Equality is the theme of the 2015 International Day of Co-operatives!!

In our globalizing world inequality is on the rise

The global income gap has continued to widen over the past years. A recent Credit Suisse report estimates that the top 1 percent of the globe’s population possesses nearly half of the world’s wealth, whereas the bottom half of world’s population holds less than 1 percent of its riches.

But inequality comes in a variety of shades. It can apply to ethnic, regional or locational characteristics, or personal features such as gender or age.

Preceding equal voting rights for men and women, gender equality has been a fundamental right in co-operatives, since their inception in the first half of the 19th century. Co-operatives’ typically flat hierarchy encourages a culture of teamwork, where talent is rewarded rather than competitiveness.

How inequality affects us all

Inequality matters because it influences our perceptions about self-worth and justice. All human beings are entitled to the same respect and dignity. Inequality however, has also serious negative socio-economic and security consequences.

  • Bad for the economy – Inequality also slows GDP growth. It hinders human capital accumulation, hurts educational outcomes and long-term economic prospects for those on the lower end of the income ladder.
  • Bad for our infrastructure – When excluded, people cannot participate in the institutions that build a society. Examples of this are medical capacity building, industry requiring schooled craftsmen, or credit and insurance.
  • Bad for our safety – The social impacts of inequality include unemployment, violence, crime, humiliation, and deterioration of human capital and social exclusion. Inequality negatively affects democratic participation, it fosters corruption and civil conflict.
  • Bad for democracy – Politically, inequality erodes the fairness of institutions. Inequality exacerbates the problem of holding governments accountable. Where social institutions are already fragile, inequality further discourages the civic and social life that underpins effective collective decision-making which is necessary for the functioning of healthy societies.

How co-operatives help

  • All owners – By widening ownership, co-operatives are a proven force for economic and social inclusion. If the co-operative model continues to grow, inequality will be reduced.
  • Open to all – Because a coop is open to all, anybody, man or woman, old or young can enter.
  • Decision power not dependent on wealth – Because a coop has 1 vote regardless of the capital, all have equal decision power.
  • Equality means also equal access to goods – The UN have recognized as a critical strategy, at the national level, that of ensuring universal access to good-quality, basic goods and services, the very purpose of a co-operative.

The United Nations state that it is important to ensure that provision actually reaches the sections of the population that are typically excluded. Co-ops focus on meeting the needs of their members rather than financial returns alone.

The co-operative movement, presents a unique combination of global reach and people based business conduct. We can play an important role in poverty reduction. Co-operatives help to reduce inequality by empowering people and by offering them a dignified and sustainable way to make a living.

Read more here

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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

Urithi Housing Co-operatives launches Sh1bn real estate scheme in Thika

By SIMON CIURI
More by this Author

Kiambu-based Urithi Housing Cooperative Society has launched a Sh1 billion residential project in Kilimambogo on the outskirts of Thika town, targeting its 6,000 members. The venture, which will comprise 600 housing units, is funded through the society’s cash reserves, including financing from local banks.

Under the scheme, members contributed Sh355,000 to acquire the land and the sacco will help them secure building loans from local lenders.

Sacco chairman Samuel Maina told the Business Daily on phone that the project seeks to equip members with decent and affordable housing.

“The project stands on 100-acre piece of land. We started the groundwork last month and we have given the project a timeframe of two years to be complete. It will be named City Edge Project,” said Mr Maina.

He added: “Urithi Housing Co-operative Society will act as collateral to our members who want to acquire loans from the banks to develop their plots. We are in talks with Unaitas, K-Rep Bank and Equity Bank for the members to access loans.”

He said the first phase of the scheme is expected to cost Sh300 million and would be completed early next year. “The idea is to acquire more land through our members and start income generating projects that can accelerate the growth of the society,” he said.

Read More Here http://www.nation.co.ke/business/Sacco-launches-Sh1bn-real-estate-scheme-in-Thika/-/996/2395626/-/o6o661z/-/index.html

Isiolo County gets first Shariah compliant Sacco

Isiolo County has launched the first Shariah compliant savings and co-operative society (Sacco) for women and youth. The initiative by the County Woman Representative Tiyah Galgalo on Saturday evening raised an initial Sh8.5 million. Ms Galgalo intends to raise Sh20 million for the 10 Wards in the County by October to jump start women and youth enterprise development. Dubbed Vuna (harvest) Sacco, the legislator said, the initiative aims to help youth start small but serious enterprises that will help them and families. Ms Galgalo was accompanied by Women Enterprise Fund Chief Executive Wainaina Wanjeri and Chairlady Mumina Gollo. She called on women to take advantage of the Women Enterprise Fund and Uwezo Fund to start small businesses.
Read more at: http://www.standardmedia.co.ke/business/article/2000126444/isiolo-county-gets-first-shariah-compliant-sacco

Stima Sacco celebrates 40th anniversary

Stima Sacco celebrated its existence for the last 40 years. The Sacco has employed over 30,000 employees nationwide since it was started in 1974.   During the celebrations, Dr. Chumo who is also the Kenya Power CEO said that 40 years is when life starts and the Sacco should become more aggressive and break new grounds. Stima Sacco, in his view, has reached a stage where it should explore partnerships with international institutions to help it increase facilities and benefits to a growing and diversifying membership. Acccording to the CEO Mr. Paul Wambua, the 40th anniversary presents an opportunity to reflect on the Sacco’s many milestones that include several firsts in the history of the movement in Kenya. He noted that the first Sacco ATM in Kenya was issued by Stima Sacco, they were the first to issue a cheque book despite Saccos not being part of the National Payment System, the first Sacco to do a rights issue and the first such business to be licensed by SASRA as a deposit-taking institution.
Read more at: http://www.standardmedia.co.ke/business/article/2000131862/stima-sacco-celebrates-40th-anniversary

Types of savings products

The SACCO members have the urge to develop and to make their lives better. The question remains therefore ―How can they make their lives better?‖ Saving for the future is one of the ways that they can improve on their livelihood. It is therefore essential to know the various savings products available so that one makes the best choice and selects what suits them best. Savings products can broadly be classified in to three namely;
 Compulsory savings products
 Voluntary savings products
 Contractual savings products.
Compulsory Saving:
These are funds that must be contributed by all members of the SACCOs as a condition of membership and in some instances to access credit (loans). Compulsory savings can be considered as part of a loan product rather than actual savings product since they are closely tied to receiving and repaying loans. Compulsory saving is a saving that a member is forced to make on regular basis; it is a membership saving and must be saved on a weekly or monthly basis. This compulsory saving is collected to lend to
members. If members fail to save on time they will get penalized based on the saving policy of the society. Unless the member quits from membership, he or she should save on regular basis. If a member wants to withdraw from the SACCO, he will have the right to take this compulsory saving. The SACCOs are supposed to provide interest for this savings. There are 2 kinds of compulsory loans i.e.
Group saving: composed of a certain percentage of the loan portfolio contributed monthly or weekly. Saving continues through the loan period and therefore protects the portfolio on one hand and serves, as an investment fund for economic ventures of the group members to supplement the loan in case of emergency needs.
Personal or individual saving: This is where each borrower is required to save a minimum amount per month but motivated to save more voluntarily.
Voluntary Saving:
Voluntary savings are savings, not for access to credit, but for the sake of saving. These are not an obligatory part of accessing credit services. They are provided by both the borrowers and non borrowers who can deposit or withdrawal according to their needs.
The voluntary savings are best fit for people who don’t receive constant cash flow like farmers who get incomes when they sell off their produce once or twice a year. They can make voluntary saving during harvest time, and transfer monthly to their compulsory saving accounts. Farmers, and other individuals, can save the full amount for the coming year’s compulsory savings in advance with the SACCO by depositing 12 months worth of saving in a voluntary account. Following that, each month on the appropriate day the member will come to the SACCO to withdraw the amount of one month’s compulsory saving from the voluntary saving -account and deposit it in the compulsory saving account. This maintains the fundamental function of the SACCO and allows individuals with seasonal incomes to be members. This ensures regular flow of cash to the SACCO society and promotes members participation. This kind of saving can be withdrawn at any time when the owner needs it. The SACCO society may or may not provide saving interest for this voluntary savings. Farmers are highly advised to save on voluntary saving for small capital investment like purchasing seed for cultivation.
Contract Saving:
These are the kind of saving accounts where by the person saves to meet a particular goal.
These include:
1. School fees savings accounts: This is the type of account used by most parents so that they are able to save for their children’s education.
2. Target Savings Accounts: This is where the client opens up an account particularly to meet a particular target like buying land, paying a mortgage among others.
3. Fixed Deposit Accounts: This is the savings accounts were by a person deposits once and they withdraw the money after a period of time. The time ranges from 3 months onwards.
This kind of saving is not used by most SACCOs unless the SACCO has acquired and mastered the good skills in managing the loans and savings effectively. It can be short-term saving like if someone wants to pay school fees; he may save to pay school fees. It can also be long term like fixed deposit accounts were time deposit bring the opportunity of high interest rate on savings. This kind of saving is good in the future when the SACCO is in a good capacity and position of managing its savings and loans properly and if there is a shortage of feasible financial demand by members. This kind of saving can be collected from members and none members but the amount, period of collection and interest for this saving should be decided by the General Meetings of  members.

 

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.

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