Cooperative Societies in Kenya Cooperative Movement in Kenya

The vibrant and dynamic cooperative movement in Kenya the strongest in

Africa is a key player in the economy, controlling about 43 per cent of Kenyas
gross domestic product (GDP). The Cooperative Societies in Kenya employs
more than 300,000 people, besides providing opportunities for self-employment
to many more. Savings and credit societies (Saccos), the fastest growing subsector in the movement, have mobilised savings of more than Kshs 230 billion.
The cooperative movement commands 67 and 62 per cent of the total assets and
deposits/savings, respectively.
The greatest contribution attributed to cooperatives in Kenyas social and economic
development has been in the financial sector, where Saccos and national financial
cooperative organisations, Cooperative Bank and Cooperative Insurance Company
(CIC), hold substantial savings portfolio accounting for more than 31 per cent of Kenyas
gross national savings.
The total number of societies and unions rose by 7.3 per cent from 13,256 in 2010 to
14,228 in 2011.
Overall, a total of 972 additional cooperative societies and unions were registered, with
almost half of these being savings and credit societies, with membership standing at
more than eight million Kenyans.
The cooperative movement is organised into service and producer entities that cut
across various sectors focusing on both private and public enterprises.
Since 1908 when the first cooperative society was formed in Kenya, cooperatives have
made remarkable progress in sectors, such as agriculture, banking, credit, agroprocessing, storage, marketing, fishing, housing and transport, among others.
Emerging sectors, such as Information, Communication and Technology (ICT), are
leveraging on the demands of the traditional cooperatives to infuse innovation and
technology in their operations.
To safeguard the gains achieved this far, the Government has taken various measures
to ensure the movement operates according to international best practice. These
include the establishment of the Sacco Societies Regulatory Authority (Sasra) through
the Sacco Societies Act 2008, which introduced prudential regulations covering all
deposit-taking Saccos to enhance transparency and accountability in the fast growing
sub-sector. It is anticipated that the move will also spur economic growth through
mobilisation of domestic savings.
Kenya and South Africa are the only countries in Africa with independent regulators and
specific regulations for Saccos the Sacco Societies Act and Co-operative Banking Act,
respectively. In most countries, cental banks regulate and supervise Saccos, which
denies the societies the exibility to serve members adequately.

Kenya has the highest proportion, in percentage points, of GDP attributable to

cooperatives globally, standing at 45 per cent, followed by New Zealand with 22 per
cent. The cooperative movement worldwide has about 800 million members in over 100
countries and is estimated to account for more than 100 million jobs around the world.
Kenyas cooperative sector is reputed to be one of the most regulated in Africa and the
best in East Africa.
One out of every five Kenyans is a member of a cooperative. This means at least eight
million Kenyans are members of cooperatives while 20 million depend on the movement
indirectly.
Registered Cooperatives in Kenya
Kenya boasts about 15,000 registered cooperatives with 12 million members.
There are more than 320,000 employees and a further 1.5 million people engaged
in small scale and informal enterprise funded by cooperative loans.
Kenya is ranked number one in Africa and seventh in the world on the strength of
savings in excess of kshs400 billion which is 35 per cent of total savings. Savings and
credit cooperative societies (Saccos) have Kshs378 billion deposits.
Cooperatives command 45 per cent of Kenyas gross domestic product (GDP), the
highest proportion in percentage points of GDP attributed to cooperatives in the world.
New Zealand comes in a distant second at 22 per cent. About 60 per cent of the Kenyan
population earn a living from cooperatives. There are 3,280 Saccos, and considered the
fastest growing subsector in the cooperative movement, this sub-sector is the fastest
growing in Africa. It accounts for about 60 per cent, 64 per cent, and 63 per cent of the
countrys savings, loan, and assets respectively.
The movement provides two million jobs with 70 per cent of Kenyans depending directly
or indirectly on cooperatives.
About 10 years after Kenya attained independence from Britain, the cooperative
movement emerged as a dominant player in the economy.
The movement picked up a fast-growth path in the 1960s and 1970s. Cooperative
activities were evident in almost all sectors of the economy, and indeed, co-ops had
freedom to venture into any economic activity. They continued to be active in marketing
of agricultural produce, agro-processing, property ownership and investments, banking
and insurance.
Transport, technology and youth are among the new sectors making tremendous strides
in giving enterprising Kenyans an opportunity to create wealth and jobs.
Information technology has been a major driver in the sectors growth in recent years
with the adoption of international accounting and management standards.

Research by the International Labour Organisation (ILO), indicates that about seven per
cent of the African population is affiliated to the cooperative movement. In Kenya
cooperatives provide two million jobs.
As a result of Kenyas success, other countries including Uganda, Tanzania, South
Africa, Malawi, Namibia, Botswana, Rwanda and Southern Sudan got inspiration and
started taking cooperatives seriously.
History of Cooperative Movement / Societies in Kenya
Origin of Cooperative Movement / Societies in Kenya
In 1908 the Lumbwa Cooperative was established and was the preserve of white
settlers to develop their agriculture.
It took more than 50 years before this changed. By 1963, about 1,000 cooperatives had
been registered in which black Kenyans had a stake.
This impetus motivated the Government of President Jomo Kenyatta to encourage the
promotion of cooperative societies as a key strategy for national development through
Sessional Paper No. 10 of 1965. As a result, the Ministry of Cooperative Development
was established to strengthen and nurture the movement.
Among the controversial policies that came on board around this time was to directly
link producer cooperatives with parastatals. This move made the government appear to
be shielding the cooperatives from competition.
It is at this time that the Cooperative Bank of Kenya, which had been incorporated in
1965, was given a license to operate.
The concept of a Savings and Credit Cooperative Society (Sacco) with an employer as
the common bond was mooted. The Government also introduced subsidies and free
access to government credit and free extension services.
Birth and entrenchment of Saccos in Kenya
In the 1970s priority was given to establishing a standardized accounting system in
coffee and dairy farming, marketing cooperatives, and a system popularly referred to as
Members Transactions
This was followed by a savings and credit system integrated to the MT system. Under
the project, a retired Swedish banker, Sven Lindkvist, was hired to study the feasibility
of introducing rural credit Saccos linked to the marketing cooperatives.
The scheme assumed his name, and was known as Lindkvist Production Credit
Scheme (LPCS). It was later renamed as Cooperative Production Credit Scheme
(CPCS).

Lindkvists study revealed that although cooperatives were the main sources of deposits
for banks, it was difficult for cooperatives to get credit from the banks due to stringent,
and what was considered discriminatory, lending policies.
Members could not open savings or deposit accounts because of unrealistic minimum
balance requirements. Lindkvist recommended that cooperatives start their own savings
and credit system. This is how the standardized MT system became an enabler for
initiation of savings and credit system for rural Saccos.
Initially, the CPCS was to use borrowed funds to lend to individual society membership.
The MT system allowed members to migrate from cash receipts for their produce to
savings deposit accounts through their societies.
The plan was to introduce and encourage a culture of saving in rural cooperatives.
Society members were also encouraged to deposit surplus cash from other sources to
build a pool from which to borrow and diversify their activities. The cooperative unions
established savings and credit (union banking) sections to manage these activities.
In many district cooperative unions, this activity developed into rural banking units, with
huge savings and loan portfolios.
When these developments were taking place, the establishment of the Cooperative
Bank was under way. The bank provided the momentum for the growth of the union
banking units by lending to the societies.
This innovation, at the time, may be comparable to Safaricoms M-Pesa, the world
famous pioneer of mobile telephone money transfer service.
Post Independence development of the cooperative movement in Kenya
After independence the position of Registrar was elevated to that of Commissioner of
Cooperative Development. The newly-independent Kenya was at the time convinced
that the movement had a vital role to play as articulated in Sessional Paper No. 10 of
1965.
The movement was regarded as a vehicle for the introduction of African Socialism in the
economic development of the young nation.
This led to the creation of a Ministry of Cooperative Development. The commissioner
became an influential authority in implementing government policy in the movement. In
time, it was inevitable that the Zeal and self-sacrifice by civil servants in promoting
cooperative ideals would be replaced by sustenance of a budding government
bureaucracy.
In the first two decades of Independence, the Commissioners of Cooperative
Development were: l. M Davies (1960-1964), J. N; Kibue (19641966), Dan Nyanjom
(1967-1970), Joshua Muthama (1970-1978) and Laban Mucemi (1979-1980). During
their tenure, co-ops grew tremendously across the country.

Agricultural marketing co-ops were the most prominent, with focus on coffee, dairy,
pyrethrum, cotton and horticulture. They majored in collection, processing, storage and
sale of the produce from the members. These societies also supplied members with
seeds, fertilisers, machinery and equipment.
Many initiatives in organizing sheries, housing, handcraft, farm purchase and multipurpose co-ops were made with less success.
Consumer coops were becoming popular during the preIndependence period and
favoured the urban areas. Their main activities were to supply clothing and food items at
competitive prices, but their growth did not pick up after Independence. Similar
initiatives in the 1950s, promoted thrift and savings coops, but failed due to structural
and management Weaknesses. They were more inclined to lending, motivated by profit
and were open to non-members. They were organized for and by people belonging to
an association or clan or members of a residential estate, church or location. They
lacked a sustainable affiliation in membership, activity participation and leadership.
In the late 1960s, a new concept of savings and credit societies was introduced, where
the employer was mooted as a defined common bond.
In 1965, a conference sponsored by the Credit Union National Association (CUNA) led
to the formation of the African Cooperative Savings and Credit Association (ACOSCA).
After the conference CUNA, the Catholic Relief Services (CRS), the Department of
Cooperative Development (DCD) and Kenya National Federation of Cooperatives
(KNFC) teamed up to promote savings and credit societies.
This team further recommended that savings and credit societies be encouraged in
major urban areas, Where Workers had occupational common bond. They would
authorize employers to deduct an agreed amount from their salaries and pay it out to
the society through a check-off system.
By the end of 1967, there were 67 savings and credit societies with a membership of
3,000, which had saved Kshsl.6 million.
In the 1960s and 1970s, important national or countrywide cooperative organisations
were founded. Known as national cooperative organisations (NACOs), these included
the Kenya National Federation of Cooperatives (KNFC) in 1964, the Cooperative Bank
of Kenya, (1968) the Kenya Union of Savings, Credit Cooperatives Organisation
(KUSCCO) (1971) and the Cooperative Insurance Services CIS (1978).
These NACOs joined the pre-Independence countrywide cooperative unions, such as
KPCU (coffee), KCC (dairy), KFA (farm input) and HCU (horticulture). The significant
contribution to the development of the cooperative movement by these national coops
is immense.
In the 1980s there were fundamental shifts, such as the World Bankprescribed
Structural Adjustment Programmes (SAPs) that had an impact on the success of the
movement. The SAPs led to, not only wide-ranging policy changes in trade and macro

economic policies, but also changes in production costs, incentive structures and
sector competitiveness.
Yet another policy initiative, namely The Sessional Paper on Renewed Growth and
Economic Management of the Economy also impacted on policies by again removing all
Government monopolistic tendencies. It divested Government investment in commercial
activities and encouraged the private sector to run and invest in the Government-owned
organisations and parastatals.
In the 1990s, liberalisation was the buzzword. As a key agenda it led to mergers,
disputes and splits in various cooperative societies, with some devolving into small and
uneconomic units on one hand, and on the other, high level of mismanagement.
The cooperative movement witnessed promotion of regionalization and globalization
policies, the key being removal of tariff and non-tariff trade barriers, withdrawal of direct
and indirect protection of domestic competition, adverse economic conditions, collapse
of many financial institutions and cooperatives.
By 2003, Kenyas registered cooperatives had soared to 10,297, with a membership of
5.9 million and an income of about Kshs7.4 billion. They were also contributing 30 per
cent of national saving.
More were introduced in 2004, the main one being the Cooperative Societies
Amendment Bill that reintroduced some degree of government control in the
movement without prejudicing its own efforts of embracing the principle of a free market.
The change led to the enactment of the Sacco Societies Act, which introduced
prudential regulation to all deposit-taking Saccos. The Sacco Societies Regulatory
Authority (Sasra) was formally established in 2009.
The Cooperative Alliance of Kenya Limited (CAK) was also registered in 2009 as the
national apex organisation for the movement under the Cooperative Societies Act
Kenyas Saccos have been recognized internationally and admitted to the Group 10 of
the most developed movements globally. The others are the United States, Canada,
Mexico, Brazil, Australia, Poland, Costa Rica, Caribbean Confederation and Ireland.
The movement cuts across various sectors of the economy and incorporates the rich,
the poor, the youth and the elderly in national development.
The year 2012, dubbed The Year of Cooperatives, was a crowning moment in Kenyas
cooperative movement calendar. The International Cooperatives Alliance (ICA), which
unites, represents and serves cooperatives Worldwide, identified Kenyas cooperative
movement as one of the most regulated in Africa and the best in East Africa.
The country celebrates the golden jubilee as an elite cooperator and one of only the two
African countries that has established independent regulators with specific regulations;
namely the Sacco Societies Act. The other country is South Africa with the Cooperative
Banking Act. Setting the country apart from others whose regulations and supervisions

rests as mandates under the Banking Supervisory Authority (Central Banks), which
denies them the exibility to serve members adequately.
Key driver of the Kenya economy
The cooperatives movement in Kenya now boasts of an annual turnover of Kshs 436
billion ($4.4 billion) equivalent to 45 per cent of the national GDP. This is a huge impact
as the movement plays a key role in nancial deepening and intermediation in industry.
In their operations, the cooperatives have mobilized savings of over Kshs230 billion and
provided affordable credit of over Kshs184 billion to members.
The total number of societies and unions registered recently had a 5.4 per cent growth,
rising from 4,228 in 2011 to 14,990 in 2012. A total of 45 multi-purpose societies were
registered in 2011 while the number of dairy societies increased from 313 in 2011 to 343
in 2012.
Saccos control over Kshs 250 billion. There are 1.8 million members with Sacco loans
compared to 1.9 million people with bank loans.
Saccos have also established over 400 Front Office Services Activities (FOSAs) in both
urban and rural areas providing basic banking services to over four million Kenyans a
number that compares favourably with the number of accounts in the commercial
banking system.
Some Saccos are key nancial sector players and providers of micro finance services.
Indeed, the Government took cognisance of this key sector, appreciating the need to
safeguard the huge public funds handled by the Saccos and saw the need to provide a
legal framework to govern this sector through Sasra.

Cooperative Societies in Kenya Cooperative Movement in Kenya

Structure of cooperative movement in Kenya
The structure of the cooperative movement in Kenya places individual members at the
bottom of a pyramidal organizational structure. The Cooperative Alliance of Kenya
(CAK), formerly known as Kenya National Federation of Cooperatives (KNFC), is at the
top as apex body. Saccos fall under KUSCCO under a similar structure.
The cooperative movement in Kenya is vertically organized into a four-tier pyramidal
structure that links up primary cooperatives at the local (lower) level to the national
(higher) level. The structure consists of primary cooperatives at the bottom, district/
commodity

cooperative

unions,

national

cooperative

organisations

and

one

confederation, CAK, whose membership includes national cooperative organisations as

well as some cooperative unions and primary cooperatives not affiliated to any union. It
is through CAK that the Kenyan cooperative movement is expected to be linked to the
W0rlds cooperative movements.
Most of the primary cooperatives in Kenya have their origin in state-controlled promotion
of cooperative development, which saw most of the people join cooperatives not on the
basis of their common bonds and mutual trust, but due to the directive from the state
that compelled those engaged in similar economic activities to join specific types of

cooperatives. For instance, in the agricultural sector it became mandatory for cash crop
farmers to join cooperatives in order to market coffee, cotton, pyrethrum and milk.

Types of Cooperative Societies in Kenya

Cooperatives in Kenya are classified into agricultural and non-agricultural
cooperatives.
Agricultural cooperatives engage in the marketing of members produce as their main
activity, though some cooperatives, such as coffee and dairy cooperatives, have
ventured into manufacturing in a bid to add value to produce. These cooperatives are
further classified by the produce that they handle, with the key ones in cash crops, such
as coffee, cotton, pyrethrum, sugar-cane and dairy. Other agricultural cooperatives
include fishery, farm purchase and multiproduce cooperatives, which market
agricultural produce and mobilize savings to purchase land for members.
However, it should be pointed out that land purchase cooperatives, which were very
active in the 1960s and 1970s in Central Kenya and the Rift Valley, are no longer as
active.
Non-agricultural cooperatives are involved in finance, housing, consumer, crafts,
insurance, transport and the informal economy. In the financial sector, the Cooperative
Bank and Saccos provide savings and credit services, while housing cooperatives help
members buy or build homes.
Consumer and craft cooperatives market their respective commodities, while
cooperatives in the transport and informal economy engage in savings and credit
activities.
The Cooperative Insurance Company (CIC) is the agship of the cooperative movement
in the provision of insurance services.
Given that Kenya has an activity-based cooperative system, the NACOs are based on
specific types of activities, including banking, insurance, dairy, savings and credit,
housing and coffee, among others.
Currently, NACOs include KUSCCO, CIC, KPCU, the Cooperative Bank of Kenya,
National Cooperative Housing Union (Nachu), and Kenya Rural Savings and Credit
Societies Union (Kerussu). Members of these organisations are mainly cooperative
unions and some primary cooperatives. Though it is essentially a government
institution, the Cooperative University College of Kenya is considered in the cooperative
movement as one of the NACOs. It was started in 1969 as a department in the Ministry
of Cooperative Development, before its transformation into a semi-autonomous
government parastatal through an Act of Parliament in 1995.

The New Kenya Cooperative Creameries (New KCC) is widely considered to be another
NACO due to its origin in the cooperative movement. It was founded by white settler
dairy farmers as Kenya Cooperative Creameries (KCC) during the colonial period.
Primary cooperatives in the dairy subsector became affiliated to it, thereby
transforming it into a dairy cooperatives federation. However, it is currently operating as
a state corporation under the Department of Cooperative Societies, following its
acquisition by the government in 2005 from private individuals that had bought the
previous KCC in 2000. The government intends to sell it back to the cooperative
movement upon stabilization of its operations.
Primary cooperatives are also affiliated to cooperative unions by economic activity or
agricultural produce marketed. For instance, in the agricultural sector there are produceoriented cooperative unions that collect coffee, pyrethrum, cotton and milk from primary
cooperatives for primary processing and marketing. In addition to these produce
based unions, there are also district cooperative unions.
These are area-based cooperative unions that bring together primary cooperatives
dealing with different activities within a geographical area and provide services to
members that would have otherwise been provided by activitybased unions.
Pillars of the cooperative movement in Kenya
Various institutions, organisations, companies and individuals have played a very
important role in the development of the union. These include;
1.

2.
3.
4.
5.
6.

Cooperative Bank was formed by cooperators in 1965. It is the fourth largest

bank by asset base with a branch network of over 90 branches, a customer base of
2.3 million and is over 80 per cent owned by the cooperative movement. The bank is
providing a one-stop-shop for financial services and hence has three subsidiaries
providing stock broking services, fund management and capacity building and
corporate advisory services.
CIC Group Limited is one of the highest capitalized insurance companies in
Kenya, with a premium income of Kshs4.5 billion in 2010 and is ranked 3 rd on
protability, and is similarly owned and managed by the cooperative movement.
KUSCCO is the umbrella body for all Saccos, under which they have pooled
deposits of over Kshs3.9 billion.
Cooperative College of Kenya is the premier training facility for provision of
cooperative education and training. It recently received a charter to become a
university.
Nachu has been instrumental in promoting housing cooperative societies,
enabling members to own houses at reasonable costs.
Kerussu is the umbrella body of the rural savings and credit societies. It provides
advocacy, training and capacity building for the rural Saccos.
Cooperative Societies in Kenya Role in Vision 2030
A number of activities are being implemented in pursuit of achieving the Kenya Vision
2030 objectives and its core mandate of developing the cooperative sub-sector into an
efficient and competitive business.

Projects have been identied and programmes designed to contribute to the

implementation of Kenya Vision 2030 Flagship projects as Well as MediumTerm Plan
to promote an innovative, commercially oriented, and modern agricultural and nancial
services sectors.
The main focus of the sub sectors activities is on facilitating cooperatives to play an
important role addressing the challenges of low productivity, inappropriate land use
systems, poor marketing systems, limited access to credit by farmers and small
businesses, and low value-addition to agricultural commodities and other services.
The primary policies and strategies implemented by the sub sector are geared towards:
1.
2.
3.
4.
5.

Streamlining and strengthening the management of Cooperative societies;

Establishing and strengthening the SACCO regulatory framework;
Improving market access and marketing efciency by cooperatives;
Promoting viable cooperatives investments; and
Encouraging cooperatives to enter into mutual partnerships with other agencies
for additional resources.
Over and above policy, governance and legal reforms in tandem with the Kenya Vision
2030, several tare gets have been set for the cooperative sector between 2009 and
2030, they include;

1.
2.
3.
4.
5.
6.
7.

Increase active membership of cooperatives by 10 per cent annually;

Increase and sustain the average market share of agro-commodity cooperatives
at 70 per cent;
Increase savings mobilization through Saccos and other cooperatives by 10 per
cent annually;
Achieve a net increase of 600,000 additional direct jobs within the cooperative
movement by 2030;
Increase growth in cooperative investments by 7 per cent annually;
Support establishment of new cooperatives in promising high growth activities;
and
Increase survival of cooperatives from the current 70 per cent to at least 85 per
cent.
Some of the key policy, legal and institutional achievements during the period under
review include:

1.

A draft Cooperative Development Policy was completed and approved by the

Cabinet. It is awaiting parliamentary approval;
2.
Enactment of a Sacco Act and consequent establishment of Sasra to spearhead
the development of the industry and entrench prudential financial standards;
3.
Decentralized operations of the Cooperative Tribunal to eight provinces to reduce
the backlog of cases and bring services closer to the movement;
4.
Establishment the Ethics Commission for Cooperative Societies to spearhead md
entrench good governance in the cooperative movement, in accordance with the
provisions of the Public Officer Ethics Act;
5.
Restructured and revitalization key viable cooperative institutions (including
elevation of the Cooperative College of Kenya into a university, launch Cooperative
Alliance of Kenya CAK umbrella body to replace the defunct KNFCU).
Cooperative Societies in Kenya Fertiliser cost reduction facility
The Government supported establishment of the Kenya Farmers Cooperative Union
(KFCU), to buy fertiliser in bulk and distribute to affiliate unions and primary societies.

Member societies have placed and paid for fertiliser orders valued at over Kshs100
million at the National Cereals and Produce Board, which was delivered by the
beginning October 2012. Once fully on its feet, the KFCU targets to be import 125,000
tonnes of fertiliser four times every year.
Value addition and market access The Government prioritized and conducted training in
product value addition in six value chains: coffee, horticulture, honey, sh, milk and
mangoes.
Cooperative Societies in Kenya Disease Free Zone
In three cooperative society ranches in the arid and semiarid lands (Asal) of Witu in
Lamu, Issa Godana in Tana River and B2 Yatta in Kitui, the ministry has supported
preinvestment activities to prepare the ranches get certication for quality premium
livestock products land tenure, bush clearing, restocking, pasture development, farm
infrastructure and ecotourism facilities.
Cooperative Societies in Kenya Financial services deepening
Initiative involves expanding availability of efcient, competitive and affordable nancial
services to Kenyans includes development of appropriate nancial products.
There are over 3,500 active Saccos serving over seven million members.
The Saccos control assets estimated at over Kshs70O billion out of which members
deposits are about Kshs400 billion.
Sasra is now in place to entrench nancial prudential standards, with just over 100
deposit taking Saccos licensed out of the targeted 216.
Cooperative Societies in Kenya Private sector partnerships
The CooperativesPrivate Sector Partnerships (CPPs) brought into play synergies
such as injection of additional investment capital, technology and superior management
services.
Examples include;
1.

Saccos operating FOSAs with banks (mainly the Cooperative Bank of Kenya) to
provide ATM services.
2.
In the dairy industry through subsidiary joint venture processing entities (e.g.
Githunguri Dairy, Siongoroi Dairy, Mariakani Dairy, Kabiyet Dairies, Mukurweini
Wakulima Dairy etc.) which provide milk processing technology and management
services.
3.
In Livestock the Turkana Livestock Marketing Cooperative Society has partnered
with the Government, AMREF TerraNouva (Italy) and AM-REF (K) to establish a
meat processing plant (Turkana Pastoralists Meat Processing factory Lomidat)
4.
In Fishing, Turkana Fishermen Cooperative Society has partnered With Samaki
(2000) Limited to rehabilitate and modernize the Kalokol Fish Processing Plant.

Cooperative Societies in Kenya Policy reforms

These include merger of small coffee cooperative societies into economically
sustainable entities to help reduce operational costs and benet from economies of
scale; formulation of more focused cooperative management guidelines and prudential
standards; and timely remittances of deductions by employees to Saccos, and recovery
of outstanding remittances by employers to a tune of Kshs3.8 billion out of the Kshs4.3
billion arrears. The Kenya Cooperative Coffee Exporters (KCCE) has been established
to facilitate export of coffee. It has increased earnings for coffee farmers.
Cooperative Societies in Kenya Mobilization and employment
The movement has a membership of over nine million in over 12,400 registered
cooperatives.
Considering an average family of four members, it is estimated that the cooperative
movement has an impact on the lives of nearly 36 million Kenyans.
Indeed the Ministry of Cooperative Development estimates that 80 per cent of Kenyas
population derives their income either directly or indirectly through cooperative activities.
Saccos have more than six million members accounting for 30 per cent of the national
savings.
The movement employs more than 320,000 people, besides providing immense
opportunities for self-employment. Across the World, over one billion people are
members of cooperatives while about 100 million are employed directly.
Cooperative Societies in Kenya Agriculture
Agriculture is the mainstay of the Kenyan economy, directly contributing 26 per cent of
the GDP annually valued at Kshs342 billion and another 27 per cent indirectly valued at
Ksl1s385 billion through linkages with manufacturing, distribution and other service
related sectors. The sector accounts for 65 per cent of Kenyas total exports and also
commands 18 per cent and 60 per cent of the formal and total employment respectively.
It is estimated that 4,988 cooperative societies and unions are directly involved in
agriculture.
The dairy industry is a source of livelihood for over a half million small scale cooperative
members in the country.
By 2010, small-scale dairy farmers were members of 278 registered cooperatives
societies in the high and medium potential dairy districts, out of which 232 were active.
Since 1999, processed milk declined from 1.2 million liters to 600,000 liters daily in
2002. With the revival of the New Kenya Cooperatives Creameries (New KCC),
however, the daily intake improved and now stands at 1.2 million liters a day. With better
credit systems, subsidy of input cost and efficient production support services the output
is projected to increase to over 2 million in the next two years.

The cooperatives share of the total national output of coffee declined substantially from
72 per cent in 1980 to 56 per cent in 2001 while the volume of production decreased
from 120,000 tonnes in 1996 to about 40,000 tonnes in 1997 due to poor world market
prices, drought, and subdivision of coffee cooperatives coupled with the debt burden.
However, with the formation of Kenya Coffee Exporter Cooperative (KCCE), coffee
business has picked up and for the first time in many years, the price of one kilogramme
of coffee is above Kshs 120.
In the tea sector, small holder farmers account for 95,779 hectares and produce more
than 190 million kilogrammes of tea every year, accounting for 61 per cent of total
production. The small holder farmers are organized into 52 co-ops across Kenya with a
membership of 430,000.
Cooperatives have contributed to the growth of the fisheries industry and even if the
number of sheries cooperatives had dropped from 82 in year 2000 to 71 in 2010 and
the membership from 14,000 in 2000 to about 11,000, the membership increased
tremendously to about 42,000 members by the end of 2010.
Cooperative Societies in Kenya- Finance
Saccos have made their indelible mark in the lives of many. Their contribution to the
gross national savings rose from 15.6 per cent in 2008 to 30 per cent by 2010.
The total Sacco Sub-sector was worth Kshs210 billion in 2010 While deposit taking
Saccos had about Kshs171 billions of this amount.
The uniqueness of the Sacco movement is its geographical distribution across Kenya.
In all the 47 counties there are Saccos providing financial access to hitherto nancially
excluded Kenyans.
Cooperatives are also the largest shareholders of the Cooperative Bank, CIC Group Ltd
(CIC) and KUSCCO.

THE ROLE OF THE GOVERNMENT ON CO-OPERATIVE DEVELOPMENT :AS

STIPULATED IN THE ACT (a)The role of the government in cooperative development is well
stipulated in the Cooperative Development Policy, 2004, as well as in the Cooperative Societies
Act, 2003. The Policy defines the roles and responsibilities of the government, and, thus- (i)
Repositions government commitment to support cooperatives which are owned and managed by
their members according to the internationally recognized cooperative principles and values, (ii)
Recognizes the structural and historical factors that constrain the development of cooperatives in
liberalized market environment, and thus creates the required conducive environment for
cooperatives to operate and compete more effectively and efficiently; (iii) Recognizes economic
groups as important initiatives towards genuine memberbased cooperatives; and (iv) Puts
emphasis on commercially oriented business minded leadership instead of civil service- oriented
management on running the co-operative movement. The Act defines the role and responsibilities
of the government (a) The government is to provide and create conducive social, economic and
legal environment for the development and prosperity of cooperatives. It is there to provide
encouragement: For the cooperative development for economic, social and cultural purposes
and for human advancement on the basis of self-help, and For the development of cooperative
societies so as to become a MEANS of:- (i) Improving the economic situation of their members
(ii) Contributing to the economy and increase measure of self reliance and democratic control of
economy activity (iii) Increasing personal and national capital resources by encouragement of a
thrift, the prevention of usury and the wise use of credit 23 (iv) Raising the level of general and
technical knowledge of cooperative members, and cooperative functionaries, and (v) Achieving
goals of development programs through peoples participation and which is a key requirement.
(b) What is required from the Government at present is to promote Co-operative Corporate
capacities that they become able to carry on inter-state business trade on agricultural economic
products in the Partner States of the EAC. Or else, the Tanzania farmers will be left out from the
main stream of Participation in the regional socio-economic integration of the EAC.