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



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!!


I will refer to this article Will Saccos Die in the Devolved Governments Era I wrote here sometimes back and how the leadership of countrywide Saccos have failed their membership despite the impending difficulties. I had said that remittance could pose a challenge, and it sure did and is still an ongoing challenge. We all read these story Ukulima Sacco freezes staff loans on Daily Nation and you wonder how comes the leadership of Ukulima and other countrywide Saccos did not anticipate this problem and come up with measures to safeguard their members funds beforehand. 

The leadership of co-operatives in Kenya are sometimes laden with incompetence beyond your imagination. Yes, you can see buildings with names of co-operatives written on them and see suited men and women looking important heading to board meetings. But the truth is, most don’t measure to the task. They are ineligible even to attend a baraza in a village.

Devolution was coming. Staffs of certain sectors were to be devolved. We all knew this. News were full of these information. But the leadership just sat there and opted to be reactive. The sane thing to do was to visit all 47 counties and establish a rapport with the salary sections. Provide them with Sacco details and make sure to get contacts of all the 47 counties so that whenever the monies are not deducted as provided for in the deduction list or remitted within the stipulated time as per Section 35 of the Co-operative Societies Act, then you know who to contact and not just sit down and telling your members that you are waiting!!! Get realistic what are you waiting for? Your Saccos to collapse due to impending financial challenges?

GHRISIt is a high time the leadership of the co-operative movement embraced technology. The government through GHRIS (Government Human Resource Information System) has provided (is it functional? Doubt it!!) an online platform where third parties e.g. Banks, MFI, Saccos, etc can login and access their members details. It would have been a relief if they could have used the system to provide deduction list or access individual members and have deductions posted for that particular month. This would have made it easier for county governments who in return would have paid the net salaries to its staffs and paid the various societies their members’ contributions within stipulated time. Things would have been easier and efficient instead of sending deduction lists to the 47 counties……this is where I start thinking if there is anyone out there who matters and has read what I have put here hehehe 🙂 Anyway, that is they way of the future. Cheers.



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.


(a) Designs the internal control systems and procedures of the society.
(b) Advise the board on the weaknesses of the existing internal control systems and procedures.
(c) Ensures that all the policies of the societies are properly implemented and adhered to.
(d) Periodically, prepares internal management report revealing whether the internal control systems and procedures are being followed. This
should be done monthly.
(e) Supervises the heads of sections by getting daily report on the performance of his department.
(f) Delegates responsibilities in his department.
(g) Evaluates the performance of all departments and make recommendations whether the performance is upto required standards.
(h) Carries out induction training to new employees in his department.
(i) Liaising with the external auditor when need arises.
(j) Examines all cheques; cash payments to ensure that NO irregularity in payments is made. Also examine all accompanying relevant documents to ensure that there is genuine authorization.
(k) Examines the final books of accounts to determine whether they present a true and fair view of the financial status of the society.
(l) Prepares leave roaster for the department.



(a) General Administration
(b) Secretarial
(c) Registry

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

(a) System design and development
(b) System implementation and support

(a) Loans processing
(b) Loans attachment

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


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.


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.


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.


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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