CO-OP REFORMS
To enhance governance, large cooperatives with over 10,000 members will now be required to implement a delegate system for their general meetings. This system will limit representation to a maximum of 500 delegates, ensuring streamlined and effective decision-making during meetings.
The Cooperative Alliance of Kenya (CAK) explained that this decision aims to address the chaos and disorganization often associated with meetings attended by a large number of members. “The delegate system will promote order and facilitate strategic decision-making,” stated CAK.
Wycliffe Oparanya, the Cabinet Secretary for Cooperative and MSMEs Development, noted that some cooperatives have expanded their membership beyond 10,000, making it difficult to convene annual general meetings. “The law—specifically Section 27(1) of the Cooperative Societies Act—vests the supreme authority of a cooperative society in the general meeting, where members have the right to attend, participate, and vote. Sections 19 and 21(a) further affirm these rights,” he said.
However, he pointed out that in practice, it is neither practical nor efficient to hold general meetings with every member present in cooperatives that have more than 10,000 members, especially those with broad geographic coverage. This situation has often resulted in disorganized meetings and poor decision-making processes.
“I am directing that all cooperative societies with memberships exceeding 10,000 must amend their bylaws within the next nine months to adopt a delegate system of representation,” Oparanya announced. Under this system, he explained, no more than 500 delegates will be selected to represent the broader membership at general meetings.
“This representation must be fair and inclusive, taking into account geographical distribution, gender balance, age diversity, and the inclusion of persons with disabilities,” Oparanya said. The Commissioner for Cooperatives is expected to issue guidelines on how the delegate system will be implemented.
Oparanya also indicated that the cooperative sector stands to benefit from improved governance once the Cooperative Bill 2024, currently in the Senate, is enacted into law.
“The Cooperative Societies Bill, 2024, introduces provisions requiring cooperative leaders to meet higher expertise standards to make informed, strategic decisions based on long-term educational and competency standards. This will ensure that cooperatives are guided by individuals with the right skills for success,” he added.
The CS also acknowledged the necessity of inclusive representation. He stressed that delegates should reflect the cooperative’s geographic distribution, gender balance, and age diversity and include individuals with disabilities.
“Inclusivity is fundamental to cooperative success and sustainable growth,” Oparanya stated, adding that allowing women, youth, and marginalized groups to have a voice in cooperative decision-making is essential for equitable growth.
Oparanya pointed out that harnessing the talent and innovation of these diverse groups is crucial for progress in the cooperative sector.
CAK Chairman McCloud Malonza highlighted the pressing need for stable governance and skilled leadership as cooperatives evolve into larger institutions. “As cooperatives grow, so does the complexity of managing them. We must empower our leaders with the necessary skills and ethical frameworks to navigate these challenges.”
Efforts are underway to enhance capacity-building programs focused on governance, financial management, product development, and competitive strategies to better equip cooperative leaders.
Malonza noted that the survival and future growth of the movement depend on ethical leadership. “Our leaders must be stewards who understand the cooperative model and drive innovation and efficiency,” he said.
This development comes as the government has issued new directives to strengthen governance, transparency, and accountability within the cooperative sector.
The CS had issued a directive to all cooperatives that had not submitted their annual returns to do so, warning that failure to comply with this mandate would result in these cooperatives being deregistered from the cooperative register. According to the Cooperative Societies Act, each cooperative is obligated to file annual returns and hold an annual meeting before the end of April. Filed returns must include approved audited financial statements for the previous year and updated information about all elected officials, such as their full names, physical addresses, telephone numbers, and email contacts.
Oparanya noted the importance of this requirement during a forum for cooperative leaders in Naivasha.
“As stipulated under the Cooperative Societies Act, all cooperative societies, including unions, national cooperative organizations, and apex cooperatives, are required to file their annual returns in the prescribed manner and within the specified timeframe each year. Unfortunately, we have observed a growing number of societies failing to meet this legal obligation, which exposes them to the risk of deregistration.”
He also pointed out that any cooperative society that fails to file its returns for three consecutive years within the designated timelines will be removed from the Cooperative Register, effectively ceasing to exist as a corporate entity.
The cooperative sector is significantly influential in Kenya’s economy, contributing approximately 35% to the nation’s GDP and offering essential financial services to millions, especially those who are underserved by traditional banking systems. With over 31,000 cooperatives registered, the sector plays a vital role in enhancing financial inclusion and addressing socioeconomic challenges.
However, this sector has faced considerable challenges, including issues of financial mismanagement and corruption, which have led to a decline in public trust. Oparanya acknowledged these challenges, stating, “The erosion of public trust in cooperatives due to poor management and governance failures has serious consequences for the communities that rely on them.”
He urged cooperative leaders to prioritize transparency, accountability, and governance reforms to ensure relevance in an evolving economic landscape.
As Kenya prepares to implement the Cooperatives Bill of 2024 and transitions to a delegate representation system, it is imperative that cooperative leaders focus on fostering inclusive leadership and sustainable growth. The decisions made today will have a profound impact on the future of the cooperative sector, influencing whether it develops resilient institutions that empower communities or struggles with systems that fail to meet current challenges.
“I am directing that all cooperative societies with memberships exceeding 10,000 must amend their bylaws within the next nine months to adopt a delegate system of representation.” CS Oparanya
