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The Challenges Facing the Sacco Societies in Kenya today

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There are many challenges facing the various Sacco societies in the Republic of Kenya to date. The Kenyan economy is heavily dependent on the Co-operative sector and over 80% of the population derive their livelihood directly or indirectly from the Co-operative sector. The Co-operative sector is undergoing many challenges that are posing numerous challenges to the Co-operatives movements and their future endeavors. Some of the major challenges facing most of the Sacco’s Societies in Kenya today include the here under:-

  1. i) Poor leadership and governance issues

The Sacco Societies need Good governance to enable them offer better services to their members. The members should always elect to office good leaders who are visionary and not jokers. Good leaders should be good savers since leaders should lead by examples and they should not be led. I am of the opinion that only the people of integrity should be elected as leaders and not necessarily their genders.

  1. ii) Competition

There is stiff competitions to the Sacco’s from the Commercial Banks who are also offering the same services. The Sacco’s can overcome the same by providing their members with more friendly products and lowering interests rates. The retention of the already existing members should be encouraged and enhanced.Sacco`s should always offer friendly and cheap loans to their members.

iii) Modern Technology

The Sacco’s need to put in to place the modern technologies to deter frauds from both the staff and the members.Thefts of all kinds should be discouraged.

  1. iv) Fraud and Forgeries

This has turned to be a menace in some Sacco’s.These two vices not only causes financial loss to the Sacco’s but also affects their image and reputation which sometimes can cause mistrust from the members not to mention that it affects the morale of the members and thus reducing the projected profits of the Sacco’s . The cases of frauds and forgeries should be dealt with the seriousness they deserve. The Sacco’s employees should be made to sign a code of conduct and the senior ones made to declare their sources of wealth at the end of the year. The Supervisory Boards should play their oversight roles accordingly.The Management Board should also be made to declare their wealth each year.

  1. v) Financial Management

This is the sourcing and the utilization of the Sacco’s financial resources to enable it meet its objectives and to declare dividends at the end of each year. Most of the Sacco’s fail in their financial management due to the here under-

  1. a) Poor Book Keeping b) The information recorded in the Books of Accounts are not analyzed and complied for decision making. c) Information is discussed but no tasks are allocated. d) The members inputs or suggestions are not considered or are ignored.The Sacco staff run the Sacco`s as their personal property.
  2. vi) Skills

The Sacco’s must have the relevant training for both the Staff and the Management Committee. The members should also be given continuous Education at all times. The members should at all times be educated on the roles they should play as members of a Sacco.The members suggestions ought to be considered.

vii) Liquidity Management

The budgetary controls should be put into place in all Sacco’s. The Boards of Management should enforce that the Sacco are ran as per their budgets and the same ought to have been approved and passed by their members in a properly constituted Annual General Meeting. The Sacco’s borrowing powers should never be exceeded without the consent of the members.Every major expenditure should be approved by the members.

viii) The Sacco’s Investments.

The Sacco’s should stick to their core businesses of taking members deposits and lending. I am of the opinion that before any investment has to be made, the relevant feasibility studies must be made and the members informed. The opening of many Branches and Satellite Offices should be minimized. I am of the opinion that the Sacco’s should nurture the existing Branches and Satellite Offices for at least five years to see whether they are making profits or not . The notion that new Branches and Satellite Offices are meant to mobilize more savings and deposits should not always be the criteria. The Sacco’s are intended to offer lending at cheaper rates and  to declare rising dividends rates at the end of each year so that the members can continue to invest in them.Properly managed Sacco`s should always declare rising dividends rates at the end of each year.

Compiled by:    MR.FRANCIS B.H MUGO

M/NO. 5183 RETIRED TEACHER

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