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History of cooperatives – saccos in Kenya

History of cooperatives – saccos in Kenya: Cooperation in various chores among Kenyans, with no expectation of financial rewards, gave birth to the spirit of Harambee (pulling together), hailed as one of the pillars of Kenya’s social, economic and political achievements.

Formal cooperatives started taking shape much later when European settlers formed the Lumbwa Cooperative Society in 1908. For about two decades, the society was restricted to the settler population. Africans were only allowed to establish cooperatives after 1930s. The first piece of legislation on cooperatives was the Cooperative Societies Ordinance enacted in 1931. On February 8, 1931, the Kenya Cooperative Creameries (KCC) was the first cooperative to be registered, followed shortly in the same year by the Kenya Farmers Association  The Kenya Planters Cooperative Union (KPCU) was registered in 1937 and the Horticultural Cooperative Union (HCU) in 1951. However, the 1931 Ordinance did not allow Africans to participate in cooperatives.

1908: Lumbwa Cooperative was established. This was at a time when the movement was seen as a strategy for revitalising agriculture. Membership was limited to the white settlers.

1944: Door opened for Africans to form and join the cooperatives. The post of a Registrar of       Cooperatives was proposed.

1945: Cooperative Societies Ordinance enacted, allowing African participation in the cooperative movement.

1946: Department of Cooperatives established and the Registrar appointed.

1950-1952.: Great support of the cooperative idea by the colonial civil servants; 160 cooperatives formed during this period.

1952: Mau Mau rebellion: Cooperative members withdrew to join pro-independence forces.

1954: Swynnerton Plan on developing African Agriculture and improving land tenure released.

1958: More than 400 cooperatives registered.

1960: The Government saw the cooperatives as vehicles to introduce African Socialism and strengthen ties between the people from different regions of Kenya.

1963: About 1,000 cooperatives were formed.

1965: Development of Sessional Paper No. 10 of 1965 on African Socialism and its Application to Planning in Kenya.

1966: Enactment of the Cooperative Societies Act (Cap 490).

1967: The Kenya-Nordic Cooperative Development Programme (KNCDP) initiated with help from the World Bank, the US and Germany to build human capital and boost capitalisation. The Government instituted subsidies and free access to government credit and free extension services.

1910: Sessional Paper No 8 on Cooperative Development released.

1914: The Ministry of Cooperative Development is created. Producer cooperatives are directly linked to parastatals and statutory boards run by the state (state corporations). Government protected the cooperatives from competition by any other market agents.

1980: Structural adjustment programmes (SAPs) are introduced, accelerating reform through liberalisation and structural reforms. The result of SAPs was wide-ranging policy changes in trade and macro-economic policies, impacting on production costs, incentive structures and sector competitiveness.

1986: The Sessional Paper on Renewed Growth and Economic Management of the Economy removed all Government monopolistic tendencies, divested Government investment in commercial activities and encouraged the private sector to run and invest in the Government-owned organisations and parastatals.

1987: Sessional Paper No. 4 on Renewed Growth Through Cooperative Movement is released.

1990: Promotion of regionalization and globalisation 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 coops.

Post-liberalisation period

1991 : Sessional Paper No. 6 of 1997 provided for a member-based, autonomous and  ember-controlled movement. A new legislation was developed. Liberalisation in the 1990s saw many mergers, disputes and splits in various cooperative societies, with some devolving into small and uneconomic units on one hand, and on the other, suffering high level of mismanagement.

1999: The number of registered cooperatives had rises to 7,000.

1999: National Poverty Eradication Plan launched, providing for a broad-based approach to economic growth, especially in the rural areas, with cooperatives being a key vehicle.

2003: Registered cooperatives reach 10,297, with a membership of 5.9 million and an income of about Kshs7.4 billion ($87.1 million), contributing to about 30 per cent of national saving.

2004: The Cooperative Societies Amendment Bill of 2004 seeks to re-introduce some degree of government control.

2008: The Sacco Societies Act introducing prudential regulation of all deposit-taking Saccos enacted, giving birth to the Sacco Societies Regulatory Authority (Sasra) in 2009.

2009: The Cooperative Alliance of Kenya Limited (CAK) is registered as the national apex organisation for the cooperative movement in Kenya, following the collapse of the Kenya Federation of Cooperatives Union. CAK’s mandate is to promote cooperative development, unite the movement and represent the cooperatives’ interests on all matters of policy and legal framework.

2011: The Ethics Commission for Cooperative societies is established to handle ethical and integrity issues. The commission works closely with the national anti-corruption agency to minimise losses occasioned by graft, and recover all assets, including land and buildings of cooperatives that have illegally been acquired.