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

Advertisements

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.

INVESTMENT CO-OPERATIVES ARE NOT NEW BEINGS!!!

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!!

Managing Change in Co-operatives

The economic environment is dynamic and keeps on changing globally. It is therefore imperative for co-operative societies to keep abreast of the global changes or risk being irrelevant. Change is sweeping in nature and non response to change leads to being obsolete.

managing change is saccosIn order for co-operatives to manage change as it occurs the following factors need to be put in place:-

1. Awareness

It is of utmost importance for members of the co-operative to be aware of the changes affecting the economy as a whole i.e. potential socio-economical, technological including information technology and their effect on modern living. To do this the co-operative are required to set aside adequate funds for training and education not only for committee members but also for the general membership. It is the general membership that provides the leadership of the co-operatives and also an enlightened membership is an asset to the society.

2. Amendment of the co-operative society By-Laws

The current liberalized economy requires that co-operatives can rise up to the challenges and pressures of everyday living. The Co-operative Societies Act Cap 490 has made provisions for the amendment of the By-Laws of co-operative societies so that they can incorporate the changes that are occurring to suit current members needs.

3. Professionalism in the management of the co-operative societies

Co-operative societies are essentially business entities with various different products and services, but they are not alone in that line of business. There are other players in their diversified fields competing for the same business. It thus important that co-operatives are managed with utmost professionalism in this age of liberalization in order for them to survive. Other competitors are professional in approach and functioning. They employ the best professionals in their fields found in the open market, they adopt the most economical, cost effective methods and strive for the maximum profit in the market.

4. Marketing strategy as a manner of change in co-operatives

Marketing research is vital to all stages of the marketing plan:-

  • For decisions on the marketing mix, for example product research, pricing research, advertising research, etc.
  • For the implementation and control of the marketing plan, and
  • For assessing the extent to which objectives have been achieved.

Marketing research gives the following information inputs from the market:-

a) Environment audit

This reviews the organizations position in relation to changes in the external environment i.e. social, political, cultural, legal, economical and technological. The audit provides information which directly affects the setting of co-operative objectives. The market place is by definition, part of the “environment” and is a source of revenue and profit.

b) The Competitor audit

Provides competitor intelligence, competitor response models and so on, which again influence the co-operative objectives, strategy and contingency planning.

c) The customer audit

Assesses the existing and potential customer bases to provide information as to whether to develop new markets.

d) Product portfolio

This analysis provides inputs for decisions on whether or not to drop certain products and or add new ones.

e) Provides the basis for all other functional activities as well as marketing.

Information inputs from marketing to the co-operative society planning decisions perform a double duty, apart from planning they also provide objectives and strategies.

From the foregoing discussions, it is apparent that in order to manage change awareness, preparedness and implementation not to forget continuous market research are necessary components that cannot be ignored.

%d bloggers like this: