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



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.


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 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.


  • 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

  • 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

LEADERSHIP FUNNELEvery 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.


Leadership in Co-operatives

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

Meaning of leadership.

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

leaderLeadership styles

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

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

Qualities of a good leader

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

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



The procurement guideline provides minimum  standards to ensure that co-operatives societies improve the speed and efficiency of the procurement function, reduce costs and improve the co-operatives society’s overall performance. Each co-operative should however, formulate its own detailed procurement policies in line with the Public Procurement and Disposal Act 2005 that take into account its special needs and circumstances.


PROThis guideline provides some suggestions in procurement management process optimization and supplier performance management.


It is the responsibility of the bard to ensure that the co-operative society develops policies that would lead to best practice in procurement function.


The procurement process management seeks to provide solutions to the following challenges:

  • The length of time it takes to identify the right supplier
  • Inability to locate pricing agreements for specific suppliers
  • Lack of easy access to contract information
  • Measurement of suppliers performance based on contract terms and
  • The time required to correct problems that occur when supplier fails to comply with the contract.

Some of these procedures that result in optimal procurement include:

  • a co-operative society should establish common procurement data base. This could be undertaken by streamlining contract data across suppliers of various commodities/services. With common procurement data, the co-operative society would be in a better position to select and channel volume commodity purchasing requirements to the most competitive suppliers. This in turn would lead to reduction in the cost of goods/services and improvement in efficiency.
  • the co-operative should rely on up to date contract information to create purchase orders. These reduces chances of errors and the associated costs and also serve as a check on contract compliance.
  • The co-operative contract data base should be comprehensive so as to allow for easy and fast identification of the preferred supplier. This enhances procurement efficiency and a reduction in time spent sourcing a supplier. It also improves the operations of the co-operative society’s supply chain as delays associated with identifying a supplier are reduced or eliminated. In addition, the contract data base should be capable of the fast identification of suppliers in time of shortages.


  • The co-operative should constantly measure suppliers’ compliance to the terms of contract. This ensures that problems are identified at an early stage thus allowing the procurement department to take corrective action in time. The co-operative should identify and shift purchasing activities to good performing suppliers. By focusing on suppliers that perform well, the co-operative reduces the cost of multi-supplier maintenance and improve supplier relations.
  • The procurement department should monitor contract compliance at the transaction level. This minimizes the costs associated with non adherence to the contract.
  • Automated contract compliance checking frees the procurement department to devote resources to more strategic activities. This helps the co-operative to realize a better return on investment in procurement and improves the departmental productivity.
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