Cooperatives play a key role in economic development

Posted On Wednesday, 31 July 2019 14:47

By Robert Komu

The world marked the International Day of Cooperatives on the 6th of July this year. In Kenya, the day was not marked with any fanfare or celebration in the sector unlike other parts of the world. This is a sad state of affairs bearing in mind the integral role cooperatives play in the economy. The day was set to remind the public that cooperatives across the world continue to help preserve employment and promote decent work in all sectors of the economy.


Cooperatives have been around for now 200 years, since the proposed "villages of co-operation" in the United Kingdom as a response to the economic crisis in 1815. The idea spread was adapted, and went global, with around 1 billion members of cooperatives worldwide today. In Kenya, the first cooperative Society was established in 1908 with the government formally getting involved in 1931. Since then there has been several developments and legislations in the sector which have led to exponential growth, a lot more still needs to be done.

Kenya is estimated to have over 14 million people in cooperatives; with about three-quarters of the population which nears 30 million depending on the activities of cooperatives and Saccos either directly or indirectly for a living. The cooperative sector has played a key role in directly employing over 500,000 people. Sacco’s today account for 80% of the total accumulated savings while Kenya’s sub-sector is the largest in Africa.

In recent decades, co-operatives have made tremendous contributions to millennium development goals, through the generation of income for their members and also offering a range of benefits which has led to their inclusion in the development conversation. Their role was recognised within the development community when the UN declared 2012 as the International Year of Co-operatives. Consequently, this has had far-reaching effects; a good example of this is the UN's Food and Agricultural Organisation noting that cooperatives have been and are key to feeding the world.

Cooperatives worldwide offer a dynamic and flexible business model that bridges market values and human values. Due to this, they have a very integral role to play in the frameworks for inclusive growth; however, they are faced with a myriad of challenges that prevents them to thrive and offer better value. For instance, in the 1960 and 70’s due to high expectations and being seen as integral and major players to development, there was a lot of government interference which led many to fail and were, as a result, written off by most development agencies. Government interference is still rife in the sector.

This interference by government today is through over-control and regulation. Cooperatives are often subject to burdensome regulations with high cost and time burdens associated with setting up a cooperative. A robust legal environment with prudential regulation needs to protect democratic member control, autonomy and independence, and voluntary membership.

At the same instance, many agencies working with cooperatives do not recognise or understand their specific governance and legislations, thus the challenge of fighting back laws that do not support the growth of cooperatives. In 2018, Kenyan co-operatives lobby groups opposed the proposed changes to the Co-operative and Sacco Act, which intended to give members with enormous resources powers to moot and control investment plans and returns from their investments; this would have been detrimental to the principle of one man, one vote and equitable distribution of returns in Sacco’s and co-operative societies.

The Industry, Investment and Trade ministry also opposed the proposals contained in the Statute Law (Miscellaneous Amendments) Bill 2018 saying they risked creating a parallel class of investors within Kenya’s co-operative movement.

This said the delays in concluding the cooperative policy-making process are now impeding the growth and management of cooperatives in the country. This kind of confusion prevents the growth of a sector that has a great experience in building sustainable and resilient societies, For example, agricultural cooperatives have been at the heart of ensuring the longevity of the land where they grow crops through sustainable farming practices. Consumer cooperatives increasingly support sustainable sourcing for their products and educate consumers about responsible consumption. Housing cooperatives help ensure safe and affordable dwellings, while Worker and social cooperatives across diverse sectors i.e. health, communications, tourism, aim to provide goods and services in an efficient way while creating long-term, sustainable jobs.

It is therefore important to give the utmost support to the  cooperatives sector, the core principles and values of voluntary and open membership, democratic member control, economic participation by members, autonomy and independence, education, training and concern for the community that guide the sector is pivotal to member and economic development of the country .

The writer is a communication consultant and a supporter of the cooperatives movement.

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