Savings and Credit Co-operatives Societies play a key role is serving the banked and the unbanked.
This is part of the Vision 2030 economic pillar that aims to create a vibrant and competitive financial sector, driving high levels of savings and financing the country’s investment needs.
Kenya’s cooperative sector has an asset base of more than Sh1 trillion, with a membership of over 15 million people and offers employment to more than two million people, directly and indirectly.
The World Cooperative Monitor 2020 indicates that more than 12 per cent of humanity are part of the three million global cooperative movement with the largest 300 cooperatives having a combined turnover of Sh244 trillion. In Africa, only Kenya is represented in the top 300 cooperative index.
The report further indicates that over 280 million people, representing 10 per cent of the world’s employed population, are employed by the Saccos.
The Sacco Societies Regulatory Authority’s supervision report of 2020 shows there are 175 deposit-taking Saccos that operate the Front Office Service Activity with 5.7 million people.
In 2020, the DT-Saccos accounted for Sh627.7 billion as total assets, Sh431.46 billion as the total deposits and gross loans of Sh474.8 billion. While the picture looks rosy, the clamour for the change in the regulatory framework governing co-operatives is in top gear.
Saccos are governed by the Cooperative Societies Act (No.12 of 1997) and the Sacco Societies Act (No. 14 of 2008). The Co-operative (amendment) Bill is expected to usher in a new regulatory regime for the Saccos. The bill is part of Dr Nelson Kuria’s Ministerial task force agenda on the operationalization of the national co-operative policy that’s currently under stakeholder validation.
For the first time, Clause 142 of the bill proposes the establishment of specialized cooperative courts to adjudicate on disputes in the sector. The co-operatives court will be presided over by a magistrate of at least the rank of a senior principal magistrate, with unlimited geographical and pecuniary jurisdiction in matters of cooperative disputes.
Parties aggrieved by the decision of the court have the right to appeal to the High Court. Clause 156 of the bill provides an avenue for parties to utilise the alternative dispute resolution mechanisms in court as per Article 159 (2) (c) of the Constitution.
The bill proposes that each co-operative should have a nomination committee with members drawn from the professional institutions, religious groups and government officials. The sole purpose of the committee would be to vet and clear potential candidates for the director or supervisory roles in line with Article 73 of the Constitution on Leadership and Integrity.
On supervisory board, the bill proposes its members will only be eligible to vie for board positions only after three years of vacating the supervisory board. This was meant to cure the “push and pull” that may arise between directors and the supervisory boards.
A plausible option would be to clearly define the duties and reporting structure of the supervisory board to minimize conflicts with the board. Clause 57 of the bill has proposed positions for independent directors in the Sacco boards as a way of improving quality decision making, especially on professional issues pertaining to the cooperative.
However, this is a bone of contention and may not see the light of the day. Clause 57 (4) of the bill provides for affirmative action and proposes that the composition of the boards should comply with the constitutional provisions on gender equity and inclusivity.
While the principles of co-operatives require that democracy be upheld, it’s imperative to note that it is a herculean task for Saccos to achieve the gender equity through the ballot. It would be prudent to amend Sacco by-laws to achieve gender balance and inclusivity.
Clause 56 (3) of the bill provides for the adoption of delegates system. Cooperatives are encouraged to amend their by-laws to provide for delegated or proxy representation at the general meetings.
Lastly, the adoption of ICT in cooperatives business cannot be overemphasized. Clause 56 (1) and (2) propose the use of virtual or both virtual and physical meetings under the supervision of the regulator to ensure the virtual meetings and voting platforms are transparent, verifiable and inclusive.
If the stakeholders give this bill a clean bill of health, then the co-operatives sector will usher in a new regulatory regime that will shape the fortunes of the movement for many generations to come.
The writer is an economist and a commentator on trade and investment. @BenShawAyieko [email protected]
