Murang’a adopts model to mobilise development funds from the locals

By JOSHUA MASINDE of Daily Nation (FRIDAY, FEBRUARY 28, 2014)

Murang’a County has adopted a report by the commission of inquiry on the area’s investment cooperative society popularly known as Shillingi kwa Shillingi (shilling by shilling).

The study calls on the county government to formally adopt the fund mobilisation model by forming a corporation to manage its deals.

The county corporation, as it will be called, is expected to provide a legal basis for managing Murang’a Investment Cooperative Society Limited (MIC) and other schemes that the devolved unit may develop.

“The commission appreciates the nobility of the idea and vision behind formation of the MIC, and its possible huge impact in the economic growth to Murang’a County. It therefore recommends that the county government considers forming a county corporation,” the 14-member tram said in its Report of the Commission of Inquiry into the Murang’a Investment Cooperative Society Limited dated February 8.

“Such a corporation will provide a legal and solid platform to accommodate entities such as MIC, and facilitate public-private-partnerships on various economic and development projects.”

MIC was registered on October 1, last year, as a co-operative society under the cooperatives Act. As of January 29, the initiative had recruited 3,000 members and raised Sh4.8 million.

“The commission recommends that the governor communicates and shares his vision both with his executive members and all other elected leaders in the county. This will elicit the support and goodwill of fellow leaders and the general public,” the team chaired by Mr David Ngugi noted.

The move to mobilise funds from the public had caused a stir with the Capital Market Authority (CMA) sending letter to Murang’a governor seeking details. In its letter, the regulator reminded the MIC officials of the various provisions of the law that the model needed to comply with.

The initiative was the brainchild of Murang’a County governor Mwangi wa Iria, who had asked area residents to use the society to save as little as Sh35 daily to fund projects in return for dividend. Audit firm Deloitte and Touché came in as the project managers.

The cooperative society had set a target of recruiting 100,000 people with annual member funds of up to Sh3 billion.

In light of the initiative and on realising a legal vacuum, the market regulator acting chief executive Paul Muthaura said CMA would work with the Sacco Societies and Regulatory Authority to develop a county financing collective investment tool that will provide a framework for capital-raising plans at the devolved government level.


My thoughts:

INVESTMENT CO-OPERATIVEI am surprised by the CMA’s reaction. If they did not know, we have many types of co-operatives registered and are being registered here in Kenya. One of them is an investment co-operative which probably is not known as much as Saccos or marketing co-operatives but they have been in existence. And they are what their names suggest them to be. They raise funds from members and invest. Probably CMA has never heard of Safaricon Investment Co-operative or Stima Investment Co-operative!!

Mr. Paul Muthaura should also know that Sacco Societies Regulatory Authority cannot develop whatever they are seeking as the name rightly suggests it deals with Saccos only as provided for under Sacco Society Act 2008. If they are seeking to develop a county financing collective investment tool, then head to department of co-operatives right next to you in Nairobi!! CMA should get out more I guess and just smell the “investment scene” for a while :-).

I am still beat why they formed the commission though!!

However there will be challenges on management of these types of ventures that are promoted by politicians……they never last. They are spineless like political parties in Kenya!!




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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