By Peris Njoki
President William Ruto’s plan to revitalise the agriculture sector will be a boon to the co-operative movement, especially the struggling agricultural Co-operative Societies.
Since his inauguration on September 13th, President Ruto has demonstrated his willingness to implement the Kenya Kwanza manifesto that largely focuses on improving agriculture to lower the skyrocketing cost of living.
Despite having the largest share of membership in the sector, many agriculture-based Co-operative Societies lag behind in terms of asset size and deposit mobilisation.
The latest Sacco Supervision Annual Report, 2021, shows that 49- agriculture-based Sacco had the majority of the members representing 46.79% of about six million total members in the sub-sector.
The sub-sector’s wealth is concentrated in a few large Saccos, mostly government-based ones prompting the Sacco Societies Regulatory Authority (SASRA) to call for amalgamation.
“The statistical information discussed in this report shows that there are too many small Saccos in the subsector. For instance, there are 49-Agriculture based Saccos in the country, but which controlled less than 10% of the subsectors’ total assets and total deposits,” reads the report.
With the government’s priority interventions directed in the agriculture sector, such as making fertiliser, good-quality seeds and other agricultural inputs affordable and available, production will increase, pushing farmers’ earnings up. Farmers will thus be empowered to save more, boosting their Co-operative Societies’ fortunes.
Agriculture is the largest sector of the economy, contributing half of Kenya’s GDP; the new government pledged to transform two million poor farmers from a food deficit to surplus producers through input finance and intensive agricultural extension support, with a target to generate a minimum productivity target of Sh50,000 revenue an acre.
If this is done, Co-operative Societies, especially farmers owned, are expected to benefit from a revitalised and lucrative agriculture sector.
Besides agriculture, Dr Ruto’s government has promised to immensely support micro, small and medium-sized enterprises through chamas, Saccos and co-operatives to make credit facilities available on affordable terms that do not require collateral. Saccos will be at the centre of hustler fund distribution once it is actualised.
“We will commit Sh50 billion a year to provide MSMEs with 100 per cent access to affordable finance through SACCOs, venture capital, equity funds and long-term debt for start-ups and growth-oriented SMEs,” the Kenya Kwanza manifesto states.
Already the President has established a Ministry of Cooperatives and SME Development mandated to ensure that every small business has secure property rights, access to finance and a supportive regulatory framework.
Co-operatives are not for profit but for service; they are people-centred enterprises owned and run by and for their members to realise their common dreams according to the International Co-operative Alliance definition. They bring people together in a democratic and equal way, managed by the ‘one-member, one-vote rule,’ which is another key distinguishing trait that separates Co-operatives from other corporate legal entities.
Serving rural communities and many people at the lower ranks of the economic hierarchy, co-operatives will definitely play a significant role in the implementation of the bottom-up economic model, which seeks to mobilise and influence the allocation of capital in the manner that it generates the most benefits for the country such as employment, equitable distribution of income and economic stability.
In addition, Housing Co-operatives and Investment Cooperatives are also set to reap big in the government’s efforts to provide low-cost houses to citizens. To deal with the huge challenge of youth unemployment, the government intends to roll out social and affordable low-cost housing programs, targeting an average of 250,000 units a year.
The requirement for new urban housing is estimated at 250,000 units a year, against the production of 50,000 units, translating to a deficit of 200,000 units. The cumulative deficit is estimated at two million units according to government data.
President Ruto’s administration also intends to grow the number of mortgages from 30,000 to 1,000,000 by enabling low-cost mortgages of Sh10,000 and below.
Currently, some Saccos are providing mortgages in partnership with Kenya Mortgage Refinance Company (KMRC). These include:
- Stima Sacco
- Imarisha Sacco
- Ukulima Sacco
- Tower Sacco
- Mwalimu Sacco
- Unaitas Sacco
- Harambee Sacco
- Bingwa Sacco
- Kenya Police Sacco
- Safaricom Sacco and
- Imarika Sacco
