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SPEECH BY HON. JOSEPH W.N. NYAGA EGH,M.P MINISTER FOR CO-OPERATIVE DEVELOPMENT AND MARKETING DURING THE 36TH ANNUAL DELEGATES MEETING OF THE KENYA UNION OF SAVINGS AND CREDIT CO-OPERATIVES (KUSCCO) LTD ON 21ST MAY, 2010 AT KUSCCO CENTRE, NAIROBI Chairman, KUSCCO Ltd, Mr. Fidelis Kimutai Members of the Board The Managing Director Delegates Invited Guests Ladies and Gentlemen I am delighted to join you during this auspicious occasion of the Annual Delegates Meeting of KUSCCO. This is an important occasion for KUSCCO leaders and delegates to reflect on the past performance of the Union with a view to putting in place new strategies to meet the set objectives and targets. Mr. Chairman, Co-operatives have made great contributions towards economic growth and employment creation in Kenya. They offer services including but not limited to credit, housing, insurance, transport, building construction and land buying among others. Through savings mobilization and provision of loans, co-operatives have brought their members into mainstream national market economy besides playing a vital role in financing education, medical services and other social economic activities. Co-operatives are best placed to facilitate good corporate governance, streamlining of management, regulatory framework and formation of new co-operatives especially in underserved rural areas of the country. In addition they undertake capacity building for effective service delivery. In this regard, co-operatives should play a key role of improving market access and enhancing marketing efficiency as well as improving value addition and financial services product development. This is through development of financial products which are demand driven and attractive to their members.
Mr. Chairman, The government recognizes the importance of SACCOs as part of the wider financial sector in Kenya. The government seeks to develop an efficient and professionally managed co-operative financial system. This is a prerequisite for savings mobilization among the low income households who have limited access to mainstream commercial banks. In this regard, the Sacco sector should diversify avenues for savings mobilization and development of new micro-finance products for improved intermediation between savings and investments. The co-operative societies have a unique advantage in that their clients are also shareholders. They should therefore undertake aggressive deposit mobilization, creation of internal incentives to attractive savings, insurance programmes to cover member’s savings and loans. In addition, they should also expand outreach in all areas of the country. The Sacco sub-sector has mobilized savings to the tune of Kshs. 200 billion. The savings mobilized represent 31% of the national savings. It is against that background that the government found it necessary to regulate the sub-sector and to enact the Sacco Societies Act 2008. The Sacco Societies Act, 2008 establishes the Sacco Societies Regulatory Authority (SASRA) whose mandate is to license, regulate and monitor the operations of all the deposit taking SACCOs. This is after the SACCOs meet minimum capital adequacy requirements. In addition, the Act establishes a Deposit Guarantee Fund to safeguard and cushion members in the event a Sacco collapses. The regulation is also aimed at creating confidence in the Sacco sub-sector with a view to attracting other players in the Sacco sub-sector. Mr. Chairman, The co-operative movement is the best vehicle for fighting poverty and inequality in the society. The co-operative values and principles have withstood the test of time and are resilient against any form of economic ideology. This explains why the co-operatives were not adversely affected by the global economic meltdown which affected major economies. In this regard, it is important for our people to work together and to patronize services of their co-operative organizations. This not only enhances their competitiveness but also creates multiplier effects, economies of scale and employment among other benefits I am happy to note that the co-operative movement in Kenya is rated 1st in Africa and 7th in the world. The Sacco movement in Kenya is recognized internationally and we were admitted to the Group Ten of the most successful SACCOs globally. Kenya is represented in the group ten by Kenya Union of Savings and Credit Co-operatives (KUSCCO) Ltd. I am confident that the Sacco movement working closely with the government is capable of achieving greater height of economic development. In this regard, I challenge the co-operative movement in Kenya to rise to the occasion and ensure that it is rated 5th globally in the next four years. Mr. Chairman, Co-operatives traverse all sectors of the economy cutting across all classes and professions in our midst. The co-operative sub-sector and the societies in general are going to play a key role in realization of the Kenyan vision 2030. The theme on economic pillar is “To have a vibrant and globally competitive financial sector driving high levels of savings for Kenya’s investment needs” In this regard and in order to realize this dream it is important for the co-operatives to position themselves strategically by adopting appropriate information, communication, technology and upgrading of systems. This will go a long way in streamlining decision making process and communication with business partners and other players in the industry. Mr. Chairman, The youth in Kenya contribute 72% of the national population. The participation of the youth and women in co-operatives is limited. It is therefore important for the co-operatives to recognize the invaluable contribution of this group, their potential and hence the need to encourage their participation in co-operative activities. The government has set aside youth and women fund to facilitate their participation in the formal market economy. The Co-operative can play intermediation role in administration and channeling of the said funds to youth and women entrepreneurs. Saccos should be able to lobby their members of parliament to intermediate in disbursement of the said funds. Mr. Chairman, My Ministry will continue playing its role as the leading agent in facilitating the co-operative sector to be globally competitive. This is through creation of an enabling environment for realization of accelerated growth of a dynamic, modern and progressive co-operative environment. The Sacco sub-sector had been growing rapidly at the average rate of 25% per annum. The commendable growth in the sector has however not been without challenges. The challenges include but not limited to inadequate capitalization, poor governance, non-remittances, loan delinquency, lack of standardized information technology, limited financial products, excess loan demands, negative impact of HIV/AIDS on membership, non-competitive models as well as inadequate regulations and supervision. I am confident that the leadership of the co-operative movement working closely with the Ministry are capable of facing the challenges in order to facilitate accelerated growth and development of the Sacco sub-sector. Mr. Chairman, I am delighted to note that KUSCCO as an umbrella organization has kept abreast of the changing financial environment and has strategically positioned itself through innovativeness with a view to remaining relevant and competitive in the dynamic financial sector. This has particular reference to the transformation and realignment of various departments of the union which is geared towards compliance with the new Sacco Societies Regulatory requirements. The department of advocacy had been set up strongly in order to engage the government and other players in the industry for the smooth operations of the Saccos in the transition period. The department of consultancy has been transformed and re-branded as department of consultancy and compliance. The department is to assist the Saccos meet the technical requirements of Sacco Societies Act, 2008 and regulations 2010. This will be achieved through dissemination of information by way of workshops, printing of brochures, booklets and updates through circulars. The Central Finance Programme has been re-branded as Central Finance Fund and will be used to facilitate the Saccos meet liquidity requirements as per Sacco Societies regulations. The fund will bridge capital shortfalls of the Saccos and is expected to act as a lender of last resort. Mr. Chairman, KUSCCO has continued to play its strategic role of capacity building of the Sacco leaders and staff through education and training. In addition, the KUSCCO Housing fund is assisting Sacco members to own houses and put up housing estates in cities. This key role is contributing to the noble goal of the government of establishing 150,000 housing units in urban areas annually. KUSCCO had also continued to play its role globally of representing the Sacco movement in Kenya in the international co-operative forums. I am happy to note that the Union has continued to perform very well and this is attested by the growth in capitalization from Kshs. 302 million in 2008 to Kshs. 451.3 Million. This represents 50% positive growth in share capital. The Union has an asset base of Kshs. 3.4 billion. The Saccos are to be given dividends to the tune of Ksh.41 million at the rate of 9% per share. It is worth noting that KUSCCO was able to produce the first Chief Executive Officer of the Sacco Societies Regulatory Authority which is commendable. Mr. Chairman The Union should continue playing its key role of assisting the Sacco movement through development of innovative products, adoption of appropriate technologies and other support services. In this regard the Saccos should support the Union by patronizing its services and products. The Co-operative movement in general should network and support each other in order to strengthen our position nationally and globally. Mr. Chairman, In conclusion I congratulate the Board, management and the delegates of the Union for working together to achieve the impressive results. The performance of any organization is dependant on leadership, the policy directions provided by members as the supreme organ and their loyalty to their organization. These are the key pillars of success particularly where teamwork is prevalent. The Board and the management must be guided by prudent business and commercial practices. The same must at all times reflect the members’ aspirations geared towards growth and development. The delegates on the other hand must exercise democratic control guided by co-operative values and principles. With these remarks, ladies and gentlemen, it is now my pleasure to wish you good deliberations in your Annual Delegates Meeting. Thank you. |
