The Kenyan Parliament is poised to deliberate and pass a pivotal Bill to revoke the outdated 27-year-old Co-operatives Act Cap 490, established under the former constitution. This significant legislative move is expected to herald a new era for the burgeoning co-operative sector in Kenya, currently boasting a balance sheet exceeding KSh 1 trillion.
The proposed Co-operative Bill, once enacted, will empower County Governments with the necessary legal tools to oversee the registration and regulation of the co-operative sector, aligning with its status as a devolved function.
Leading figures in the co-operative industry have voiced their concerns regarding the prolonged delay in updating the obsolete Coop Act Cap 490. They argue that revising the law is essential to align it with the current constitution and the dynamic changes in technology, society, and the business landscape, which are crucial for sustaining the sector’s growth and achievements.
The Co-operatives Bill 2024, sponsored by Hon Kimani Ichung’wah, Leader of the Majority Party in Parliament, has already been received by the Directorate of Legal Services of the National Assembly.
This will be the first attempt by the Kenya Kwanza administration to amend the co-operatives sector mother-law after previous attempts by past administrations of Uhuru Kenyatta and Mwai Kibaki failed to see the light of day.
The principal object of this Bill is to provide the legal framework that will enable the co-operative sector to transform into a devolved function as envisaged in sections of the new constitution.
In particular, the Bill provides for transitional provisions, which include a repeal of the Co-operative Society Act 12 of 1997, the creation of the new offices of the Commissioner, County Director for Co-operatives, members of the Co-operative Tribunal, and County Assembly legislations.
While County Governments have been instituting their own legislation to guide the regulation and registration of co-operative societies, the Bill now provides guidelines on this matter, creating a new office of Commissioner for Co-operative Development at the national level and office of the county director for co-operatives at the county government level and provides for inter-government co-operative relations.
The Bill delegates to the Cabinet Secretary for Co-operatives and MSMEs development and the County Executive Committee members the power to make regulations necessary to operationalize the new law and better carry out its objectives.
The Bill is divided into several sections, including the establishment of offices and administration of the Act, Inter-Governmental co-operatives relations technical forum, the structure of co-operatives in Kenya, registration of co-operatives, rights and liabilities of members, duties of co-operatives, Governance of Co-operatives, amalgamation and division of co-operatives, rights and obligations of co-operatives, property and funds of co-operatives, charges by co-operatives, inquiry, inspection and surcharges, dissolution, special powers of the co-operatives tribunal, settlement of disputes, general provisions, and transitional provisions.
Although attempts have been made to create new legislation and rules to accommodate Deposit-Taking as well as the Non-Withdrawable Deposit-Taking Savings and Credit Co-operative Societies, the Co-operative sector still faces significant challenges due to the outdated Co-op Act Cap 490, which is the mother law for the industry.
For instance, it has not been clear where the supervisory mandate of the Sacco Societies Regulatory Authority(SASRA) and the Co-op Ministry, as well as those of the County Co-operative Officer, begins and ends or the role of Counties and the National Government when it comes to those societies that are located in more than one County.
There is also now clear regulation on how an inter-Sacco lending facility should operate or even how Saccos should charge interest rates on their financial products. The new Co-operative Bill 2024 has made attempts to address these issues and others.
Co-op Act Cap 490 is still rigid on the period upon which an asset, deposits, dividends, or shares held by a co-operative society, can be classified as unclaimed.
Due to the absence of clarity within Co-op Act Cap 490, DT Saccos that have been paying levies to both the County and SASRA, mentioning that they do not get any benefits in return, apart from these payments enabling the regulators to supervise their operations.
While the Sacco Act, as well as other Sacco regulations, have to a large extent covered the various inadequacies that the Co-op Act Cap 490 has, the new bill attempts to harmonize the roles of Counties and the National Government in regulation and supervision of financial Saccos and other Co-operative societies so that there is no clash or duplication.
Cap 490 and the Sacco Act clauses, which require a financial co-operative society to have nine members on its board of directors, are static, obsolete, and do not reflect what is happening on the ground, especially with multi-sector DT Saccos societies that draw membership from all regions and economic sectors. The new Bill addresses these concerns.
Amending the co-operative sector mother-law
