State sets up commission to audit co-operative societies debts

Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya during the Kenya Private Sector Alliance’s Inaugural Annual SME Conference, Awards, and Exhibition. [File, Standard]

The government has formed a committee chaired by the Commissioner of Cooperatives to audit billions of shillings that co-operatives societies owe farmers.

Ministry of Co-operatives and MSMEs said the debts arise every year despite efforts by the government to offset them.

Co-operatives and MSMEs Cabinet Secretary Wycliffe Oparanya questioned the debts mainly in the agricultural sector terming the ongoing government waivers unsustainable.

Oparanya raised concern that despite the government offsetting accrued debts owed by cooperatives, their debt portfolio keeps on rising due to mismanagement by the top officials.

The CS noted that debts owed to the coffee sector had risen from Sh6 billion to 7.2 billion within months as management borrowed funds to pay dividends.

"The government has set up an audit committee to tame unwarranted loan applications by management of cooperatives which will help address rising debts," said Oparanya.

Speaking in Naivasha during the SACCA Congress 2024, the CS said the Ministry had introduced the Cooperative Bill (2024) which would address challenges facing the sector.

He explained that the Bill seeks to introduce a term limit for directors to serve a term of three years  renewable once, which would help iron out management and governance issues.

"Cooperatives have for years been plagued by poor management and misuse of member’s savings which this Bill seeks to cure once it's enacted into law," he said.
Oparanya lauded the growth of cooperatives movement in Kenya which ranked top in Africa with accumulated savings of more than Sh1.2 trillion.

He said there was a need to transition from small sector lending to funding manufacturing to stimulate growth and create jobs with cooperatives being the key enabler.

"This congress brings together members from 42 countries to share experiences towards enhancing financial inclusion in order to create jobs, wealth and eradicate poverty'", he said.

Cooperatives PS Patrick Kilemi said the growth in the sector has seen over 15m Kenyans join cooperatives mostly in the agriculture sector and over 4m in the financial sector.

“The Cooperative Bill will cure increasing debts owed by cooperatives and we have formed a committee to audit and recommend any borrowing by management", said Kilemi.

George Ombado, the CEO of Africa Confederation of Cooperatives Savings and Credit Cooperatives Societies (ACCOSCA), regretted that despite Africa's huge population of more than 2.3 billion people, less than 100 million were members of Saccos.

Ombado said the growth of cooperatives through enhanced robust regulations would help cure high youth unemployment in the continent.