Despite the setbacks occasioned by the negative impact of the COVID-19 pandemic, Kenya’s Cooperative industry remained resilient.
“The Cooperative movement recorded an increase in the number of registered Cooperatives to over 26,000 while membership rose to 1.14 Million. The Cooperatives industry also saw the size of its overall balance sheet increase to 1.5 Trillion while the loan book grew to KSh 980 million against the industry’s total accumulated savings of KSh 1 Trillion,” said Simon Kiprono Chelugui, Cabinet Secretary for Cooperatives and Micro, Small and Medium Sized Enterprises (MSME) Development.
He made these remarks recently at Sawela Lodge, Naivasha, Nakuru County while he was officially opening a Consultative meeting organized by the Cooperative Alliance of Kenya(CAK)-whose theme was Realignment of Cooperative Societies activities with the new Kenya Kwanza Administration.
This meeting was attended by top officials of the cooperative movement, including the Commissioner for Cooperatives David Obonyo, CAK senior officials including the CEO Daniel Marube and Chairman Macloud Malonza, outgoing PS State Department for Cooperatives Ali Noor Ismail, SASRA CEO Peter Njuguna and well as top brass in the Cooperatives industry.
The meeting formed sector groups for the purposes of presenting a memorandum to the CS, with sectors such as Housing, Transport, Financial and Agriculture featuring prominently. These different sub-sectors were given an opportunity to openly discuss various sub-sectoral challenges and prioritized issues.
Available figures indicate that Kenya faces a deficit of 2 million housing units. CS Chelugui said Cooperative Societies can use some of their available idle land parcels and invite the Government to provide the necessary infrastructure facilities, allowing developers to put up the properties.
“I expect Cooperative Societies from the 33 counties that grow coffee to come up with suggestions on how the production of the crop can be enhanced from the low levels it has sunk since the onset of the structural adjustment programs, modelled by the International Monetary Fund(IMF),” said CS Chelugui.
He told the meeting that one of the first issues that his new ministry, is to improve prices and eliminate cartels through speedy liberalization of the Nairobi Coffee Exchange(NCE).
“We also need to attract the younger generation to the coffee sector to take over the leadership of many coffee cooperative societies from the older generation that has been running these societies for decades. We also need to digitize operations of coffee cooperative societies so that a farmer is able to receive an alert on their cellphones when delivery of the product is made to the factory as well as the prices that the produce will fetch in the market,” said CS Chelugui.
While Kenya has suitable soil and climate that can support the growing of rice, the country still imports 75% of its rice from markets such as India and Pakistan.
Further, while Kenya has one of the best tea flavours in the world, only 5% value addition is done.
“I, therefore, challenge farmer Cooperative Societies in the Rice, Tea, Sugarcane and Coffee sub-sectors to increase their production levels and also engage in more value addition so as to put more cash in their pockets.
The collapse of many dairy cooperative societies, said CS Chelugui, has led to a drastic reduction in the volume of milk produced in the country to just over 1.5 million litres per day, a volume that involves 80% contribution from dairy cooperative societies.
CS Chelugui cited the example of a successful Githunguri Farmers Dairy Cooperative-which has been able to provide additional services to its members, including payment of school fees for their children, shopping for family needs, medical cover and other welfare schemes.
“A number of cooperatives have collapsed due to governance issues-including those in the cotton industry while the full potential in the fish industry is yet to be fully exploited by Cooperative societies. Farmers of these crops still own vast pieces of land which can be used to put up new factories to replace those that have collapsed,” said CS Chelugui.
During the meeting, CS Chelugui also disclosed that unscrupulous employers owe Savings and Credit Cooperative Societies(SACCOs) over KSh 2.3 Billion in unremitted dues deducted from members.
“We have formed a team that will also involve the Central Bank of Kenya, Ministry of Finance, SASRA and other state agencies for purposes of pursuing those who still hold Sacco dues. Freezing the accounts of those who have for no reason, failed to remit the funds, is an option that is now on the cards,” said CS Chelugui.
He also told the meeting that plans are at the advanced stages to create a Central Liquidity Facility(CLF) that will allow SACCOs with excess funds to lend through this window to those faced with liquidity challenges. This is in addition to a deposit guarantee fund that will shield members from a SACCO that has shut down due to liquidity challenges.
He said the new administration is keen to use funds from SACCOs to finance public projects such as the construction of roads or the drilling of water boreholes.
On the Hustler Fund, whose first phase is to be launched by President William Samoei Ruto, CS Chelugui said SACCOs are expected to play a key role in enabling borrowers at the low end of the pyramid to access affordable credit.
“Credit scoring will be used to determine who qualifies for the loan. We are shifting from collateral lending to credit scoring. SACCOs will have to wait until January 2023 when we will launch the Microloans product,” said CS Chelugui.
