The government and other stakeholders are pushing for the merger of small cooperative societies as part of boosting their competitiveness both locally and internationally.
Cabinet Secretary for Cooperatives and MSMEs Wycliffe Oparanya said that small cooperatives cannot endure local and global emerging competitive dynamics; thus, there is a need to pursue new approaches to remain afloat in the business.
“We cannot ignore the realities facing the sector. Over 216 regulated SACCOs have asset bases below Sh1billion, limiting their ability to compete effectively,” he said during the 4th annual Cabinet Secretary’s Cooperative Movement Stakeholders’ Forum.
The CS urged Savings and Credit Cooperative Organizations (SACCOs) operating within similar economic or social bonds to explore mergers or shared services, particularly for ICT platforms as this is vital for achieving economies of scale, enhancing service delivery, and staying competitive in an era of fintech-led financial services.
“Global business practices demand entities to consolidate resources in order to enjoy economies of scale. Further, merging of small cooperatives, especially the SACCOs will boost Kenya’s competitiveness in the global cooperative movement,” said Oparanya.
The CS argued that cooperative leaders and managers need to embrace best international business practices that dictate high returns, noting that giant cooperative leaders globally, especially in America, Canada, and Europe, have succeeded because of consolidating their businesses.
“Giant credit unions in the USA, Canada, and other developed countries have continuously fast-tracked mergers and acquisitions but equally maximized on technology, thus being able to serve their customers within their jurisdictions,” he added.
The merging process, he added, will also require stakeholders, including the government, to relook at the legal framework so that the same is applied to allow massive registration of new cooperative societies.
“We have for long witnessed self-interested businesspeople seeking registration of new cooperative societies while other big institutions split due to leadership wrangles and resource mismanagement. The government’s new advocacy is that small cooperative societies need to embrace new ideas of operating compound businesses that are able to manage costs, compete aggressively, and enjoy economies of scale,” added the CS.
Oparanya called upon the cooperative movement to embrace innovation and sustainability, saying that ICT adoption is essential to compete with digital lenders and commercial banks.
“Shared digital platforms, fintech partnerships, and sound cybersecurity practices are no longer optional; they are critical for growth and resilience,” the CS said.
McCloud Malonza, the Cooperative Alliance of Kenya (CAK) chairman, said that to guarantee the authenticity of reporting, all must embrace technology and enforce consistency.
He added that the era of paper ledgers and delayed, opaque financial reporting must end and that the solution should be digital integration and transparency and International Financial Reporting Standards (IFRS) specifically tailored for SACCOs and cooperatives, coupled with rigorous, risk-based audit procedures.
“By doing this, we signal to our 14 million members, to the government, and to international partners that the data coming out of the Cooperative Movement is verifiable, reliable, and absolutely trustworthy,” Malonza said.
The cooperative movement, the chairman added, has very strong fundamentals of growth and is thus on the right track of development globally, and based on reforms undertaken in the past and still ongoing, he was hopeful of registering more growth locally and internationally.
“The future of Kenyan cooperatives is bright, but its path is demanding. We must lead with professional zeal, innovate with digital solutions, and govern with uncompromising integrity. As the CAK, we pledge our support to the necessary reforms to write the blueprint for the Cooperative Renaissance,” Malonza said
According to the Department of Cooperatives, Kenya has 26,582 registered cooperatives, out of which 13,511 are Saccos and 4,300 are Sacco agents. Some of the cooperatives are small in size, and their assets are low, and they are not able to cover their expenses.
The cooperative movement in Kenya largely contributes to the national economy. The sector’s asset base is robust and growing, with recent figures showing a total asset base of Sh1.07 trillion for the regulated SACCO industry last year.
Kenya is rated position one in Africa in terms of membership and deposits and position seven in the world.
By Wangari Ndirangu
