President Uhuru Kenyatta recently penned his signature to the Sacco Societies (Amendment) Bill 2021 into law, perhaps his last significant contribution to Kenya’s co-operative sector as his administration comes to a close.
President Kenyatta’s Government has, since 2013, initiated major policy reforms for the sector to enable societies to thrive and become significant enablers of the country’s big four agenda blueprint.
Under his watch, significant reforms have been initiated in the coffee, tea and dairy sector-where co-operatives are hugely involved.
As part of the revitalization, the Government revived the Kenya Planters Co-operative Union (KPCU) in 2019 and resolved its myriad challenges.
The Government established a coffee Cherry Revolving Fund under the new KPCU, digitized all cooperative-run coffee mills, stabilization fund and refurbished coffee drying beds.
Today, the new KPCU provides milling and marketing services to 236 coffee co-operative societies and 92 coffee estates.
New KPCU charges farmers $ 42 for milling services compared to $65 per tonne charged by private millers for the same service. New KPCU has milled 1,828 tonnes of coffee, demonstrating the impact of competition and transparency in the Union.
Average earnings for coffee farmers have increased from Ksh 35 per kilo to Ksh 80 per kilo of cherry, while coffee prices have risen from $ 143 to $ 320 per 60 kg bag between 2019/2020 and 2021/22.
Uhuru Kenyatta is thus leaving office at a time when earnings for coffee farmers have more than doubled.
Between 2015 and 2022, the Kenyatta administration extended support of over Ksh 2 billion towards the modernization of all New KCC processing facilities across the country into modern state-of-the-art factories.
The impact has been the stabilization of milk prices at the farm gate and retail levels due to the enhanced processing and packaging capabilities of New KCC.
New KCC has been able to absorb excess milk from farmers, preventing huge losses at the farm level while providing a ready market for milk products from farmers.
Earnings to milk farmers have thus risen from a total of Ksh 2.5 billion before modernization to over Ksh 5 billion after the revitalization and modernization of New KCC plants across the country. Stabilization of the dairy sector has increased the number of dairy co-operative societies.
The Government set a target of increasing domestic rice production from 104,800 metric tonnes in 2017 to 406 486 metric tonnes in 2022 to meet national food security needs.
The State also revived the Kenya National Trading Corporation (KNTC) to address the rice value chain’s loopholes and set up a Ksh 660 million revolving fund to ensure farmers receive prompt payment for their rice deliveries from their respective co-operative societies.
Today, KNTC has issued contracts worth Ksh 2.5 billion to 8 rice farmers’ co-operatives for the supply of 17,620 metric tonnes of rice
During the 2021/22 period, KNTC has received 4,975 metric tonnes from contracted rice farming co-operatives, valued at Ksh 1.8 billion and has supplied this product to state-owned institutions under the Buy Kenya Build Kenya Policy.
Under the Kenyatta administration, the State has been keen to revive the cotton sector value chain to supply raw materials to textile industries, using technology to access markets. The plan is to revitalize all cotton co-operative societies.
The administration has successfully revitalized the cotton ginnery in Busia that can process 30,000 tonnes of cotton per year and has a program to restore other ginneries in Kenya.
Kenya has one of the most successful financial co-operatives in Africa, cutting across housing, investment and other activities that serve the needs of all sections of the population, controlling assets worth more than Ksh 1.5 trillion. These Saccos provide savings and credit products to over 6 million members.
The Government has passed the Sacco DT Sacco amendment Bill 2020 to ensure the financial soundness of these societies, which commenced in January 2021, doubling the number of Saccos under prudential supervision to 360 and proving effective monitoring and supervision of the Sacco industry.
Between 2014 and 2021, the Sacco industry has registered remarkable growth in terms of membership, from 3 million in 2014 to 5.5 million in 2021, signifying the sector’s significance as an investment vehicle.
In terms of loans and deposits, the loan portfolio for the industry has grown from Ksh 228 billion in 2014 to Ksh 522 billion in 2021. Deposits have also risen from Ksh 206 billion in 2014 to 474 billion over the period under consideration.
Co-operatives remain critical players in the land and housing sector, providing loans to members to construct houses and purchase plots.
Under the Housing Pillar in the Big Four agenda, the Kenya Mortgage and Refinancing Corporation has partnered with co-operatives to provide finance for affordable housing development. Currently, 12 Saccos have bought equity in KMRC to grow their mortgage portfolios.
KMRC has refinanced mortgages to the tune of Ksh 305 million to 4 of these participating Saccos.
In 2019, the Kenyatta administration issued directives for establishing a Central Finance Facility. The Bill received Cabinet approval in May 2022, and the requisite legal arrangements will now be processed by Parliament.
The Kenya Cabinet has also approved the establishment of a Deposit Insurance Scheme for Saccos. This guarantee fund will play a critical role in further enhancing the financial stability of Saccos by compensating members in the event of a Sacco collapsing.
The Kenyatta administration has also initiated a comprehensive review of the Co-operatives Act to be in tandem with the rapidly changing sector. The cabinet approved the National Co-op policy in 2019 and by Parliament as sessional paper No. 4 of 2020.
A review of Cap 490 of the Co-op Act has resulted in the Draft Co-op Bill 2022, awaiting Cabinet approval before submission to Parliament for debate and enactment.
President Uhuru has also been a regular guest during the Co-operative major events. He presided over the 100th International Cooperative Day, Ushirika Day, on July 2, 2022, when co-operatives globally commemorated the successes of the co-operative movement.
At the event, President Uhuru said that to eliminate the threat posed by pyramid schemes in the country, legislative measures aimed at strengthening Savings and Credit Co-operatives (SACCOs) operations had been put into place.
He noted that the regulations had encouraged Kenyans to save more because they are assured of their money safety.
He noted that over the previous seven years, the Sacco sub- sector had shown excellent membership growth, going from 3 million in 2014 to 5.5 million in 2021.
The loan portfolios of Saccos increased from Sh228 billion in 2014 to Sh522 billion in 2021, while deposits increased from Sh206 billion to Sh474 billion within the same period, according to President Kenyatta.
“Saccos continue to play a significant role in the financing of the land and housing sub-sector, with a third of loans made to members going toward the purchase of land and home development,” he said as he bade goodbye to the co-operators.
