The government is developing the Kenya Co-operative Transformation Strategy (KCTS) to align with the National Co-operative Policy outlined in Sessional Paper No. 4 of 2020. The KCTS aims to build on the success of the co-operative sector and align its efforts with the Bottom-up Economic Transformation Agenda (BETA). The strategy seeks to maximize the impact of co-operative initiatives to foster sustainable development and prosperity for all. All stakeholders are encouraged to participate in shaping the future of the co-operative sector.
The government is committed to creating an environment where co-operatives thrive, empower communities, and drive inclusive growth. The co-operative sector plays a crucial role in Kenya’s socio-economic development, offering services in all sectors of the economy, including financial services, housing, insurance, transport, hospitality, and agriculture. Housing co-operatives are expected to provide 25% of the 500,000 houses required across the country under the Low Cost Affordable Homes (LCAH) program.
There are over 30,000 registered co-operatives in Kenya with a membership of over 14 million, commanding an asset base of over Ksh1.5 trillion and mobilizing savings of over Kshs. 1 trillion. Approximately 30% of Kenya’s annual savings are through co-operatives. The government supports the agenda of uplifting the lives of millions of Kenyans at the bottom of the economic pyramid.
Sacco societies operate in a highly competitive and dynamic financial sector, and their clients are also shareholders. The sector has a unique advantage as its members should patronize the services of their society where they are co-owners. Sacco leaders should be innovative and come up with demand-driven and attractive financial products for their members.
The co-operative sector is vital for the Bottom-Up Economic Transformation, contributing to the Gross Domestic Product (GDP) by providing opportunities for income generation and employment, particularly for marginalized individuals. The State Department of Co-operatives has constituted value chain implementation teams who serve as desk officers for the prioritized nine (9) value chains.
Co-operatives are founded on seven principles that provide foundational guidelines for democratic governance, member participation, and mutual benefit. The core values guide co-operatives in making decisions, building relationships, and solving problems. These principles include Self-help, Self-responsibility, Democracy, Equality, Equity, and Solidarity. Operating outside these guidelines voids the uniqueness of the business model they are expected to espouse.
Boosting MSME Growth
The government has recognized the importance of funding Micro, Small, and Medium Enterprises (MSMEs) within high-impact value chains to drive economic growth and social development. To achieve this, the government has identified priority value chains to fund MSMEs effectively. It has encouraged Savings and Credit Cooperatives (SACCOs) to provide financing to MSMEs along these value chains to create a mutually beneficial relationship between cooperatives and MSMEs. Furthermore, other financiers are encouraged to support MSMEs along the priority value chains to achieve better outcomes.
One significant challenge facing MSMEs is the lack of access to affordable credit. However, the government has been addressing this issue through innovative financing, such as the Financial Inclusion Fund, Uwezo Fund, and other affirmative funds. Last year, the Financial Inclusion Fund launched the second product, the group loan product, which has been growing steadily, expanding the horizon for accessing credit for borrowers in this category. To make credit more accessible, the government intends to digitize the issuance of credit through other government funds.
To stimulate growth and competitiveness in the MSME sector, the government is focusing on strengthening SACCOs financing mechanisms. Several initiatives have been put in place to support the transformation of the MSMEs sector, including Green Financing Initiatives. The government encourages MSMEs to adopt eco-friendly practices, produce socially responsible products and services, and reduce carbon footprints.
The government is promoting economic growth and social development by prioritizing funding for MSMEs along the priority value chains. It is crucial for SACCOs and other financiers to support the MSME sector by providing affordable credit, which will stimulate growth and competitiveness. With initiatives like Green Financing, MSMEs can adopt eco-friendly practices, produce socially responsible products and services, and reduce carbon footprints, contributing to a sustainable future.
by Cabinet Secretary for Cooperatives and MSMEs Development Simon Chelugui.
