Cooperatives in Kenya
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.
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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.
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Focus is on facilitating cooperatives to address 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.
In 2010/2011, the Ministry of Cooperative Development and Marketing finalised its Development Policy and drafted a Sessional Paper for presentation to Parliament.
To tackle the high cost of fertilizer and create stability in the inputs market, the ministry embarked on registering the Kenya Farmers Cooperative Union, sponsored by District Co-operative Unions, a process to be finalised in 2011/ 2012.
In an attempt to address value chain development initiatives, the Mariakani Dairy and the Kenya Coffee Cooperative Exporters (KCCE) started operations. New Kenya Cooperative Creameries (KCC) was also re-designated a State corporation. The contribution of Saccos to national savings exceeded target savings rate of 10 per cent annually in 2011 to reach 25 per cent.
In the year 2010/ 2011, the cooperative subsector’s Final Draft Bill was adopted by the Cabinet, the Draft Sessional Paper was finalised and the SACCO Act 2008 enacted. The Cooperative Alliance of Kenya (CAK) also launched the Cooperative Investment Policies and Guidelines. The Ethics Commission for Cooperatives (ECCOS) was also established as planned and about 20 of the 126 SACCOs with Front Office Service Activities (FOSAs) have now complied with the SACCO Act.
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