Cooperative societies play a vital role in enhancing the livelihoods of people across various sectors, including agriculture, education, the environment, and small and medium-sized enterprises (SMEs). Their unique capacity to mobilize resources effectively positions them as significant contributors to socio-economic transformation in Kenya. This potential was highlighted by Prime Cabinet Secretary Musalia Mudavadi during the 24th Savings & Credit Cooperatives Association (SACCA) Congress held in Naivasha, where he represented President William Ruto.
The Role of Cooperatives in Kenya’s Economy
Mudavadi emphasized the importance of cooperatives as vital partners for governments and institutions aiming to access concessional funding. Their remarkable ability to generate resources and foster community development makes them indispensable, particularly for marginalized communities. In Kenya, cooperatives span various productive sectors and provide crucial livelihoods, especially for those at the bottom of the economic pyramid.
In his speech, Mudavadi pointed out that cooperatives in the financial sector have excelled in deepening financial inclusion. They currently account for over 30% of the country’s domestic savings, showcasing their significant impact on the economy. By the end of 2023, Savings and Credit Cooperatives (SACCOs) operating under the regulatory framework of the Sacco Societies Regulatory Authority (SASRA) had an impressive membership of 8.84 million depositors. They controlled an asset base of Sh972 billion, with savings amounting to Sh682 billion and an outstanding loan portfolio exceeding Sh758 billion.
“These are not just numbers—they are the lifeblood of our economy,” said Mudavadi, underscoring the enormous potential of the cooperative movement. However, despite these impressive achievements, cooperatives face challenges that hinder their growth and development. These challenges include regulatory hurdles, limited access to funding, and the need for improved governance structures.
Government Support for Cooperatives
Mudavadi assured participants that the government is committed to providing an enabling environment for cooperatives through appropriate policy, legal, and institutional frameworks. He mentioned the sponsorship of the Cooperatives Bill No. 7 of 2024, which is currently before Parliament. This legislation is expected to strengthen governance and enhance efficiency in the management and operations of cooperatives in Kenya.
In addition to the Cooperatives Bill, the government is implementing several legal and institutional reforms aimed at bolstering the cooperative sector. One notable initiative is the establishment of a Sacco Central Liquidity Framework. This framework will improve liquidity in the sector by facilitating short-term inter-Sacco lending and enhancing access to the National Payment System.
Moreover, Mudavadi highlighted efforts to support specific agricultural sectors. For instance, the Coffee Cherry Advance Revolving Fund will be enhanced to Sh6.7 billion, aiming to provide farmers with better access to finance. The government is also streamlining operations at the Nairobi Coffee Exchange through demutualization and supporting cotton farmers with modern ginning equipment. Additionally, the modernization of the New KCC plant and equipment reflects the government’s commitment to advancing the agricultural sector.
The Role of ACCOSCA in Promoting Financial Inclusion
Mudavadi commended the African Confederation of Cooperative Savings and Credit Associations (ACCOSCA) for its relentless efforts to support financial inclusion across Africa. ACCOSCA advocates for the SACCO business model, which has proven effective in empowering communities.
The Africa Development Educators (ADE) program, launched in 2014, has played a significant role in enhancing the professionalism and image of SACCOs throughout the continent. This program has sparked change in 36 countries, promoting financial inclusion and economic empowerment for marginalized communities. Mudavadi recognized the valuable partnership between ACCOSCA and Visa International, which focuses on transforming communities by providing innovative financial education programs and strategic linkages to cooperatives offering financial services.
Through these initiatives, underserved groups, including youth, women, and marginalized communities, are empowered to participate in the formal economy. This collaborative approach aims to enhance access to financial resources and promote sustainable economic development.
Climate Action and Sustainable Development
Mudavadi also highlighted ACCOSCA’s partnership with Development International Desjardins, the largest credit union network in the world, in establishing a Cooperative Climate Action Plan. This initiative supports member institutions in adopting Environmental, Social, and Governance (ESG) practices that promote resilience and sustainability.
The African Cooperative Climate Action Plan is a crucial step toward helping countries, including Kenya, better preserve and conserve the environment. It aims to enhance resilience against climate change, support the transition to a green and circular economy, and mitigate the adverse impacts of climate change.
The theme of the SACCA Congress, “The Role of Cooperatives in Promoting Sustainable Socio-Economic Transformation,” aligns perfectly with the Kenyan Government’s Bottom-Up Economic Transformation Agenda (BETA). BETA is designed to lead transformative change in the lives of rural and urban poor communities, focusing on key pillars such as agricultural transformation, the MSME economy, housing and settlement, and the digital superhighway and creative economy.
This theme also reflects the vision articulated in Kenya’s Sessional Paper No. 4 of 2020 on National Cooperative Policy, which underscores “Promoting Cooperatives for Socio-Economic Transformation.”
A Platform for Collaboration and Innovation
The congress, which convened 1,600 participants from 24 countries, provided an excellent platform for exploring how collective savings culture can be harnessed to address the pressing debt issues facing developing countries. Mudavadi advocated for Kenya to host the inaugural World Council of Credit Unions meeting in 2026, marking a historic first for Africa. He noted that this event would serve as a pivotal opportunity to showcase Kenya’s commitment to advancing cooperative principles on the global stage.
The gathering also featured Cabinet Secretaries from various ministries, including Wycliffe Oparanya from the Ministry of Cooperatives and MSMEs Development, Dr. Andrew Karanja from the Ministry of Agriculture and Livestock Development, and Beatrice Askul from the Ministry of East African Community, Arid and Semi-Arid Lands (ASALs), and Regional Development. Their presence underscored the collaborative approach necessary for the development and sustainability of cooperatives in Kenya.
Conclusion
The cooperative movement in Kenya holds significant potential for promoting sustainable socio-economic transformation. With the government’s commitment to creating a conducive environment for cooperatives and the active support of organizations like ACCOSCA, there is hope for overcoming the challenges that hinder cooperative growth. By fostering financial inclusion, enhancing governance, and supporting environmentally sustainable practices, cooperatives can play a pivotal role in driving economic development and improving the livelihoods of Kenyans.
As Kenya continues to navigate the complexities of its economic landscape, the recognition of cooperatives as key players in development will be crucial for fostering resilience, empowering marginalized communities, and ultimately achieving the nation’s development goals.
