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

Annual General Meetings are Here!!!

This is the time all co-operatives that have their financial year as 1st January to 31st December are holding their annual general meetings. Members’ expectations of course is tied to interest on deposit and dividends. People are making calls to know what percentages they are getting for the previous financial year. Some are making calls to know who is retiring in the management committee and who are contesting. Most probably nobody is sending their agendas to be considered for discussed at the AGM.

Most co-operatives only meet once in a year whether through the delegates system or whole membership attending the AGMs. Sometimes the agendas are so congested such that all of them are not discussed and some important agendas are postponed till the next AGM!!! That is 12 months or more of delay!!! So how do we get out the most from these meetings as societies or as members??

The societies…..

1. Membership/delegates should be informed earlier as stipulated in the societies’ by-laws. All of the agenda clearly stated. AOB (Any Other Business) shouldn’t be encouraged always as this ends up consuming more time. Members should be encouraged to present their agendas to the secretary early enough to be considered for discussion in the AGM.

2. Keep time. I have attended many AGMs and keeping time is a big problem. Members and even the board of directors/management committees most times never arrive on time. On average meetings usually start 2 hours later after the stipulated time even 4 hours later is not uncommon!!. This discourages some members who usually arrive early and they are also converted to late comers of AGMs. Also late meetings will lead to all the agendas being not discussed sufficiently and resolutions too will not be of quality or well thought out as the early birds will be tired.

3. Keep to the agendas. I have been to meetings where the chairman loses the control of the agenda and the membership end up discussing other things. This will to lead meeting being prolonged and members exhausted and therefore failure to finish all the agendas or have effective meeting.

4. Let the presentations be brief and to the point. Some people when given time, will bore members to death and it happens that these people are poor in reading body language. Difficult to them to know if members are bored. These people are sometimes not time conscious and most times they are the ones that arrive late for meetings!! It is important that societies’ appoint a time-keeper who will notify speakers if they have finished their allocated time.

5. Do not give drinks when the meeting is ongoing. It is better to have a short break rather than you have a presenter on the floor and someone is distributing drinks or food. Membership ends up not listening or their concentration is interfered with because of the movements and noise. Better, provide water before the meeting starts.

6. Use public address system if member numbers exceed 100! Some people are inaudible and they end up talking on the podium with the first and second rows and the rest of membership wonder what the person in front of them is saying!!

7. Switch phones off or have them in silent mode. I have witnessed several members of the societies an even board members, receiving calls when the meeting is ongoing. That is RUDE!! If the call is important, walk out with minimal noise.

8. It is good to take questions first and then answer them instead of taking one question and answering that one question before going to the next question. This saves time.

9. The societies’ minutes should capture all the relevant issues being said and proposers and seconders of those issues. It will be easier to pick up from where the societies left from the previous meetings.

The membership/delegates……..

1. Come with a pen and a paper and note all the points you thing are important or questions you will need clarification on.

2.Be patient and let there be order in asking questions. If your question has been asked, do not ask the same thing again.

3. Learn to arrive early as stipulated in the notice convening the meeting. It is good to be time keepers by reminding the management/board/members/delegates if they are taking too long to start or spending too much time on a topic or a point.

4. Be constructive. Remember the supreme authority is the AGM. Whatever is discussed or passed in these meetings as resolutions are what will determine the future of the co-operative society and also the ramifications are far much greater and do not stop at you. So be helpful.

5. Restrict your movements. Some are particularly annoying and cannot be in a meeting for more than ten minutes continuously. They usually keep dragging everybody else on same issues that have been asked or discussed time and again.

Probably there are more points that I have missed, but hope that the message has been driven home here….cheers!!

 

 

Co-operatives are Endangered

I think the lobby groups that are required to champion for the rights of co-operatives in the country are sleeping and have been doing so for a very long time. Now with the devolution, county governments and the national government are making laws without proper consultation with the sector.

danger1We all remember the Finance Act that introduced 10% excise duty to Saccos with FOSAs. The Finance Act 2013 talked of “Saccos registered under Sacco Act 2008” which contradicts the Sacco Act 2008. The Sacco Act 2008 provides for licensing, regulation and promotion of certain Sacco societies to establish Sacco Societies Regulatory Authority and for connected purpose and not registration. Registration is the function of Co-operative Societies Act Cap 490. Now county governments are coming up with licenses or permit fees to be charged co-operatives in their respective bills/acts.

Here is an excerpt of Kiambu Government Finance Bill that touches on Co-operative Societies:

The following permit/licence fees shall be charged on the business listed in first column at the rate specified in either in the second, third or fourth column depending on categories of the urban zone

BUSINESS Major Urban Zone Medium Urban Zone Small Urban Zone
Large financial services including Saccos and cooperative societies with over 25 employees & / or premises over 300 sq.m 45000 25000 15000
Medium financial services including Saccos and co-operative societies with 6 – 24 employees & / or premises of 100 – 300 sq.m 25000 15000 7000
Small financial services including Saccos and cooperative societies with up to 5 employees & / or premises up to 100 sq.m 15000 7000 5000

Well the Kiambu Finance Bill seems to have not realized that Saccos are co-operatives by saying “financial services including Saccos and co-operative societies.” Sacco stands for “Savings and Credit Co-operative Society.”

Seems also the Bill targets the permit/license fees based on number of employees and or premises where they do business. I bet many Saccos do not have employees nor offices although they are required to. Many co-operatives officials usually store their documents at home or within the companies/institutions where they work so how will the Kiambu Government implement this?

Co-operatives are not profit oriented and some have small membership and cannot afford to employ or rent offices/places of business. The advantage of being under the national government is that this was understandable even the county councils and municipal councils were instructed not to charge co-operatives license fees or permit fees and this lead to growth of the sector hence being number one in the continent.

The Bill should have specified what does “small, medium or large financial services” specifically means. Not only based it on premises size and numbers of employees. Is the fees (license/permit) charged per business or premises of every branch and the main branch? Many co-operatives have branches in Kiambu County and therefore this is going to be costly bearing in mind the license fees charged by Sacco Society Regulatory Authority (SASRA) on the main branch and sub-branches. Also is the number of employees per branch on a particular premise or is it the Sacco or that particular business total number of employees? The Bill also should have specified between the premises size and number of employees what takes precedence. A business could be occupying a bigger space but has two employees and a business with a small space with more than 10 employees for example.

For co-operatives license/permit fees should have been based on membership or share capital irrespective of whether they are in the major, medium or small urban zones. The reason is, many Saccos are in major urban zones and smaller co-operatives in the major urban zones will suffer if this bill becomes an act and is implemented as it is.

NOTES

Major urban zones includes Thika Sub-County, Kiambu Sub-County, Ruiru Sub-County, Githunguri Sub-County and Limuru Sub-County.
Medium urban zones includes Juja Sub-County, Kikuyu-Sub County, Lari Sub-County and Kabete Sub-County.
Small urban zones includes Gatundu North Sub-County, Gatundu South Sub-County and Kiambaa Sub-County.

 

DUTIES AND RESPONSIBILITIES OF A LOANS CLERK IN A SACCO SOCIETY

For those aspiring to work in a Sacco Society, these are the main duties and responsibilities of a loans clerk:
(a) Maintain records of members’ loan applications and approvals.
(b) Scrutinizes loan application forms and agreements to ensure they give accurate information and other particulars.
(c) Guides board of directors meeting and advises them on the loan policy, defaulted loans and recovery methods from the guarantors.
(d) Advices the society on amount of loan to be recovered from each member.
(e) Ensures loan transactions are posted to members’ account and computation of interest earned by each member and society is done as necessary.
(f) Reconciles loans accounts to ensure postings are correctly done.
(g) Attends loans committee meetings.
(h) Ensures adequate supply of stationery.
(i) Ensures sample checking of the correctness of interest calculations on loans and act upon discrepancies discovered.
(j) Follow up list overdue loans and debts and ensure that proper recoveries are made.
(k) Carry out any other duties related to credit administration as instructed by the senior management.
(l) Appraise loans applications before they are forwarded to the General Manager.
(m) Advise the senior manager on defaulting of loans and means of recoveries.
(n) Compute defaulted loans, reveal how much is defaulted and the number of defaulters.
(o) Serve guarantors with letters on defaulted loans.
(p) Maintain records of each members’ loan application and approval, have knowledge of how much is loaned each month and the number of loanees.
(q) Ensure adequate supply of stationery in the department.
(r) Enter necessary data in the loan register
(s) Attend approval of loans by the credit committee.
(t) Ensure that there is proper recovery of loans through updating of statements.
(u) Compute capitalized interest on defaulted loans.
(v) Ensure that refund of loan is properly computed.
(w) Delegates duties and responsibilities in the department
(x) Carry out any other duties related to loans as instructed by the senior manager from time to time.

DEPARTMENTS IN A SACCO SOCIETY

1. ADMINISTRATION
(a) General Administration
(b) Secretarial
(c) Registry

DEPARTMENTS2. ACCOUNTS
(a) Information processing and reporting
(b) Book-keeping
(c) Loans recovery
(d) Claims settlement

3. INFORMATION TECHNOLOGY
(a) System design and development
(b) System implementation and support

4. LOANS
(a) Loans processing
(b) Loans attachment

5. FOSA
(a) Savings
(b) Advances
(c) Salary processing
(d) Cheques clearance

HOW SACCOS WORK AND GET FRUSTRATED WHEN THEY ARE GROWING

Adapted from a case study based on Hanover Insurance Company in the book Systems Thinking, Systems Dynamic. Managing Change and Complexity by Kambiz E. Maani and Robert Y. Cavana Second Edition.

We have to understand how co-operatives work and how they get frustrated, especially giant co-operatives. This is a casual loop diagram (CLD) that I will attempt to explain how especially Saccos are frustrated by lack of success and what they can do to change that.

The staff of Saccos Society are usually advised to work faster and work harder and probably also take fewer or shorter breaks. Over short time these usually produce desired effects but also lead to unintended consequences. The unintended consequences are usually masked by long time delays and hidden cause and effect relationships. This could be happening now or has happened to many Sacco societies especially after opening up of the common bonds leading to growth in membership.

First, lets start with Productivity Loop below.

PRODUCTIVITY LOOP

As the society grows, there are more incoming loan application forms. With more loans forms to be processed i.e. categorized into different products (advance, emergency, school fees, development loans, etc), requires that the rate of clearance of these loan forms/requests has to be increased due to time pressure. This will of course lead to less time spent on loan forms and therefore higher productivity (in making payments/giving out loans) and reduced pending loan applications. This will ease pressure on required clearance rate.

Second, Work Week Loop as depicted below.

WORK WEEK LOOP

The increased time pressure, will lead to increased work intensity which will in turn lead to greater productivity. More members will receive their loans on/in time and of course this means more income for the society, more interest on deposit and dividends for members.

Third, Burnout Loop as indicated below.

BURNOUT LOOP

As the work intensity increases, it means that the staff are working longer hours,  taking fewer breaks or shorter breaks or even not taking breaks (seen some eating at their workstations!). This will lead to fatigue, burnout and poor health which has a negative effect on productivity. Simply put, more loan forms are processed but at the expense of the society’s staff who affect productivity due to quality of work they are giving members and the society.

Fourth, Turnover Loop as pictured below.

loop turnoverPersistent burnout increases staff turnover hence reduced numbers of staff in the society. People will start applying for other jobs when they do not rest or have breaks or their health start deteriorating. When the number of staff has reduced in the Sacco society, it means that the incoming loan application forms and pending loan application forms will not be cleared at the rate required unless the now fewer staff, spend even less time per loan application, i.e. work longer hours with fewer or no breaks.

This will affect the quality of work as there will be inadequate time to verify information given in the loan forms by borrowers and hence increasing chances of loan defaulting or over-loaning or under-guaranteeing of loans. There will be poor documentation, staff will spend less time with members of the society and therefore no rapport will be developed with members who now have more options of joining other Saccos where they can be attended to properly.

Fifth, Cost Loop as indicated below.

costThere will be higher financial pressure on the Sacco society given that more borrowers will default and some dissatisfied members will withdraw membership and therefore loss of income and economies of scale respectively by the society. The society will be unable to recruit the right people into their staff because of financial pressure thus exacerbating the time pressure further.

So far what the CLD have shown are the ‘Fixes that Fail‘, short-term fixes and their unintended consequences. As the society grows, board of directors shouldn’t be asking their staff to work harder and have fewer breaks or refuse them their annual/maternity leave, but look for fundamental strategies for dealing with increased workload.

The Fundamental Strategies for dealing with increased workload include:-

  1. to improve/re-engineer processes
  2. to add capacity
  3. to do both

Saccos have to carry out process improvement. For example instead of board approving emergency loans and advances, this can be delegated to the employees of the society and hence saving time. Saccos can also invest in information technology; computers and software that will improve on accuracy and efficiency of operations.

Despite of the financial pressure, Saccos can also hire more staff, a statement to commitment of best practice. The valuable staff should also be encouraged, developed and retained in the society. Change of board of directors shouldn’t lead to change of the staff of the society. I have seen this happening so many times.

These are simple solutions, but at the ground level it is more complicated than this. But, in looking for fundamental solutions, all variables as per the context in which a particular Sacco operates must be considered and their interplay mapped and understood.

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