Co-operative Development Policy (Review of draft) - Agricultural Industry Network (AIN)

Currently, two Acts of Parliament regulate the cooperatives sector: the Cooperative Societies Act, CAP 490 of 1997 and the SACCO Societies Act, CAP 490B of 2008. These Laws are based on the Sessional Paper no. 6 of 1997. The State Department of Cooperatives in the Ministry of Industrialisation, Trade & Cooperatives (MoIT&C) has been reviewing the Sessional Paper no. 6 to ‘provide a new policy direction in the changing legal and business environment’ in collaboration with National Co-operative Organizations (NACOs) 

The key change arises from the 2010 Constitution that devolved some of the regulatory role of cooperatives to counties. The new Co-operative Development Policy needs to clarify the different roles and functions of the National and County Governments in the management of cooperatives. It also needs to address emerging trends/models of operations and diversification in cooperative societies; enhance governance and safety of member’s investments; enhance the expansion and transferability of cooperative equity; and position the sector for better participation in processing, value addition / agro-processing and housing sectors. The revised Policy will inform the amendment of both CAP 490 and 490B and will clarify the regulatory responsibility.

The Ministry has agreed to partner with Kenya Rural Savings and Credit Co-operative Societies’ Union Ltd (KERUSSU) and AIN in the validation and finalisation of the Policy. However, KERUSSU which is a NACO and a member of the Agricultural Industry Network (AIN), would like to review the draft Policy and engage MoIT&C to revise it to address some issues KERUSSU and AIN have noted. These issues include:

  • Roles of the National and county governments as outlined in the current draft could be overlapping and likely to create further confusion in the Co-operative movement. It does not specify in sufficient detail the institutions and instruments that would be responsible for implementing it.
  • The policy does not clearly spell out the relationship between SASRA and the County Governments. SASRA, as currently established by Cap 490B, regulates all SACCOs operating front office savings activities (FOSA) in Kenya.
  • In its objects, the policy does not provide for integration of SACCOs in the financial services system whereby SACCOs can be part of the National Payment System.
  • Role of the Co-operative Tribunal is to resolve disputes that arise. However, the draft Policy does not categorically provide for Alternative Dispute Resolution (ADR) as a mechanism to resolve disputes, a mechanism that is now widely embraced in Kenya.
  • The policy should be more emphatic in the promotion of middle-level colleges in offering training, standards and research to the co-operative movement. Currently, the draft Policy confines this training to the Co-operative University of Kenya only.

In January 2017, AIN in partnership with KERUSSU sought to undertake a comprehensive review, prepare proposed amendments and policy position paper(s), and agree on these with MoIT&C.

Expected Outcome

The key outcome of this process will be a sound policy framework for the cooperatives sector and the SACCO sub-sector in Kenya. Kenya has 19,200 registered cooperatives employing over 2 million people directly and indirectly. The SACCO sub-sector alone has mobilized savings of KShs. 500 billion, with assets valued at KShs. 700 billion and a collective loan portfolio of KShs. 501 billion. This has led to Kenya’s SACCO sub-sector being rated by the International Cooperative Alliance (ICA) as the strongest in Africa and seventh globally.  Vision 2030 aims to improve saving rates from the current 17% to 30% of GDP and improve access to finance through cooperative sector reforms.

Stronger SACCOs have the potential to create more formal jobs for Kenyans and increase access to finance for the rural poor especially agricultural producers (farmers). Enhanced financial access to farmers will support the development of the agricultural sector. This is supportive of a green economic growth agenda for Kenya.