Merge or perish, Kenya saccos warned

Merge or perish, is the message Mr Joseph Nyaga, Co-operatives Development and Marketing minister, has for savings and credit co-operative societies.

And towards this end, he said, the ministry is encouraging the more than 5,000 registered saccos in the country to come together by forming several regional associations to survive cut-throat competition from other players in the money market.

The minister is urging the societies to diversify their operations from the core business of members’ contributions, and venture into businesses to maximise on earnings.

Societies should also invest more in information technology and banking services, to be able to compete favourably in the financial sector, he added.

Mr Nyaga was speaking in Thika while officially launching the recently established Mt Kenya Teachers Savings and Credit Association, formed by nine member societies from the region.

Loaned

The association with a membership of 43,000 has a share capital of Sh7.2 billion out of which Sh4.3 billion has been loaned to members, according to the chairman James Mahugu.

Noting that the co-operative movement has mobilised savings to the tune of Sh200 billion or 31 per cent of the country’s savings, Mr Nyaga said his ministry plans to raise the profile of saccos by entrenching them into the management of top co-operative institutions.

At the same time, Mr Nyaga blamed the management of the Kenya Planters’ Co-operative Union and the government, for the woes facing coffee farmers.

While the management failed to manage the liberalisation initiated in the sector, the government hurriedly introduced reforms without preparing the organisation for the changes, he said.

This, coupled with general mismanagement, led farmers to stop milling their produce at KPCU, as the firm plunged deeper into debt before being put under statutory management, the minister added.

Taking measures

However, he added, the government is taking measures to rescue the firm, whose dual registration as a company and co-operative union, has been hindrance to the efforts.