All you need to know about being elected to the Sacco Board of Directors
In its 2023 Guidance Notes on Corporate Governance for Regulated Sacco Societies, SASRA lays down a definitive framework for member representation. According to Section 3.1 of the guidance notes, the Board is tasked with ensuring that Sacco bylaws provide an “adequate and effective framework” for democratic control. But significantly, Section 3.2 shifts the burden to the general membership, stating that members have an “obligation to elect only credible persons.”
As the financial year draws to a close, the Savings and Credit Cooperative Organization (Sacco) sector is buzzing with activity. Several societies have announced dates for their Annual General Meetings (AGMs) and subsequent Board of Directors elections, inviting members to vie for leadership positions.
However, for those eyeing a seat at the high table, popularity alone will not suffice. Being elected to a Sacco board has evolved from a simple popularity contest into a rigorous recruitment process, governed by strict bylaws designed to safeguard members’ funds.
From substantial financial stakes to clean criminal records, here is an analysis of the “fit and proper” test candidates must pass to qualify.
Perhaps the most significant hurdle for aspirants is the financial threshold. Saccos require directors to have significant personal wealth invested in the society, ensuring they are protecting their own interests alongside those of the members.
While the specific amounts vary by institution, candidates are typically required to meet a minimum threshold for shares and deposits. This ranges from a baseline of Ksh 50,000 in smaller societies to Ksh 400,000—and in some top-tier Saccos, millions of shillings—in share capital and deposits.
Furthermore, a candidate’s credit history is scrutinized. Aspirants must not be delinquent on any loans. A director cannot be expected to enforce debt recovery policies if they are defaulting on their own obligations.
Membership and Loyalty
Tenure is another non-negotiable factor. One cannot simply join a Sacco and immediately run for office. Most bylaws require a candidate to have been a full, active member for a specific period, typically ranging from three to six years. This ensures that the aspiring director understands the organizational culture, history, and operational challenges of the society before taking the helm.
The Integrity Test
Given that directors are custodians of public funds, the integrity bar is set high. Candidates are required to submit a valid Certificate of Good Conduct, proving they have no criminal record.
Specific disqualifications include:
- Bankruptcy: Any member who has been declared bankrupt is automatically disqualified to prevent financial mismanagement.
- Dishonesty: Anyone previously convicted of an offense involving dishonesty or adversely named in a past inquiry report is barred from running.
- Tax Compliance: Aspirants must present a valid Tax Compliance Certificate from the revenue authority.
Conflicts of Interest
To ensure undivided loyalty to the society, the cooperative sector enforces strict rules regarding conflicts of interest. An individual is generally prohibited from serving as a board member if they already sit on the board of another Sacco or cooperative society.
Additionally, current employees of the Sacco are ineligible to run for the board to prevent administrative conflicts.
Interestingly, the bylaws often draw a line between cooperative management and national politics. In many Saccos, members actively involved in national or county elective politics are barred from board positions to prevent the politicization of the society’s management.
Education and Literacy
The modern Sacco is a complex financial institution requiring technical oversight. As such, literacy standards have been elevated. Candidates must be able to read and write proficiently in English and/or Swahili.
Academically, a minimum level of education is often enforced. While smaller societies may accept an “O” Level certificate, larger, deposit-taking Saccos frequently require a Bachelor’s degree to ensure directors can interpret complex financial reports and strategic documents.
The Vetting Process
Meeting the qualifications is only the first step. Candidates must formally apply and undergo a vetting process by a nomination committee. This involves submitting detailed forms, academic certificates, and clearance documents.
Experts advise members interested in these positions to review their specific Sacco bylaws, as requirements can vary significantly between Tier-1 deposit-taking Saccos and smaller community-based societies.
As the election season heats up, the message to members is clear: the custodians of your savings must be men and women of means, integrity, and sound mind.
SUMMARY
2023 SASRA Guidance Notes On Corporate Governance for Regulated Sacco Societies in Kenya
The Board of Directors shall ensure that the SACCO By-laws and all its policies provide an adequate and effective framework for member representation and democratic control of the affairs of the Regulated SACCO Society.
Election of Members of Board of Directors and Supervisory Committee
- Members’ obligation to elect only credible persons.
Subject to the Act and Regulations made thereunder, members of a Regulated SACCO Society shall ensure that only credible persons are elected as members as Board directors and Supervisory Committee.
- Criteria for qualification to be included in By-Laws and Electoral Policy
Regulated SACCO Societies shall ensure that the minimum criteria for qualification for membership in the Board of Directors or the Supervisory Committees are incorporated in their By-laws and or electoral policies, which must have been approved by the members prior to implementation.
- General minimum qualifications
The minimum qualifications for membership in the Board of Directors and the supervisory Committee shall in include but not limited to –
- any minimum qualifications prescribed in the Act or the Regulations;
- adequate knowledge and experience in cooperative financial affairs;
- good leadership and integrity;
- sufficient knowledge of the Regulated SACCO operations and the SACCO system in Kenya, generally together with the associated business risks;
- demonstrated political neutrality;
- good standing with the Authority and any other professional body to which the person is a member; and
- g) any other matter which the Regulated SACCO may consider necessary taking into consideration its operating environment or circumstances.
Affirmative Action in Representation
The Regulated SACCOs By-laws and Electoral Policies shall as much as is practicable, taking into considerations the unique operating circumstances of the Regulated SACCO integrate measures providing mechanisms for equitable representation of the:
a) vulnerable members of the SACCO as well as ensuring gender parity, youth, and minority representation; and
b) geographical distribution of the membership, ethnicity, race, age, members clusters among others.
