The Co-operative Bill 2024, which Parliament is presently scrutinizing, aims to tackle the persistent governance and management issues afflicting the co-operative sector. Cabinet Secretary for Co-operatives and MSMEs Development, Wycliffe Oparanya, highlighted that the bill, now in its second reading, seeks to supersede the Co-operative Act of 2004 with new provisions to prevent the mismanagement of Sacco members’ funds. This problem has significantly impacted parts of the sector.
Dr Oparanya pointed out that the bill anticipates enactment by year-end and proposes setting term limits for co-operative society directors. Directors will have a tenure limitation of three years, with the possibility of just one term renewal. This initiative aims to mitigate the financial misappropriations by long-standing directors, which have lost billions of shillings of members’ funds over the years.
Additionally, to combat the accrual of unwarranted debts by co-operative management teams, the government has initiated a loan verification committee led by the Commissioner of Co-operatives. This committee’s task is to oversee borrowing activities to ensure they don’t lead to excessive debt.
Dr Oparanya emphasized that the bill is designed to rectify the mismanagement and misuse of members’ savings within co-operatives. Despite significant government interventions, including debt waivers amounting to billions of shillings, numerous co-operatives still grapple with escalating debts, leaving many members in precarious positions.
He also criticized certain co-operative directors for mishandling loans, leading to unmanageable debts and, in some cases, the dissolution of societies. Highlighting the instability of the government’s waiver system, Dr Oparanya noted a worrying trend in the coffee sector, where debt rose from Sh6 billion to Sh7 billion in just a few months due to improper borrowing by management teams. Additionally, he mentioned that Sh4 billion has been allocated to address the spiraling debts in the sugar sector, with further verification processes ongoing to ensure the legitimacy of these debts before additional payments are made.
