Don’t base your success on dividends -Kenyan SACCOs told
NAIROBI-Professionals in the Kenyan cooperative sector have appealed to their government to regulate dividend payment in SACCO sub-sector, to separate their success from dividends, according to local media outlets in the country.
The Kenya Society of Professional Co-operators [KSPC] argue that is wrong to base the success of cooperatives on the rate of dividends or interest on savings.
This came up during cooperative professional growth and policy analysis forum organised by KSPC to among other issues discuss cooperative policy gaps and chart a policy advisory.
Participants at the forum noted that SACCOs sharply compete on the basis of dividend payment at the expense of the members’ socio-economic welfare.
According to KSPC’s acting CEO, Symon Mburia, the Cooperative model advocates for maximum member service at near zero cost, meaning that the measure of success would be the best member service at the lowest possible cost.
“For companies, multinationals and small businesses, the participants were unanimous that maximum profits and high dividends to the shareholders and business owners were the driving force behind their establishment. Is it the same for cooperative organisations? Are high dividends, huge profits, high rise office buildings, huge membership, high asset levels, high loan portfolio, large number of branches a measure of a successful Cooperative?” Mburia was quoted by Sacco Review as saying.
He said that the objective of forming a cooperative should be to promote the socio-economic welfare of members, saying that meaning a cooperative that has not met this objective is a failure.
KSPC members also noted that society by-laws, the cooperative law and regulations, and the interpretation of accounting documents should be incorporated in member education days since knowledgeable members represent a successful cooperative society.
They said governance in cooperatives requires full involvement of members in the management of their cooperative and leads to a better understanding of the society’s programmes and services by members in an environment free of conflict.
They said education and training, which is one of the cooperative principles necessary for all organs.
“With many Cooperatives opening their common bonds and widening their area of operations, it has become necessary to adopt a delegate system of representation. However, this system introduces an extra layer in the governance structure of a Cooperative,” added Mburia.
KSPC noted that member participation is the basis of vibrant business since the member is also the customer. This principle becomes the foundation of business in a cooperative society.
“Poor member participation means poor business for the Cooperative organisation. A society where a member consistently saves, borrows and pays or delivers his produce is a progressive Cooperative. An increasing high average savings, large per capita loans that are affordably priced, and low default rates denote a successful Society,” said Mburia.
The participants also observed that under principal no. 7, a cooperative society should benefit the area under which it operates. They urged the implementation of eco-social audit and value for money audit, saying the impact of a Cooperative on members should be observable and differentiable.
KSPC urged its members to observe the seven Cooperative principles and values, adding that the model is comparably more superior and more resilient.
The seven principles are; open and voluntary membership, democratic member control, members’ economic participation, autonomy and independence, education, training, and Information, cooperation among Cooperatives, and concern for community.
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