Cooperatives Movement / Societies in Kenya


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The vibrant and dynamic cooperative movement in Kenya – the strongest in Africa – is a key player in the economy, controlling about 43 per cent of Kenya’s gross domestic product (GDP). The cooperative movement employs more than 300,000 people, besides providing opportunities for self-employment to many more. Savings and credit societies (Saccos), the fastest growing sub-sector in the movement, have mobilised savings of more than Kshs230 billion.

The cooperative movement commands 67 and 62 per cent of the total assets and deposits/savings, respectively.

The greatest contribution attributed to cooperatives in Kenya‘s social and economic development has been in the financial sector, where Saccos and national financial cooperative organisations, Cooperative Bank and Cooperative Insurance Company (CIC), hold substantial savings portfolio accounting for more than 31 per cent of Kenya’s gross national savings.

The total number of societies and unions rose by 7.3 per cent from 13,256 in 2010 to 14,228 in 2011.

Overall, a total of 972 additional cooperative societies and unions were registered, with almost half of these being savings and credit societies, with membership standing at more than eight million Kenyans.

The cooperative movement is organised into service and producer entities that cut across various sectors focusing on both private and public enterprises.

Since 1908 when the first cooperative society was formed in Kenya, cooperatives have made remarkable progress in sectors, such as agriculture, banking, credit, agro-processing, storage, marketing, fishing, housing and transport, among others.

Emerging sectors, such as Information, Communication and Technology (ICT), are leveraging on the demands of the traditional cooperatives to infuse innovation and technology in their operations.

To safeguard the gains achieved this far, the Government has taken various measures to ensure the movement operates according to international best practice. These include the establishment of the Sacco Societies Regulatory Authority (Sasra) through the Sacco Societies Act 2008, which introduced prudential regulations covering all deposit-taking Saccos to enhance transparency and accountability in the fast growing sub-sector. It is anticipated that the move will also spur economic growth through mobilisation of domestic savings.

Kenya and South Africa are the only countries in Africa with independent regulators and specific regulations for Saccos – the Sacco Societies Act and Co-operative Banking Act, respectively. In most countries, cental banks regulate and supervise Saccos, which denies the societies the flexibility to serve members adequately.

Kenya has the highest proportion, in percentage points, of GDP attributable to cooperatives globally, standing at 45 per cent, followed by New Zealand with 22 per cent. The cooperative movement worldwide has about 800 million members in over 100 countries and is estimated to account for more than 100 million jobs around the world.

Kenya’s cooperative sector is reputed to be one of the most regulated in Africa and the best in East Africa.

One out of every five Kenyans is a member of a cooperative. This means at least eight million Kenyans are members of cooperatives while 20 million depend on the movement indirectly.

Registered Cooperatives in Kenya

“Kenya boasts about 15,000 registered cooperatives with 12 million members. There are more than 320,000 employees and a further 1.5 million people engaged in small scale and informal enterprise funded by cooperative loans.”

Kenya is ranked number one in Africa and seventh in the world on the strength of savings in excess of kshs400 billion which is 35 per cent of total savings. Savings and credit cooperative societies (Saccos) have Kshs378 billion deposits.

Cooperatives command 45 per cent of Kenya’s gross domestic product (GDP), the highest proportion in percentage points of GDP attributed to cooperatives in the world. New Zealand comes in a distant second at 22 per cent. About 60 per cent of the Kenyan population earn a living from cooperatives. There are 3,280 Saccos, and considered the fastest growing sub—sector in the cooperative movement, this sub-sector is the fastest growing in Africa. It accounts for about 60 per cent, 64 per cent, and 63 per cent of the country’s savings, loan, and assets respectively.

The movement provides two million jobs with 70 per cent of Kenyans depending directly or indirectly on cooperatives.

About 10 years after Kenya attained independence from Britain, the cooperative movement emerged as a dominant player in the economy.

The movement picked up a fast-growth path in the 1960s and 1970s. Cooperative activities were evident in almost all sectors of the economy, and indeed, co-ops had freedom to venture into any economic activity. They continued to be active in marketing of agricultural produce, agro-processing, property ownership and investments, banking and insurance.

Transport, technology and youth are among the new sectors making tremendous strides in giving enterprising Kenyans an opportunity to create wealth and jobs.

Information technology has been a major driver in the sector’s growth in recent years with the adoption of international accounting and management standards.

Research by the International Labour Organisation (ILO), indicates that about seven per cent of the African population is affiliated to the cooperative movement. In Kenya cooperatives provide two million jobs.

As a result of Kenya’s success, other countries including Uganda, Tanzania, South Africa, Malawi, Namibia, Botswana, Rwanda and Southern Sudan got inspiration and started taking cooperatives seriously.

History of Cooperative Movement / Societies  in Kenya

Origin of Cooperative Movement / Societies in Kenya

In 1908 the Lumbwa Cooperative was established and was the preserve of white settlers to develop their agriculture.

It took more than 50 years before this changed. By 1963, about 1,000 cooperatives had been registered in which black Kenyans had a stake.

This impetus motivated the Government of President Jomo Kenyatta to encourage the promotion of cooperative societies as a key strategy for national development through Sessional Paper No. 10 of 1965. As a result, the Ministry of Cooperative Development was established to strengthen and nurture the movement.

Among the controversial policies that came on board around this time was to directly link producer cooperatives with parastatals. This move made the government appear to be shielding the cooperatives from competition.

It is at this time that the Cooperative Bank of Kenya, which had been incorporated in 1965, was given a license to operate.

The concept of a Savings and Credit Cooperative Society (Sacco) with an employer as the common bond was mooted. The Government also introduced subsidies and free access to government credit and free extension services.

Birth and entrenchment of Saccos in Kenya

In the 1970s priority was given to establishing a standardized accounting system in coffee and dairy farming, marketing cooperatives, and a system popularly referred to as Members Transactions

This was followed by a savings and credit system integrated to the MT system. Under the project, a retired Swedish banker, Sven Lindkvist, was hired to study the feasibility of introducing rural credit Saccos linked to the marketing cooperatives.

The scheme assumed his name, and was known as Lindkvist Production Credit Scheme (LPCS). It was later renamed as Cooperative Production Credit Scheme (CPCS).

Lindkvist’s study revealed that although cooperatives were the main sources of deposits for banks, it was difficult for cooperatives to get credit from the banks due to stringent, and what was considered discriminatory, lending policies.

Members could not open savings or deposit accounts because of unrealistic minimum balance requirements. Lindkvist recommended that cooperatives start their own savings and credit system. This is how the standardized MT system became an enabler for initiation of savings and credit system for rural Saccos.

Initially, the CPCS was to use borrowed funds to lend to individual society membership. The MT system allowed members to migrate from cash receipts for their produce to savings deposit accounts through their societies.

The plan was to introduce and encourage a culture of saving in rural cooperatives. Society members were also encouraged to deposit surplus cash from other sources to build a pool from which to borrow and diversify their activities. The cooperative unions established savings and credit (union banking) sections to manage these activities.

In many district cooperative unions, this activity developed into rural banking units, with huge savings and loan portfolios.

When these developments were taking place, the establishment of the Cooperative Bank was under way. The bank provided the momentum for the growth of the union banking units by lending to the societies.

This innovation, at the time, may be comparable to Safaricom’s M-Pesa, the world famous pioneer of mobile telephone money transfer service.

Post – Independence development of the cooperative movement in Kenya

After independence the position of Registrar was elevated to that of Commissioner of Cooperative Development. The newly-independent Kenya was at the time convinced that the movement had a vital role to play as articulated in Sessional Paper No. 10 of 1965.

The movement was regarded as a vehicle for the introduction of African Socialism in the economic development of the young nation.

This led to the creation of a Ministry of Cooperative Development. The commissioner became an influential authority in implementing government policy in the movement. In time, it was inevitable that the Zeal and self-sacrifice by civil servants in promoting cooperative ideals would be replaced by sustenance of a budding government bureaucracy.

In the first two decades of Independence, the Commissioners of Cooperative Development were: l. M Davies (1960-1964), J. N; Kibue (1964—1966), Dan Nyanjom (1967-1970), Joshua Muthama (1970-1978) and Laban Mucemi (1979-1980). During their tenure, co-ops grew tremendously across the country.

Agricultural marketing co-ops were the most prominent, with focus on coffee, dairy, pyrethrum, cotton and horticulture. They majored in collection, processing, storage and sale of the produce from the members. These societies also supplied members with seeds, fertilisers, machinery and equipment.

Many initiatives in organizing fisheries, housing, handcraft, farm purchase and multi-purpose co-ops were made with less success.

Consumer co—ops were becoming popular during the pre—Independence period and favoured the urban areas. Their main activities were to supply clothing and food items at competitive prices, but their growth did not pick up after Independence. Similar initiatives in the 1950s, promoted thrift and savings co—ops, but failed due to structural and management Weaknesses. They were more inclined to lending, motivated by profit and were open to non-members. They were organized for and by people belonging to an association or clan or members of a residential estate, church or location. They lacked a sustainable affiliation in membership, activity participation and leadership.

In the late 1960s, a new concept of savings and credit societies was introduced, where the employer was mooted as a defined common bond.

In 1965, a conference sponsored by the Credit Union National Association (CUNA) led to the formation of the African Cooperative Savings and Credit Association (ACOSCA).

After the conference CUNA, the Catholic Relief Services (CRS), the Department of Cooperative Development (DCD) and Kenya National Federation of Cooperatives (KNFC) teamed up to promote savings and credit societies.

This team further recommended that savings and credit societies be encouraged in major urban areas, Where Workers had occupational common bond. They would authorize employers to deduct an agreed amount from their salaries and pay it out to the society through a check-off system.

By the end of 1967, there were 67 savings and credit societies with a membership of 3,000, which had saved Kshsl.6 million.

In the 1960s and 1970s, important national or countrywide cooperative organisations were founded. Known as national cooperative organisations (NACOs), these included the Kenya National Federation of Cooperatives (KNFC) in 1964, the Cooperative Bank of Kenya, (1968) the Kenya Union of Savings, Credit Cooperatives Organisation (KUSCCO) (1971) and the Cooperative Insurance Services CIS (1978).

These NACOs joined the pre-Independence countrywide cooperative unions, such as KPCU (coffee), KCC (dairy), KFA (farm input) and HCU (horticulture). The significant contribution to the development of the cooperative movement by these national co—ops is immense.

In the 1980s there were fundamental shifts, such as the World Bank—prescribed Structural Adjustment Programmes (SAPs) that had an impact on the success of the movement. The SAPs led to, not only wide-ranging policy changes in trade and macro—economic policies, but also changes in production costs, incentive structures and sector competitiveness.

Yet another policy initiative, namely The Sessional Paper on Renewed Growth and Economic Management of the Economy also impacted on policies by again removing all Government monopolistic tendencies. It divested Government investment in commercial activities and encouraged the private sector to run and invest in the Government-owned organisations and parastatals.

In the 1990s, liberalisation was the buzzword. As a key agenda it led to mergers, disputes and splits in various cooperative societies, with some devolving into small and uneconomic units on one hand, and on the other, high level of mismanagement.

The cooperative movement witnessed promotion of regionalization and globalization policies, the key being removal of tariff and non-tariff trade barriers, withdrawal of direct and indirect protection of domestic competition, adverse economic conditions, collapse of many financial institutions and cooperatives.

By 2003, Kenya’s registered cooperatives had soared to 10,297, with a membership of 5.9 million and an income of about Kshs7.4 billion. They were also contributing 30 per cent of national saving.

More were introduced in 2004, the main one being the Cooperative Societies Amendment Bill that re—introduced some degree of government control in the movement without prejudicing its own efforts of embracing the principle of a free market.

The change led to the enactment of the Sacco Societies Act, which introduced prudential regulation to all deposit-taking Saccos. The Sacco Societies Regulatory Authority (Sasra) was formally established in 2009.

The Cooperative Alliance of Kenya Limited (CAK) was also registered in 2009 as the national apex organisation for the movement under the Cooperative Societies Act Kenya’s Saccos have been recognized internationally and admitted to the Group 10 of the most developed movements globally. The others are the United States, Canada, Mexico, Brazil, Australia, Poland, Costa Rica, Caribbean Confederation and Ireland.

The movement cuts across various sectors of the economy and incorporates the rich, the poor, the youth and the elderly in national development.

The year 2012, dubbed The Year of Cooperatives, was a crowning moment in Kenya’s cooperative movement calendar. The International Cooperatives Alliance (ICA), which unites, represents and serves cooperatives Worldwide, identified Kenya’s cooperative movement as one of the most regulated in Africa and the best in East Africa.

The country celebrates the golden jubilee as an elite cooperator and one of only the two African countries that has established independent regulators with specific regulations; namely the Sacco Societies Act. The other country is South Africa with the Cooperative Banking Act. Setting the country apart from others whose regulations and supervisions rests as mandates under the Banking Supervisory Authority (Central Banks), which denies them the flexibility to serve members adequately.

Key driver of the Kenya economy

The cooperatives movement  in Kenya now boasts of an annual turnover of Kshs 436 billion ($4.4 billion) equivalent to 45 per cent of the national GDP. This is a huge impact as the movement plays a key role in financial deepening and intermediation in industry.

In their operations, the cooperatives have mobilized savings of over Kshs230 billion and provided affordable credit of over Kshs184 billion to members.

The total number of societies and unions registered recently had a 5.4 per cent growth, rising from 4,228 in 2011 to 14,990 in 2012. A total of 45 multi-purpose societies were registered in 2011 while the number of dairy societies increased from 313 in 2011 to 343 in 2012.

Saccos control over Kshs 250 billion. There are 1.8 million members with Sacco loans compared to 1.9 million people with bank loans.

Saccos have also established over 400 Front Office Services Activities (FOSAs) in both urban and rural areas providing basic banking services to over four million Kenyans – a number that compares favourably with the number of accounts in the commercial banking system.

Some Saccos are key financial sector players and providers of micro finance services. Indeed, the Government took cognisance of this key sector, appreciating the need to safeguard the huge public funds handled by the Saccos and saw the need to provide a legal framework to govern this sector through Sasra.

Structure of cooperative movement in Kenya

The structure of the cooperative movement in Kenya places individual members at the bottom of a pyramidal organizational structure. The Cooperative Alliance of Kenya (CAK), formerly known as Kenya National Federation of Cooperatives (KNFC), is at the top as apex body. Saccos fall under KUSCCO under a similar structure.

The cooperative movement in Kenya is vertically organized into a four-tier pyramidal structure that links up primary cooperatives at the local (lower) level to the national (higher) level. The structure consists of primary cooperatives at the bottom, district/ commodity cooperative unions, national cooperative organisations and one confederation, CAK, whose membership includes national cooperative organisations as well as some cooperative unions and primary cooperatives not affiliated to any union. It is through CAK that the Kenyan cooperative movement is expected to be linked to the W0rld’s cooperative movements.

Most of the primary cooperatives in Kenya have their origin in state-controlled promotion of cooperative development, which saw most of the people join cooperatives not on the basis of their common bonds and mutual trust, but due to the directive from the state that compelled those engaged in similar economic activities to join specific types of cooperatives. For instance, in the agricultural sector it became mandatory for cash crop farmers to join cooperatives in order to market coffee, cotton, pyrethrum and milk.

Types of cooperative societies in Kenya

Cooperatives in Kenya are classified into agricultural and non-agricultural cooperatives.

Agricultural cooperatives engage in the marketing of members’ produce as their main activity, though some cooperatives, such as coffee and dairy cooperatives, have ventured into manufacturing in a bid to add value to produce. These cooperatives are further classified by the produce that they handle, with the key ones in cash crops, such as coffee, cotton, pyrethrum, sugar-cane and dairy. Other agricultural cooperatives include fishery, farm purchase and multi—produce cooperatives, which market agricultural produce and mobilize savings to purchase land for members.

However, it should be pointed out that land purchase cooperatives, which were very active in the 1960s and 1970s in Central Kenya and the Rift Valley, are no longer as active.

Non-agricultural cooperatives are involved in finance, housing, consumer, crafts, insurance, transport and the informal economy. In the financial sector, the Cooperative Bank and Saccos provide savings and credit services, while housing cooperatives help members buy or build homes.

Consumer and craft cooperatives market their respective commodities, while cooperatives in the transport and informal economy engage in savings and credit activities.

The Cooperative Insurance Company (CIC) is the flagship of the cooperative movement in the provision of insurance services.

Given that Kenya has an activity-based cooperative system, the NACOs are based on specific types of activities, including banking, insurance, dairy, savings and credit, housing and coffee, among others.

Currently, NACOs include KUSCCO, CIC, KPCU, the Cooperative Bank of Kenya, National Cooperative Housing Union (Nachu), and Kenya Rural Savings and Credit Societies Union (Kerussu). Members of these organisations are mainly cooperative unions and some primary cooperatives. Though it is essentially a government institution, the Cooperative University College of Kenya is considered in the cooperative movement as one of the NACOs. It was started in 1969 as a department in the Ministry of Cooperative Development, before its transformation into a semi-autonomous government parastatal through an Act of Parliament in 1995.

The New Kenya Cooperative Creameries (New KCC) is widely considered to be another NACO due to its origin in the cooperative movement. It was founded by white settler dairy farmers as Kenya Cooperative Creameries (KCC) during the colonial period.

Primary cooperatives in the dairy sub—sector became affiliated to it, thereby transforming it into a dairy cooperatives federation. However, it is currently operating as a state corporation under the Department of Cooperative Societies, following its acquisition by the government in 2005 from private individuals that had bought the previous KCC in 2000. The government intends to sell it back to the cooperative movement upon stabilization of its operations.

Primary cooperatives are also affiliated to cooperative unions by economic activity or agricultural produce marketed. For instance, in the agricultural sector there are produce-oriented cooperative unions that collect coffee, pyrethrum, cotton and milk from primary cooperatives for primary processing and marketing. In addition to these produce—based unions, there are also district cooperative unions.

These are area-based cooperative unions that bring together primary cooperatives dealing with different activities within a geographical area and provide services to members that would have otherwise been provided by activity—based unions.

Pillars of the cooperative movement in Kenya

Various institutions, organisations, companies and individuals have played a very important role in the development of the union. These include;

  1. Cooperative Bank was formed by cooperators in 1965. It is the fourth largest bank by asset base with a branch network of over 90 branches, a customer base of 2.3 million and is over 80 per cent owned by the cooperative movement. The bank is providing a “one-stop-shop” for financial services and hence has three subsidiaries providing stock broking services, fund management and capacity building and corporate advisory services.
  2. CIC Group Limited is one of the highest capitalized insurance companies in Kenya, with a premium income of Kshs4.5 billion in 2010 and is ranked 3rd on profitability, and is similarly owned and managed by the cooperative movement.
  3. KUSCCO is the umbrella body for all Saccos, under which they have pooled deposits of over Kshs3.9 billion.
  4. Cooperative College of Kenya is the premier training facility for provision of cooperative education and training. It recently received a charter to become a university.
  5. Nachu has been instrumental in promoting housing cooperative societies, enabling members to own houses at reasonable costs.
  6. Kerussu is the umbrella body of the rural savings and credit societies. It provides advocacy, training and capacity building for the rural Saccos.

Cooperatives role in Vision 2030

A number of activities are being implemented in pursuit of achieving the Kenya Vision 2030 objectives and its core mandate of developing the cooperative sub-sector into an efficient and competitive business.

Projects have been identified and programmes designed to contribute to the implementation of Kenya Vision 2030 Flagship projects as Well as Medium—Term Plan to promote an innovative, commercially oriented, and modern agricultural and financial services sectors.

The main focus of the sub sector’s activities is on facilitating cooperatives to play an important role addressing the challenges of low productivity, inappropriate land use systems, poor marketing systems, limited access to credit by farmers and small businesses, and low value-addition to agricultural commodities and other services.

The primary policies and strategies implemented by the sub sector are geared towards:

  1. Streamlining and strengthening the management of Cooperative societies;
  2. Establishing and strengthening the SACCO regulatory framework;
  3. Improving market access and marketing efficiency by cooperatives;
  4. Promoting viable cooperatives investments; and
  5. Encouraging cooperatives to enter into mutual partnerships with other agencies for additional resources.

Over and above policy, governance and legal reforms in tandem with the Kenya Vision 2030, several tare gets have been set for the cooperative sector between 2009 and 2030, they include;

  1. Increase active membership of cooperatives by 10 per cent annually;
  2. Increase and sustain the average market share of agro-commodity cooperatives at 70 per cent;
  3. Increase savings mobilization through Saccos and other cooperatives by 10 per cent annually;
  4. Achieve a net increase of 600,000 additional direct jobs within the cooperative movement by 2030;
  5. Increase growth in cooperative investments by 7 per cent annually;
  6. Support establishment of new cooperatives in promising high growth activities; and
  7. Increase survival of cooperatives from the current 70 per cent to at least 85 per cent.

Some of the key policy, legal and institutional achievements during the period under review include:

  1. A draft Cooperative Development Policy was completed and approved by the Cabinet. It is awaiting parliamentary approval;
  2. Enactment of a Sacco Act and consequent establishment of Sasra to spearhead the development of the industry and entrench prudential financial standards;
  3. Decentralized operations of the Cooperative Tribunal to eight provinces to reduce the backlog of cases and bring services closer to the movement;
  4. Establishment the Ethics Commission for Cooperative Societies to spearhead md entrench good governance in the cooperative movement, in accordance with the provisions of the Public Officer Ethics Act;
  5. Restructured and revitalization key viable cooperative institutions (including elevation of the Cooperative College of Kenya into a university, launch Cooperative Alliance of Kenya — CAK umbrella body to replace the defunct KNFCU).

Fertiliser cost reduction facility

The Government supported establishment of the Kenya Farmers’ Cooperative Union (KFCU), to buy fertiliser in bulk and distribute to affiliate unions and primary societies.

Member societies have placed and paid for fertiliser orders valued at over Kshs100 million at the National Cereals and Produce Board, which was delivered by the beginning October 2012. Once fully on its feet, the KFCU targets to be import 125,000 tonnes of fertiliser four times every year.

Value addition and market access The Government prioritized and conducted training in product value addition in six value chains: coffee, horticulture, honey, fish, milk and mangoes.

Disease Free Zone

In three cooperative society ranches in the arid and semi—arid lands (Asal) of Witu in Lamu, Issa Godana in Tana River and B2 Yatta in Kitui, the ministry has supported preinvestment activities to prepare the ranches get certification for quality premium livestock products — land tenure, bush clearing, restocking, pasture development, farm infrastructure and ecotourism facilities.

Financial services deepening

Initiative involves expanding availability of efficient, competitive and affordable financial services to Kenyans — includes development of appropriate financial products.

There are over 3,500 active Saccos serving over seven million members.

The Saccos control assets estimated at over Kshs70O billion out of which members’ deposits are about Kshs400 billion.

Sasra is now in place to entrench financial prudential standards, with just over 100 deposit taking Saccos licensed out of the targeted 216.

Private sector partnerships

The Cooperatives—Private Sector Partnerships (CPPs) brought into play synergies such as injection of additional investment capital, technology and superior management services.

Examples include;

  1. Saccos operating FOSAs with banks (mainly the Cooperative Bank of Kenya) to provide ATM services.
  2. In the dairy industry through subsidiary joint venture processing entities (e.g. Githunguri Dairy, Siongoroi Dairy, Mariakani Dairy, Kabiyet Dairies, Mukurwe—ini Wakulima Dairy etc.) which provide milk processing technology and management services.
  3. In Livestock the Turkana Livestock Marketing Cooperative Society has partnered with the Government, AMREF Terra—Nouva (Italy) and AM-REF (K) to establish a meat processing plant (Turkana Pastoralists Meat Processing factory — Lomidat)
  4. In Fishing, Turkana Fishermen Cooperative Society has partnered With Samaki (2000) Limited to rehabilitate and modernize the Kalokol Fish Processing Plant.

Policy reforms

These include merger of small coffee cooperative societies into economically sustainable entities to help reduce operational costs and benefit from economies of scale; formulation of more focused cooperative management guidelines and prudential standards; and timely remittances of deductions by employees to Saccos, and recovery of outstanding remittances by employers to a tune of Kshs3.8 billion out of the Kshs4.3 billion arrears. The Kenya Cooperative Coffee Exporters (KCCE) has been established to facilitate export of coffee. It has increased earnings for coffee farmers.

Mobilization and employment

The movement has a membership of over nine million in over 12,400 registered cooperatives.

Considering an average family of four members, it is estimated that the cooperative movement has an impact on the lives of nearly 36 million Kenyans.

Indeed the Ministry of Cooperative Development estimates that 80 per cent of Kenya’s population derives their income either directly or indirectly through cooperative activities. Saccos have more than six million members accounting for 30 per cent of the national savings.

The movement employs more than 320,000 people, besides providing immense opportunities for self-employment. Across the World, over one billion people are members of cooperatives while about 100 million are employed directly.

Agriculture

Agriculture is the mainstay of the Kenyan economy, directly contributing 26 per cent of the GDP annually valued at Kshs342 billion and another 27 per cent indirectly valued at Ksl1s385 billion through linkages with manufacturing, distribution and other service related sectors. The sector accounts for 65 per cent of Kenya’s total exports and also commands 18 per cent and 60 per cent of the formal and total employment respectively.

It is estimated that 4,988 cooperative societies and unions are directly involved in agriculture.

The dairy industry is a source of livelihood for over a half million small scale cooperative members in the country.

By 2010, small-scale dairy farmers were members of 278 registered cooperatives societies in the high and medium potential dairy districts, out of which 232 were active.

Since 1999, processed milk declined from 1.2 million liters to 600,000 liters daily in 2002. With the revival of the New Kenya Cooperatives Creameries (New KCC), however, the daily intake improved and now stands at 1.2 million liters a day. With better credit systems, subsidy of input cost and efficient production support services the output is projected to increase to over 2 million in the next two years.

The cooperatives’ share of the total national output of coffee declined substantially from 72 per cent in 1980 to 56 per cent in 2001 while the volume of production decreased from 120,000 tonnes in 1996 to about 40,000 tonnes in 1997 due to poor world market prices, drought, and subdivision of coffee cooperatives coupled with the debt burden. However, with the formation of Kenya Coffee Exporter Cooperative (KCCE), coffee business has picked up and for the first time in many years, the price of one kilogramme of coffee is above Kshs 120.

In the tea sector, small holder farmers account for 95,779 hectares and produce more than 190 million kilogrammes of tea every year, accounting for 61 per cent of total production. The small holder farmers are organized into 52 co-ops across Kenya with a membership of 430,000.

Cooperatives have contributed to the growth of the fisheries industry and even if the number of fisheries cooperatives had dropped from 82 in year 2000 to 71 in 2010 and the membership from 14,000 in 2000 to about 11,000, the membership increased tremendously to about 42,000 members by the end of 2010.

Finance

Saccos have made their indelible mark in the lives of many. Their contribution to the gross national savings rose from 15.6 per cent in 2008 to 30 per cent by 2010.

The total Sacco Sub-sector was worth Kshs210 billion in 2010 While deposit taking Saccos had about Kshs171 billions of this amount.

The uniqueness of the Sacco movement is its geographical distribution across Kenya. In all the 47 counties there are Saccos providing financial access to hitherto financially excluded Kenyans.

Cooperatives are also the largest shareholders of the Cooperative Bank, CIC Group Ltd (CIC) and KUSCCO.

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