Step by Step Procedure of how to form the best and most efficient Cooperative Societies and Unions in Kenya
This is a follow up of the lesson No. 1 that we learnt in my previous article titled How to Develop Kenya to a Middle Income Country for our Vision 2030. In that article I explained why we need to form Cooperative Societies in Kenya, if at all we need to transform Kenya into a middle income country through our Vision 2030 strategy.
The lower-middle-income status that was announced by the Kenya Government and the World Bank in the year 2015 was not a real one, it was a perceived one. Yes, the economy has expanded but only to a selected few in the urban centres and few, if not none, in the rural areas.
But How comes that the Kenya Economy had expanded but only a few felt it? It is because some sectors of the economy had expanded so rapidly, fast and furious, and made it look like Kenya as a whole has developed. These sectors are like
- ICT Sector
- Financial Sector
- Real estate sector etc
Most of the above-named sectors are controlled by a few individuals and companies who understand this wise saying, ‘If you want to walk fast, walk alone. If you want to walk far, walk together.’ Before 2017, The real estate sector players had embraced this saying and were smiling all the way to the bank, until when the bubble began to burst. Look at how the Saccos and Investment Cooperatives in Kenya are progressing well. It is the power of a united people with a common purpose.
Why should Kenyans adopt the model of Development through Cooperative Societies and Unions
According to Food and Agriculture Organisation – FAO, –Agriculture is key to Kenya’s economy, contributing 26 per cent of the Gross Domestic Product (GDP) and another 27 per cent of GDP indirectly through linkages with other sectors. The sector employs more than 40 per cent of the total population and more than 70 per cent of Kenya’s rural people.
According to the above report, Agriculture contributes only 26% of Kenya’s GDP and according to World Bank, 74% of Kenyans in 2016 live in rural areas. This means 33 million Kenyans live in rural areas and out of these 33 million Kenyans, only approximately 13 million Kenyans eke a living out of Agriculture. And whatever they produce is just 26 % of the GDP. Don’t forget that this 26% can be linked to the GDP by Multinational Agricultural companies.
These 74% bucolic Kenyans have access to land whether big, small or just a tiny plot but do not utilize it for agribusiness. They just use it for subsistence agriculture if they are lucky to have some farm inputs.
Now, Formation of Cooperative Societies and Unions by these farmers can help them move from subsistence agriculture to profitable agribusiness.
Through Cooperative Societies and Unions the farmers can get
- Affordable farm inputs
- Ready market for their produce sourced by the Cooperative Society’s and Union’s network.
- Outreach services from the County Government because Agriculture is a fully devolved sector.
- Affordable financial help from the Sacco formed through the Cooperative Society or Aid fund from either the County Government or National Government.
- Frequent education and training organised by the Cooperative Society or the County Government on how to better do their agribusiness.
- Fast and immediate help from County Government or National Government in case of a disease or pest problem affecting their crops.
- Savings and Investment mechanisms proposed by the Cooperative Society through the members.
- Insurance facilities for the crops or animals owned by the farmers
- Any other benefits not highlighted here.
This is to the Farmers and other working Kenyans. For your information, The Government, Donors and Strategic Investors fall in love with organised groups like Cooperative Societies and Unions. This is because they are sure that if they release any help whether funding or important information, it will flow down promptly to the bottom-most person of the pyramid.
The government can even comfortably look for foreign markets because they are sure that the quality and quantity of that produce is good and sustainable.
The problem of the current composition of Cooperative Societies in Kenya
There are some Cooperative Societies in Kenya which have flourished and benefited members. These Cooperative Societies are mostly formed by members or employees of certain Companies who have a goal of saving and investing their disposable incomes.
The reasons as to why they flourish is because first and foremost the members have been brought together by employment. While in employment, these employees caucus and decide to join hands and form a Sacco and an Investment Cooperative Society to deal with their similar problems like Housing and Strategic Investment of their savings. Most importantly, these employees know each other especially at the departmental level and so in case of a problem they can collectively agitate for that problem to be solved and indeed it gets solved amicably.
So, the lesson above is that for any Cooperative Society to be formed
- The members have to know each other.
- Members have to communicate with each other to know if they have a similar problem to solve.
- The members must have a common goal and purpose
- The members have to be bound by a certain ‘cord’ or ‘chain’ that makes them to be their brothers keeper.
- Each member should have the resources, whether Monetary Capital, Intellectual Capital or Human Resource Capital to contribute towards building the Sacco or Cooperative Society.
So from the above explanation, what is the problem with the current moribund Cooperative Societies in Kenya? The problem is that they lack most of the above qualities and characteristics especially the conflict resolution mechanisms.
Members start to pull out of or sabotaging the Cooperative Societies or Saccos after realizing that they have no one to help them when problems arise since they joined alone and do not know anyone inside there and help from the officials or state authorities is not forthcoming.
This is the other major problem bedevilling the existing cooperative societies. There are those cooperatives that were formed in the 1960s, 1970s and 1980s. Most of these cooperatives were formed by the government and farmers were encouraged to join. Ladies and gentlemen, that was the genesis of the problems that the farmers have. That is because of the fact that they were formed by the government.
You know in Kenya, when an entity belongs to the government, it is prone to so much political interference. In Kenya, people have been seasoned to fear the government and all its operatives. Therefore most elected and appointed government officials can go to a government-formed cooperative society and do whatever they wish with just a statement that it is an order from above. They can even get money and goods fraudulently and leave the society to colapse and there is nothing the poor farmers can do because they fear the government.
To beefup the above observation, I would like you to go to any government-formed cooperative society, especially the coffee, tea, pyrethrum and sisal cooperative societies. Ask them why they keep delivering their produce to the cooperative societies yet they don’t get paid for that produce. You will be shocked by the reply. They will even tell you that when they deliver the produce at the society’s gate, their power over that produce ends there. The weight of their produce can be slashed by half and there is nothing they can do about it. That is how the people fear the government and the societies management know this and exploit it to their advantage.
The sad thing is that these cooperatives are governed by the Cooperative societies act, just like any other cooperative society in Kenya. The problem is that the deep-rooted dictatorial management tendencies and political interference make the poor farmers not see that they actually own these cooperative societies. They are always intimidated to believe that decisions are made from above and the AGMs are just to rubber-stamp those decisions from above.
Therefore, from the above explanation, we can authoritatively say that the cooperative societies of the future MUST be formed by the farmers themselves, out of their own volition, with no coercion or intimidation, with the full realisation of the law and with full knowledge of their duties, responsibilities and obligations.
How to solve the problem of Cooperative Societies/unions in Kenya
How to form a Cooperative Society from Scratch
In this article, I will use an example on how to form a Maize Farmers Cooperative Society from the Jambo Homes level all the way to the County Maize Farmers Cooperative Union in Trans Nzoia County in Kenya. Let’s call it Endebess Maize Farmers Cooperative Society. The formation of such a cooperative society can be replicated elsewhere in other agribusiness ventures or trades in all other counties, in the same model.
We will make the assumption that most, if not all, residents of Trans Nzoia County are interested and have a passion for maize farming.
For a good cooperative society to be formed we need a private sector intervention to make this dream become true and better. We need to engage an entity that can be able to develop an online system where farmers and traders with the same passion can find each other, contact each other, collate their ideas and form a cooperative society to bind them together.
I am just thinking aloud, but just allow me to use the example of the Safaricom Digifarm initiative. The reason I pick the Safaricom Digifarm is that Safaricom is a trusted corporate that can be sued and also sues in case of a dispute. Safaricom can also be trusted because for over a decade and a half, we have trusted them with our Mpesa money and they have done a sterling job. The other reason tied to this is because of the Masoko Platform whose benefits I will Highlight in This Article
So, I would like Safaricom to come up with a repository which connects the farmers in the same trade, at the JAMBO Homes level. At this level, they will form a Cooperative Society. Then at the Ward Level, they will form a first-level Ward Cooperative Union composed of the various Cooperative Societies that have been formed in the Ward. From the ward level, the farmers can then be motivated to unite at the County Level to form a second Level County Cooperative Union. From the County level, the farmers can still be enticed to form the National Cooperative Union which will cater to the needs of all the farmers in the country engaging in that particular crop or animal. Still, don’t forget that this is a farmers and private sector-driven initiative and not a government-driven initiative.
When Safaricom or any other respected private company, (like those in the banking sector e.g. Equity Bank) develop such an online platform, then its all-systems-go. The online platform that gives the best user experience will be the favourite or the traders and farmers and will be smiling all the way to the bank. This is because it will give the platform for farmers and traders to find each other, a financing platform as well as marketing platform all in the same eCommerce website.
Now, let’s assume that the all-inclusive eCommerce platform has been formed. How do these technologically disadvantaged farmers and traders access and make good use of this eCommerce platform?
This is where our youth, tech-savvy sons and daughters come into play. This is where jobs for the youth are created. At the ward level, the youths will create digital villages where our old and analogue bucolic fraternity will be getting guided digital services at a fee. So let there be affordable internet connectivity in all our wards.
So, our fathers and mothers will go to these digital villages and register themselves in the various trades they would like to belong to.
As its the case in technology, when one registers, he/she is placed in a group of like-minded farmers or traders at the JAMBO Homes level, Ward Level, County Level and National level. That’s the beauty of ICT. ICT solves 1000 problems with a single stone as opposed to the proverbial analogue quote that says, killing two birds with a single stone.
Now, at the JAMBO Homes level, how should a farmer know that there are other farmers or traders interested in the same trade? That’s the work of the eCommerce platform to provide each subscriber with an email and an SMS notification to each person who subscribes to each trading sector as a new member.
When these members contact each other at the JAMBO Homes level, they can form a cooperative society in accordance with the law.
I would encourage cooperative Societies to be formed at the JAMBO Homes level. In a ward, if there are like 100 JAMBO Homes which each have formed a cooperative society, then they can collectively form a Ward First-Level Cooperative Union. eg. In Endebess Ward, of Trans Nzoia County, There may be 100 Jambo Homes. Each Jambo Home can have 50 families with a collective inventory of 1000 acres of land. This can form a first-level Ward cooperative union composed of 50 Cooperative Societies.
The various first-level Ward Cooperative Unions will make a Second Level, County Cooperative Union. With the various related second-level County Cooperative unions in the other counties will eventually make the National Cooperative Union.
Therefore, at this stage, we have established how our national cooperative organogram will look like. So at the Cooperative Society level (Jambo Homes Level), let’s elect officials who will be able to run and govern our cooperatives well and also articulate our concerns and needs at the ward level.
The leaders from the Jambo Homes level will meet at the Ward level to form the First-Level Ward Cooperative Union and elect their leaders from among themselves. The same scenario will guide the formation of the Second-level County Cooperative Union and third-level National Cooperative Union.
Therefore, at the Jambo Homes Level, farmers and traders should elect those officials who have the gait, stature, decorum and disposition to represent the farmers and traders transparently, morally and legally and can be trusted.
One of the traits of these leaders should be that, first and foremost, that their remunerations can be honoured after the sale of their harvest. So elect patient and servant leaders who will be able to sacrifice themselves and diligently work without pay till harvest time. But you must have a framework of calculating their remuneration and petty cash expenditure until when money starts trickling in. After money comes you can employ professionals to handle the operations of the Cooperative Societies. There is no other way to go about this! There is no Rocket Science!
After forming the Cooperative Society, your names and identification numbers are on paper, so what next?
At this stage, the farmers may think that miracles will happen and maize will sprout in their farms and Hurray! They are rich! Sorry to disappoint you, No! It doesn’t work that way. This is where the rubber meets the road. Or this is the time your baby has been born! You exactly know the work that awaits you ahead!
Take an example, you as an individual, have finished forming the Cooperative Society, you are seated in your house and you don’t even have a coin in your Mpesa Account to even start tilling your land, what do you do? So what next?
This Cooperative Society that you have formed doesn’t have a coin in its Bank Accounts, so you cannot tell the Cooperative Society to help you to till your land. My friend, you have to wake up in the Morning, Grab your Jembe and Panga and physically go to the shamba and start digging! There is no rocket science here, you have to sweat and make your hands dirty!
Then, you have finished tilling your land and you don’t have money to buy fertilizer and certified maize seeds from Kenya Seed Company, What do you do?
Simple! You now have the strength! How? Because you are not alone! When you talk to the other members of your Cooperative Society, you will realize that even your fellow members are as broke as you. So the needy number of members will increase as you continue communicating with each other and thereafter the whole ward Cooperative Union finds that they all need the seeds and fertilizer.
So, what do they do? They go to the County Government for help! Period. The keyword here is to COMMUNICATE with each other. Don’t suffer alone with your problems! A problem shared is halfway solved! (Note: This is benefit no. 1 of Cooperative Societies in Kenya)
When the County Government hears that there is an organized and legally registered Ward Cooperative Union with a sizeable number of farmers, let’s say, 1000 farmers or more who need such help, I tell you most solemnly, and without fear, they will factor that in the County budget and you will get the Seeds and Fertilizer. There is no Government worth its salt that can turn down such a request. Because where the “******” will the MCA’s be?
Now that you have seeds and certified fertilizer, go plant them after rains come. Here you will not necessarily need anyone’s help.
Weeding: Here you will not necessarily need anyone’s help.
Top Dressing: County Government, through the same help process, Chips in with the required fertilizer.
Pest and diseases: In case of pests and diseases the Cooperative Society and union officials, by the fact that it is recognized by the County Government, will obtain help from relevant Research Institutions like Pest Control Products Board – PCPB, and/or other companies listed in this Document (Disease and Pest Control Companies in Kenya) (Note: This is benefit no. 2 of Cooperative Societies in Kenya)
Harvesting. Now, it is during harvesting that the Cooperative Society will start minting its own money.
At this time, the Cooperative Society members should have done the following as they await harvest time.
- Looked for a lucrative market for the produce.
- Prepared a store or warehouse to store the produce if it is appropriate.
- Prepared the books of account for each member for the purpose of deducting contributions and other statutory deductions.
- Prepared for action, any other essential, regulatory and mandatory requirements like cess rates payment, etc
- Any other thing not mentioned here.
Now, the members of Endebess Maize Farmers Cooperative Society have maize in their granaries. How does this maize now come to Endebess Maize Farmers Cooperative Society godown or warehouse for sale?
At this point, the farmer can choose to thresh his/her own maize manually or using a machine if there available funds for that. Then store the maize or take it to the Cooperative Societies Warehouse if it is available. Then communicate to your officials of the quantity available.
Sale of Produce: All 90 Kg maize bags are collected to one point and the Cooperative Society will then invite the selected Miller or Buyer and the transaction is completed. Money is deposited into the Cooperative Society’s Bank A/C.
The benefit of selling this way is that you get the best price and Post harvest losses are mitigated and chances of being conned are eradicated. (Note: This is benefit no. 3 of Cooperative Societies in Kenya)
Now, you get a proportional share of what is due to you and your path to wealth takes shape.
It is at this point where we will discuss in the next article about value addition and value proposition to this produce.
Summary of Best Way for People to Form the Best Cooperative Societies in Kenya
Cooperative Societies in Kenya is the best way of doing things and the most rewarding way to go for all Kenyans.
Kenyan Farmers and other self-employed workers, have the power in their hands to unlock their potential through Cooperative Societies
All they need is to come together and communicate with each other with a purpose of progressing and the above processes will start to take shape.
Kenyan leaders should start championing for farmers and all people to embrace Cooperative Movement and see the potential that will be unlocked.
County Governments should budget for such eventualities that farmers might require monetary, capacity and informational help from them.
Kenyans, which is the other surest way to empower our farmers if not through such Cooperative Societies?
The message of Development in Kenya Through Cooperative Societies can be amplified by our leaders as explained in This Article
If all other farmers around the country form Cooperative Societies for their respective crops and animals, would we ever have lack of food? I assure you that any crop that can be grown in any part of Kenya will be planted and we will experience a surplus for export, farmers will have the disposable income to move into the next phase of development that I will elaborate in my Next Article.