a lot of help in knowing when to cut back on spending. In the modern context, budgets are planning tools that consider income generation, cost allocation and new
opportunity tapping. It is therefore important to remember that the budget is not only an expenditures control toll but also a tool for watch over the income generation process as well. The income generation is very important aspect of budgeting which many SACCO leaders and managers tend to forget and instead concentrate on expenditure variables yet
both sides require equal attention.
(v) Communication

Budgets are critical vehicles for internal and external communications. The budget process allows leadership to describe its plans, goals, and assessment of economic conditions for the rest of the organization. In soliciting budget proposals, leadership can
ask the various parts of the organization for their assessment of relevant conditions, thus providing new information about the organizations opportunities and threats and obtaining a reality check on leadership’s vision. Once the budget is set, managers can
take their guidance from it. External groups rely on budgets to understand the organization’s plans and expectations. Funders want to see budgets that show how the organization intends to use the money it receives.
The budget shows an organization’s Administrative Committee what management thinks is going to happen in the coming year and what management intends to do to boost its outcomes. At the intra institutional level, the branch or departmental budget tells senior management how the branch/ department heads thinks their units are going to fair. The budget also allows the Management Committee and external groups to assess management’s ability to oversee finances, serve as a steward for resources, and achieve objectives. If the budget is unrealistic, it suggests that management does not have a good plan for maintaining the organization’s financial health.
In summary, an effective budget should:
 State all of the assumptions
 Be understandable and simple
 Represent the combined judgment of staff and management
 Cover a period for which reliable estimates can be made
 Be flexible to permit adjustment
 Establish standards of performance
 Provide motivation and guide performance
 Guide management and staff towards objectives
Who should be involved?
Operational/ activity based budgets must be drawn up by people who have ground experience. Long term strategic budgets should be drawn by senior management. For an annual budget, both the strategic and operational angles are needed; therefore field staff,
departmental managers, accounts staff, and senior management should all be involved. A budget committee normally coordinates the process. The overall budget (Master Budget) should be approved by the Administrative Committee.
Budgeting Process
The budget process provides the vehicle for operationalising strategy by making decisions to allocate funds in line with the strategy. There are differences between organizations- size, type of mission, number of products/ programs/ projects, to name just
a few factors. Across the variety, the budget process maintains a remarkably consistent shape. Generally, the budget process consists of three basic phases:
 Budget development
 Budget monitoring, tracking, and adjustments
 Analysis of final results
These phases cross years: Budget development takes place before the budget year in question starts; Monitoring and adjustment occur throughout the budget year; Final results are analyzed after the year ends. In most healthy organizations, one of these three
phases is in progress at any given time, and the phases from different years feed back to each other.
(i) Budget Development
It should start with a set of activities to lay the ground for the next year’s budget. Managers of the organization should start the process by evaluating its financial position and reviewing the organization’s strategies. Managers usually begin by looking at the
results from the year that has just ended. Although another complete year-the one current underway-will occur between the period covered by those results and the year for which they are preparing a budget, this information is the best at this time, as it covers the most recent results realized.
(ii) Budget Monitoring, Tracking and Adjustments
Activity related to monitoring and tracking the current year budget usually consumes more time than budget development. The first task in managing the current year is to make sure that spending stays with in limits and that the revenue goals are achieved. If
revenues exceed plan, increased spending may be acceptable or necessary. In face of revenue shortfalls, it does not do the organisation any good to meet its expense budgets.
The process of comparing actual and budgeted outcomes periodically is known as budgetary control.
(iii) Analysis of Final results
When the year ends, the budgeted and actual results are tallied. At this point the budget process has completed the cycle. Only with the final results can the organisation judge whether its budgeting process has succeeded or failed. The following questions should be answered:
 Did the budgeting process succeed in anticipating events of the year?
 Did the process help the organisation identify and respond to conditions as they changed during the year?
 What do the final results tell us that we need to take into consideration for our planning for next year, and do they suggest an adjustments we need to make in our plans, goals, or actions during the year that just got started?Prior year budget versus actual analyses and full year forecast form the basis of the ensuing year’s budget.
Implementation/ execution of Plans
After going through the entire process of planning, the plan(s) should be executed or implemented. Even the most well thought out plan will remain useless if it is not executed. In implementing the plan(s), tasks are assigned with deadlines to responsible
individuals and progress is continually assessed against set goals and milestones.

INDICATORS OF GOOD GOVERNANCE IN SACCOs

• Participation

The concept of people’s participation in their own development is central for good, effective and efficient governance of the SACCOs. All women and men who are shareholders/ members should have a voice in the decision-making process either directly or through the organs that represent them. Such participation should be fair and free of intimidation, duress or undue influence.

• Transparency

All processes, decisions and relevant information should be conducted in a transparent manner and should be accessible to all those concerned.
Governance organs should hold regular meetings to direct the affairs of their SACCOs. The Committees should meet at least once a month while the General Meeting should be held at least once a year. Being working committees, the Credit/Loans and Supervisory/ Audit Committees should meet regularly to ensure close supervision of the SACCOs’ leading and general business.

• Accountability

All decision-makers; Administrative Committee, Supervisory Committee, Audit Committee and Management must be accountable to their immediate supervisors and ultimately, to the members (through the General Assembly) and the members of their
communities.

• Consensus Orientation

In-spite of the uniform membership criteria, there is bound to be differing interests, views and opinions in the SACCO. It is, therefore, very important to reach broad consensus among the parties concerned on all matters of the SACCOs’ operations. This will best be achieved through an all-inclusive participatory approach, transparent systems and operations, and full accountability to the members.
People in positions of power, like chairpersons, should be open to differing viewpoints.

• Efficiency and Effectiveness

The governance and management organs of the SACCOs must have processes and procedures which produce results in time, using resources in the most economical way. The results should meet the needs of clients and stakeholders. This is an indicator of good governance.

• Equity (fairness to all)

All members and clients should have equal opportunities to benefit from the SACCOs’ services in order to improve their economic status and share in the vision of the society. They should therefore, be equally accorded the SACCOs’ opportunities and services. The basis for equitable participation could either be a combination of the members’ share capital and saving deposits or any one of them as it may have been agreed upon. In the governance organs, none should be suppressed, ignored or shut up when they have suggestions.

• Respect for Rules, Policies and Regulations

The legal framework and policies under which SACCOs are regulated and operate should be respected, strictly and impartially enforced. They should be made known to all members at all times.

• Strategic and Visionary Leadership

The SACCOs must have leaders and managers who have a vision for and commitment to the organization. The leaders and managers should seek and improve their institutions and do all that is necessary to satisfy the needs of their members and the communities in which they are located. Their character and past record should be free of any professional and operational flaws. Such leaders and managers need to have strategic thinking so that the affairs of the SACCO are managed with a sense of purpose.

• Knowledge and Skill in Leadership

The members of the governance organs should be knowledgeable and trainable in the matters of the SACCOs’ governance and operations. It would be of good if all members of the governance committee (the Administrative Committee, Audit and Loans Committees) were holders of at least Ordinary Level Certificate or higher qualification.

• Organizational Performance and Growth

SACCO growth both in portfolio size and savings volumes is often an indication of good governance. Sound Governance will lead to sound management and sound operations. In return, these aspects will lead to excellence in performance. Continued growth of the SACCO will result in its survival and sustainability in the long-term. In the same respect, a poorly governed SACCO will hardly post good performance and annual growth on a continuous basis.

Organizational Vision, Mission, Goals and Objectives

Every SACCO should have a clear statement of its vision, mission, goals and objectives in order for all those involved in its management/ operations to have a clear sense of destiny, and for the Management Committee/Board of directors to guide or direct management in that direction.
 Vision- This is the ultimate aspiration of the SACCO as an institution and its members. The institutional vision expresses the dreams of the SACCO as an institution and its members in the long run. An example of SACCO vision may run as follows “ a rich and prosperous membership served by a profitable and sustainable SACCO”
 Mission Statement – this is a brief statement that indicates the purpose for which the SACCO was formed, it indicates the direction to which the SACCO is intended to move, and the clientele it aims to serve. It seeks to answer the following questions:
1) What business is the SACCO in?
2) What business does the SACCO want to be in?
3) What do we intend to achieve?
4) Who are our clients and stakeholders?
Examples of mission statements could be:
“We aim to excel in meeting the savings and credit service needs of the community through provision of safe and secure saving deposit services as well as affordable and easily accessible credit facilities”
“Through provision of high quality financial services, intend to help our membership excel and thereby maintain a leading position in the local market;”
 Goals – these are medium and long-term aspirations that the SACCO wants to achieve, based on its mission statement and driven by its vision. Examples of a goal statement may run as follows “Maximize savings and credit services to members while maintaining a healthy portfolio during the next 6 years” or “Attaining and maintaining a leading market position by way of clients served and gross loan portfolio in four years’ time”
 Objectives are specific quantified targets that the SACCO has set to be achieved in a short-term period, which will move it in the direction of achieving its goals. Examples SACCO objectives may include the following:
– To increase savings by 20% per annum over the next five years
– To increase credit services to members by 20% by the end of the year
– To increase income and net profits by 15% per year, etc.
– To increase the number of members from 80 to 200 by the end of next year
– To serve 2,000 borrowers and 6,000 savers, with a loan portfolio of Ksh. 1.2 Million in two years’ time.
– Increase the savings deposits by 200% in the next five years
– To improve the gross income by 155% and net income by 215% in seven years
One goal may have one or more objectives, which are in a sense the more specific targets contributing to the attainment of the goals.

ADAPTED FOR THIS BLOG FROM: RWANDA COOPERATIVES AGENCY (RCA) MODULE ONE: ORGANISATION AND MANAGEMENT OF THE UMURENGE SACCOS

Savings Management

The savers are mainly concerned with the safety of their deposits as well as being able to access these funds as and when the need arises. These two reasons therefore call for good management of the savings if the SACCO is to effectively mobilise savings from their membership.
Effective savings management requires consideration of liquidity reserves, proper cash handling procedures, and adequate internal controls on the part of the SACCO. These will ensure the SACCO has the trust of its members since savings mobilization requires
members’ confidence that they will be able to access their savings when they want them.
 Liquidity management requires a reserve to be created as a percentage calculated on all withdrawable savings. The SACCO should deposit these reserves in short-term, secure investments in formal financial institutions. This reserve ensures that the SACCO will have funds available to meet withdrawal and disbursement demands.
 Good cash management procedures at the SACCOs are critical for the successful management of the savings. This is so considering that a substantial portion of the money held by the SACCO is mobilised from savers so if it is not handled with extra care, it can spell danger. The cash management procedures should include daily cash retrieval records from the safe by the accountant/cashier, logging in the accountant/ cashier’s balancing report, general journal to record cash inflows and outflows. These records should be filled by the accountant/ cashier and verified and signed by the manager.
 The SACCOs should ensure the safety of the savings by having adequate internal controls. The controls will include amongst other preventive measures like the safes having two sets of locks and keys (one set of keys kept by the manager and the other by the accountant on another senior person), daily filling of records that are verified by the manager, and regular reconciliation of the cash record with the cash count. No one person should be able to open the safe and access money without the other being present, i.e. the 4 eyes principle has to be observed at times. The members of the supervisory committee should also regularly conduct
cash counts. These measures will amongst other ensure that fraud risk is well managed.

Types of savings products

The SACCO members have the urge to develop and to make their lives better. The question remains therefore ―How can they make their lives better?‖ Saving for the future is one of the ways that they can improve on their livelihood. It is therefore essential to know the various savings products available so that one makes the best choice and selects what suits them best. Savings products can broadly be classified in to three namely;
 Compulsory savings products
 Voluntary savings products
 Contractual savings products.
Compulsory Saving:
These are funds that must be contributed by all members of the SACCOs as a condition of membership and in some instances to access credit (loans). Compulsory savings can be considered as part of a loan product rather than actual savings product since they are closely tied to receiving and repaying loans. Compulsory saving is a saving that a member is forced to make on regular basis; it is a membership saving and must be saved on a weekly or monthly basis. This compulsory saving is collected to lend to
members. If members fail to save on time they will get penalized based on the saving policy of the society. Unless the member quits from membership, he or she should save on regular basis. If a member wants to withdraw from the SACCO, he will have the right to take this compulsory saving. The SACCOs are supposed to provide interest for this savings. There are 2 kinds of compulsory loans i.e.
 Group saving: composed of a certain percentage of the loan portfolio contributed monthly or weekly. Saving continues through the loan period and therefore protects the portfolio on one hand and serves, as an investment fund for economic ventures of the group members to supplement the loan in case of emergency needs.
 Personal or individual saving: This is where each borrower is required to save a minimum amount per month but motivated to save more voluntarily.
Voluntary Saving:
Voluntary savings are savings, not for access to credit, but for the sake of saving. These are not an obligatory part of accessing credit services. They are provided by both the borrowers and non borrowers who can deposit or withdrawal according to their needs.
The voluntary savings are best fit for people who don’t receive constant cash flow like farmers who get incomes when they sell off their produce once or twice a year. They can make voluntary saving during harvest time, and transfer monthly to their compulsory saving accounts. Farmers, and other individuals, can save the full amount for the coming year’s compulsory savings in advance with the SACCO by depositing 12 months worth of saving in a voluntary account. Following that, each month on the appropriate day the member will come to the SACCO to withdraw the amount of one month’s compulsory saving from the voluntary saving -account and deposit it in the compulsory saving account. This maintains the fundamental function of the SACCO and allows individuals with seasonal incomes to be members. This ensures regular flow of cash to the SACCO society and promotes members participation. This kind of saving can be withdrawn at any time when the owner needs it. The SACCO society may or may not provide saving interest for this voluntary savings. Farmers are highly advised to save on voluntary saving for small capital investment like purchasing seed for cultivation.
Contract Saving:
These are the kind of saving accounts where by the person saves to meet a particular goal.
These include:
1. School fees savings accounts: This is the type of account used by most parents so that they are able to save for their children’s education.
2. Target Savings Accounts: This is where the client opens up an account particularly to meet a particular target like buying land, paying a mortgage among others.
3. Fixed Deposit Accounts: This is the savings accounts were by a person deposits once and they withdraw the money after a period of time. The time ranges from 3 months onwards.
This kind of saving is not used by most SACCOs unless the SACCO has acquired and mastered the good skills in managing the loans and savings effectively. It can be short-term saving like if someone wants to pay school fees; he may save to pay school fees. It can also be long term like fixed deposit accounts were time deposit bring the opportunity of high interest rate on savings. This kind of saving is good in the future when the SACCO is in a good capacity and position of managing its savings and loans properly and if there is a shortage of feasible financial demand by members. This kind of saving can be collected from members and none members but the amount, period of collection and interest for this saving should be decided by the General Meetings of  members.

 

Savings Mobilisation Strategies

As it has been highlighted in the previous posts in this blog, savings mobilisation is very critical if the SACCOs are to attain operational self sustainability. The SACCOs therefore have to develop a good savings mobilisation strategy. The key aspects of the SACCOs savings mobilisation strategy should include the following:
1) Increased participation of the members in the governance of their SACCOs: This will increase their trust and commitment to the institutions. This can be done by giving them an opportunity to express their concern during the General Meetings, having suggestion boxes for them to comment on the various aspects of the SACCOs’ operations. The SACCOs can also set aside a particular day on a quarterly basis during which the management, committee members and general SACCO members interact and determine the way forward for their SACCOs.
2) More sensitisation of their members on the importance of Savings: During the membership mobilisation meetings, the SACCO staff should always talk to potential new members about the importance of savings for their personal development as opposed to focusing on credit. This message should also be echoed during any meetings between the staff and members of the SACCOs. One way to enhance this is to ask some successful members to give testimonies during pre-arranged members meetings.

3) Improve on the SACCO’s financial management and reporting systems: Safety of the savings is very important in the savings mobilisation endeavours. The SACCOs should improve on the financial accountability systems. Financial information generated should regularly be shared with the members to allay any fears of their finances being misappropriated. The staff should also prudently manage their savings and be able to grant the members’ interest on their savings so as to motivate them to save more.
4) Staff training: The SACCOs staff should specifically be trained on savings mobilisation. Considering that the staff usually interact with the members in their daily execution of their activities, they can always encourage the members to safe more. This is important because if the staff are not well prepared for this task, they will fail to encourage the members to continue saving.
5) Savings products development: The SACCOs should aim to develop different savings products that are tailored to the needs of their members basing on the major economic activities undertaken in their areas of operations. Given that the major proportion of the members are engaged in agricultural activities, the SACCOs could for instance develop savings products that encourage the members to save with the objective of being supported to acquire improved seeds, irrigation equipment or value adding equipment.
6) Entrepreneurship training for the SACCO members: As the SACCOs commence their lending operation; their memberships should be trained in business management skills so that they engage in gainful Income Generating Activities (IGAs) thus increasing their disposable income which results in improved savings.

The above strategies will tremendously improve the SACCOs capacity to mobilise savings from their membership thereby accessing low-cost funds. This will be a great step towards these SACCOs becoming operational self-sufficient.

External Conditions for Savings Mobilisation

Appropriate Regulatory Environment:
To ensure the safety of the members’ savings, a rigid and effective regulatory framework with on-site and off-site inspections is important. The failure of financial institution and eventual loss of savings can lead to a detrimental effect on the savings  mobilisation initiatives of the financial institutions. The SACCO regulators need to strengthen their capacities to effectively perform their respective duties, this will go a long way in increasing the membership’s trust and easing their fears about the possibility of losing their hard earned savings that are kept at the SACCOs.
The experience in other countries has been that SACCOs that are not supervised by the regulator tend to have fairly weak internal controls and poor financial disciplines. As a result these SACCOs have suffered from fraud perpetuated by the managers and the
elected leaders, a fact that has made them fail to mobilise savings from their membership who view them with suspicion and only seek credit/ loans from these institutions.
Macroeconomic stability:
The ability of the SACCOs to successfully mobilize savings is dependent on the macroeconomic environment which allows them to operate at rates that are viable and sustainable while providing a real positive return to protect the value of their members’ savings. When inflation rates are high, the SACCOs members may see the value of their savings being eroded, thus seeking other alternative ways of saving like buying domestic animals, investing in capital assets like land and buildings or storing grains thus depriving the SACCOs a critical source of funds.
The ability of the SACCOs to manage savings will also depend on the level of inflation. If savers are unable to recover the real value of their savings, they will stop saving with the SACCO. In high inflation economies where political instability and shallow financial markets allow for few alternatives, savers turn away from the formal institutions and shift to informal ways of saving in alternative forms or assets-real goods, such as animals or building materials-which may be illiquid but will maintain their value.
The problem with saving in alternative forms arises when a saver needs to access his or her savings quickly, but may not be able to liquidate the asset.

Institutional Requirements for Savings Mobilisation

Savings mobilization is a contract between parties: the SACCO receiving the savings and the SACCO member placing savings. Considering that the key consideration of the savers are; safety of savings, liquidity (easy access) and interest on savings, there
are critical measure that the SACCOs must address in order to successfully mobilise savings from their membership. These include;
 Strengthening governance and organisational structure
 Develop suitable savings products and marketing strategies
 Enhance management capabilities
Strengthening governance and organisational structure
Trust in the SACCO by the general membership is very important in savings mobilisation. This trust can be built through active participation of the members in the governance of their SACCOs. Because of the high level of participation in the affairs of the SACCOs, the members’ levels of ownership and commitment to the SACCO will be enhanced thereby increasing savings level at the SACCOs.
Savings mobilization also influences financial management function of the SACCO since the institution needs to prudently manage the funds to gain the members’ confidence and trust. The threat of deposit withdrawal due to savers’ lack of confidence in management should compel managers to operate within prudential guidelines, since widespread withdrawals would eliminate the base of funds and threaten the sustainability of the SACCO. As a result, members of the supervisory and administrative committees and managers are forced or expected to operate according to sound principles by ensuring the SACCO has adequate capital reserves, provisions for loan loss, and have liquidity reserves in order to protect client savings and the existence of the institution.
Developing savings products and marketing strategies
The SACCOs should aim to offer a wide range of savings products that are tailored to the specific needs of the members depending on the economic activities they are engaged in. These economic activities may include; agriculture, commercial activities, fishing amongst others. Having a wide range of savings products gives the members an opportunity to make choices between immediately accessible, liquid products, or semi-liquid accounts or time deposits with accordingly higher interest rates.
Simple and clear design of basic savings products enables depositors to easily select the product that best suits their needs. The simple and transparent design of the savings products also enables staff to administer them with ease, reducing administrative costs.
Having developed the savings products, the SACCO should embark on marketing and sensitising (create awareness) amongst the general community so that they attract many members from the communities to join the SACCO.
Enhancing Management capabilities
The mobilization of savings requires establishing a close and trusting relationship with the clients, which is easier when staff are familiar with the members and relate well with them. This therefore necessitates the SACCOs to do the following:
 Train staff in savings mobilisation: So that staff understand that it’s their duty to mobilise savings from the membership as well as knowing the importance of savings for the eventual success of the SACCO. This training also highlights the key factors that determine whether the members save informally or with formal institutions like the SACCOs.
 Financial Management: To ensure the safety of the members’ savings, the SACCOs need to improve on their financial management capabilities so that the savings are safeguarded from fraud through having strong internal control systems in place as well as prudently investing the funds to earn interest which can also be paid to the savers.
 Liquidity Management: This is important so that the SACCO does not invest all the funds and fails to pay members’ savings as and when they need to withdraw some of it. The managers of the SACCOs need a good liquidity management system in place so that the savers can access their savings while at the same time the SACCOs also maximise returns by investing the surplus cash by advancing loans to their members.
 Financial Records: The Umurenge SACCOs should maintain a good track record of accountability. This will ensure that the members’ trust is gained thereby enhancing the savings volumes at the institution.

Adapted from: RWANDA COOPERATIVES AGENCY (RCA) MODULE TWO: SAVINGS MOBILISATION AND MANAGEMENT FOR
THE UMURENGE SACCOS

The Importance of Savings Mobilisation

There should be a Savings Mobilisation Strategy that highlights the importance of savings as a key to national economic development in Kenya. The growth of the economy depends on capital accumulation, which in turn depends on investment and an equivalent amount of savings to match it. Savings can therefore be used to finance investments which boost production and subsequently an increase in household income. Savings mobilisation by the SACCOs is thus important and critical if the overall standard of living style of the membership is to improve.
Savings mobilisation is all about the SACCOs encouraging their membership and community members to join and begin saving with the SACCO. This requires the SACCOs to become safe and sound institutions where savers can place their deposits with the expectation that they will receive the full value of their funds, plus a real return, upon withdrawal. Savings mobilisation therefore requires the development of appropriate savings products to satisfy the local demand for voluntary savings services and marketing
those products to savers of varying income levels. Effective savings mobilization requires clear principles related to:
 Safety of the members’ deposits (without risk of loss)
 Interest on savings (interest should regularly be paid to the members)
 Liquidity (the members should be able to withdraw their savings when needed)
The SACCOs, like any financial institution need to provide services to its members of diverse income groups while tapping into savings deposits as a relatively stable, low-cost source of funds to finance growing its loan portfolios. The mobilised savings are then loaned to members to fund productive investments in agriculture, education, housing, and microenterprise in the local community. SACCOs have long realised that savings deposits provide them with a cheaper source of funds compared to borrowing from commercial banks and other sources. The market cost of paying individual members tends to be lower than the non-subsidized loans in the financial markets. The existence of savings deposits as an independent source of funds will reduce the dependence of the SACCOs on subsidies from development partners. Savings being internally-generated funds provide an independent and sustainable supply of funds that can be invested in the SACCOs.

Adapted from RWANDA COOPERATIVES AGENCY (RCA)- MODULE TWO: SAVINGS MOBILISATION AND MANAGEMENT FOR
THE UMURENGE SACCOS.

Challenges hindering Savings

1. Lack of or inadequate interest paid to savings: People see no reason as to why they should save because there is either no interest or very little interest paid to their savings hence this discourages them from saving
2. Increasing debts: Many people have accumulated many debts because of the ever increasing inflation and poor spending cultures hence they always end up paying debts and borrowing more in order to save.
3. Prioritize saving: In most cases many people in rural areas see no need to save since to them it’s not a priority as they have other basic needs to attend to.
4. Little to save: People don’t save because they have very little money and spend a lot hence there is nothing left to save in most cases. On the other hand, some people believe that it is those with a lot of money who save so the ones with little have no business in saving.
5. Don’t want to deal with banks: Most people do not save because they do not desire to deal with banks. This is because banks have a lot of bureaucracy which pushes them away from saving and they end up spending the money or keeping it in unsafe places.

Be careful with fast growing Saccos!!!

People, Processes and Systems should be in place before Saccos go “viral.”  A Sacco growing fast is not a bad thing but management should make sure they are ready for it. I have witnessed some societies that were just recently registered that have opened up branches across the country raising questions as to whether they followed the right procedures in doing so.

I will be more comfortable with say Unaitas Sacco growing very fast than with a newly registered society like Good Life Sacco. Unaitas has been there for years and they have the experience running a co-operative business. Its important to have the right people, processes and systems in place before aggressive marketing.

Some of the newly registered societies are usually restricted to operate within a small area of operation e.g. a sub-county or county. Sometimes without close supervision, they expand very fast opening branches all over the country without following the required procedures or sticking to the society’s by-laws especially the area of operation and resolutions passed by members.

I have also realized that some of these newly registered and fast growing societies have hidden intention and the public should be wary of these societies and inquire appropriately before committing. Hidden agenda specifically boils down to management/board of directors. Some of them have no intention of exiting the board and have carefully orchestrated an election “system” where they get re-elected year on year out. They use intimidation or membership ignorance to continue being in office. They have somehow put in place an election policy that they sneaked into a general meeting and had it approved that assures assures them of re-election. I still believe an election nomination process that excludes independent persons, is a sham. How can a nomination committee be composed of same people in the management committee who are to be subjected to an election process and to make matters worse, end up nominating exact number of people required? Isn’t this an election carried out by board and not members of the society?

Some of the fast growing societies have also sometimes close relationship with the church or the company within which the membership is drawn. They have what they call “a patron” who has way too much sway when it comes to societal matters. They fail to note that the society is an autonomous and synonymous organization. That the society can be sued, it can sue, own both movable and immovable property, etc. The membership in this scenario has been reduced to the role of attending meetings….just to fill the hall!! They have also failed to note that the Co-operative Societies Act and Rules, does not mention “patron” anywhere!!

I predict very soon, we will have some of the fast growing societies collapsing. This is because they have not considered some of the following issues before going ‘viral’-

PEOPLE: Do you have people in place who will steer and direct the growth? Has the management been trained/educated on basic co-operatives operations, Act, Rules? Does the staff have the required qualifications and experiences? Do the membership know what are the objectives of their co-operative? Do you know the stakeholders??

PROCESSES: Are there loan applications, membership withdrawal, staff recruitment, code of conduct, staff promotion, staff dismissal, elections, investments, dividends payments, etc processes that are known by all concerned? How did these processes come into being? How are meetings conducted management (board of directors), supervisory, management/supervisory and general meetings? Are membership views taken into consideration? How is the management committee, supervisory committee, staff and membership taken into account?  How are disputes resolved? Do you have an ICT system in place to manage the unprecedented growth? Is there a strategic plan for the society? How are shareholders and stakeholders engaged? Is there a risk management programme?

SYSTEMS: How do you manage people and processes in your society? Is there congruence of action within the society? Does these system re-invent or how agile is it? How do you make sure that society’s vision is shared across board? Does this system infringe on people and processes? What is the organizational culture like?

We shouldn’t sit down and wait. The ministries (both national and county) concerned should have policies in place to check on Saccos growth and fund sub-county offices to effectively and efficiently carry out their mandate. Otherwise new kinds of DECI is in the making.

This is a must read for every young co-operator out there.

Courtesy Daily Nation

I saw a gap in seeds and planted success

As she grew up in Kiserian, on the outskirts of Nairobi, MaryAnne Wairimu was always saddened that farmers struggled in vain to have all their seedlings germinate after transplanting.

She watched helplessly as tomatoes, cabbages and onions wilted and died. “But I also saw a business opportunity and when I was old enough, I could not let it pass,” says Wairimu.

The young entrepreneur with the help of her mother later ventured into the seedlings business.

“While in college, I researched on how to attain 100 per cent germination rate for various seedlings. I learnt about a technology known as hygro-mix,” recalls Wairimu.

After graduating in 2012 from the Kenya Polytechnic with a diploma in Physics, Wairimu, 23, started farming at her parents’ one-acre farm in Kiserian using hygro-mix, which is a soil-less technology. The capital was Sh100,000, part of which she used to put up a greenhouse measuring five by 10 metres.

She further bought hybrid seeds and hygro-mix trays. A packet of 10,000 seeds of capsicum cost Sh30,000 while 2,500 tomato seeds went for Sh8,000.

IMPORTED EQUIPMENT

The young woman, who runs Gad Eden Greenhouses and Nurseries, imported hygro-mix equipment from South Africa.

“The yield from seedlings made from the technology is higher and one does not waste seeds during the transplanting ” says Wairimu.

She now has two large greenhouses where she grows all varieties of horticultural crops that include tomatoes, capsicum, onions, cabbages, cucumber, broccoli, cauliflower, beetroot, spinach and kale.

With the help of her mother, Lister Kinuthia, Wairimu waters the plants at least once a day depending on the weather.

Normally, tomato seeds stay in the nursery for about 21 days while capsicum takes five weeks before maturity.

The seedlings are then sold to farmers in Nairobi, Kisumu, Chavakali, Mombasa and Kampala.

“Farmers book the seedlings even before they are fully developed,” says Kinuthia.

Tomato and capsicum seedlings retail at Sh10 each, while kale and spinach go for Sh2 and lettuce and beetroot at Sh3.

“For out-of-town orders, we use courier services to send the seedlings to farmers,” says Wairimu.

Mother and daughter have proved to be a dynamic and formidable team. They are also experimenting with various seed varieties and teaching farmers from as far as Nigeria how to achieve 100 per cent seed germination. The two are also growing  onion seeds as well using soil since the crop requires plenty of space, which might not be available in a greenhouse.

“The onions take about six to seven weeks to mature. We use drip irrigation to water them,” says Kinuthia.

According to Wairimu, farmers must debunk the myth that drip irrigation is too expensive and complex.

“We also teach farmers how to succeed in drip irrigation. A good drip system for an eighth acre costs a farmer about Sh30,000,” she says.

In a good month, mother and daughter make up to Sh200,000 from selling seedlings and teaching farmers.

“Breeding seedlings is very profitable as everyone is farming these days. Greenhouse farmers will always need hybrid seedling,” says Wairimu.

Germination success rate is dependent of the seed quality.

“The advantage of soil-less medium is that it can be sterilised completely and chances of seed rotting are minimal,” says Dr Miriam Mwangi, a senior lecturer in the crop, horticulture and soils department at Egerton University. She adds farmers should ensure seeds germinate in right temperature.

By Njoki Chege –

SATURDAY, MARCH 29, 2014

Achievements of Strict Enforcement of the legal framework

• Kenya Co-operative movement is currently ranked 1st in Africa and 7th internationally. In July 2013 WOCCU recognized Kenya SACCOs as the fastest growing sub-sector in the World.
• Co-operative enterprises have generated employment opportunities of over 500,000 people and indirectly for 2 million
• Recovery of Ksh.3.8 billion in SACCOs remittances from employers by 2010 out of Ksh. 4.3 billion arrears that had been outstanding since 2004.
• SACCOs had mobilized savings to the tune of Ksh.380 billion with asset base of 493 billion as at 31st December, 2012
• Savings mobilization in the SACCO subsector has been growing at the average rate of 30% per annum.
• Income to co-operators has increased, e.g. milk-from ksh. 8 to ksh. 38 per litre; coffee-from ksh. 10 to ksh. 140 per kg.
• There has been tremendous growth of co-operative financial organization into giant financial power houses which surpassed the normal commercial banks and other financial institutions. The Co-operative Bank of Kenya is the 3rd largest bank in Kenya,while the Co-operative Insurance Company of Kenya (CIC), is the 2nd largest insurance in Kenya and the only one of its kind in Africa.
• The Co-operative sub-sector has two major components, the Government which drives its policy through movement on the other for efficient delivery of service to the members and the general public.

Compiled By:

Emily M. Gatuguta, OGW
Peter Kimotho
Samwel Kiptoo
Date: Tuesday, January 14, 2014

Structure of Co-operative Development and Marketing

Sub Sector State Corporations/Commissions/SAGAs
i. Sacco Societies Regulatory Authority (SASRA)
ii. Ethics Commission for Co-operatives (ECCOS)
iii. Co-operative Tribunal
iv. New Kenya Cooperative Creameries (New KCC)
v. * The Co-operative College which was a National Co- operative Organization has been upgraded to a University College and is now under the Ministry of Higher Education. We expect the college to be given a charter in the near future to be a full Co-operative University in Kenya
Sacco Societies Regulatory Authority (SASRA)
The Sacco Societies Act, 2008 was enacted by the Parliament to “make provision for the licensing, regulation, supervision and promotion of Sacco societies, to establish the Sacco Societies Regulatory Authority (SASRA). To make the Act operational, the Minister made the SACCO Societies (Deposit- Taking SACCO Business) Regulations, 2010.
SASRA is a State Corporation as provided under section 2(b) of the State Corporations Act (Cap. 446) of the Laws of Kenya and SASRA is established under section 4 of the Act with the mandate to:
(a) license Sacco societies to carry out deposit-taking business in accordance with the Act
(b) regulate and supervising Sacco societies
(c) hold, manage and apply the General Fund of the Authority in accordance with the provisions of the Act
(d) levy contributions in accordance with the Act
(e) do all such other things as may be lawfully directed by the Minister; and
(f) Perform such other functions as are conferred on it by the Act or by any other written law.
Ethics Commission for Co-operatives (ECCOS)
The issue of good governance has been discussed widely since the end of the twentieth century. The Government of Kenya on its part, after the year 2002, embarked on an ambitious strategy to enact laws to combat graft, which was rampant and threatening to tear institutions of government apart. The
existence of other institutions with massive public interest, for example the cooperative societies were equally threatened.
Consequently, the Government enacted various laws geared towards eradicating graft and improving governance in public institutions in 2003. These legislations include;
 The public officer Ethics Act of 2003
 The Anti-corruption and Economic crimes Act
 The Public Procurement and Disposal Act
In the Public Officer Ethics Act (Section 2) cooperative society’s staff and committee are included in the definition of a public officer, hence responsible for guarding the interests of their members, who are the Kenyan public.
Most of the public officers as defined in the public officer Ethics Act, had commissions responsible for their integrity, and discipline, some of which were already statutory, with well established administrative structures, for example;
Among the existing commissions, none was found appropriate to handle the integrity issues of the cooperative public officers. This necessitated the creation of a cooperative sector, integrity commission. By legal Notice No.120/03 (The public officer Ethics regulations 2003) the Ethics Commission for Cooperative Societies was established, to be the responsible commission for officers and employees of cooperative societies established under the cooperative societies Act, including members of the governing body of the cooperative society.
The members of the above Commission comprise officers within the Ministry only and the cooperative college. There was no stakeholder participation, which is essential in matters of integrity.
The Ministry approached the Ministry of Justice National Cohesion and Constitutional Affairs, with a view to amending Regulation 7 of the public officer Ethics Act Regulations 2003, to include stakeholder participation, to give the commission a wider scope. After numerous discussions and consultations, between the two ministries the amendment was accepted, and the Regulation now titled ‘The public Officer Ethics (Amendment) Regulations, 2010’. The composition of the Board is now drawn from,
institutions such as ICPAK, Kenya Bankers Association, Strathmore University, Co-operative College of Kenya, Co- operative Alliance of Kenya, and the Co-operative Tribunal.
Mandate
The mandate of the ECCOS is “To promote and enforce Ethical conduct and anti-corruption reforms within the cooperative movement, through responsive education, advice, investigations and financial disclosure processes”.
Duties and responsibilities of the commission will include;
 Enforcement of the cooperative society’s general code of conduct.
 Development and administration of training programmes aimed at integrating good governance and Ethical principles in the management of cooperative societies
 Awareness creation and institution of corruption prevention measures in the cooperative movement.
 Investigation on any matter that in the commissions opinion raises suspicion that conduct liable to allow, encourage or conduct constituting corruption, is about to occur.
 Investigation on any officer of the cooperative society that in the opinion of ECCOS is conducive to breach of integrity.
 Examination of the practices and procedures of work of cooperative societies in order to facilitate the discovery of corrupt practices and to secure the revision of methods of work or procedures that in the opinion of the commission are conducive to breach of integrity.
 To investigate the extent of liability for the loss of or damage to any co-operative society property.
 To make recommendations on disciplinary actions to be taken by the committee/board and the general meeting on the staff and the committee respectively among others.13
 As part of its institutional development agenda, the Ministry will establish the requisite institutions and structures to operationalize and entrench the provisions of the Ethics Commission for Cooperative Societies. For an integrated approach to addressing poor governance, the Ministry will put in place mechanisms to empower the Co-operative Tribunal to enable it enforce the cases tabled by the Ethics
Commission.
The commission may refer a matter to another appropriate body for investigation, and that body to investigate, within a reasonable time, and submit a report to the Commission on its findings.
Co-operative Tribunal
The Co-operative Tribunal is one of the functions of the Ministry of Industrialization and Enterprise Development. The Tribunal is a quasi judicial body established under the Co-operative Societies Act No.12 of 1997 as amended by the Co-operative Societies (Amendment) Act, 2004 with the sole purpose of hearing and settling co-operative disputes.
In order to qualify as a dispute for purposes of the Tribunal, the matter must concern the business of the society. That is;
 Among members, past members and persons claiming through members, past members and deceased members; or
 Between members, past members or deceased members; and the society, its committee or any officer of the society; or
 Between the society and any other co-operative society.
Tribunal services include; advisory services, assessment of claims, custody of documents, processing of documents, granting ex parte judgments, giving hearing dates and hearing disputes.
The Tribunal has decentralized services by establishing registries across the Republic, namely; Mombasa, Kisumu, Embu, Nakuru and Kakamega. Aggrieved parties are advised to seek these services at the registries nearest to them.
Advantages of the tribunal mechanism
 Fast in settling disputes
 Ensures a win-win situation
 Emphasizes justice rather than technicalities of procedure
 Enforces its own decrees
 Has qualified personnel with representation from Co- operative Movement itself.
 It is only in a tranquil and peaceful environment that business can thrive.
 Customer friendly
 Open to members of the public(transparent)
 Closer to the people through the regional registries15
 Specialization in Co-operative matters
New Kenya Co-operative Creameries Ltd (NKCC)
Kenya Co-operative Creameries (KCC) was the first co- operative to be registered on 8th February 1931 under the Co-operative Societies Ordinance.
 This society operated very well up to the year 2000 when it was sold to private investors and renamed KCC 2000.
 The New Kenya Co-operative Creameries Ltd was registered on the 25th of June 2003. Its predecessor, the Kenya Co-operative Creameries Ltd has operated in Kenya since 1925. This makes it the oldest dairy processor in the country.
 New KCC is the largest business entity in the dairy industry in East Africa involved in food industry,
processing and marketing milk and milk products.
 The business process of New Kenya Co-operative Creameries Ltd encompasses receiving of raw milk
from farmers, processing it into various milk products and marketing and selling the products for the benefit of the company shareholders.

Compiled By:

Emily M. Gatuguta, OGW
Peter Kimotho
Samwel Kiptoo
Date: Tuesday, January 14, 2014

Structure of the Co-operative Movement in Kenya

The co-operative movement in Kenya is organized into four-tier system consisting of; Apex, Tertiary (NACOs), Secondary (County/District Unions) and Primary;
Apex Co-operative Organization
The apex co-operative organization today in Kenya is the Co- operative Alliance of Kenya (CAK).
 The Co-operative Alliance of Kenya Limited (CAK) was registered on the 22nd December, 2009 as the National Apex Organization for the Co-operative Movement of Kenya under the Co-operative Societies Act, CAP 490 Laws of Kenya.The newly registered Co-operative Alliance of Kenya Limited is to be the driving force of the Co-operative Movement in Kenya.
 CAK is a successor to Kenya National Federation of Cooperatives (KNFC). KNFC was formed in 1964 by co- operative societies unions and NACOs to be the spokesman of the co-operative movement and to promote co-operative interest. However, KNFC faced some challenges in late 90’s and early 2000 which led to its liquidation.
 CAK endeavors to promote co-operative development, to unite the Co-operative Movement and to represent the Co- operative interests on all matters of policy and legal framework and to be the spokesperson of the Co-operative Movement in Kenya.
Tertiary National-Co-operative Organizations (NACOs)
These are countrywide co-operative organizations whose membership is drawn from secondary and primary co-operatives.
NACOs offer specialized services to their affiliates, which include insurance, banking, housing, commodity marketing and promotion of active relationship with social and economic partners in order to create favorable climate for co-operative development.
They provide commercial and financial services, human resource development, advocacy and representation of co-operative unions and societies at the international level. Currently there are ten
NACOs which are:Co-operative Bank of Kenya Ltd, Kenya Co- operative Coffee Exporters (KCCE) Ltd, Co-operative Development and Information Centre (CODIC) Ltd, Co-operative Insurance Company of Kenya (CIC) Ltd, New Kenya Co-operative Creameries (KCC) Ltd, Kenya Planters Co-operative Union (KPCU),
Kenya Union of Savings and Credit Co-operative (KUSCCO) Ltd, Kenya Rural SACCO Societies Union (KERUSSU) Ltd, National Co- operative Housing Union (NACHU) Ltd and Cooperative Communication Holdings Ltd (CCHL)
Co-operative Bank of Kenya Ltd
The Co-operative Bank of Kenya Limited was registered as a co- operative society on the 19th June 1965.
 The Bank applied for a banking licence to operate under the Banking Act, which was granted later on and it opened for business on 10th January 1968.
 The Bank is now incorporated in Kenya under the Company’s Act and is also licensed to do the business of banking under the Banking Act. It was initially registered under the Co-operative Societies Act at the point of founding in 1965.
 This status was retained up to and until June 27th 2008 when the Bank’s Special General Meeting resolved to incorporate under the Companies Act with a view to complying with the requirements for listing on the Nairobi Stock Exchange (NSE).
 The Bank went public and was listed on December 22 2008. Shares previously held by the 3,805 co-operatives societies and unions were ring-fenced under CoopHoldings Co- operative Society Limited which became the strategic investor in the Bank with a 64.56% stake.
 Co-operative bank has a distinct advantage in co-operative societies spread across all the 47 counties and can therefore provide a reliable alternative for establishing branches countrywide.
 The Bank is already in a franchising partnership through Sacco Link which provides wholesale banking services to individual SACCO’s which then provide retail banking services to members through FOSAs.
Kenya Co-operative Coffee Exporters (KCCE) Ltd
This was formed in 2008 by small scale coffee farmers to enable them access export markets through enhanced economies of scale and professional expertise in coffee marketing. KCCE is licensed as a commercial coffee marketing agent that provides small holder coffee farmers with an opportunity to directly sell their produce to the international market. Since its registration producer prices have improved significantly.
Co-operative Development and Information Centre (CODIC) Ltd
This was developed as a one stop shop for co-operative societies on issues of information technology and co-operative development.
 The primary function is computerization of cooperative society operations in order to improve efficiency.

 Among its major achievements is development of software which is used to install ATMs in a number of societies.
Co-operative Insurance Company of Kenya (CIC) Ltd
The Co-operative Insurance Company of Kenya Limited (CIC) was established in 1978 and was formerly known as Co-operative Insurance Services Limited (CIS).
 In 1999, the company name was changed to the Co- operative Insurance Company of Kenya Limited (CIC)
 The name change was part of the company’s market repositioning strategy of completely changing the then small company to a respected insurer in the country.
 It is currently among the largest insurance companies in terms of capitalization and insurance premium
Kenya Planters Co-operative Union (KPCU)
Kenya Planters Co-operative Union (KPCU) was registered 1937 as a national co-operative union for primary coffee co-operatives societies.
 The union, however, currently faces some serious challenges necessitated by poor governance structure and dual certificate of registration.
 KCB had placed the organization under a statutory manager/receiver but has since been lifted pending clearance of the outstanding loan
 A new board of directors has already taken over from the receiver manager and are in the process of paying the loans
Kenya Union of Savings and Credit Co-operative (KUSCCO) Ltd
KUSCCO is the union for SACCOs in Kenya. It is charged with responsibility of championing issues affecting SACCOs in Kenya through advocacy and representation. The main objectives of
KUSCCO are to:
 Promote the organisation and development of viable co- operative savings and credit societies
 Disseminate information concerning savings and credit societies and co-ordinate their operating methods and practice to maintain basic uniformity
 Foster education, training of members, officials and employees of savings and credit societies
 Act as the sole local and international representative and mouthpiece of savings and credit societies
 Help improve the internal management of savings and credit societies by providing a standardized management system.
KUSCCO operations are managed by a board of 15 directors selected by member SACCOs on regional basis.
The organisation has its Headquarters in Nairobi and five branch offices in Kisumu, Nakuru, Nairobi, Embu and Mombasa. Each upcountry office serves KUSCCO members within its region.There are sub branches in wider regions to cover all the 47 counties
Kenya Rural SACCO Societies Union (KERUSSU) Ltd
The Kenya Rural Savings & Credit Cooperatives Societies Union (KERUSSU) was registered in 1998 and is the umbrella national cooperative organization for rural SACCOs. KERUSSU brings together rural SACCO societies and other forms of savings & credit associations in Kenya.
The membership of KERUSSU is made up of cooperative societies whose operations are largely based in rural areas of Kenya where:
 The members’ major source of income is from rural based activities such as farming
 The greater percentage of the members live in rural areas
 And where members are largely derived from institutions and establishments such as factories based in rural areas and/or process inputs that are mostly from the rural areas.
The overall goal of KERUSSU is to contribute to improved standard of living in the rural areas of Kenya through appropriate, efficient and effective rural cooperative movement with the capacity to offer accessible and affordable financial services.
The aim of KERUSSU is to work towards empowered and dynamic rural SACCOs offering effective and efficient services to their members.
National Co-operative Housing Union (NACHU) Ltd
NACHU was established in 1979 under the Co-operative Societies Act (Cap 490)to coordinate shelter issues through the co- operative model by providing financial and technical service.
 Its formation was in response to the great demand for decent and affordable housing among the low income group.
NACHU therefore is an organization whose membership is made of registered primary housing cooperatives.
 The co-operative movement has an obligation under Kenya Vision 2030 to provide 25% of annual housing demand in Kenya.
 NACHU’s strength is its holistic approach to shelter development: housing microfinance combined with advocacy and technical services that allow cooperatives to gain access to land and infrastructure, and ensure quality construction.
 NACHU also supports member cooperatives with training in financial management, governance, and other important topics including HIV/AIDS prevention.
Cooperative Communication Holdings Ltd (CCHL)
Co-operative Communication Holdings Limited (CCHL) is a National Co-operative Organization (NACO) which was registered on 8th March 2010 to enter into partnership with the private sector in the provision of Information Communication Technology (ICT) services to the co-operative movement as a vehicle for
investment in this fast growing sector.
The core activity of the CCHL is to partner with the private sector on areas of ICT in order to maximize returns to the members and ensure access to information through the provision of affordable products and services thereby promoting their social economic welfare. ICT is critical to the country’s development and CCHL is strategically placed to provide the best ICT products.
Secondary Co-operatives (County/District Cooperative Unions)
These co-operatives restrict their membership to primary co- operative societies. They include the County/District Co-operative Unions which serve the primary co-operatives as service agencies.
They are managed by an executive committee whose members are elected from the primary co-operatives. They are formed with the aim of enhancing economies of scale through shared goods
and services such as bulk procurement of farm inputs and education and training of its afflicts.
Primary Co-operatives
These co-operatives restrict their membership to individual persons and are mainly formed by individuals within a given locality or common bond. Most of them are single-purpose or single product enterprises.They group individual members for their economic thrift and cut across all sectors of the Kenyan economy such as; Marketing Co-ops, Savings and Credit, Housing, Horticulture, Livestock, coffee, pyrethrum, sugar cane, cotton, Fisheries and Dairy. They include; Manufacturing/processing, Construction, Transport, Irrigation, Farm purchase e.g Konza, Mining [Turkana] alluvial gold and Investment Co- operatives. Notable achievements include;
 Most Kenyans have benefited in one way or the other from the Co-operative movement, through educations and acquisition of land from the white settlers.
 Modern day Kenyans in very many spheres of the economy have benefited from societies through borrowing and establishing businesses
 Employees have joined SACCOs, obtained loans for purchase of plots, cars, construction of houses and payment of school fees.
 Notable cooperators are Members of Parliament who are either members of Bunge Sacco or Parliamentarian Sacco.
 The SACCO sector has grown to a point where some SACCOS are bigger than commercial banks e.g Mwalimu SACCO with a membership of 47,179, has assets totaling Kshs. 22 billion with a monthly cheque of Ksh.600 million from employers and Harambee SACCO with a membership of 98,640, has assets totaling 13 billion with a monthly cheque of Ksh.454 million as at November 2010.
 Individual contribution has grown and there is case where one employee has saved fifty million shillings with a SACCO which shows the confidence members have in cooperatives.
 SACCOS have mobilized huge amounts of money, thereby support the economy. So far SACCOS have raised approximately Kshs. 380 billion as at 31st December, 2012.
 Co-ops bring about security, stability, prosperity and equity
 Co-operatives are not well understood and therefore their potential to reduce poverty and the inequality gap is not appreciated.

Compiled By:

Emily M. Gatuguta, OGW
Peter Kimotho
Samwel Kiptoo
Date: Tuesday, January 14, 2014

Challenges Faced by Co-operatives

 Some Societies are too small hence not sustainable and need to be merged.
 There is a serious shortage of Co-operative staff in the Counties which is hampering effective extension services as shown below:-  Approved establishment Inpost Variance
o 2999 1060 1939
o Total number of Districts (Sub Counties) – 240
o Manned Districts – 220
o Districts without staff – 20
o Total number of officers required for the twenty Districts – 186 made up of Co-operative Officers,
Clerks, Secretaries, Drivers and Support Staff
 Succession planning is a very serious challenge to the Co- operative Movement. The former Ministry of Co-operatives & Marketing has applied over the year to be authorized to recruit staff without success. Co-operative technical officers require thorough training to enable them facilitate Co- operative affairs in the County and to create wealth for Kenyans. The Movement is under serious threat because of
inadequate human resource capacity as indicated below.
o Officers above 55 years old – 153 officers
o Between 50 – 55 years – 100 officers
o Senior officers to retire in 2014 – 35 officers
 Recommendations of the Workload analysis should therefore be implemented.
 Inadequate working facilities:- Accommodation, Transport and Computers
 Capacity building issues-empowering members and management
 Inadequate financial resources
 Lack of Innovativeness/best practice and the new areas the movement can move to.
 Huge disparities in development, e.g. some SACCOs are ISO certified while others have stagnated at rudimentary levels.
 Selling bulk produce instead of marketing value added and branded products.
 Limited value addition and lack of control of marketing produce.
 Old and ageing co-operative membership.
 Sustainability of the movement requires registration of new co-ops and member recruitment.
Recommendations
 Entrenchment of Governance issues
 Capacity building of Co-op Leadership and Co-operative staff should be undertaken.
 Succession planning in the Ministry of Industrialization and Enterprise Development should be addressed to avoid a situation where the Co-operative Movement finds itself in a situation where there are no experienced Co-operative professionals to facilitate its operations.
 The workload Analysis by DPM should still be implemented through the Counties because the constitution is about equity and economic citizenship and therefore all Districts should be given an equal opportunity to learn about Co- operatives through professional staff; and to investCo- operatives are about wealth creation, poverty reduction and economic prosperity for Kenya.
 County Co-operative officers should be trained as trainers so that they can assist Societies to develop strategic plans for the Counties by the Ministry of Industrialization and Enterprise Development.

 Management reforms as well as use of ICT should be facilitated
 The Co-operative Development Fund should be operationalized and be utilized to mainstream youth and women participation in the movement.
 Working tools should be provided.
 The ministry needs support in generating credible data.
 One way of creating awareness is hosting workshops/conferences for Government officials to sensitize them on the role of Co-operatives and their diversity.
 Support value addition and access to markets-do away with brokers and middlemen.
 Developing National capacity in marketing value added and branded products as well as gathering market intelligence.
 Involvement of Youth in the Movement [membership and leadership]- succession planning.
 Come up with national co-operative member recruitment strategy and development of new societies/new co-operative products.
 There is need to carry out an evaluation of the dormant societies to determine whether they should be revived liquidated.
 The small Societies which are not economically viable should be merged.
 Members should be encouraged to recruit professionals who are also people of integrity.
 A bench marking exercise should be carried out to determine the way forward. [Western Union is a Credit Union from the U.S.A . and had started as a SACCO] Co-op Bank.

Compiled By:

Emily M. Gatuguta, OGW
Peter Kimotho
Samwel Kiptoo
Date: Tuesday, January 14, 2014

Contribution of Cooperatives to the Achievement of Kenya Vision 2030

Kenya Vision 2030 aims at making Kenya a newly, industrialized, middle income country providing high quality life for its citizens.
The Vision 2030 has three key pillars: economic, social and political. Co-operatives contribution to the vision is guided by the seven internationally recognized co-operative principles as illustrated above.
The Ministry of Industrialization and Enterprise Development in its current strategic plan embraces measures that will contribute to the implementation of Vision 2030 Flagship projects as well as
Medium Term plans. The co-operative movement in particular will play the following key functions in delivering Vision 2030:
The Economic Pillar
The Saccos will continue to mobilize savings, developing demand driven financial products which encourage members to save additional resources. This is in line with economic pillar whose key
mandate is to mobilize savings for Kenya’s investment needs. In this regard the Ministry has focused on registration of Youth Co- operatives, transport, Jua kali Saccos and enhancing management of the already existing Saccos through adoption of best accounting, management and governance practices.
In the retail trade Vision 2030 envisages the transformation of informal sectors into an efficient, multi-tiered and production of diversified product range. In this regard the Co-operatives have transformed Jua Kali informal sector with particular reference to transport, community based interest groups, Youth groups into organized Co-operative enterprises.
In the agro-processing sector the Co-operatives are already doing processing and the same is geared towards industrialization. The key Co-operatives in this area are the successful Githunguri dairy,
Limuru diary, Meru dairy which are processing and marketing their products in Supermarkets in Nairobi and other areas. Meru Central Union is manufacturing animal feeds products and milling maize flour for the local market.
The Kenya Co-operative Coffee exporters Ltd is assisting the farmers to access international market but is geared towards processing and marketing Kenya Coffee as finished products in the international market.
Social Pillar
The social pillar under Vision 2030 envisages to transform the eight social sectors namely education and training; health; water and sanitation; environment; housing; gender, youth and sports.
The Co-operative Movement and in particular the savings and credit Co-operative Societies (Saccos) mobilize billions of shillings to finance education from Primary to University through affordable loans to the members. In addition they provide credit facilities to meet agricultural, medical and legal services. In
housing, Co-operatives facilitate members to pool resources to buy plots and to finance construction.
The National Co-operative housing Union (NACHU) and Kenya Union of Savings and credit Co-operative society Ltd, through housing scheme are financing long term mortgages for individuals and societies to put up houses. Some of the land mark buildings in Nairobi e.g. Harambee, Imenti and Ukulima Plaza are owned by co- operatives.
The Co-operative active participation complements government efforts of putting up 150,000 housing units in urban areas. The Co-operative will play pivotal role in realization of the social pillar in Vision 2030.
Political Pillar
The Vision 2030 0n the political pillar envisages to create “a people centred and politically engaged open society”. The Co- operatives are economic based and are driven by economic needs. In this regard the Co-operative brings people together irrespective of class, social status in life, ethnicity or other
considerations. The Co-operatives have institutionalized democratic culture through engagement in free and fair elections. The Co-operatives therefore form the bases and the building blocks for a cohesive society and enhances issue base and politics economic survival. 10.0 Emerging Issues in Co-operative Marketing
 Value addition is done by some co-operative societies: e.g. New Kenya Cooperative Creameries (New KCC), Githunguri, Meru Central and Kenya Coffee Co-operative Exporters (KCCE). These co-operatives will continue value addition under vision 2030 in order to control larger part of product value chain.

 Co-operatives will also play a vital role in input supply and distribution. Through Kenya Farmers Co-operative Union (KFCU) they will participate in bulk fertilizer importation and distribution using the existing infrastructure (stores, vehicles and machinery) owned by co-operatives and unions.
 Promotion of producer-based groups/co-operatives. In order to address the problems of fragmentation and informality that exist in supply chain, the ministry will encourage linkages between the formal market operators (wholesale and retail hubs), e.g. supermarkets and producer co- operative organizations.
 The development of Diaspora co-operatives (SACCOs) – Already the Ministry has promoted two Diaspora SACCOs in America and United Kingdom (UK) in order to tap enormous resources generated by this subsector to channel into the country’s investment opportunities.
 Matatu SACCOs- In order to streamline and promote viable investments in transport subsector, the Ministry in collaboration with the Ministry of Transport and Infrastructure has already registered 600 Matatu SACCOs in the country.

 Sharia Compliant Co-operatives. In order to promote and tap investments from the Muslim community, the Ministry has established Sharia compliant co-operative by-Laws to roll out
products geared towards this segment market. The Sharia compliant co-operative policy is underway. The following 4 Sharia Compliant Co-operatives are already registered; Cofi Sacco Ltd, Cresent Takaful Sacco, Taqwa Sacco and PumwaniRiyadha Sacco Ltd.

 Housing Co-operatives- With the country experiencing an acute shortage of housing, especially for the low-income segment of the population in urban settlements, the Ministry has promoted 440 housing Co-operatives. However, these housing programmes have stagnated due to lack of affordable mortgage facilities and long term lending to assist in housing development. Besides; poor planning, high cost of
construction and building material and the complex land administration mechanisms discourage investors/co- operatives in committing funds for housing projects.
 Youth Co-operatives- The Ministry in collaboration with USAID, has registered and supported 27 County Youth Bunge SACCOs in order to engage the youth in gainful business enterprises. These SACCOs have already mobilized Ksh. 10 million savings and loaned out Ksh. 7 million. In January 2014 USAID will inject Ksh.8 million grants in form of a revolving fund to this programme.

Compiled By:

Emily M. Gatuguta, OGW
Peter Kimotho
Samwel Kiptoo
Date: Tuesday, January 14, 2014

Global Perspective of Co-operative Movement in Kenya and International Obligations

The Kenyan Co-operative Movement is rated 1st in Africa and the 7th global among the developed movements. This rating is by the international Co-operative alliance. The Sacco Movement in
Kenya was admitted to the group 10 of the most developed Sacco Movement globally.
The members of group 10 are Kenya, Ireland, United States of American, Brazil, Mexico, Poland, Australia, Caribbean, Canada and Costa Rica. Kenya is represented in the group 10
by Kenya Union of Savings & Credit Co-operative Ltd (KUSCCO).
It should further be noted that Kenya offers consultancy services on Co-operatives to various countries in Africa, e.g. Rwanda, South Sudan and South Africa among others and has developed an MOU with the Ethiopian Government for Technical Cooperation Program.
The country through the various National cooperative Organizations and CAK which is the Apex is represented in the international cooperative movement. The movement in Kenya is a member of;
 International Cooperative Alliance (ICA)
 World Council of Credit Unions (WOCCU)
 Africa Confederation of Savings and Credit Associations (ACOSCA)
 International Cooperative Mutual Fund (ICMF)
This membership is in line with the international cooperative principle “Cooperation among  cooperatives”.

Compiled By:

Emily M. Gatuguta, OGW
Peter Kimotho
Samwel Kiptoo
Date: Tuesday, January 14, 2014

The Early History of Cooperatives

The modern history of cooperatives started with the Rochdale Society of Equitable Pioneers, founded in 1844. This was an early consumer co-operative, and one of the first to pay a patronage dividend, forming the basis for the modern co- operative movement. Although other co-operatives preceded them, the Rochdale Pioneers’ co-operative became the prototype for societies in Great Britain. The Rochdale Pioneers are most famous for designing the Rochdale Principles, a set of principles of co-operation that provide the foundation for the principles on which co-ops around the world operate to this day.
The model the Rochdale Pioneers used is a focus of study within co-operative economics. The Rochdale Society of Equitable Pioneers was a group of 28; around half were weavers in Rochdale, Lancashire, England, that was formed in 1844. As the mechanization of the Industrial Revolution was forcing more and more skilled workers into poverty, these tradesmen decided to band together to open their own store selling food items they could not otherwise afford. With 2 lessons from prior failed attempts at co-operation in mind, they designed the now famous Rochdale Principles, and over a period of four months they struggled to pool one £1 per person for a total of 28 pounds of capital. On 21 December 1844, they opened their store with a very meager selection of butter, sugar, flour, oatmeal and a few candles. Within three months, they expanded their selection to include tea and tobacco, and they were soon
known for providing high quality, unadulterated goods. Ten years later, the British co-operative movement had grown to nearly 1,000 co-operatives.
The Cooperative Group is one of the largest supermarket chains in the United Kingdom.

Compiled By:

Emily M. Gatuguta, OGW
Peter Kimotho
Samwel Kiptoo
Date: Tuesday, January 14, 2014