A delay in reviewing the outdated Co-op Act Cap490, the principle law that governs how cooperatives operate in Kenya so that it is in sync with the new constitution and a rapidly evolving business environment, could be holding back the growth of this crucial sector.
Stuck in the legislative agenda of parliament and Cabinet is the approval of a new sessional paper that will set fresh policy guidelines and trigger a review of the dilapidated Co-operative Act, Cap 490.
As matters stand, the Co-operative Sector is still governed by old laws that touch on crucial aspects such as the liquidation of co-operative societies, the role and mandate of national and county governments as well as that of the Commissioner for Co-operatives Development and the Sacco Societies Regulatory Authority(SASRA).
Industry stakeholders have also been pushing for a review of regulations regarding how directors of financial co-operatives should be remunerated, to replace the present scenario where these officials are only paid sitting allowances and honoraria.
A large number of Co-operative Societies are also still holding huge unclaimed shares and unpaid dividends as well as deposits belonging to deceased members. These societies are unable to surrender these unclaimed assets to the Unclaimed Financial Assets Authority(UFAA) because the old laws require that co-op members declare their beneficiaries in confidence.
“We need to review that law to extend the period upon which assets that a deceased member of a co-op society holds, can be said to be unclaimed,” said Everlyn Moraa, CEO of Sotico DT Sacco Limited.
A glance at the Kenya Gazette reveals numerous notices of Co-operative Societies, especially those in the coffee industry, which went under decades ago, but whose liquidation is yet to be concluded.
“At present, it takes too long for the liquidation of a co-operative society to be concluded because the law does not impose any time limits on this process. We have numerous cases of co-operative societies that had huge assets at the time of liquidation and yet members of such societies are still waiting for their share. The law needs to be changed so that liquidation of a society should not take more than 4 years while the appointed liquidator should also be accountable to members and not only the commissioner, as it is now,” said David K. Marete, CEO of Solution Deposit-Taking Sacco Society Limited.
Top industry executives also argue that a requirement within the Co-op Act that a Society should have a maximum of 9 directors on its Board, has been overtaken.
They argue that with many of the financial co-operatives rebranding and opening the common bond, there is a need for them to have a large board of directors to take care of diverse membership interests.