The cooperative movement has played a significant role in Kenya’s socio-economic development since independence in 1963 when most began as agricultural marketing outfits, before expanding into credit, savings and insurance in two decades to the 80s.
Cooperatives then gradually morphed into housing, transport, education, healthcare, manufacturing and services, and by 2019, the mobilised savings in cooperatives from 14 million members was $6 billion in deposits or almost half of Kenya’s gross domestic product (GDP), according to the World Bank.
The global lender adds that such financial war-chest provides affordable, tailor-made loans for education and business ventures. Today, Kenya’s cooperative movement is Africa’s largest in turnover per capita, and the seventh best globally, notes the World Cooperative Monitor Report for 2022.
Cooperative societies in Kenya, according to Dr Frederick Wanyama, in Surviving Liberalisation: The cooperative movement in Kenya published in 2009, have traversed two eras: State control and liberalised markets.
Under state control, cooperatives like Kenya Planters Cooperative Union and Kenya Cooperative Creameries (KCC) greatly helped rural communities foster a culture of saving and access to financial services before withering in the 1980s due to the economic crisis, high inflation, low economic growth and decline in agricultural production.
Some survived with the mini coffee boom of the late 1980s and others thrived in the 1990s – after liberalisation of the economy, which made most “commercially autonomous, member-based cooperative organisations, which would be democratically and professionally managed, self-controlled and self-reliant business enterprises,” notes Dr Wanyama.
Indeed, through collective action, cooperatives have contributed to social and financial inclusion, agricultural productivity and sustainable growth via job creation, economic empowerment, community empowerment and poverty reduction.
From 655 registered cooperative societies at independence, there were 25,984 institutions as at 2021 with 30 per cent in agriculture and 70 per cent in non-agriculture, according to the State Department for Cooperatives. Their phenomenal growth can be discerned from the 19,951 cooperatives registered between 2017 and 2022, a 30 per cent increase in five years, according to the Economic Survey 2023, which adds that they employ over 300,000 directly and millions indirectly.
From Sh1 billion worth of assets in 1963, cooperatives now sit on Sh1 trillion assets and they account for 45 per cent of Kenya’s GDP and 30 per cent of national savings and deposits, according to the Kenya Union of Savings and Credit Cooperatives (Kuscco).
The biggest impact of cooperatives has been felt in Savings and Credit Cooperatives Societies (Saccos), now key institutions in mobilising savings, which stand at Sh730 billion or 30 per cent of national savings and deposits and Sh700 billion in loans, according to the Economic Survey.
The institutions, according to KNBS, have capacity to nurture entrepreneurs through micro-finance, business skills through training and mentorship programmes, thus contributing to overall economic growth via access to markets and leveraging on economies of scale to negotiate better prices for inputs and outputs.
Women-led businesses have also grown through promoting gender equality and economic empowerment via access to credit.
A research titled, What difference do cooperative make? The Kenya Country Study, was carried out by the International Cooperative Research Group (ICRG) of the US Overseas Cooperative Development Council (OCDC) in 2017–2020 and revealed that “cooperative members are generally in better economic positions (that is higher incomes, less likely to be poor and a greater sense of financial security) than non-members and the general population.”
To protect members, the Sacco Societies Regulatory Authority (Sasra) was established under the Societies Act in 2008. It became operational in 2010 with the mandate of ensuring stability as the regulator.
And it all began in 1966 with the passing of the Cooperative Societies Act providing a legal framework for their formation and regulation and two years later, the Cooperative Bank of Kenya was established to provide them with financial services and advisory services.
Besides members enjoying benefits of shared resources and risk mitigation, Coop Bank has also nurtured entrepreneurship and increased the number of the unbanked and the marginalised accessing formal financial services.
Coop Bank was listed at the Nairobi Securities Exchange (NSE) in 2008 and is today the largest cooperative bank in Africa and the fourth largest in Kenya, with assets of over Sh600 billion (US$5.6 billion) as of December 2021. The bank has over six million customers and is majority owned by 3,794 cooperative societies under Co-op Holdings Co-operative Society Ltd with a 64.56 per cent controlling stake.
Overall, Coop Bank has been instrumental in growing cooperatives, which have helped improve farming practices, training opportunities, access to inputs, credit, seeds, fertilisers, and machinery at affordable prices through bulk buys.
Examples of cooperatives, which have become national success stories, include Githunguri Dairy Farmers Cooperative Society, the third largest dairy processor through the well-known Fresha brand.
Agriculture cooperatives have also invested in irrigation schemes, shared storage facilities, reducing post-harvest losses besides enhancing marketing opportunities and helping smallholder farmers tap the technical support from governments and NGOs.
Housing cooperatives, on the other hand, have facilitated affordable housing schemes, access to mortgage financing, thus generating employment in construction and related industries. The World Bank notes that “nine out of 10 housing units in Kenya are constructed through cooperatives and 25 per cent of housing stock in urban areas” under Kenya’s Vision 2030.
Education cooperatives have helped provide accessible and quality education via increasing the number of schools and colleges the same way those in healthcare have been instrumental in medical healthcare while consumer cooperatives have been promoting fair pricing, quality products and consumer protection.
In a nutshell, cooperative societies and their umbrella organisations have been influencing policies and regulations that support the sustainability of cooperative. But the societies have faced a myriad of challenges, including failure to acknowledge their economic and social impact, lack of adequate entrepreneurial vision, weak policies and programmes focused on gender equality.
1908: The Lumbwa Cooperative Society registered as the first cooperative in
Kenya for White Settler Diary farmers in Kipkelion, Rift Valley Province.
1950s: The colonial government began encouraging indigenous Kenyans to form cooperatives.
The 1960s – 1970s: National Cooperative Organisations (NACOs) like Cooperative
Alliance of Kenya (CAK), former Kenya National Federation of Cooperatives helped grow the sector.
1968: The Cooperative Bank of Kenya was founded as well as College
Milestones in the growth of cooperative societies of Cooperatives (now Cooperative
University of Kenya)
1971: The Kenya Union of Savings and Credit Cooperatives (Kuscco) and
Cooperative Insurance Company (CIC) formed.
1975: Ministry of Co-operative Development established.
1978: The National Cooperative Housing Union (NACHU) formed.
2008: Sacco Societies Act enacted establishing the Sacco Societies
Regulatory Authority (SASRA) as regulator
2016: State Department for Cooperatives established.
