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


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

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.



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.

Back to Work

holidayHi, the blog has not been updated for awhile now, but I am back to business!!!!…keep the questions coming and anything you want to know about the co-operative movement in Kenya…i.e. general issues about the movement form registration to dissolution. Cheers.

Co-operative Legislation In Kenya

The three main sources of co-operative laws applicable to the co-operatives in Kenya are:

  • The Co-operative Societies Act (Cap 490 of the Laws of Kenya)
  • The Co-operative Societies Rules 2008
  • The Sacco Society Act 2008
  • The Sacco Societies Regulations
  • The registered By-laws of the co-operative society

Other sources include government policies issued from time to time in form of circulars (commissioners circulars) and resolutions passed by members in validly convened and conducted general meetings.

The co-operative Societies Act

This is an Act of Parliament relating to the constitution, registration and regulation of co-operative societies. It is the supreme law relating to the operations of the co-operative societies. Like any other law, the provisions of the Act do not in any way conflict the constitution of Kenya.

The Act is one of the documents that should be available in every co-operative society office and should be thoroughly understood and referred to by the officials from time to time in the conduct of the society business.

The Co-operative Societies Act provides the following areas

  • registration of co-operative societies
  • privileges of a registered co-operative society
  • rights and liabilities of members
  • duties of co-operative societies
  • amalgamation and division of co-operative societies
  • rights and obligations of co-operative societies
  • property and funds of co-operative societies
  • inquiry and inspections
  • surcharge
  • dissolution
  • settlement of disputes
  • offence under the Act, the rules and penalties

The Act has broad provisions and does not specify how certain issues shall be implemented. Section 91 of the Act therefore gives the Minister power to make rules for the better carrying out of provision and purpose of the Act.

The Sacco Society Act, 2008

This Act of Parliament makes provision for the licensing, regulation, supervision and promotion of Sacco societies, to establish the Sacco Society Regulatory Authority and connected purposes. This Act is divided in seven parts as follows:

  • preliminary
  • the Sacco Societies Regulatory Authority
  • licensing of Sacco societies
  • regulation Act and supervision of Sacco societies
  • the deposit guarantee fund
  • miscellaneous
  • schedule-conduct of the affair of the board

The Co-operative Societies Rules

The rules are subsidiary legislation made by the Minister. The Minister derives powers to make rules under Section 91 of the Act. The current rules were made and became effective from November  2004. Being subsidiary legislation, the Rules do not conflict with the Act.

The rule is another document that society should keep in the office and should be referred to and used by the society officials from time to time.

Important provisions in the rules

  • the procedures and forms used in the registration of co-operatives
  • the procedure for making and amending the by-laws of co-operatives
  • the procedure for admission of members in the co-operative societies
  • the procedure of general meeting of members and powers of members
  • the appointment, suspension and removal of committee members
  • the formation and maintenance of reserve fund
  • the procedure for appeals to the Minister
  • the returns to be submitted by the co-operative societies
  • the procedure to be followed in liquidation of societies

The Act and the Rules cannot give adequate details on how each individual co-operative society should be internally governed. Internal regulations are made by each society, because not all aspects are the same in all societies. The rules therefore provide for every society to make by-laws to serve as internal regulations (Rule 7).

The registered By-laws of co-operative societies

The By-laws are internal regulations made by each co-operative society to bind and govern its members. The By-laws are only effective if they are registered by the Commissioner for Co-operative Development. Important areas covered in the By-laws include:

  • name and postal address of the society
  • area of operation and membership common bond
  • the objects for which the society is formed
  • the purpose for which its funds maybe applied
  • the disposal of accumulated funds
  • the qualifications for membership, the terms and mode of admission
  • the withdrawal and expulsion of members
  • the rights, liabilities and obligations of members, including minimum shareholding
  • the transfer of shares or interest of members
  • the manner of raising funds
  • the procedure and quorum of general meetings
  • the appointment, suspension and removal of members of the committee
  • the duties of the management and supervisory committee
  • the period of its financial year
  • the authorization of officers to sign documents
  • the settlement of disputes
  • the condition for issuing of loans

By-laws maybe amended by members in a validly convened and held general  meeting. At least fifteen (15) clear days notice of the proposed amendment must have been given to all members.

Any amendment of the by-laws of a co-operative society shall only be valid if the amendment is registered with the Commissioner of Co-operative Development. When Commissioner registers an amendment of the by-laws of a co-operative society, he issues to the society a copy of the amendment certified by him as evidence that the amendment of the By-laws has been registered. This copy should be kept in the society office for use.

The By-laws of a co-operative society are subordinate to the Act and Rules. They should not contradict any of the above.

Copies of the registered By-laws should be acquired by each member of the society so that they are conversant with each provision there-in. This can be through suitable arrangement with the society officials.

The by-laws binds only members of the respective co-operative society. They bind all members irrespective of when they joined the society. They should therefore be obeyed by all members and be observed by the society officials in the conduct of all business of the society.

Government Policies/Commissioners Circulars 

The government issues policy circulars from time to time. Such circulars are normally issued by the Commissioner for Co-operative Development and are meant to be implemented and their purpose is to assist in the growth and development of the societies, and in the administration of the provisions of the Act and rules.

General Meeting Resolutions

Members do pass resolutions in general meetings. These resolutions, as long as they are passed in validly convened and conducted general meetings and do not contradict any of the By-laws of the society, form part of the society’s internal rules and regulations. Once the resolutions have been passed by the required majority, they bind all members whether they were present or not, and whether they voted in favor of the resolution or not.

Any resolution passed  in a general meeting should have a proposer and a seconder. Where there is division, the issue should be decided by vote and the majority vote is recognized. Resolutions passed in a general meeting should not contravene any provisions in the Act, Rules and the society By-laws. However a special resolutions requires 2/3 majority of the members present and voting at duly convened general meeting.

Compliance Issues as per the Act and Rules

The latest revised Act and the new Rules of November 2004 have introduced amendments and provisions which should be complied with by all co-operative societies. The compliance issues that affect societies include:-

  • every co-operative society shall hold its annual general meeting within four months after close of its financial year (by 30th April for Sacco Societies)
  • every co-operative society shall present to members its audited accounts and balance sheet for each year within four months after close of financial year. The audited accounts shall be displayed in a conspicuous place for members to read at least two weeks before they are presented to members in a general meeting.
  • the audited accounts and balance sheet shall be presented to the Commissioner for registration before they are presented to members in a general meeting
  • borrowing powers shall be fixed by members in a general meeting subject to approval by the Commissioner.
  • every co-operative society with employees shall have terms and conditions of service for staff. The terms and conditions shall be approved by the commissioner.
  • the manager shall be a counter signatory to all documents and contract of the society.
  • all society committee shall file an indemnity-Form V of the Co-operative Societies Act shall be signed by the management committee members agreeing to uphold the values of accountability, honesty and transparency in dealing with the affairs and resources of the society and accepting liabilities arising from lack of upholding such values. This is done within fourteen days after being elected, and if they do not, they will automatically lose their positions. The indemnity figure shall be fixed by members in a general meeting.
  • all committee members shall fill wealth declaration forms within thirty days after elections, and if they do not, they automatically lose their positions.
  • supervisory committee should write periodic reports (quarterly) and table their findings at management committee meetings. It shall also submit its reports to the commissioner present the report to the general meeting.
  • committee members shall be elected for three years, subject to one third retiring annually but being eligible for re-election.
  • every society shall have members funds separated into shares and deposits.
  • every society shall maintain a reserve fund where one fifth of the net surplus in any years shall be credited. An account should be maintained for the fund.
  • no co-operative society shall invest its funds in non-core business except with the approval of the Commissioner and the general meeting through a special resolution.
  • estimates of income and expenditure shall be prepared and presented to members for approval in a general meeting at least three months before the end of the preceding year.
  • every member of a co-operative society shall appoint a nominee or nominees, who shall inherit his/her shares or interest in the society upon his death.

Relevant Policies for Co-operative Societies

Societies are expected to carry out certain business operations according to their established policies. The purpose of policies is to establish procedures for carrying out certain aspects of the business of the society. The By-laws of the society should normally provide and give power to the society officials to formulate such policies as may be necessary from time to time. Some of the policies relevant to co-operative societies include:

  • The loan policy-this is an internal regulation document that guides and regulates loan granting and loan administration. The loan policy should be known, understood and adopted by members, as it affects them.
  • The investment policy-a document that guides the society on areas of investment of society’s and members’ funds.
  • The human resource policy-this is a document that guides the society on issues of administration of society’s human resource, right from recruitment stages to promotion and exit stage.
  • The education and training policy-this is a document that guides the society on issues of education to members and training of committee members and members of staff.
  • The public procurement and disposal policy-this is an internal document that establishes procedures for procurement and disposal of goods and services. it should be prepared in conformity with the Public Procurement and Disposal Act and the regulations made there under.
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