NAIROBI, October 19, 2024 — The Cooperative Bill 2024, which the Kenyan Parliament is presently scrutinising, aims to tackle the persistent governance and management issues afflicting the cooperative sector, according to Wycliffe Oparanya, Cabinet Secretary for Cooperatives and MSMEs Development.
Oparanya recently highlighted that the bill, now in its second reading, seeks to supersede the Cooperative Act of 2004 with new provisions to prevent the mismanagement of SACCO members’ funds. This problem has significantly impacted parts of the sector.
He pointed out that the bill anticipates enactment by year-end and proposes setting term limits for cooperative society directors. Directors will have a tenure limitation of three years, with the possibility of just one renewal. This initiative aims to mitigate the financial misappropriations by long-standing directors, which have seen the loss of billions of shillings of members’ funds over the years.
Additionally, to combat the accrual of unwarranted debts by cooperative management teams, the government has initiated a loan verification committee led by the Commissioner of Cooperatives. This committee’s task is to oversee borrowing activities to ensure they don’t lead to excessive debt.
Oparanya emphasised that the bill is designed to rectify the mismanagement and misuse of members’ savings within cooperatives. Despite significant government interventions, including debt waivers amounting to billions of shillings, numerous cooperatives still grapple with escalating debts, leaving many members in precarious positions.
He also criticised certain SACCOmanagers/directors for mishandling loans, leading to unmanageable debts and, in some cases, the dissolution of societies.
Highlighting the instability of the government’s waiver system, Oparanya noted a worrying trend in the coffee sector, where debt rose from Ksh 6 billion to Ksh 7 billion in just a few months due to improper borrowing by management teams.
Additionally, he mentioned that Ksh4 billion had been allocated to address the spiralling debts in the sugar sector, with further verification processes ongoing to ensure the legitimacy of these debts before additional payments are made.
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