Historical Background of Co-operatives in Kenya

In Kenya the history of cooperatives date back to 1908 and has continued to grow since then;

  1. 1908- first Co-operative Society was established in Kenya, a dairy Co-operative
  2. 1931 –Government’s first formal involvement in Cooperatives when the first Co-operative Ordinance was enacted to regulate the operations of co-operatives.
  3. 1946 -Inclusion of Africans in the Movement when the colonial government acknowledged that Africans needed to participate in the economy through co-operatives resulting in the enactment of a new Co-operative Societies’ Ordinance.
  4. 1955-African involvement in the growing of cash crops following the Swynnerton Plan paved the way for the formation of more co-operatives.
  5. 1932 – 1969; 1,894 societies had been registered.
  6. These first co-operatives were Predominantly marketing oriented & Auxiliary focus,
  7. Key examples then were Kenya Co-operative Creameries (KCC-1925), Kenya Planters Co-operative Union (KPCU- 1923) and Kenya Farmers Association (KFA-1923).
  8. These organizations were originally registered as companies and only became registered as co-operatives in 1931 when the first Co-operative Ordinance was promulgated.
  9. 1965-The sessional paper No. 10 of 1965 on “African Socialism” gave impetus to rapid Africanization of Kenyan economy and poverty eradication based on principles similar to those adopted by the co-operative movement.
  10. 1970-The first post-independence Government Co-operative Development Policy was contained in Sessional Paper No. 8 of 1970 whose main goal was the consolidation of the co- operative activities.
  11. This included improvement of management of societies, intensification of education and training for members, 4 committee and staff with provision of government support staff as supervisors.
  12. 1975- Another review of the Co-operative Development Policy took place in which the government continued to recognize co-operatives as vital organs for mobilizing material, human and financial resources for national development.
  13. The government reiterated its commitment to pursue and promote expansion of co-operative activities in all the productive spheres of the economy.
  14. 1980s –The government started implementing Structural Adjustment Programmes (SAPs) for a market economy. Sessional Paper No.1 of 1986 on “Economic Management for Renewed Growth”, emphasized the importance of unfettered (free) private sector led economic development.
  15. The government through Sessional Paper No. 4 of 1987 on “Renewed Growth through the Co-operative Movement”, reiterated its commitment to enhance the participation of Kenyans in the economy through Co-operatives.
  16. The responsibility of organizing and managing co-operatives was left to the members and their management committees while the government played an advisory role.
  17. The Sessional Paper No. 1 of 1994 on “Recovery and sustainable Development to the Year 2010” reaffirmed the need for a private sector led economy to accelerated and sustained development.
  18. Through Sessional Paper No. 6 of 1997, on “Co-operatives in a Liberalized Economic Environment”, the government reviewed its involvement in the management of co- operatives by providing a legislative framework under which co-operatives were to survive in a competitive economic environment.
  19. The enactment of the Co-operative Societies Act No. 12 of 1997 removed completely the government’s role in the affairs of co-operative societies. This resulted into a near collapse of the entire co-operative movement in the country. Improved governance through Legislative and Institutional Reforms
  20. Recognizing the urgency to preserve and maintain the role of co-operatives in national economic and social development, the government vigorously pursued legislative and institutional reforms in order to forestall the imminent collapse of the co-operative subsector.
  21. Consequently, it amended the Co-operative Societies’ Act No. 12 of 1997 vide the Co-operative Societies (Amendment) Act No. 2 of 2004 and prepared new Co-operative Societies Rules,2004. This also revamped the role of Co-operative Tribunal Court, a specialized Co-operative Commercial Court, to fast track and speedily dispenses the backlog of cases previously pending. This is the first Tribunal of its kind in Africa and many countries are consulting on how to establish Tribunals in their countries.
  22. In recognition of the growing importance and sophistication of SACCOs, a SACCO Societies’ Act was enacted in 2008 to pave way for vigorous enforcement of prudential standards for SACCOs with FOSAs. This gave rise to SACCO Regulatory Authority (SASRA). The body charged with the responsibility of regulating deposit-taking SACCOs.
  23. There was also the drafting of co-operatives’ management guidelines and Prudential Standards on inspection and inquiries which led to entrenchment of good corporate governance and best business management practices. This was achieved through the establishment of Ethics Commission for Co-operative Societies (ECCOs) and the strengthening of the Audit Department.

Compiled By:

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

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