The Ministry of Co-operatives and MSMEs Development has entered into an agreement with the Council of Governors to initiate several legal and structural reforms that will see the industry align its priorities to those of the Kenya Kwanza administration’s bottom-up economic model. It will also ensure that County Governments are able to manage co-operatives-which is now a devolved function.
“The Ministry intends to fast-track the co-operatives industry legislative agenda, including the Co-operatives Bill which is before parliament. It was passed by the cabinet after public participation and fulfilment of all the necessary requirements,” said Cabinet Secretary for Co-operatives and MSMEs Development, Simon Chelugui.
If passed into law, the Co-operatives Bill is a precursor for a repeal of Cap 490 of the Co-operatives Act. This will enable the co-operatives industry to be in sync with the new constitution, which has devolved functions of co-operatives to County Governments.
The Co-op (Amendment) Bill has undergone validation by stakeholders and is now awaiting consideration by both the Senate and Parliament before being presented to the President for Assent.
Role of County Governments
During a meeting between the Ministry of Co-operatives and the Council of Governors, held in January 2023, it was also agreed that County Governments allocate more financial resources to co-operatives-which is now a devolved function.
“We encourage all County Governments to appoint and deploy co-operative officers in every ward to ensure the deepening of co-operative services at the ward level. This co-operative officer will provide support and mentor co-operatives involved in farming, housing, transport, financial services, small businesses and others, at the ward level,” said CS Chelugui.
County Governments are also expected to invest their resources in training and capacity building for co-operatives, co-operators and leaders of the co-operative movement. The County Government of Nyeri already spends an estimated Ksh 15 million each year in training and capacity building of all those involved in its co-operatives sector. Elgeyo Marakwet County has also been cited as having deployed a co-operatives officer in each of its wards.
Revival of key agricultural value chains
“We have in the present past been aligning the mandate of the Ministry with that of the Kenya Kwanza administration’s plan. We shall be using the value chain approach for effective service delivery and this will enable us to reach that section of the population that is at the bottom of the pyramid,” said CS Chelugui.
During the January meeting, the Ministry agreed with the Council of Governors on the need for collaborative revitalization of key agricultural value chains. For instance, Kilifi County was known for its vibrant dairy sector, sisal growing and many other agricultural activities.
“There is a huge irrigation scheme that covers Kilifi, Tana River and parts of Taita Taveta, expected to generate new value chains for Maize, Cotton and Sunflower as well as fisheries. We have agreed with the Council of Governors to pursue these value chains.”
The Ministry is already engaged with various Coast region stakeholders on how to grow multiple value chains within the blue economy.
The Ministry, the Kenya Fisheries and Marketing Board, and the Mombasa and Lamu County Governments are already engaged in creating export markets for fish, generating employment opportunities for the local communities, and promoting beach activities.
The Government has prioritized the co-operatives sector as a tool for uplifting the living standards of the population at the bottom of the income pyramid, and co-operatives will thus be critical components of all value chains.
“We are currently mapping all counties according to their value chains and will sensitize all CECs and co-operative officers at the county level. Sub-sectors that have been given priority include dairy, cotton, ranching and beef production, horticulture, tea, coffee, and the fishing industry. Also included are sugarcane, pyrethrum, blue economy and edible oils,” said CS Chelugui.
Role of Saccos in the provision of affordable housing
A Government sponsored social and affordable housing program is already ongoing, with Saccos expected to play a critical role in this initiative.
“We are discussing with the Ministries of Housing and Lands in identifying pipeline projects that will interest members of the Sacco movement. We will ask the Government to provide basic infrastructural facilities and services while Saccos will be expected to contribute and participate in these housing projects,” said CS Chelugui.
Co-operative Bank of Kenya is expected to be the anchor banker of the co-operative movement, which will pool all its resources while the lender will check out for all risks to ensure that Sacco members invest only in safe and secure pipeline housing projects.
Available figures indicate that Kenya faces a deficit of 250,000 new housing units annually. Establishing the State-run Kenya Mortgage Refinance Company(KMRC) was expected to allow Saccos to participate in affordable pipeline housing projects.
Corporate Governance and digital transformation in Co-op Sector
The Ministry is pushing for legal and structural reforms in the co-operatives sector when the sector is still suffering from poor publicity.
The list of Savings and Credit Co-operative societies to collapse or experience liquidity problems due to poor corporate governance structures include Moi University Sacco. The sector has also suffered due to the mushrooming of outfits using the name of Saccos to collect deposits from the unsuspecting public illegally.
“I urge Sacco leaders to safeguard assets assigned to them by members. We are strengthening the office of Commissioner for Co-operatives together with County Governments to ensure timely audits and inspections as well as a record of all activities,” said CS Chelugui.
He urged all DT Saccos in Kenya to adopt modern ICT systems and platforms to reach out and deliver more services to members.
Available figures indicate that Kenya’s co-operative sector considered the largest in Africa and placed 7th worldwide, has a balance sheet size of Ksh 1.5 trillion with a members’ total loan portfolio of Ksh 980 billion or 30% of Kenya’s national savings.
“This sector, therefore, needs to be nurtured, developed and inspired to reach even greater heights,” said CS Chelugui.
