State moves to reinforce transparency and good governance in cooperative societies
MABEL KEYA – SHIKUKU-KNA
The Government is planning to develop and implement several legal frameworks to revitalize the cooperatives movement which currently is facing challenges.
Cabinet Secretary for Cooperatives, Micro, Small and Medium Enterprises (MSMEs) Wycliffe Ambetsa Oparanya said the government is on the verge of finalizing the Cooperatives Bill No. 7 of 2024 that will enhance governance and legal collaboration between the national and county governments.
Speaking during the third Annual Cooperatives Movement’s Stakeholders meeting in Naivasha, the CS said the Commissioner of Cooperatives is also coming up with a policy that will streamline operations in the cooperative sector and enhance accountability and transparency in the sector.
Oparanya noted that some Savings and Credit Cooperative Societies (Saccos) have been sacrificing professionalism and accountability at the altar of huge dividends to the extent of borrowing to pay the dividends and even declaring dividend from losses in order to make members believe that their Saccos are financially sound when in the actual sense, they are struggling.
“It is essential to instil “good dividend manners" within cooperatives. Prioritizing long-term sustainability over short-term benefits ensures cooperatives remain financially robust and capable of meeting members’ future needs. To this end, my ministry, through the Commissioner for Cooperatives Development, is developing a dividend policy to address the issues of malpractice in the sector,”
He was categorical that the legislations that are coming up on the floor of the House will help end these malpractices.
The cooperative movement, Oparanya said, has witnessed remarkable growth, contributing significantly to job creation, wealth generation, financial inclusion, and community empowerment.
With over 14 million people engaged as co-operators and more than 500,000 employed in the sector, the role of cooperatives in shaping our nation’s prosperity cannot be overstated.
“To this end, this forum presents an invaluable opportunity to align our efforts, refine strategies, and reaffirm the movement’s central role in driving sustainable development through this sector,”
The CS also noted with concern that despite many cooperatives upholding their values, a few have failed to adhere to good governance principles, resulting in financial losses and eroding public trust.
This, he said, tarnished the reputation of the entire movement, overshadowing the remarkable efforts of cooperatives committed to improving their members’ livelihoods.
He at the same time noted the government is working on a framework dubbed “Mwongozo” for Cooperatives” an initiative that aims to promote transparency and accountability as well as training and capacity building manuals to instil and enhance leadership skills among cooperative members.
According to the CS, the ministry is relooking at the Sacco Societies Act to be amended to establish a central liquidity facility and shared services platform to streamline the financial sector.
Further, Oparanya said in order to safeguard the members ‘savings, the operationalization of the Deposit Guarantee Fund (DGF) is underway to address the challenge of mismanagement of depositors` funds that has threatened to cripple the movement.
He challenged the cooperative movement to embrace technology in their operations, urging them to opt for shared platforms that will ensure they remain competitive and resilient in this digital era.
The CS further disclosed that the Saccos were owed over Sh600 million in members` contributions with the biggest defaulters being county governments and public Universities and this has greatly affected the performance of these entities.
Oparanya highlighted the coffee sector's debt of Sh9 billion, which the government promised to waive, but only received Sh2 billion from the Treasury, limiting its ability to address the issue.
He said the financial landscape is evolving rapidly, and cooperatives must adapt to remain sustainable.
Mergers offer an effective solution, enabling cooperatives to pool resources, enhance operational efficiencies, and achieve economies of scale and added that by joining forces, cooperatives can deliver better services, expand their competitive advantage, and provide greater returns to their members.