Understanding a Co-operative Society

What is a co-operative society?

A co-operative society is an association of persons who have come together with a common purpose of pooling their resources together for mutual economic and social benefit.

Types of co-operatives societies in Kenya

a) Savings and credit co-operative societies

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

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.

c) Consumer co-operative societies

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

d) Agricultural/marketing/farmers co-operatives

These are formed by small farmers to work jointly in marketing their produce 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) Multipurpose co-operative societies

These are co-operatives that deal with more than one activity. The Ministry of Co-operative Development and Marketing discourages the formation of such co-operatives as their overall performance has been found wanting.

What are the objects of a co-operative society?

The main object of a co-operative society is to organize and promote the economic interest of its members in accordance with the Co-operative Principles and Values. The specific objects include:-

  • promotion of thrift among members-opportunity for accumulation of savings/deposits; loans at fair and reasonable rates of interest
  • to provide opportunities for members to improve their economic and social conditions
  • perform those functions and exercise powers designated for Co-operatives Societies under applicable by-laws.

The Co-operative Values:

  • Self-help
  • Mutual responsibility
  • Equality
  • Equity
  • Honesty
  • Openness
  • Social responsibility

The seven universal co-operatives principles:

  • Voluntary and open membership
  • Democratic member control
  • Economic and participation of members
  • Autonomy and independence
  • Education, training and information
  • Co-operation among co-operatives
  • Concern for community

Structure of co-operative movement in Kenya

The co-operative movement in Kenya is divided into four distinct divisions namely:-

a) The National Apex:

Kenya National Federation of Co-operatives Ltd (KNFC)- defunct, was formed on 28th April 1964 as the Apex Co-operative organization of the Kenya Co-operative Movement with the mandate to lobby, advocate for, network, collaborate and unite all co-operatives in Kenya. It has been replaced by Co-operative Alliance of Kenya that was inaugurated in 2010.

b) National Co-operative Organizations:

Secondary Co-operative Societies:

Comprises of all co-operatives unions countrywide.

Primary Co-operative Societies:

Comprise over 12,000 primary co-operative societies registered countrywide.

Registration of Co-operative Societies

Pre-requisites

The co-operative Societies Act, Chapter 490 of the Laws of Kenya, states that for a society to be registered with or without limited liability, it:

  • has to have its object as the promotion of the welfare and economic interest of its members and
  • has incorporated in its by laws the co-operative principles

Essentials for registration of a co-operative societies

For a society to be registered under the Act, it must:

  • in the case of the primary society, consist of at least ten persons all of whom shall be qualified for membership of the co-operative society
  • in the case of a co-operative union, it consists of two or more registered primary societies
  • in the case of an apex society, consist of two or more secondary societies

Procedure for registration

  • an application is made to the commissioner for co-operatives development in the prescribed form and signed by at least ten would be members
  • the application is accompanied by four copies of the proposed by-laws of the society in English and the person or persons by whom or on whose behalf such application is made, shall furnish such information with regard to the society as the commissioner may require
  • if the commissioner for co-operatives development is satisfied that a society has complied with the Act and any rules made there under and if the proposed by-laws are not contrary to the Act, he may register the society and its by-laws.

Registration Documents 

  • The proposed by-laws in four copies
  • Filled application for registration form in four copies
  • Supplementary information form in four copies (if any)
  • Economic appraisal in four copies
  • In case of salaried workers with check-off agreement with employer, a letter from the employer is needed.

Model By-Laws:-xxxxxxxx SAVINGS AND CREDIT CO-OPERATIVE MODEL BY-LAWS

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