By now, am sure we all know definition of a co-operative society and that a Sacco is a co-operative. Just to remind you of the definition; “a co-operative is an autonomous association of people who have gathered in a voluntary way in order to satisfy their economic needs as well as, social and cultural aspirations by means of a jointly owned and democratically-managed venture” International Co-operative Alliance. Therefore in short, co-operatives derive their advantage from their nature as seen in the definition.

competitionBanks and micro-finance institutions are profit oriented/driven in every sense. They are doing well, when they make millions for the shareholders. We can say banks and micro-finance institutions are associations of capital. Co-operatives are not profit oriented, they are socio-economic ventures owned solely by the members. Co-operatives are association of people. The goal of a co-operative is “to promote thrift among its members by affording them an opportunity for accumulating their savings and deposits and create thereby a source of funds from which loans can be given to them exclusively for provident and productive purposes, at fair and reasonable rates of interest; thereby enabling them to use and control their money for their mutual benefit.”

So what are some of the main advantages that give Saccos competitive advantage?

  1. Offering fair and reasonable interest rates. Saccos remain the source of cheapest credit to date in the country. No bank or micro-finance gives rate of interest like Saccos do. NONE! Therefore Saccos need to maintain these interest rates and use allowed procedures/structures to increase or reduce.
  2. Saccos have ‘cost advantage’ meaning that the cost of undertaking Sacco ‘business’ and creating value in the business are less than that of its competitors. Look at what banks pay as interest on deposit/dividends and what Saccos pay given interest they charge loans!! Banks are miserly here! This cost advantage is difficult for other businesses to replicate. But can Saccos sustain these?
  3. Saccos are democratically governed. The supreme authority is the general meeting. The interest rate, minimum shares, entrance/registration fees, etc. are proposed by management committee and discussed then approved or otherwise by membership in the general meetings. Banks and other financial institutions do not seek authority of all shareholders but this is done through a board of directors or such other body/interests. It is therefore very easy for Saccos to encourage and enhance member loyalty unlike banks.
  4. The terms and conditions of Saccos loans/savings are in black and white, easily understandable. There are no ‘threats’ like interests rate is subject to change without ANY notice like with the banks! This can be a competitive edge since what you see is what you get, nobody will call or not call you when they want to reschedule/restructure your loan!

What do Saccos need to do to compete effectively?

Improve services. Some Saccos offer poor services to its members. Sometimes loan disbursement is delayed and a member is not communicated to. Staffs are usually rude and even some are outright abusive. Therefore co-operatives need a proactive management committee/board of directors of good standing who will put up measures that will ensure effectiveness and efficiency of the Sacco business. It never helps to hire a relative who is or not qualified. Professionalism must be maintained at all times and reprimanding someone hired on basis of tribe, nepotism, etc is difficult.

Service delivery is cornerstone of any business. Saccos cannot afford to lose business because of inefficiency and lack of structures and process that can effectively and efficiently address any of the anomalies. The fact that policy implementation can delay due to the requirement that the management committee/board of directors need approval from membership, is not sufficient to further deteriorate service delivery. Hiring, firing, promotion, etc of employees should be transparent and pre-understood. Getting the right persons on-board is as important as maintaining them as a knowledgeable workforce is a valuable commodity.

proactiveSaccos also need the ‘power to add, change, evolve, or self-organize system structure’ (Donella Meadows-Leverage Points-Places to intervene in a system). As I have noted earlier, the process of putting up policies and having them operational, sometimes delay and the advantages that could have been gained by having them in/on time, are lost. Saccos therefore are required to be pro-active and envisage situations or plan through strategic plans, business plans, etc. Information technology especially the internet has not been fully utilized by Saccos. I believe there is no single Sacco where a member can access his/her account online and transfer savings from one account to another or pay loans online through use of Visa Cards, etc. Is there? “Any system, biological, economic, or social, that becomes so encrusted that it cannot self-evolve, a system that systematically scorns experimentation and wipes out the raw material of innovation, is doomed over the long term on this highly variable planet” Donella Meadows.

Leadership is another area of great import for Saccos to effectively compete with other financial institutions. Leadership is a process of social influence, which maximizes the efforts of others, towards the achievement of a goal. It is said that leadership stems from social influence, not authority or power. Co-operatives elect their leadership from the membership. Sometimes elected leaders are not elected solely based on the quality of leadership they offer the society but other attributes like tribalism, nepotism, etc. Membership should be sensitize on importance of electing credible, accountable, honest, etc. leaders and be reminded of what is at stake when things go wrong because of the leadership they elected.

…………………………………………………….TO BE CONTINUED……………………………………………………..



What is customer service?

CUSTOMERThis is a broad term which refers to those activities which are deliberately undertaken by the service or goods provider with the objective of satisfying the current customers and also attracting potential customers.

Generally it is a concept which explains all those activities undertaken by an organization to satisfy a customer.

The customer can only be satisfied if their perceived expectations of needs and wants are met by the organization.

Reasons for customer service in co-operative societies:

  • a customer who is cared for and satisfied will always become a loyal customer
  • a customer who is satisfied will tell other people
  • a satisfied customer will become your agent recruiting others
  • to be able to cope with competition
  • the customer makes the organization survive
  • the customer is the organization’s life
  • the customer is the voice of the organization
  • the customer makes the organization become proud of its business
  • the customer is the organization’s future
  • a dissatisfied customer will tell other people about his dissatisfaction and this will spoil the image of your Sacco.

Employees of Sacco Societies must possess the following qualities for effective customer service:

  • Communication skills. It calls for the use of right word when talking to a customer. Avoid phrases that may be offensive to the customer.
  • Personal presentation. You must be clean and appropriately dressed (in all ways). Avoid talking to a customer when smoking or eating unless you know him/her.
  • You should have an idea of the type of customer you are dealing with. These are his/her requirements, needs and priorities, his concerns, etc.
  • Product knowledge. You must have a sound (technical) knowledge of the type of product/service you are offering. The is only way you can confidently answer a customer.
  • Respect. Respect a customer for what he/she is. He/she may appear boring, proud, poor, uneducated, etc, but you must respect him/her. If you respect a customer, he will value you and will be ready to listen to you.
  • Mental ability. This is the ability to think quickly, to handle questions quickly and to respond with sensible answer.
  • Dependability and honesty. You must keep promises. Keep appointments. If you cannot, explain this in advance.
  • Self-Control. Avoid showing irritation, impatience, temper, open rudeness, fear, hesitation and other such negative behavior.
  • Sociability. Be a sociable and cheerful person. Leave your troubles at home but do not take them to your customers. It is necessary to know the names of the customers you are dealing with.
  • Courage, determination and perseverance. Have confidence in yourself and the value of the services you are offering.

How can your Sacco participate in customer service?

  • offering quality services to the existing customers
  • efficient handling of customer inquiries
  • quick and effective handling of customer complaints
  • professionalism when dealing with customers, both current and potential
  • competitive pricing of your service or product
  • seeing the customer as an integral (and indispensable) part of you business
  • greet the customer with enthusiasm and smile
  • thank the customer for transacting business with your Sacco and invite him/her back
  • heighten his/her wish to return soon
  • be positive.

In conclusion the customers’ perceived expectations must be met by your organization in order to have a satisfied customer. Customer care is not responsibility of one individual but everybody in the organization must participate. The customer is the king and he/she pays your salaries and must therefore be taken care of. A customer is not an outsider, but part of the business.


Disputes in Co-operative Societies in Kenya

Co-operative Societies Act Section 76 defines Disputes as:
(1) If any dispute concerning the business of a co-operative society arises—
(a) among members, past members and persons claiming through members, past members and deceased members; or
(b) between members, past members or deceased members, and the society, its Committee or any officer of the society; or
(c) between the society and any other co-operative society, it shall be referred to the Tribunal.
(2) A dispute for the purpose of this section shall include—
(a) a claim by a co-operative society for any debt or demand due to it from a member or past member, or from the nominee or personal representative of a deceased member, whether such debt or demand is admitted or not; or
(b) a claim by a member, past member or the nominee or personal representative of a deceased member for any debt or demand due from a co-operative society, whether such debt or demand is admitted or not;
(c) a claim by a Sacco society against a refusal to grant or a revocation of licence or any other due, from the Authority.

Co-operative Corporate Governance

What is co-operative corporate governance?




Corporate governance takes into account public policy, national values and ethics. It covers systems by which the individual corporations regulates itself for competitiveness and sustainability through practices and procedures for supervising, monitoring, regulating and controlling its affairs. Regulatory authorities, national trade and business associations, professional bodies and societies should all practice good corporate governance.

Co-operative corporate governance is about the use of power in co-operative organizations. It is concerned with the leaders who are the people who govern, that is, direct and control co-operatives.

Co-operative corporate governance also targets members of co-operatives. These are the main stakeholders. They are the people whose money is invested in the organization. They are the ultimate beneficiaries of well run co-operatives and the ultimate losers of badly run organizations and for this reason, they are the supreme authority. 

For co-operatives to be efficient and productive, they must apply good corporate governance practices that seek to ensure that the power of the organization is used in a manner that ensures:

  • effectiveness-that the co-operative society abides by and achieves the objects for which it exists.
  • efficiency-that the undertaking of the organization are honest and have integrity.
  • fairness-that the organization treats all its shareholders and the community in which it operates in reasonably and justly.
  • transparency-that the organization is open about its activities and that it meets that information needs of all its stakeholders.
  • discipline-that the organization complies with all the laws of the country, its by-laws and that it exercises self-control in all its dealings.
  • accountability-that the organization is answerable to and satisfactorily explains its actions to its members/stakeholders.
  • responsibility-that the organization exercises good judgment. That is able to make informed and astute decisions, act accordingly and accept the consequences of its actions, taking remedial actions where necessary.
  • independence-that the organization acts of its free will, in its best interests and with the consideration for all its stakeholders and not according to the dictates of external interests.
  • social responsibility-that the organization is sensitive to and that it responds to the needs of the members/society, for example by improving its products or where necessary developing new ones.

Why Good Corporate Governance


Money can't buy happiness, however it can rent it :-)

Money can’t buy happiness, however it can rent it 🙂

Good corporate governance can greatly enhance effectiveness, competitiveness and sustainability of the organization. This is important in the highly competitive global market. Members must demand good governance of their co-operative to ensure:

  • that the organization achieve the objective for which they exist.
  • that the organization are effective and make good returns on members’ investments.
  • that the organization are innovative by improving on their products and introducing new ones.
  • that the organizations are credible so that they can attract more members and savings.
  • that the organizations are sustainable and continue to exist and be effective for a long time.
  • that the organizations use resources efficiently and with due regard to the needs of future generations.
  • that the organizations are responsible and that they contribute to well-being of the community in which they exist.

Authority and Duties of the Members as Stakeholders

Shareholders in the co-operative society must play their role in ensuring that their organizations are well-governed. In order to do this, they must keep themselves informed about their co-operative societies  so as to be in a position to make independent and informed decisions on all issues on they are called upon to make decisions. Shareholders should ensure that they clearly understand the objects for which their co-operative are formed so that they can effectively hold directors they elect to account.

Shareholders have a duty to ensure that only competent and reliable persons, who can add value, are elected to the board of directors. They must also ensure that the board is constantly held accountable and responsible for the efficient and effective governance of the co-operative society so as to achieve corporate objectives, prosperity and sustainability.

The Board of Directors



Every co-operative should be led by an effective board which exercises leadership, enterprise, integrity and judgment in directing the co-operative society and which acts in the best interest of the co-operative in a transparent, accountable and responsible manner.

Accountability and Transparency

To enhance accountability and transparency in co-operative organizations, the leaders have to observe and adhere to the co-operative values of honesty, openness, social responsibility and caring for others. These values may be exercised while performing various activities of the co-operative organization as follows:

  • meetings-convene and conduct co-operative meetings as specified in the Act and Rule and the co-operative by-laws.
  • elections of leaders-have regular and timely elections and allow members to participate without interference such as rigging and other forms of influence.
  • accounts and audit-maintain up to date an accurate records of the organization and ensure audited accounts are presented and read to members in time and members allowed to deliberate and resolve on them.
  • budgeting procedures-budgeting for the organization should be participatory, with members originating ideas and giving final approval.
  • recruiting of personnel-co-operative leaders should source personnel from open market and should avoid nepotism.
  • code of conduct for leaders-co-operative societies should develop code of conduct and best practice for their leaders.
  • delegation of duties-to enhance transparency and accountability, each co-operative should recruit experienced and professional persons to avoid board members acting as executives. Clear job description should be prepared for every position.
  • training-training can do a lot to enhance transparency and accountability. It should be done in  a participatory and leaner centered manner and be geared towards change.
  • tendering and procurement-tendering should be done according to the provisions of the Public Procurement and Disposal Act and Regulations. Always seek for quality goods and services.
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