CO-

OPERATI
VEPHI
LOSOPHYAND
MANAGEMENT
 SECTIONONE
CO-
OPERATIVEPHILOSOPHY

LESSONONE
CONCEPTOFCO-
OPERATI
ON

1.
1 WHATI SCO-OPERATI ON?
Co-oper
ati
onsi
mplymeanswor ki
ngtoget
herf
oracommonpur pos
e. Thi
sisa
joi
nteffor
ttohelp oneanot
hersoastoaccompl
ishcer
tai
ntasksthatwoul
d
benefi
tmembersofthegr
oup.

1
.2 I
NFORMALFORMSOFCO-
OPERATI
ON

Exampl
e
 AGr oupofpeoplewhocomet oget
hertoweedt hei
rcr opsofharves
tthei
r
cropsf oroneanotheri
ntur
nunti
leverybodyisassi
sted.
 Villagersbroughtthei
rres
our
cestotheircont
ractonacces sroad/dam/
catt
l edipe.t
.c.

Inconcl usi
onpeoplecar r
iedoutthes etaskswit
houtbeingf orcedordemandi ng
anypayment .Theys upplyj oi
nedt oget
herinordertoper forms omewor kwi t
h
thehopet hatthefoll
owi ngdayt heywoul dalsobenefi
tfr om t
hegr oupacti
vit
ies,
thisistheinfor
mal/t r adit
ional
co-operati
on.Remembert hatnot
hingwaswr i
tt
enr ul
es/dut ieseveryt
hingwas
ver balandever ybodyadher etoits i
nceitwasvoluntary.I t
'sbasedonmut ual
trust

Today’sinf ormalco-operationpracti
ces
 Peopl ej oi
ninghandt ocleant hevalidlypartsofthetownt heyworkand
hir
ei n.
 Peopl ecomi ngtogetherforahar ambeet obuildmoreclassr
oomsf ortheir
childr eninschoolandcolleges.
 Peopl econduct i
ngaf undr i
singdrivetobuildachurch
 Mer ry–go–r oundinwhi chmember softhegroupagr eet
ocontributea
certain amount of money ever y montht o each other intur
n vi tal
ever ybodybenef it
s.

N.B theharambees pi
riti
sKenyawhichhasbeendoneinpr
omoti
ngoursoci
al
andeconomi
cdevelopmenthasit
sroot
sinthi
stypeofi
nfor
malco-
oper
ati
on.

In conclusi
on you noti
ce thatthe need for co-
operat
ion among tradit
ional
communi ti
eswasi mport
antfortheirsurvi
val.Theyneverhadmoneyt oempl oy
labourers,bui
ldshelt
ere.t
.candt heref
orethecasetoday.Al lt
hepeopl ehave
thebas i
cneedsforfood,shelt
er,securi
tyandsenseofbelongi
ng,hencerequires
acombi nedeffort
.

Theideaofco- oper
ati
onther
eforeisnotnew,sinceaswehaves eeni thasbeen
pract
icedf oralongti
mewher ethosepeopleco-oper
atedasar esultofpeople
fi
ghti
ngf orsur
vivalagai
nstnat
ure.Theyco-operat
edinordert
os olveproblems
2
caus
edbyphys
icalenvi
ronmentwi
ldani
malanddr
ought
.

1.
3 MODERNFORM OFCO- OPERATI ON
Duet odevel opmentofs cienceandt echnologypr oblemscausedbynaturehave
reducedbuts til
lwef indour s elvescomi ngi nt
oproblemswi t
hothermembersof
society.Thi spr oblem i sbecaus eofs ocialandeconomi cinequal
it
ybeingmost
soluti
onstot hesepr oblemsl i
esi n
Co- operati
veact i
onhenceneedf orfor malco- operat
ion
Char act
eristi
csoff ormalco- oper ati
on
 For medoutoff el tneedsofmember s
 Sel f–hel p.
 vol untarism
 member shipsupr emacyi ndeci sionmaki ng
 commonobj ecti
ves
 commonbond
 Conceptofmut ual ity/r eciprocity.
 Sel freliance.

1
.4 SI
MILARITIES
 Bothai msatas s
isti
ng thei
rmember stoup riftthei
rst
andar
d of
li
vingbyvol untaril
yj oi
ningt ogethertowor
kar eto.
 Inboththereistheas pectofcommonobj ect
ive
 Theyar ebothbas edonmut uality
 Theybot haiminpr ovidings ervicestomembers
 Inboth,iti
sselfhelpor ganization

1
.5 DI FFERENCES
 Traditi
onalwasmai nlypr act i
cedi nrespecttonat uralorenvi ronment al
problemswhi lemoder nar ef ormedpr i
mar il
yasas olut i
ontoexpl oi t
ati
on
and as a col lect
ive act i
on t os ol
ve par ti
cular socialand economi c
problems.
 Traditi
onalco- operat
ionwasawayofl ifewi t
hal oos ekindfas s ociati
on
ofpeopl ewhoar ebound t ogetherby t hei
rs ens
eofs oci
aldut iesand
desir
est ohelponeanot her.Moder nco-operati
onsar ef ormedcons ciously
andr egulatedbyt helawsofacount ryandt heco-oper ati
onprincipl es.
 Ininformalco- operat
iont herulesanddut ieswer everbalwhi lethef ormer
havewr itt
enr ulesanddut i
es.

1
.6 BENEFI TSDERI VEDFROM CO- OPERATI VES
 Co-oper ati
vesencour aget hebenef it
sofeconomi esofs cal etoaccr uet o
themember s
,f acili
tatesands ervices,whi chwoul dbeoutofr eachduet o
financialcons traintsduet oi ndividualf ar
mers,coul dbeavai ledtot hem
i
nco- operati
on.
 Thr oughco- oper ati
ves ,smalls calef ar mersshoul dbei nabet t
erpos i
t i
on
tocombatpr obl emst hatappeari nt hewakeof“ greenr evolut
ion”t hey
woul dbebet terpl aceandequi ppedt omeett hehi ghercos tofmi grat i
on
and f erti
li
zerswhi chnew s eed requir e. Theywoul d bei napos it
iont o
resisttheofferoft her ichfarmer swhoar eanxioust oextends i
zesoft heir
farms . The danger s of s ocialdes tructi
on becomi ng wi der could be
reduceswi t
ht heai dofco- oper at
ives.
3
 Par tici pat ion i n co- oper at ive gr oups enabl es t he member st o make a
cont ribut ion int he i nter es toft he gr oup t o ar ti
cul at et heirneedsand
ambi tionsandmor ei mpor tant ly,r eceivef eedbackandpr ovi deameet ing
pointf ori deasandact ions .Co- oper ativeshel pt obr ingt oget herunderone
umbr ell as our cesofs cat tered and di ver sei mpul s est her efor e maki ng
meani ngf ulgr owt hpos sible.
 Co- oper at ives encour age mar ket ing pol ici es t o become f ami li
ar ized.
Insteadofcompet ingagai ns teachot hert hei rbyencour agi ngvi ct i
mi zat i
on
by t hebuyer s. Far mer sar ei na bet t
erpos i
tiont oembar k ona j oint
aggr es sivepol i cyofa“ pus hmar ket i
ngs trat egy” .
 Wi tht heai dofco- oper atives ,f ar mer scanbecomemor ecompet i
t i
veand
strongerandbebet terabl et omaket heirpr esencebef eltaspar t
ner si n
devel opmentanddemandt hei rr ight fuldueandpl ace.
 Thr oughco- oper at i
ves ,t wowaycommuni cat i
onchannel scanbeopened
andl i
nkss trengt henedwi tht hegover nment .Fr om t hegover nmentpoi ntof
view i twoul dbeabl et oexpl ai ni t
spl ansf ordevel opment ,t othef ar mi ng
communi ties. Fr om t hef ar mi ngpoi ntofvi ew,t hr oughco- oper at i
vesas
theirmout hpi ece,t hey canhopet of und t heear ning oft hos ewhoar e
respons ibl ef orpl anni ng,whoar ecapabl eofgi vinghel pandt hos ewho
establ ishal istofpr ior iti
esal locat ingr esour ces .I ti st hr ought hischannel
ofcommuni cat ion t hatt he co- oper at i
onscan hope f ors tabi li
zat ion of
prizes ,s peci alf i
s calr el ief .
 Co- oper at ive encour ages t he pool ing of s kil
l s of management and
impr ovementofs killsal r eady pr esent . Gr oup act ionencour agest hos e
who have l eader ship qual it
ies t o car ryf orwar d and t ake i nitiat ive.
Qual itieswhi char edor mant ,wi llhavet hepos sibi lity ofcomi ng t ot he
sur facet hought heydynami sm ofgr oupact i
on.Suchl eader swi llbeabl e
topar ticipat ei nt hepol iti
call ifeoft hecount rywi thf ul lerawar enes sof
theneedsofr ur als ect or s.
 Co- oper at ivesf ar mi ngcanpr ovi det hebes tofi ndi vi dualt itleont heone
handandgr oupt itl
eont heot herhand.I tencour agest hehabi tofs avi ng
amongt hei rmember sandactasameansofacces st os oci albenef itsand
educat iont othepeopl ei nt her ur alar eas .
 Co- oper at iveshel pt oadvanceeconomi cdevel opmentt oi tsmember sby
Col lect ing,t rans por t
ing,pr oces sing,and mar ketingagr i
cul turalpr oduct s
effect ivel y.
 Mobi lizi ngs avi ngi nco- oper ativeandchal lengi ngt hef undst ounder stand
member sf ors peci ficdevel opmentpr oj ect.
 Pur chas ingi nbul kanddi stri
but ionf rom i nput ss uchass eeds ,f ertilizer s
whi chhel psi nboos ti
ngf ar m pr oduct i
on.
 Shar ingt echnol ogys uchast ract or sandpackagi ngt echni que.
 Provi di ng cr edi tt o member sata r eas onabl ei nt er es tr atef orur gent
expens esl ikes choolf ees ,hos pitalbi llsandf uner als .
 Distr ibut ing Nat ionalI ncomet hr oughpar ticipationi ni ncomegener ating
act i
vi ties .
 Cer tai nj obsoppor tunitiesf ors el fempl oymenti nt hecas eoff ormer sand
artisanbes i
desempl oyments taf ft owor kf ort heco- oper atives
 Reduci ng pover ty by of fer i
ng peopl e a chance t o car ry outi ncome
gener at ingact ivi tiesj oint ly.
 Tr aini ng member s on i ssuesr elat i
ng t o bus i
nes seconomi c and s oci al
aspect sofl ife.
4
LESSONTWO
GENESI
SOFCO-
OPERATI
VEI
NTHEWORLD

Hi
stor
yoft
hecooper
ati
vemovement

Thehi s
toryoft hecooperati
vemovementconcer nstheori
ginsandhi storyof
cooperati
ves.Al t
houghcooperati
vearrangements,s
uchasmut uali
ns urance,and
pri
nciplesofcooper at
ionexis
tedlongbefore,t
hecooperati
vemovementbegan
withtheapplicationofcooperat
ivepri
ncipl
estobus i
nessorganizat
ion.

Thecooper ativemovementbegani nEur opeinthe1 9t hcent

ur y,primaril
yi n
Br i
tainandFr ance,alt
houghTheShor ePortersSoci etyclaimst obeoneoft he
wor ld'
sf i
rstcooper ati
ves,bei
ngestabl
ishedinAber deenin1 498( alt
houghithas
sincedemut uali
zedt obecomeapr ivat
epar tner
ship) .Theindus t
rialrevoluti
on
andt heincr easi
ngmechani zati
onoftheeconomyt rans f
ormeds ociet
yand
threatenedt heliveli
hoodsofmanywor kers
.Theconcur r
entlabourands ocial
movement sandt heis
suestheyatt
emptedt oaddr essdes cri
bet hecl i
mateatt he
time.

Thef i
rstdocumentedconsumercooperati
vewasf oundedin1769,inabarely
furni
shedcottageinFenwick,EastAyr
s hi
re,whenlocalweaversmanhandleda
sackofoat mealint
oJ ohnWalker
'swhitewashedfrontr
oom andbegans el
ling
t
hecont ent
satadi scount
,for
mingtheFenwi ckWeavers'Soci
ety.

I
nthedecadesthatf
oll
owed,s
everalcooperat
ivesorcooper
ativesoci
eti
es
f
ormedincludi
ngLennoxt
ownFri
endlyVi ct
ualli
ngSociet
y,foundedin1812.

By1 830,therewer eseveralhundredco-oper at

ives .Somewer einit
ial ly
successful,butmos tcooperat
ivesfoundedi ntheear ly19t
hcenturyhadf ai
led
by1 840.
However ,Lockhurs
tLaneI ndustri
alCo- oper ati
veSoci
ety(f oundedi n
1832andnow Hear tofEnglandCo- oper
ativeSoci ety),andGalashiel sand
Hawi ckCo- operati
veSocieti
es(1839orear li
er,mer gedwi thTheCo- operati
ve
Group)s ti
lltradetoday.

5
Itwasnotunt il1844whent heRochdal eSoci etyofEqui tablePi oneers
est
abl i
shedt he‘ RochdalePrinciples’onwhi cht heyrant heircooper ative,t
hatthe
bas i
sfordevel opmentandgr owt hoft hemoder ncooper ativemovementwas
est
abl i
shed.Fi nanciall
y,creditunionswer einventedi nGer manyi nthemi d-
19t
h
century,fi
rstbyFr anzHer mannSchul ze-Delit
zs ch(1852,ur ban) ,thenby
Friedri
chWi l helm Raiffei
sen(1864,r ural)
.Whi leSchul ze-Del i
tzs chis
chronologi
cal lyear li
er,Raif
feisenhaspr ovenmor einfluentialovert ime–s ee
his
toryofcr edi tunions.I
nBr i
tain,thefriendlys ociet
y,buildi ngs ociety,and
mut ualsavingsbankwer eearli
erf ormsofs imilarinsti
tuti
ons .

Rober
tOwen-RobertOwen(1771–1858)isconsideredthefatherofthe
cooper ativemovement .AWel shmanwhomadehi sfortuneint hecot t
ont rade,
Owenbel ievedi nput t
inghiswor kersi nagoodenvi ronmentwi t
hacces sto
educat ionf orthems elvesandt heirchildren.Thesei deaswer eputi nt
oef f
ect
succes sfullyi nthecottonmi l
lsofNew Lanar k,Scotland.Itwasher et hatthe
firstco-oper atives t
orewasopened.Spur redonbyt hes ucces
soft his,hehadt he
ideaoff or ming" vil
lagesofco- operation"wher ewor kerswoul ddr agt hemselves
outofpover tybygr owingthei
rownf ood,maki ngtheirowncl othesand
ultimatelybecomi ngself-
gover ning.Het ri
edt oforms uchcommuni ti
esi n
Or bist
oni nScot l
andandi nNew Har mony,I ndi
anai nt heUnitedSt atesof
Amer i
ca,butbot hcommuni t
iesf ail
ed.

Wi
lli
am Ki
ng
AlthoughOweni nspiredt heco- operativemovement ,others–s uchasDrWi lli
am
King( 1786–1 865)–t ookhi sideasandmadet hem mor ewor kabl eandpr act
ical.
Kingbel i
evedi ns tartings mal l,andr ealizedt hatthewor ki
ngcl asseswoul d
needt os etupco- operat i
vesf ort hems elves ,sohes aw hisrol easoneof
[9]
ins
t ruct i
on.Hef oundedamont hl yperiodi calcal ledTheCo- operator, thefir
s t
editionofwhi chappear edon1May1 828.Thi sgaveami xtur eofco- oper at
ive
philos ophyandpr acticaladvi ceaboutr unni ngas hopus ingcooper at
ive
principl es.Kingadvi sedpeopl enott ocutt hems elvesof ff rom s oci
ety,butr ather
tof orm as ocietywi thinas oci
et y,andt os t
ar twithas hopbecaus e,"Wemus tgo
toas hopever ydayt obuyf oodandneces sar i
es-whyt hens houldwenotgot o
ourowns hop?"Hepr opos eds ensibl
er ules,suchashavi ngaweekl yaccount
audi t,havi ng3t rus t
ees ,andnothavi ngmeet ingsinpubs( toavoi dt hetempt ati
on
ofdr i
nki ngpr ofits)
.

TheRochdal
ePi
oneer
s
TheRochdal eSociet yofEqui tablePioneerswasagr oupof1 0weaversand20
[2]
othersi nRochdal e,Engl and,thatwasf or
medi n1844. Ast hemechanizati
onof
theIndus t
r i
alRevol utionwasf orcingmor eandmor es killedwor ker
sinto
pover t
y,thes etr
ades mendeci dedt obandt ogethertoopent heirowns t
oresell
ing
foodi temst heycoul dnotot herwiseaf f
ord.Wi thlessonsf r
om pr i
orfai
led
attempt satco-oper ationinmi nd,theydesignedt henow f amousRochdal e
Pr i
nciples,andoveraper iodoff ourmont hstheys t
r uggl edtopoolonepound
sterli
ngperper sonf orat otalof28poundsofcapi tal.OnDecember21 ,1
844,
theyopenedt hei
rs torewi thaver ymeagers electi
onofbut t
er,sugar
,flour,
6
oatmealandafew candles.Wit
hint
hreemonths,t
heyexpandedthei
rsel
ect
iont
o
incl
udeteaandtobacco,andtheyweresoonknownf orpr
ovidi
nghighqual
it
y,
unadult
erat
edgoods.

TheoldCo-
operat
ivebui
ldi
ngbehi
ndt
heGat
esheadMi
llenni
um Br
idgei
n
Newcast
leuponTyne.

Co-
oper
ati
vest
oday-Co-operativecommunitiesarenow widespread,
withoneofthelargestandmos ts
uccessf
ulexamplesbeingtheMondr agón
Cooperati
veCorporati
onintheBasquecount
ryofSpain.Co-operati
veswereal
so
success
fulinYugoslaviaunderTitowhereWorker
s'Councilsgaineda
si
gnifi
cantrol
einmanagement .

InmanyEur opeancount ri
es,cooper ati
veinst
itut
ionshaveapr edominantmar ket
shareinther etailbankingandi nsurancebusinesses.Anannualgener almeeting
ofar etai
lco- operati
vei nEngl and,2005. I
ntheUK,co- oper
ativesformedt heCo-
operati
vePar tyintheear ly20t hcenturytorepr esentmember sofco- opsi
n
Parli
ament .TheCo- oper ati
vePar t
ynow hasaper manentelector
alpactwi ththe
LabourPar ty,ands omeLabourMPsar eCo-oper ati
vePar t
ymember s .UKco-
operati
vesr etainas i
gnificantmar ketsharei
nf oodr etai
l,i
nsurance,banking,
funeralservices,andt hetraveli ndustryinmanypar t
softhecountry.

Denmar khashadas tr
ongcooper
ati
vemovement
.I
nCol orado,t
heMeadowl
ark
cooperati
veadmini
sterst
heonlypri
vat
efreel
andprogr am int
heUni
tedSt
ates
,
providi
ngmanys er
vicestoi
tsmemberswhobuyands elltoget
her
.

IntheUni
tedStat
esther
ear eover29,
000co-oper
ati
vesempl
oyi
ng2mi
lli
on
peoplewi
thover$652bill
ioninannualr
evenue

2.1 DOCTRI NEOFCI RCUMSTANCE

Rober tOwenbel i
evedt hatmenwer eneit
hergoodi
nit
ial
ly;i
twascircums
tance
thattheliveinthatmadeones earch.Heasgoodnes
sofhumanit
iesandbeli
eves
thatneedchanged.Hei niti
atedt hefol
lowing;
 Di scouragementofwor kinghours
 Pai dhighwages
 I nt
roduceds hortworkinghour s
 Pr ovidedhous i
ngf orwor kers
 Hei ncr
easedpr oducti
vi t
y.

Ot
hereffort
s
 He s t
arted mutually ass
ociat
ion for mutual hel
p alt
hough he never
succeeded.
 Hei nt
roducedlabournotestobeexchangedf orgoodsbyworkers.
 Heal socreatedaf unofexper i
encealthoughhisli
fewastermedasr ich
promiseandpoorper formance.

2.
2 CO- OPERATIVESCHOOLOFTHOUGHT
Many economi
sts
,therefor
e,thi
nk iti
spr ef
erablet
or ef
rai
nfrom any f
ixed
def
ini
ti
on.They agree,howeverthatco-
operati
vesnotanend i
nits
elfbuta
7
meanstocer
taingoal
.Theopini
onsast owhetherthi
sgoals
houl
dbeandhow i
t
shoul
dbeachievedaredivi
ded.
Therear
ethreemainschool
softhoughti
nthi
sr es
pect.

1.Theco- oper at
iveent er pris
es chool
Thiss chooloft hought“ pace- maker s”or“co-operati
veyar ds t
icks chool ”isbas ed
on def init
ion that t he co- operat i
ve s ociet
y i s a vol untar y as sociati
on of
independenteconomi cuni t,f arm,bus inessand hous ehol ds,tof orm abus iness
enterprise”organized,capi talizedandmanagedofandf ori t
smemberpat r
ons,
furnishi
ngand/ormar keting,atcos tgoodsand/ors ervicest opat rons”
The pr imar y object
iveofa co- oper ati
ves ociety undert hes eaus picesi st he
advanceofmember ’seconomi ci nterest
s,and pr otecti
ng and mai ntaining the
economi ci ndependence oft he s mal lentrepreneurand f armerby bal ancing
economi cweaknes sthroughpool ingr esources,andt husachi evementeconomi cof
scale.The member s us ual ly s ee i nt hei
rs oci
ety one t ype of economi c
organizat i
on,amongot hers,bes tsuitedt otheirparti
culars i
tuationandneedsi na
compet it
iveeconomi cs ystem.

Thiss chooloft houghthasa s t

rong following int he classi
calco- oper ati
ve
count r
ies,es peciallyi nt he co-oper at
ive movement sf ormed by f ar mer sand
smal lentrepr eneurs,butal somor eandmor ei nthecons umer’movement .Itisits
his
tor i
calbas isint hel i
ber alis
m and pr act i
calappr oachofmenl ikes chulze-
Delitzsch“HaasRai ffeei
s enandPl unkett
”.
Her menns chulze-Del i
tzs
ch( 1
808- 83)in Ger manyf ormedpeopl e’
sbanksandco-
operatives upply or ganizationsamong ur ban smal lt r
ader s
,bus i
nes s
men and
arti
sans .Anot herGer man,Vi kt
orHuber( 1800-69),madet hefirs
teff ortt ostart
co-oper at
ivehous i
ng.

Themot i
vesofthes
eear l
yco-operativewer ebas
edei t
heronthemerefeel
ingof
Chri
sti
anorhumani tar
ianresponsi
bilityofanmanf aced bythemiseryofhis
fel
low menasitisthecaseofRai fei
s en,Haas
,Plunket
tetcoronthepoli
ti
calor
onthepoli
ti
calmainstr
eam ofthei
rt i
me.

2.Theco- oper ativecommonweal ths chool

Thiss chooloft houghti snots ati
sfied wi t
hi mpr oving themember ’
seconomi c
positi
onwi thi nt heexi s
tingeconomi cs ys t
em butwant s,asal ong–ter m objecti
ve,
toel i
mi natet hecompet it
ive,capi t
al i
sti
cs ys t
em andr eplaceitbyaneconomi c
system bas edonmut ualco- operati
on.
Thes et heor i
eshave t hei
rs ourcei nt heemer ging sociali
sm oft heni neteenth
century,es peci allyi nChr ist
ians ocialis
m andt hechar ti
stmovement .
Itisconnect edwi thmenl ikeRober tOwen,Henr ySai nt-
Simon,Char lesFour i
er ,
LouisBl anc,Char lesGi de,Fer dinandLaSal leandmanyot hers.
Theyhadat remendousi mpactont hecons umer s’movement ,thoughmor eint he
form ofi ns pir ati
onhadbydi rectinfluence.Thi ss pi
ritconti
nuedt ol i
ngeroni n
many cons umer s’s ocieti
esand f ound a r evivali n developing countri
es,f or
ins
tance,i nt het eachi ngofMahat maGandhi ,int heof fi
cialgover nmentpol icy
towar ds co- oper at i
ves and i nt he Lat i
n-Amer i
can advocat es of ‘lar epubl i
c
cooper ati
va’et c.

8
3.Thes ocial istco-oper atives chool
Thes ocial istco- oper atives chool ,t hemos tr ecents choolt hought,i sbas edont he
Mar xi st-lerint heor yaccor dingt owhi chco- oper ativecanbeani mpor tants tepin
soci al i
s tpr ogr ess .lenrin’ soper ativepl anal locatest oco- operativest hepar tof
trans i
tor ys tagewhi chf aci liti
est rans for mat ionf rom capi tali
smt os oci al i
sm and
event ual lyt o communi s m,as par tof t he hi s
tory pr ocess of r evol utionary
devel opment .Undert hisas pectt heco- oper at ivesoci et
ycoul dbedef inedast he
“economi c and s ocialor gani zat ion oft he wor king peopl e”,s erving notonl y
inter estoft hememberbutal sos oci alpr ogr ess’(whi chi ntermsofMar xism-
Leni nism means a devel opmentt owar ds a event ually communi s tics ociet
y)
whi ch’pr omot es,s af eguar ds and r eal izes t he interes tan as pirat ion of t he
wor kingpeopl e”.
Ifanat temptwast obemadet of indacommondenomi nat orf orthes edi verging
opi nions ,oper ation coul d be def ined i nt he wi dests ense as a vol untary
organi zat ionofeconomi cuni t
s ,bas edonequal it
y,car ryingoutanal locatedor
self -giveneconomi cobj ectives .
 Whati sr elevanceoft hi
sco- oper atives chooloft hought ?
 Ar eco- oper ati
vesi ndevel opi ngcount iesbas edonanypar ticul ars choolof
thoughorami xtur eoft het hr ee?Whi char ethedomi nants chooloft hought
andwhy?
 How has t he hi storicaldevel opmentof co- oper ati
ves i n Kenya been
i
nf luencedbyt het hreeoper at i
ves chool softhought ?
The meani ng o economi c co- oper ation and co- oper ative pr incipl es chapt er
2(pp. 47- 53)i nW. JCHEESMAN,
C.B. E.MC.Handbookf orco- oper at iveper s onneli ntheCar i
bbeanFAO. TRI NIDAD
(1956) .

LESSONTHREE
CO-OPERATI
VEPRI
NCI
PLES

3.1 I NTRODUCTI ON
Co-operati
vepr i
nci
pl esareguideli
nesbywhi chco-operati
vesputt hei
rval ues
int
o pr acti
ces. Co-operati
ves are the base of s el
f-help, responsibi
li
ties
,
democr acy,equali
ty,equityand soli
dari
ty.I
ntr adi
ti
onsoft hei
rfounder s,co-
operati
vesmember sbel i
eved i
ntheet hi
calvalueofhones ty,openness,social
responsi
bili
tyandcar ingforot
hers
.

9
3.2 THEROCHDALEPI ONEERS
Theywer e28weaver swhol i
vedi navi ll
agei nEngl
and.Theyweref ollower
s
ofRober tOwenwhoi n1844t riedtostartther
eowns tor
etoendexploit
ationby
ret
ailer
s.Theyf ormedthef i
rstsuccessf
ulcons umerco-
oper
ati
vesociety.Thei
r
effor
tsiniti
allywer eafailureduet o;
 Cr editsales
 Theys oldbelow mar ketrateandpr i
ces
 Unheal thycompetiti
on

Lat
ert
heyimprovedthei
roper
ati
onandi
ncr
eas
edi
n;
 Member s
hip
 Acti
vit
ies
 Sharecapit
al
 Paymentindivi
dend

Obj
ect
ivesofRochdal esociety
 Toestabl is
hs elf-s
upporti
ngneeds
 Toprovi dehous ingformember s
 Tocreat eempl oymentt hroughmanagementi
nthes
oci
ety
 Topur chas elandf orculti
vati
on bymembers
 Toopenhot elformember s
 Toopent hecommuni t
yl i
brary

3.3 THEORI GINALROCHDALEPRI NCIPLES

Thes ocietywasf ormedwhenBr it
ainwasunder goingindus
trialr
evol
uti
on.Asa
resultofr evoluti
on,al otofpeoplelosttheirj
obsi nthefactori
esasmachi nes
wer eint
r oducedtor epl
acet hem.I
naddi t
iontothis
,therewasagener allackof
creditands upplyofes s
entialcommoditi
eslikesalt
,sugar,f
lourandcookingf at
.
Businessment ookadvant ageofthi
ssit
uationands t
artedsel
lingimpur
epr oducts
atver yhighpr i
ces.

I
tisagai
nstthisbackgr
oundt
hattheRochdalePioneerdeci
dedtodr aw upsome
sor
tofprinci
pleswhichwouldguidet
heiroperati
onsasaco- oper
at i
vesoci
ety.
Thesepi
oneersther
efor
edeci
dedonthefoll
owingpr i
nci
ples
.

 Thatt hes oci etywoul dnoti nt erferewi t

ht hevar i
ousr eligi
onsorpol iti
cal
differencewhi chexistedi nthecommuni tybutwoul dal l
ow anybodywi th
similari nter es tstotheseoft hes oci
ety,t oj oini t(reli
giousand pol iti
cal
neutrality).
 Thatt hecapi talwoul d ber aised from t hemember sand woul d beara
fixedr ateofi nteres
t.
 Thatonl yt hepur estproductss houldbes uppliedt omember s.
 Thatf ul lwei ghtandmeas ur
eofeachpr oducts houl dbegi ven.
 Thatmar ketpr i
cesshoul dbechar gedandnocr edit.
 Thatpr ofits houl dbes haredaccor dingt ot heamountofpur chas
esmade
byeachmember .
 Thateachmembers houldhaveonevot er egardl essoft hes haresheholds.
(Democr aticcont rol
).
 Thatt hemanagements houl
d bei nthehandsofof fi
cer sand commi t
tee
member sel ect edperiodicall
y.
10
  Thatadefini
tepercent
ageforprof
itss
houldbeus edi
neducation.
 Thatf r
equents t
atement
s ofsoci
ety’
stransact
ions and bal
ance s
heet
s
shoul
dbepr esent
edtomembers.

Thesepr i
nci
pleswer eintended fortheregul
ationofaco- operat
ives oci
etyas
indi
catedbyt hegreatstr
es sonthes al
eofpur eproduct
sands aleofgoodsf or
cashonly. Itwast her
efor efoundnecessarytor ef
ormulatetheprincipl
esfor
adaptati
onbyot hert
ypesofCo- operati
ves
.

3.4 I NTERNATI ONALCO-OPERATI VEALLI ANCES( I

CA)
Itwasfor medi n1895.Iti
saworldwi deor ganizationanddr awsitsmember shi
p
from al
lcount ri
es.Itisanumbrel
labodyf orallco- operat
iveorganizat
ionsall
overthewor ld.Iti
sanapexbodyf oral lcrops.I tactsonanadvi soryagentand
poli
cy f ormulati
on body which representsthe i nt
erestof co-operat
ives i
n
int
ernat
ionalforums .

Obj
ect
ivesofICA
 Cus t
odi anofco- operati
vepr inci
plesandpr omotestol ookwher eitis
forwor l
dl evel .
 Repr es entaco- oper ati
vei not herfor umss uchasgover nment ,UNO,
ILO,
 Subs ti
t uteprof itmaki ngi nsti
tuti
onwi thoneofs uchs ervicetowhol e
communi tybas edonmut uals elf-
help
 Topr eachandpr opagateco- operativeideat hr
oughoutt hewor ld
 To pr omot eeconomi cr elati
on among co- operativest hroughoutt he
worldbyencour aginginter-co-operativet r
ade.
 Topr ovi deaf orum f ordiscus si
onsbet weenmember sofco- operative
movement s.
 Tokeepmember sawar eofoneanot herpr ogressandexper i
encesal l
overthewor ld.
 Pr omot eco- oper ativedevel opmentt hroughoutt hewor l
d al ong co-
operativepr inciples.

3.
5 CO-OPERATI
VEPRI
NCI
PLESADOPTED BY THE I
CA COMMI
SION OF
1966.

TheICA Commi
ssi
onadopt
edthefol
lowingpri
nci
pleswhi
char
eneces
sar
yfor
t
herunni
ngofagenui
neco-
oper
ati
vesoci
ety.

 Openandvol unt
arymember ship
 Democr ati
cadmi ni
strat
ion(
onemanonevot e)
 Limitedint
erestonsharecapit
al
 Paymentofdi videndsandbonus estomembers.
 Promot i
onofeducat i
on
 Co-operati
onwi t
hot herco-
operativesatl
ocal,nat
ionalandi
nter
nat
ional
levels.

3.
5.1 OPENANDVOLUNTARYMEMBERSHI
P
1
1
Thisprinci
pler epresentstheri
ghtofanybodywhof ulf
ilst
heconditi
onssetoutin
theby-lawsofacooper ati
vesocietytobecomei t
’smembers,regardles
sofhi s
colour
,r el
igion,sex,tri
beorpol i
ticalaf
fil
iat
ion.Amemberofao- operati
vecan
alsowithdraw hismember s
hipfrom aco-operat
iveifheisnotbenefi
ti
ngf rom i
t
toforanot herval i
dr easons.

1
.1.
1 DEMOCTRATI
CADMI
NISTRATI
ON

Allmembersofaco-operat
iveorgani
zat
ionhaveanequalsayint
herunni
ngof
i
tsaffai
rs. Eachmemberhasonevot eregardl
essofhow manyshar
esheas .
Everypaid–upmemberhasar i
ghttovotei
nageneralmeeti
ngasweass tand
forel
ect
ionsifhes
owishes.

3.
5.3 LI
MITEDI
NTERESTONSHARECAPI
TAL.

Co-oper ativesareal l
owedt opayi nt
erestonshar ecapi
taltothei
rmember supt o
amaxi mum of1 0% oft hefull
ypai ds hareperyear .Thi srateisregulatedto
discour aget hesociet
iesfrom t
radingwi ththemember ss har
e.Thel imit
ationof
theinter estpaidons harecapit
alal sodiscouragesthemember sfrom buyingthe
sharess olel
yf orthepur pos
eft radingwi ththem orusingthem forspeculati
ve
purpos es .

3.
5.4 PAYMENTOFDI
VIDENDSANDBONUSESTO MEMBERS

Ifas ocietyhasmades omes urplusatt heendofaf i

nanci
alyear
,itshoul
dbe
paidoutt omember sinaccordancewi thhow mucheachhascontri
butedtothe
surpl
us .Thel aw howeverrequiresthes oci
etyt
osetasi
de25% ofthatsurpl
us
befor
edi s
tri
but
ingitt
othemember s.Thi samounti
sputinthes
tat
utoryres
erve
fundwhi chisusedinexpandi
ngt hesociety’
scapi
tal
.

A di
videndispai
dt oamemberofaco-
operati
veorgani
zationifthesurpl
usin
ques
tioncomesaboutasares
ultoft
hei
nter
estthatt
heco-operat
iveearnsfrom
manys har
esamemberholds

A bonusont heotherhand i
spaidf r
om t hes urplusar is
ing di
rect
lyf rom t he
busi
nessthemember shaveconduct
edwi t
ht heirco-operat
iveorganization.For
exampleamemberofamar keti
ngsocietywi llbepai dabonus espr opor ti
ont o
how muchproducehehasdeliver
edtohi ssociety.Inas avingandcredi ts oci
ety,
aemberwoul dbepaidabonusi nrel
at i
ont ohow muchhehasbor rowedf rom
hiss
ociet
y.

3.
5.5 PROMOTI
ONOFEDUCATI
ON

Thispr i
nci
plerequi
resallco-operat
ivestomakeprovi
sionfort
heeducat
ionof
theirmembers,commit
teemember s,theempl
oyeesandthegener
alpubl
iconthe
princi
pleandoperat
ionofco-operati
on

3.
5.6 CO-
OPERTI
ONWI
THOTHERCO-
OPERATI
VES

1
2
Thispri
ncipleexpress
estheneedforco-oper
ati
veinst
it
utionst
ofir
ml ysuppor
t
each other in fulf
ill
ing t
hei
r object
ives ei
ther wit
hin each count
ry or
int
ernat
ional
ly.

The co- oper

ati
ve princi
plefor
m a s ys
tem under which al
l co-oper
ati
ve
organizati
onsoper
ate.Thepri
nci
plesar
ether
efor
eins
eparableandtheysupport
andr einf
orceoneanot
her.Thy

3.
6 ICACO- OPERATI VESOCI ETYPRI NCIPLESOF1 995
3.6.1 VOLUNTARYANDOPENMEMBERSHI P.
Co-operat i
vesarevoluntaryorgani
zati
onopentoallper sonswhoar
eablet
ous e
thei
rs ervicesandwi lli
nglytoaccepttheres
ponsibili
tyofmembershi
p,wi
thout
gender,s ocial
,raci
al,poli
ti
calorrel
ati
onaldi
scri
mi nati
on.

3.
6.2 DEMOCRATI CMEMBERSCONTROL
Co-operati
vesar edemocr aticorganizati
onscontr
ol l
edbyt hei
rmember swho
activel
ypr edi
cateins et
t i
ngpol iciesand makingdeci si
ons
.Menand women
servingaselectedrepresentati
vesar eaccount
ablet othemember s
.Inpri
mary,
co-operati
ve member s have equal r i
ghts(one member one vot e)and i
n
secondary,ter
tiaryandapexs ocieti
esareorganizedi ndemocrati
cmembers’
partici
pati
ons.

3.6.3 MEMBERSECONOMI CPARTI CIPATI ON

Member scont ributeequitabletoanddemocr aticallycont r
olthecapi t
aloft heco
-oper
at ives oci ety.A leastpar toft hatcapit
ali sus uall
yacommonpr opertyof
theco- oper ative.Member susuallyr eceivelimited compens ationinanyont he
capit
als ubs cribedasacondi t
ionofmember s
hip.Member sal l
ocat esuppl
iesf or
anyoft hef ollowi ngpur pose:
 Devel oping theirco-oper ati
ves oci
ety, possibl
y by s etti
ng up r
es er
ve
par tofwhi chatl istwoul dbeindivisi
ble
 Benef iti
ng member si n proport
ionst ot heirtransactionswi t
htheco-
oper ativesociety
 Suppor ti
ngotheract i
viti
esappr ovedbymember s

3.6.
4 AUTONOMYANDI NDEPENDENCE
Co-operat
ivesareautonomous ,s
elfhelporganizati
on,cont rol
ledbythemembers
.
Iftheyenterint
otheagr eementwi t
hotherorganizati
onsi ncludi
nggover
nmentor
raisecapit
alf r
om externalsources,t
heydos oont ermst hatensur
edemocrat
ic
controlbymember sandmai ntainthei
rco-operat
iveaut onomy.

3.6.
5 EDUCATI ON,TRAINING,ANDI NFORMATI ON.
Co-operatives pr ovi
de educat
ion and t rai
ning for thei
r member s,elected
representati
ves ,manager
sandempl oyeess othatt
heycancont ribut
eeffecti
vely
tot he devel opmentof thei
r co-
operatives.They inform the gener
alpubl i
c
particul
ar lyyoungpeopleandopini
onl eadersaboutthebenefit
sofco-operati
on.

3.6.6 CO- OPERATI ON AMONGTHECO- OPERATIVES

Co- operat
ivesoci
eti
esservet
hei
rmember smoreeff
ectivelyands tr
engthent
he
co- oper
ativemovementbyworki
ngt
ogethert
hroughlocal,nat
ional
,regi
onaland
internati
onalst
ruct
ure.
13
3.6.7 CONCERNFORCOMMUNI TY.
Co-operat
ives oci
eti
esworkforthesus
tai
nabledevel
opmentoft
hei
rcommuni
ty
throughpoli
ciesapprovedbythei
rmembers.

LESSONFOUR
HISTORI
CALDEVELOPMENTOFCO-
OPERATI
VESI
NKENYA

4.1 I NTRODUCTI ON
Devel opmenti sachangepr ocesschar acteri
zedbyi ncreasedpr oductivit
yi nthe
distr
ibutionofs oci
alproductandt heemer genceofindigenousinstit
utionswhos e
relati
onswi t
ht heoutsi
dewor l d arechar acter
ized byequal i
tyr athert hanby
dependence
In co- operat
ive sector we l ook at t he role of co-operati
ves i n nat i
onal
developmenti n Kenya.We s hallour selvest o whatextenthasco- oper at
ives
contri
but ed tot he reduct
ion/eliminati
on of pover ty,unempl oyment and i n
inequal i
tyamongi t
smember sandi tsKenyansi ngeneral.

Thehi
stor
yinco-operat
ivedevelopmentmaybedi
videdi
ntot
hreemai
nphas
es.
 Earlycolonialperi
od-1908-
1945
 Latecoloni
alper i
od-1
945-1963
 Postcoloni
alper i
od-1
963-date.

4.2 EARLYCO- OPERATI VESDURI NGCOLONI ALPERI OD1 908-1945

Themoder nco-operati
vemovementi nKenyadat esbackt otheyear1 908,when
thefir
stco-operati
ves ocietybyEur opeanf armer sint hewhi t
ewasf ormed.The
nameoft hesocietywasLumbwaf ar mer ’sco-oper ati
ves ociet
yandl aterwas
renamed asKi pkelionco- operati
ves oci ety.Itwass i
tuated atKer i
chodi stri
ct.
Theobj ecti
vesoft hes ociet
y wer et omar ketcer ealscr ops,frui
tsand dai ry
productsbelongingt owhi t
es ett
lers
.I tal sobr oughtf erti
li
zers,chemicals,seeds
and otheragr i
culturalinputsi ncol lectiveef fortsf ori t
smember s.Eur opean
sett
ler
s hence benef it
ed f rom f armi ng,mar keting of pr oductsi ts and the
economyofs cales.

In1931,KFA wasr egi

steredasaco- operati
ves ociet
yt otakeovert herol
eof
Kepkelion
Co-operat
ivesociety.Itwasanas sociat
ionofEur opeanf armer sandwasbas ed
ons omebas icco-oper ati
vei deas
.Theydi dn’tobserveco- operat
ivepri
nci
ples
li
kevol untar
y and openmember ship becausecol onialgover nmentdi
d all
ow
Africantoparti
cipantint heearlyco-operati
vesuntilthemid1 940s.

Reasons why Br i
ti
sh col
onialgover nmentdi d notallow the i
ndi
genous
Afri
canstopar t
ici
pateinco-
operativeatthattime
 Thecolonialgovernmentfel
tthatitwast ooearlytoall
ow Afri
canengage
in
Co-operat
ives.I
twasbel i
evedt hatitwoul dbei mpos
s i
bletofi
ndpeople
14
 whocoul dcommandt het rustoft heirf ellow Af ri
cani nkeepingbus iness
operat i
on.
 TheEur opeans et
tlerswant edt omaxi mi zet hei
rpr ofitbyt r
adingunder
thepr etextof
Co-oper ativeor ganization,therebyenj oyingt hepr i
vilegesprovidedbyco-
operat i
vesal one
 The col onial gover nment pol icy gener ally did not encour age equal
polit
ical ,economi c and socialpar ti
cipati
on ofAf ri
can wi t
ht heir
Europeansmas t
ersandgener allyr egardedasas ourceofcheapl abors.
 The col onial pol icy encour aged pol itical suppr essi
on towar ds t he
colonized,bas edont hef eart hati fAf ri
canwer eper mit
tedtopar ti
cipate
in co-oper ati
ve,t hey woul dr ealize the s ocio-
economi c di
spariti
est hat
exist
edbet weenAf ricanandwhi t
es.

Objecti
ves behi
nd t he es t
abl is
hmentof t he co- operati
ve s oci
ety by whi
te
set
tler
s
 Topr ovidehighqual ityofr aw mat eri
al s.
 Tocreatemar ketf ort heagr iculturalpr oduce
 Toenabl ethePr ocessingt heirfar m produce
 Tocheckt heexpl oit
at i
ont readofmonopol ist
ic
 Tocreateempl oyment
 Topr ovideinput satl ow cos t
 Toimpr ovet heirlivings tandar ds
 Tocreateuni tyandcor porationamongs ett
lers
 Tofor m aFor um f ordi scussionamongt heEur opeanfarmers

4.3 CO- OPERATI VEDEVELOPMENTI NTHEPERI OD1 946-1963

Dur i
ng t his per i
od t he col onial gover nment al lowed Af ri
can t of orm co-
oper at
ives.
Reas ons
a)Neces sitytoi mpr oveAf ricani nr e-buil
dingofeconomy
Thecol onialgover nmental l owedAf ri
cant opar ti
cipateinco- operat i
vesas
awayofens ur i
ng:
 Pr ovisionofr aw mat eri
alst othecolonialhome
 Paymentoft axesbyAf ri
cans t of i
nancei ndustr
iesoft hecol oni
al
admi nist
ration
 Faci lit
ationofs ocio–economi cactivit
iesinther uralareasi nKenya
Ther eforether easonwhyt hecol oni
algover nmental l
owedAf r
icant of orm co-
oper at
ivewast oenabl et hegover nmentt ohavet otalcontroloverAf r
ican. smal l
-scalecof feeand pyr ethr um gr ower s
.Ther efor
e,on- member sofco- oper ati
ve
wer enotal lowedt ogr ow t hes ecas hcrops .
Thei mplement at i
onoft hes i
vynner t
onpl anr emoved t hebar rier
sonAf r i
can
participati
oni nagr icultur e. thispaved way f orthegr eatpar tici
pationoft he
indigenousAf ri
cani ncommer ci
alf armi ng.

b)Enact mentofco-oper ati

veor dinanceof1945
The fir
stCo- operat
ive s ociety ordi
nance (l
aw)i n Kenya wasi nt
roduced by
col
onialgover nmentin1931andwasl ateramendedi n1932.
Theco-operativesocietyor dinancewast oregulat
et heoperationofco-oper
ati
ve
s
By1 944,21co- oper
at i
ves ociet
ieshad beenr egi
stered and outofthese7have
15
beender egister edl eavingonl y14inoper ati
on.Thecaus ewaspoormanagement
by t he of ficial s and i nadequatelegal pr ovisi
on.Due t ot he caus es
,t he
gover nment i nvited ef fectst o make pr oposal sf or organizi
ng s mall-
s cale
managementf armer si nt oco-operat
ives.Theycameupwi ththeco- operative
ordinance of1 945 whi ch wast oimpr ove to co-operati
vesi nt he yearst hat
foll
owed.I twast hisor dinance t
hatcr eated the departmentofco- operative
underar egis t
r arf orco- operati
vein1946
Ther es ponsibilityoft hedepar t
mentwas :
 Pr omot ing
 Cont r olling
 Educat ing member sand publ ic on the need and us efulnessofco-
oper ativeef forts

Power
sofr egis
trarofs ocieti
esass t
atedintheco-operat
iveor di
nanceof1
945.
Theordi
nancegavegui delineon:
 Registrat
ionofco- operat i
vess oci
eti
es
 Rightandl iabil
it
iesofr egi
steredco-operati
vesoci
eties
 Mat t
ersregar di
ngt hef undsandpr oper
tiesofregi
steredsoci
eti
es
 Settl
ementofdi sputes .

c)St rugglef orAf ricannat ional ism

From 1 946 Af rican nat i
onal ism ( struggl ef or i ndependence)began put ti
ng
pressureont heBr itishcol onialgover nmenti nKenyat oal low mor epar t
icipation
by Af ricansi nt he economy.The col onialgover nmentt hereforeal l
owed t he
format i
on and r egi strati
on ofmor e Af rican co- oper at
ive s ociet
iesundert he
managementofAf ricanal thoughunders trictcont r
ol .Bet ween1 945and 1 980,
mos tofco- oper at ives ocieti
esf ormedwer easar esultoft his
.By1 950t heco-
operativer egis t
rarcont ained75vi ables oci et
iesmaj ori
tiess uchwer ef oundi n
coffeegr owi ngar easl i
keki ambu,ki sii,nyer i
,e.t.
c.dur ingt hes ameper i
od1 83
soci
eties had been der egister ed f or t he f ollowing r eas ons:t he co-oper ati
ve
soci
ety
 Some r egi stered co- oper ati
ve s oci et
iesdi d nots t
artoper ati
on af ter
regis tr
at ion.
 Nonpaymentofdebt sby co- oper ati
veand cr editorsdemanded f or
cancel l ation.
 Vol unt ar yl iquidationatt her eques tofmember s.
 Li qui dat i
on by t he r egistrar owni ng t o non- camphene wi th t he
permi ssionsoft heor dinancebyt heco- operatives .
 Mos tsoci et i
eswer el i
quidat edei therf ornotbei ngeconomi callyval ue
orf orl ackofpr opermanagement .

EffectsofMauMauupr ais i
ngt oco- operativemovement
Africannat ionali
sm event uallydevel opedi ntoMauMauwarofi ndependence.
Thedecl arati
onofs tat
eofemer gencyi n1952br oughtadverseef f
ortst otheco-
operativemovement .Theof ficialsofco- operativeswhohaddi r
ecti nterf
erence
withcol onialadmi nistr
at orsint olieofco- operativeadminist
rati
onwer etermed
bytheirf ellow Africansascol laboratorsandt raitors
.Thisaffectedco- operati
ve
soci
etiesbecaus etheyf ear edt obeki lledbyt heMauMau.
However ,manyco- oper ativei nKenyas ummedt heupheavalsMauMauwhen
thestateofemer gencyendedi n1 958.
A placel i
kenyanza,r egistrationofco- operati
veshadcont inuedt ogr ow dur i
ng
16
t
heemer
gency.

Landcons oli
dat ionanddemar cation
Thisbegani nl at e1950 ins omepar tsot hecount ry.During early1960’sthe
populati
onofcent ralKenyaar easwhi chhadbeenbadl yaf fectedbys tat
eof
emergencys tartedt osett
leinal readydemar catedl and.
Effectsonco- oper ati
vesocietiesofKenyai ncluded:
 Agr i
cul t
ur alproductional loverthecount ryintensi
fied.
 Smal l-hol dersfarmer splant edmor ecashcr ops
 Dairyf armer simprovedt hequal i
tyoft heiranimals
 Poul t
ryf ar mersusedbet t
ermet hodofpr oduct i
on.
 Hor t
icultur alfarmersincr easedproduct i
on.
Thisled tor egis tr
ati
onofmor eco- operati
vesi mpr oved effi
ciency and bett
er
ret
urnstoAf rica.

4.4 DEVELOPMENTOFCO- OPERATI VEAFTERI NDEPENDENT

Reas ons that l ed t or apid devel opment of co- oper ative dur i
ng t he pos t
independenceper iod
a)Pol i
ticalr easons.
Beforei ndependence,co- operative wer er egarded mer ely as a vehi cl
ef or
intr
oducing l imited cas h crops tot he Afr ica small-holders.However af ter
independence,t he obj ecti
veschanged many new t ype ofco- operative being
formed.Maj orit
yoft hesesocieti
esi nvolvedt hemar keti
ngofagr icult
ur alcrops
suchascof fee,mai ze,beans,pyr et
hr um,cott onanddai lypr oduct
st hrought heir
co-operati
vess oci et
ies.t
hiswasnot icedbet ween1 963and1 964.
Theexpans i
ont ookpl aceatt hefollowi ngareas .
 Set tl
ementar eas
 Whi t
ehi ghlands
 Tr adi t
ionals mall-holderss ectors

i) Sett
lementar eas
Alsomanymul ti
-purpos
emarket
ingco-
operati
vesoci
eti
eswereregi
ster
edtothe
new Afr
icans et
tlersint
hepr
ovis
ionoffar
m- i
nput
s,market
ingfar
m produceand
tr
ansport
ation.

i
i) Whi tehighlandareas
Many co-oper
ativeswer ef or
med wit
ht heobjecti
vesofpur
chasi
ng European
far
ms .They wer e encouraged t
o poolf i
nancialres
our
ces among l
andless
Kenyantopurchas eEuropeansfar
mers.

ii
i) Tr adit
ionalsmall-
holderareas
Thisinvolvestheexpansi
oncas hcropgrowinge.
g.s
ugar canesoci
eti
esi
nki
sumu,
coffeeanddai rysoci
eti
esinpartsofcentr
alandeaster
npr ovi
nces.

Therolethatpoli
ti
csplayedi nthedevel opmentofco- operat
ives
Aft
erindependence,t
heef f
ortt oform co-operati
veswer eprimar i
lypol i
ti
cally
moti
vated asaway ofbui lding t he nature”settlement”co-operati
veswer e
pol
it
icall
yi nspi
red as wellas l and pur chase( farm)co-operative societ
ies
.
WantedAf ri
cantoacquir
el andsandot herpr oper
tiesleftbywhi t
es et
tler
shence
17
t
heywer emot ivatedpol i
ti
callyandgi venassistance.Manys ocieti
esf or
medi n
small-
holders ectorhadbeencr eatedtodemons tratetheirint
erestindevel oping
t
his Gover nment
Thereforetheco- operati
vemovementwass eenbyt hegover nmentasavehi cle
fortheintr
oduct i
onofAf r
icansociali
sm andstrengthenr ati
onalintegrati
on.
Thiswascont ainedi ntheseasonalpapersno.1
0of1 965onAf ri
cans ociali
sm and
i
tsappl i
cati
ont opl anni
nginKenya.

In1963t herewer e1930 co-operatives ociet

iesoutofwhi ch655wer eacti
ve.
Therewasar apidgrowthofco- oper ati
vewi t
har egist
rationof200soci
eti
esper
year.Byt heendof1 966,therewer e1 744co- operati
ve. r
egist
eredoutofwhich
mostwer es ti
ll agr
icult
ural oriented.However dur ing thi
st i
me some co-
operat
ives oci
eti
esfail
edduet o:
 Poormanagement
 Inadequatecop-operat
iveeducat ionandt rai
ning
 Lackofeconomi capprais
albef orer egi
s t
rat
ion

b)Economi creasons
After independence,t he r
ecogni
zed co-operati
ve as a tool for economic
developmentcons equentl
ythegovernmentenactedtheco-
operat
ivesociet
y’sact
of1966.

Ef f
ect s of t he enact ment of co- operat
ive s oci
ety act on co- oper
ati
ve
development .
Althought heco- oper ati
ves oci
etyor di
nanceof1 945sr eceivedtheco- oper
ati
ve
ct pr ovided f or s tri
ct regulation f or or
ganizing new co- operat
ives wer e
regist
er ed, whi ch s ati
sfi
ed t echnical and economi c cons i
derat i
on. the
achievement sofs uccessofi nagr icultur
alsect
oraf t
erindependencef ormedas
catalysti nt heexpans i
onofco- oper ativein wi
tanar eas.thenew societi
eswer e
involvedi nt hef ollowingact i
vit
ies ;
 Agr o- processing
 Bui ldingandcons t
ructi
ons
 Savi ngandcr edit
 Hous i
ng
 Ext ernalt rade
 Banki ng
 I nsur ance.
Thenew actal s
oenabl edthecooper ativemovementt oreceivedonors upport

Rol eofdonorcommuni tyindevel opmentofco- oper ati

ves
Betweent heyear1 967to1975co- operat i
vemovementexpandedataf as terpace
dooft hedonorf i
ndschannel edt otheco- operativesf rom Nordi
ccountr ies.t
his
continued upto1
993 when t he Nor dic countiesdeci ded to wit
hdraw itsdi rect
fi
nanci al and t echni
cal as si
stance t hrough gover nment to gover nment
collaborati
on.Fr om thistime t he Nor dic preferred movementt o movement
suppor tai
medatdeal i
ngwi t
hindividualco- operativeor gani
zati
ondirectl yguts
being theintermediari
es.Thi sar rangementdi d notgoa wel lasi n1 997;t he
KenyaNor dicdevelopmentpr ogram wasdi sconti
nued.

I
mpact
sofco-
oper
ati
vesont
heKenyaneconomy

1
8
Sincei ndependentco- oper at i
vemovementhasgr ow from s trengtht ostrength.
Todayco- oper ativesmovementpl aysamaj orr oleinnat i
onaleconomy.Thi scan
bet racedf rom thenat ur eofi t sdiver sifi
edact ivit
ies.
By1 987,co-oper ativesmovementwasknownt ohavegi vendi rectempl oymentt o
over60, 000peopl e. Als oanes ti
mat ion of oneoutoft woKenyanswer eei t
her
directlyori ndirectlyder ivinghi sorherl i
vel i
hoodf rom co-operatives
Themaj ors ervicespr ovidedbyco- oper ati
vemovement sinclude:
 Banki ng
 Loanandcr edit
 Tr ans portation
 Cent ralizedaccount ing
 Bul kpr ocur ement
 Agr o-pr oces sing
 Educat ionalandt rai ningofcommi t
tee,staff,memberofpubl i
c
atl arge
Thegr owt h ofco- oper ativemovementr esulted i na numbero i mpor t
antco-
operativeor gani zat i
onsbei ngf ormedt ogivet echnicalands pecializedser vi
ces
inagr i
cultur alandf inanci als ectors.Thes eincludes
 ¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬KPCU
 Co- operat ivebankofKenya
 KUSCCO
 Co- operat ivei nsurancecompany
 Nat ionalco- oper ati
vehous inguni on
 Kenyar urals accouni on

LESSONFI VE
CLASSIFICATI ONOFCO- OPERATI VESOCI ETIESI NKENYA
5.
1 I NTRODUCTI ON
Acti
vit
iescar r
iedoutbyco- oper
atives .
a)Col lecti
on t he member pr oduce e. g.coffee,cot t
on,tobacco milk etc
processingit,packaging,st
oringandmar ketingitorthem
b)Col lectmoney i nf orm ofs hares /depositsfrom member s,saving or
i
nves ti
ngi tf orthem and givi ngbackt ot hem asl oanand erodentand
i
nterestont hedepos i
ts.
c)Cont racting livi
ng housesbr i
nging constr
uct ed oneand sel
lthem t othe
19
 member satar easonabl eterm andcons iderati
on.
d)Buyi ngconsumer sandhous eholdgoodsands el l
ingthem tomember sata
reasonabl epriceanddi str
ibutingthes urplusreal i
sti
ct omember s
e)Under t
akingcons truct
ionwor kol ivingandcommer ci
albuilding.
f)Tr ansportat
ionfpeopl eandgoods
g)Mar ketingwor d and storecar ryi
ngorunder t akingwor ki nbasket
ryor
othercr aftsuchasmi ning,engineer i
ngandt ailoring.
h)Gr owingveget ableanf ruitsforl ocalandover seasmar ket
i) Under t
akingtwoormor eact ivit
ies.
N/Bdiff erentacti
viti
esgi vedi fferenttypeofco- operatives oci
eti
esinKenya.

5.
2 MARKETI NGCO- OPERATI VESOCI ETIES
Theyar ef ormedt ocol lectmember sproduce,proces
sgr ade,packandmar ketit
.
Theys ellt hepr oduceonbehal fofmember s.
Theyar eamongmos timpor tanti nKenyabecaus e
They dealwi th agr icul t
ur alpr oduce,livest
ock,fish et
c hence t
hey collect
,
process,gr adeandpackaget hemember sproduceandmar keti
tonthei
rbehave
Theyi nclude:
1)Fi sher iesco- oper at ive
2)Mul ti–pur pos eco- oper at i
ves
3)Ti mberdeal er s co- oper at i
ve
4)Hi deands kinco- oper at ives
5)Ranchi ngf armer ’sco- oper at i
ves
6)Pi gf armer sco- oper atives
7)Poul tryf armer ’sco- oper at i
ves
8)Dai r yf ar mer ’sco- oper atives
9)Sugar canef armer ’sco- oper ati
ves
10)Sis
alco- oper atives
11)Pyr ethr um f armer ’sco- oper ati
ves
12)Fruitf ar mer ’sco- oper at i
ves
13)Cottonf ar mer ’
sco- oper atives
14)Coff eef armer sco- oper ati
ve
15)Grai nf ar mer sco- oper at i
ves

5.2.1 Reas onf ortheirsucces s

a)Thr oughco- operativemember shaves uccessi nmar keti
ngtheirproductat
favor abl epr i
ceandcos teffectivel y?
b)Thr ough col l
ecti
ve pr oduction and pr ocessing off arm produce.Thes e
societiesens urever ylow cos thencehi ghr et
urns.
c)Ther ei sr eady mar ketdue t o exi stence of nat i
onalagr icult
ure,co-
oper ativeandmar keti
nguni onl ikeKPCU,KCCet c
d)Theyof fercr edi
tf acil
it
yt of ar mer swi thmor ei ncomewhi chi spaidoff
afters el l
ing.
e)Gr antsf rom gover nmentandf or eigncount rylikeCanada
f)Advi ce f rom ext ension officerof fered by t he governmentwho car ry
demons trationonbes twayoff ar ming
g)Educat iont omember sor ganized by s ociety and unioninwayf armi
ng,
impor tantofear l
ypaymentofl oan.
h)Member sar eas s
istedinpr opermanagementoff inancesbyr egulati
ngthe
ear ni
ngr elevantbyf armert oens ur eflow.
i) Member sar eablet oacquiref ar mi nput satcheappr i
ce
20
 Throughthes
oci
etyi
sabl
etocar
ryoutr
esour
cemos
tef
fect
ivewayof
far
mi ng

5.
2.2 Pr
oblem andchal lenges
 Dishones tyofj uniormember swhoar eent r
us t
edinrunningoft he
society
 Pricef luct uationofpr oduce
 Compet itionf r om pr ivatet raders
 Var yingweat hercondi ti
ons
 Member sar enotens uredofs teadyflow ofincome
 Inadequat er es ources t hatmakes oper ati
on cost
ly and have
forceds ocietyacqui r
el oanl eadingtol i
qui
dat i
on
 Diseas eandpes t
 Lack of qual ified man power at management l evel and
oper ationall evel
 Tr ans por tati
onpr oblemsduet oimpas s
ableroads
 Lackofs toragef aci l
iti
es
 Noneorl atepayment .
 Gover nmentl egi slati
onwhi chf orcethem tooperat
einanar row
edge.
 Tr aditional/cul t
ur e
 Pol i
ticali nf luencesandi nt
erferences
 Poors tor agef acil i
ti
es
 Lackmoder nt echnol ogy
 Memberi gnor ant .

5.2.3 Functi
ons
Col
lecti
ng,pr oces
sing,st
ori
ng,sell
ing,trans
port,paymentoff ar
mer
spr
oduce
andassistinprovi
sionoffar
mi nput
sar r
angef orcredi
tfaci
li
ty.

5.
3 SAVI NGANDCREDI TCO- OPERATI VEORGANI ZATION(SACCO)
Saccoscoll
ect/acceptmoneyf rom member s,s
avingitontheirbehal
fandgive
backtothem i
nform ofloan,bonus,di
videndorint
erestondeposi
ts
They mainl
y dealwi thoneact ivi
ty mainl
y mobili
zati
onoff unds/s
avi
ng and
gi
vingloanfacili
ti
estomember s.

5.
3.1 Rurals
accos
RuralSACCOsar eSACCOsf or
medbyf armersandt r
aders
.Theyar eaffect
ed
by seasonal
it
y and hence do not have steady i
ncome. Major
iti
es were
tr
ansfor
med f r
om the Uni
on Banki
ng Sect
ion (UBS)
.They are aff
ili
ated t
o
KERUSSO

5.
3.2 Urbansaccos
Thes
ear eSACCOswhi char efor
med bys al
aried worker
s.Theyhaves t
eady
i
ncomebecaus eworkersarepaideverymonth.Theyar ethemostsucces
sful
ly
t
ypesofco-operat
ivesoci
eti
esinKenya.Theyareaffil
iat
edtoKUSCCO.

5.
3.3 Reas onsf
ors t
eadygrowthofur
bansaccos
 Steadyincomebecausetheyarefor
medbyemployedpeople
 Co-oper
ationbetweenmembersandemployerswherethei
rdeduct
ionsas
21
 deductedt hroughcheckof f.
 They (member s)ar el oaned and t his contribute effect
ivelytowards
developmentofs ociet
yi nAGM
 Member s(
maj orit
y)havehi ghs alaryhences t
r ongcapi t
albas e
 Theyar eabl et ohir
eexper iencedandqual i
fiedper sonnel.
 Theyar enotaf fi
li
atedbyt hes easonali
ty
 Haver epr esent at
ionwi despr eadandnotl ocal ly.Thisgavet hem anedge
overothers oci eti
eswheni tcomest ocont r
ibutingofi deas.
 Paymentofdi videndmot i
vat espeopletopar ticipate
 Largeinves tmentduet ogoodcapi t
albas e
 Hightur noverofmeet ingbecaus etheyareeducat ed/
 Langel oan
 Centr
alizeds erviceslikeaudi t
ing,accounti
ngs upervis
ion
 Qualifi
eds t
af f( t
heyens ure)

5.
4 CONSUMERCO- OPERATI VES
Theydeali nbuyi
nghousehol
dandcons umergoodsands ellthem t
oitsmember s
atreasonablepri
ces
.Anypr ofi
toccurr
ingfrom thei
roperationisdist
ribut
edt o
member s.t
heyarefacedwi t
hpoormanagement ,compet
i t
ionf r
om supermarket
and lack ofenough fr
om member s.E.g.KUSCCO s uper market
,Ismal i
a co-
operat
ivestore(
Mombas a)

5.4.1 Reas onsfortheirdecline

Dishones ty
Lackofef fect i
vemanagement
Lackoft rainedper sonnel
Compet it
ion
Lackofpat r onageofmember s
Suchco- oper ativeas si
sti
nr educingthenetpricepaidforconsumergoodsandi n
mai ntaining s tandard ofqual it
y.They helpt or educetheneed f orittotheir
member sbyencour agingthem t os avethr
oughdepos it
sorpat ronagebonus es
.
cons umer sco- operati
veshel pt opr ovi
deout l
etsfrom far
mer smar keti
ng co-
oper atives.Kenya and eas tAf ri
ca countr
ies in notso much devel oped in
cons umerco- operati
vesli
keSweden,Denmar kandNor way.

5.
5 HOUSI NGCO- OPERATI VES
Thistypeofco- operati
vecons t
ructorbuyt healreadybuilthouseandsellt
hem
to member son f avorableterms. t
hey builthousesf oreach other
.They ar
e
affi
li
at ed to NACHU.Thei r ai ms aret o provide houses t
o members.The
organizati
onexper t
’sbuil
der
s ,whobuil
tandl at
ers el
ltoouts
iders
.

5.
6BUI LDINGANDCONSTRUCTI ONCO- OPERATI VES
Theyunder takeconst
ructionworkinvol
vinglivi
ngandcommer cialbui lding.
Themember saretheact ualbui
lders.Theyjoint ogether,contribut
est ot he
soci
ety daily/weekly/ormont hl
y.They even hel p each ot hert ol ook f or
casualwor k or contr
act.When one get s a contract,t hey empl oy t heir
coll
eaguesi nco-operati
ve,theysharetheprofittogether.Howevert hist ype
ofco- operati
ve i
n Kenya i snotcommon becaus e oft he mus hroomi ng of
Cons t
ructi
onCompany.

22
5.7 TRANSPORTCO- OPERATI VES
Thes etypesofco- oper ativesar eformedbymember swhobr i
ngt heirresources
together,purchasevehi clesandus et hem fortransportati
onofpeopl eandgoods .
Mos tlythemember siniti
al lyhavet hei
rownper sonnelvehiclefort ransport
ation
hencet heyknow t hei mpor tanceoft het rans
por tbus i
ness.Theirgr owthhave
picked up r ecentl
yt hrough s low due t o various challenges and pr oblems.
HoweverTr ans por
tco- oper ati
vespr esentapotentialareaofexpl oitati
onbyco-
operatives.

5.
8 ARTANDCRAFTCO- OPERATI VES
Theco- operati
vesmaybet heunder
takingofthecraftl
ikewoodorstones
curving,bas ketry,tail
ori
ng,engineering or mini
ng.This aref air
ly
dist
ributedthroughoutthecount
ryofl atetheyhaveventur
edintoexpor t
forKenyan pr oducthandcraftan outcr aft
.Hence t
hey bri
ng f
or ei
gn
exchanget hroughtrade.
E.g.Akambaar tcraftco-
operat
ivei
nMombas sa.

5.
9 HORTI CULTURALCO- OPERATI VES
Theseco- oper ativesmaybegr owingofveget ablesand frui
tsf
orlocal
consumpt ion and over seasexpor t
.They ar ef ound in ar
easwi t
h good
climat ef orhor ticulturalcul t
ivat
ion.Howevert hesearemanypr oblems
thathavehi nder edt hei
rpr osperi
ti
es.thi
sincludes :
 Pooror ganizat i
on
 Backofmar ketingf acili
ti
es
 St oragepr obl ems
 Expl oi t
at i
onbymi ddl emen
 Li qui dat i
onofnat i
onalhor t
icul
tureco-operativeuni
on
 Pes tanddi sease
 Hi ghpr oduct ioncos t
 Tr ans por t
at i
on.

5.1
0 SERVI CESCO- OPERATIVES
Theseareco-oper
ati
vessoci
eti
eswhi
char eformedtoprovideser
vicest
otheco-
operat
ivemovement.Anexampl eist heco-oper
ativei
nsurancecompany (
the
formerCIS)
.OtherareacanbeAudi
tingmerchandise

5.
11 MULTI PURPOSECO- OPERATI VES
Thiskind ofco-operativesmaybeunder t
aki
ngt
woormor
efunct
ions.
Thi
sis
whytheyar emul t
ipurposeco-oper
ati
ves
Probl
ems
 Confli
ctofinterest
 Compl exi
tyofmanagement
 Compet i
ti
on
 Mismanagement .

23
 MANAGEMENTOFCO-
OPERATI
VESOCI
ETI
ES

LESSONSIX
CO-OPERATIVEAFFAI
RS

6.1 I NTRODUCTI ON
Co-operative managementi sgener ally defined ast he pr oces sormet hod of
organizinganddi rectingco- operati
ver es
ourcest owardst heachi evementoft he
societ
y’sobj ectivesi nt hemos teff i
cientway.Co- oper
at iver esourcesi nclude
personnel,s hare-capi tal ,loan,gr ants,and f acil
iti
ess uch asmat erialsand
machi nes.inotherwor ds ,co-operati
vemanagementi sthe met hodofachi eving
theaim orgoal sofco- oper at
iveorganizat i
onsinthemos tpr ofitabl eway.
Aco- operativeor ganizat ioncompr isesofmember ,commi tteemember sands taff
,
allofwhom ar ei nvolvedi nt herunningoft heorganizati
onatdi fferentlevels.

The thr
ee bodiesthatmake up t
he managements
truct
ure ofa co-
oper
ati
ve
soci
etyare
Thegeneralmeeti
ng
Themanagementcommitt
ee
Theemployees(st
aff
)

Sizeofco- oper ati

ves ocieti
es
The above di agr am illust
ratest he managements tructure ofa primar y co-
operati
ves oci
et y.Thes izeoft heco- operati
ves ociety and thevolumeofi t
s
businessus uallydet erminethes izeofmanagementcommi tt
ee.Thes i
zeandt he
volumeoft hebus i
nessitcar r
iesoutwi lldeter
mi net henumberofs up-commi t
tee
thatcanbef ormedt odealwi thspecificduti
esint hemanagementofas oci
ety.
Aco- operatives ociet
yi sdemocr aticinst
it
uti
on,thati s,iti
sownedandcont rolled
byi t
smember si nanor ganizeds ystem ofmeet i
ngandbyel ecti
ngmanagement
commi tt
eewhi chi sarepr es
entati
vebodyofal lmember s.

6.2 GENERALMEETI NG
Thegener almeet i
ngist hecomi ngtoget herofal lthemember soft hesocietyin
an organized manneri n ordert o di
s cussand deci de on certain mattersof
commoni nteres
tconcerning ther unning ofa co- operati
ves ociety. Sinceco-
operati
vesdepend ont hes harecapi talast hef i
rstsourceoff undsf ort heir
operati
ons,t helargerthemember shi
p,t hes tr
ongert hes oci
etyi sfinancially.
Consequently,aco-oper
at i
ves ociet
yt r
iest oincreaseit
smember shipasmuchas
possi
ble.

The gener almeet i

ng ist he s
upr eme gover
ning body and the source ofall
authori
ty.Pr ovi
dedt hatithasbeenconvenedaccor di
ngtotheexi s
tingrul
esand
by-laws,itsdecis
ionsar ebidedonal lmember swhetherpresentornot .Duri
ng
themeet i
ngs,eachmemberi sentit
ledtoonevoteonlyirr
espectiveofthenumber
ofshareshemayhol di nthesociet
y.

Befor
ewediscussthedut
iesand r
espons
ibi
li
ti
esoft hegener
almeet
ings,i
tis
neces
sar
ytodi
sti
nguis
hbet
weenthethreet
ypesofgeneralmeet
ings
.Theseare:

24
  Fir
stgeneralmeet
ing
 Annualgeneralmeet
ing
 Speci
algeneralmeeti
ng

6.2.1 FIRSTGENERALMEETI NG
The f irs
tgener almeet ing t akespl ace when al lmember scome t oget herto
discussand make deci sionson mat t
ersconcer ni
ng the runni
ng oft heirnew
societ
y.i ti
sal egalr equi r
ementundert heCo- operati
veRul e25,t hatt hefirs
t
generalmeet ingofmember sofar egister
eds ociet
ys hallbeheldnotl aterthan
onemont haf terther ecei ptofCer tifi
cateofRegi st
rati
onoft hes ociety. This
happenswhena co- oper ati
ves oci
etyi sstar
ting tooper ateforthef ir
s tti
me,
following it
sr egi
str
ation by t heoffice ofthe commi s
sionerforCo- oper at
ive
Devel opment.

Dut
iesandr es pons i
biliti
esoft hef irstgeneralmeet i
ng
Theduti
esandr espons i
bilit
iesoft hismeet i
ngasr equir
edbyr
ul e25ar
et o:
 El ectthef i
rstoff i
cialsoft hes ociet
y
 Fixt hebor rowingpoweroft hes oci
ety
 Cons ider,appr oveorr ej
ectt hef i
rstbudget
 Appoi ntt hes ociety’
sbanker s
 Recei ver eportsandactonanyot hermatterli
kelyt
oaffectt
heconductof
t
hes ociety’sbus inessini t
sf i
r s
tyear .

6.2.
2 ANNUALGENERALMEETI NG
Theannualgener almeet i
ng ishel d onceever y yearwi thinonemont haf ter
receiving t he audi t
ed f i
nal account sf rom t he audi tor. The dut ies and
respons i
bili
tiesoft hismeetingasr equi r
edbyr ule27ar eto:
 Cons i
derandconf i
rmthemi nutesoft hepr eviousannualgener almeet ing
 Cons i
dert her eportofthecommi t
tee,t hecommi s si
onerorhi sr epr esentat
ive,
andhi stheaudi tor’
saccountandbal ances heetoft hesoci et
y
 Appr oveaccount softhes ocietyori ft heaccount sareappr oved,caus ethe
secretaryt onotifythecommi ssionerwhos halltakeaf i
naldeci sion.
 Di spose oft rai
ning oroper ation s urplus ,subj ecttot he appr ovaloft he
commi ssi
oner
 El ectt hemanagementcommi tteememberf ortheens uringt hreeyear s
 Cons i
derand deci de,ifneces sary,t hemaxi mum bor rowing poweroft he
societysubj ecttotheapprovaloft hecommi ssi
oner .
 Tr ansactanyot hergeneralbus i
nessoft hes ocietyofwhi chnot icehasbeen
givent omember sinthemannerpr escribedi ntheby- lawsoft hes ociety.

6.2.3 SPECI AL/EXTRAORDI NARYMEETI NGS

As pecialgeneralmeet i
ngisanyot hermeet i
ngofal lmember swhichcanbe
convenedatanyt i
mebyt hecommi t
tee,thecommi ssi
onerorhisrepres
entativeor
throughawr it
tendemandf rom as pecif
iednumberofmember sinaccor dance
witht hesoci
ety’sby-laws.Therefor
e,as pecialgeneralmeet
ingcanbecal ledat
any t i
medur i
ng thef i
nanci
alyeart odiscussmat ter
sthatr equi
retheur gent
attentionandaut hori
tyofthemember s.Thes emattersmustbes opressingt hat
theycannotbes eas i
deunti
lthenextannualgener almeeti
ng.

25
Dutiesandr es ponsi
bilit
iesofs pecialgener almeet i
ng
Themat t
ert obedi scuss edint hes pecialgener almeet i
ngwi l
lal waysbes tated
inthenot i
cecal li
ng fort hemeet ing.Someoft hepos si
bl emat tersthatcoul d
necessitatet heconveni ngofas pecialgener almeet i
ngi ncludet he:
 Amendmentoft heby- lawsoft he societ
y
 Reduct i
onori ncreas eoft heincomeorexpendi tureitem
 El ect i
onofa new managementcommi t
teei npl aceoft hosewhomi ght
haver esignedorhavebeenr emoved
 I nf ormi ng and instructcommi t
teemember sonco- oper ativemat ter
st hat
requi ret heiratt
ent i
onf orexampl e,undertakingnew i nves t
ment .
 Enqui ryi nt
other unn9i ngoft hes ociety’
sbus i
nes s
,thati s,ifmember shave
feel ingst hatallisnotwel linther unningoft heirfthei rs ociet
y.
 Fi xi ng of maxi mum bor r
owi ng power si n cas e of need f or further
bor rowi ng
 Conf ir
mi ng orr ejecting ofdeci si
onsoract ionsoract ionst akenby t he
managementcommi tt
ee.

6.3 MANAGEMENTCOMMI TTEE

One ofthe duti
esand r es
ponsi
bil
it
iesofboththe f
irs
tgeneralmeeti
ng and
subs
equentannualgener
almeetingistoel
ectt
hemanagementcommit
tee.

Whys houl daco- oper ativesoci et

yhavemanagementcommi t
tee?
Forpr act icalreas ons,itisneces sarytoadoptapol i
cyofdivisi
onofl abori naco
-operat ives oci
et y.A co- operatives ocietyoft enmember scanaf for dt ocal la
meet ing i nwhi chal lmember scameand deci deonever yissueaf fecting the
society,bi g ors mal l.Int hi
scas e,ever y membercanmanaget oat tend and
participat ei nal ltheaf fairsoft hesoci et
y.
Inter msofmember ship,however ,t
hes i
zeofmanyco- operati
ves oci eti
es,range
hundr eds t ot hous ands ofpeopl e,thus maki ng i tal
mos timpos sibl ef oral l
member shavet oat t
endmeet ings.Undert heseci r
cums t
ances,itisi nevi t
abl ethat
af ew t rus t
edmember shavet obeel ectedandent r
ust
edwi tht her es pons i
bili
ty
ofr unni ngt hes oci ety.
Thes ef ew el ectedmember swhor unt hes ocietyonbehal foft heot hermember
formt hemanagementcommi tt
eeoft hats ociety.Theby- law ofever ys ociety
requir est hatamanagementcommi t
teebeel ectedf orathr
eeyear st er m.

6.3.
1 compos it
ion
Themanagementcommi tt
eenor mal ly consist
soff i
ve,s even,orni neelected
member s.
Ther easonwhyt hecommi tt
eemember ss houldnotbeanevens uchass i
xor
eighti sthatwhent hemanagementcommi tt
eei svoti
ngi twoul dbedi ffi
cultto
haveamaj orit
yvot ewhenhal foft hecommi t
teevotedf orthemot i
onwhi lethe
otherhal fvot edagai nsti t
.Iti sthereforeal waysadvi sablet ohavet hemember
ofcommi t
teemember sinas oci et
yanoddnumberl ikefive,sevenorni ne.
Theco- oper at
iver ulespr ovidet hatfivei sthemi nimum numberofcommi tt
ee
member swhi leninei sthemaxi mum l imit.However ,inver ys pecialcases,the
society may f eelt hati tneeds mor et han nine member st o ensurethatal l
member sar efairl
yr epres ented.Fori nstance,wher ethegeogr aphicalcover age
oft hes ocietyiswi de,mor ecommi tt
eemember sareneededt orepresentvar i
ous
vill
ageorl ocati
ons.Insuchacas e,t
hes ocietyhastos eekf orthecommi s
sioner’
s
exempt i
ont ohavemor et hanni nemember sinthemanagementcommi t
tee.
26
The managementcommi ttee member s el ectf r om amongs tt hems elves,the
execut ivecommi tt eemember sasf oll ows :
 Thechai rman
 Vi cechai rman
 Thehonor ar ys ecr etar yand
 Thet reas ur er
Theexecut ivecommi tteemember sar et hes ignat or iest othes ocietychequesand
otheri mpor tantdocument s .Ther emai ningmember sar eus uallyr eferredt oas
theor dinar ycommi tteemember s
6.3.2 QUALI FI CATI ON
Ideally,t her e ar et hr ee qual i
ties t hata member as pir
ing t ot he j oi
nt he
managementcommi tteeofaco- oper at iveor gani zat ions houldhave. therear e:
 Hones ty
 Fai rnes s
 Abi li
t yandwi s dom t omanagecompet ently.
Member ss houl d el ecta per son t o manage whos e hones tyi sknown.Thi sis
neces sar ys incet heper s ont hepos i
tionoft hemanagementcommi t
teei sofahi gh
statusr equi ring compl etes i
ncet hepos it
ion oft hemanagementcommi t
teeis
entrustedt os af eguar dt hes ociety’spr oper ty.
Thos ewhoar eel ect ed t omanaget heaf f airsoft hes ocietys hould exer ci
se
fairnessi nal lt hei rdeal ingswi tht hes ociety’saf fairs.Thisi sr equired inthe
recruitmentands elect ionofnew empl oyeesi ntot hes ociety.thes
eempl oyeesare
likelyt os tayl ongi nt hes oci et
yands houl dawr ongchoos ebemade,i tcoul dbe
har mfult othepr ogr es sofal lmember s.
The ot herqual itiest hata members houl d pos s essi n or dert o be el ected a
memberoft hemanagementcommi tteear et heabi li
tyand wi sdom t omanage
compet ently,t heaf fairoft hes ociety.

No per son s hallbe el igiblef ormember s

hip ofa commi t
tee ofa r egi
s t
er ed
societ
yorr emai namemberofs uchcommi t
teeif:
a.Hei sn’tamemberoft hes ociety
b.Hei sundert went yoneyear sofage
c.Her eceivesanyr emuner at ion,s alary,orot herpayment sfrom thes ociety
savei naccor dancewi tht heact .
d.I nthecas eofs ocietyt hatl endsmoneyt oitsmemberhe l endsonhi sown
accountons ome
e.I ncas eofa s ociety t radesi ngoodsorpr oduce,he, ei
theronhi sown
accountoron s ome ot herper son’saccount ,tr
adesi nthe s ame t ype
produce
f.Hei sanunder char gedbankr upt
g.Hei sofuns oundmi nd
h.He has been convi cted of any of fensei nvolving di shones ty or i s
impr isonedf ort hreemont hsormor e
i. Hehasbeenconvi ctedofanyof fenceundert heactorr ulemadet her e
under
j.Di smi ssedempl oyeeofar egistereds ociety
k.He hasany uncl eared debtt oa r egistered societ
y att heend oft he
society’sf i
nanci alyearot hert hani nr espectofal oanundert hepr ovisi
ons
ofr ule48oft hes er ulesort her elevantby- lawsofs ociet
y
l. He,s hes pouse,gr andpar ent ,par ent,child,gr andchild,brother,anybody,
whet her cor por ate of uni ncor por at
ed,has bus iness dealing wi tht he
27
 regis
teredsoci
etys oci
eti
es.
m.Hei sorhasbeenmemberofacommi tt
eewhichhasbeenf oundaf t
eran
enquiryunders ect
ion61oft heactshall
,unt
ilt
hedeterminati
onofwhat
enquiry,andsubjecttosub-par
agraph(m)ofparagr
aph(I)
,beel i
giblef
or
re-el
ectiont
othatcommi tt
ee.

The dut ies oft he managementcommi t

tee i nr unni ng t he af fairs oft he co-
operatives oci etyonbehal foft hemember sar easf oll
ows .Themanagement
commi tteehaspowert o:
 Ent eri nt oagr eement st hatar eneces sar yi nt hepr omot i
onoft heai msof
the s oci ety. for i ns tance,t he s oci ety may ent eri nto cont r
act s wi tha
bui ldi ngandcons tr uctions ocietyorcompanyt oputupanof ficebl ockor
a cof f eef act or y.Thes oci et y may al sowi sht obor row money f rom a
financi ali ns ti
tut ioni nl i
newi t
hr ul e45.
 Over see t he s af e keepi ng oft he money bel ongi ng t ot he s oci ety.For
exampl e,t hes oci et yi sr equi redt obankal lt hemoneyi trecei vesi nt he
cour seofi tsoper at ionsati tsear l i
es toppor tuni t
y.Al lpayment smadeby
checkst obes ignedbyof ficer saut horizedbyt hes ociet y’sby- laws .
 Checkands crut inizet heaccount s, bankbooksandcas hoft hes oci etyand
recor danyobs er vat i
onmade
 Cons idert hel oanduet ot hes oci ety.t hismeanst hatt hecr edi tor sand
debt or soft hees t i
mat et obeappr ovedbyt hecommi ss ionerbef oreany
 Sendt ot hecommi ss i
oner ,anes t
imat edandexpendi tur ef oeens uringyear ,
suches timat et obeappr ovedbyt hecommi ssionerbef or eanyexpendi ture
isi ncur red.
 Keep avai labl ef ori ns pect i
on undert he co- oper at ive s ociet y actt he
fol lowi ng:
o Thecer t
ificat eofr egis t
r ationoft hes oci et y
o Acopy oft heAct, rulesandt her egi strat i
onby- lawsoft he
s ociet yal istofmember s
o A l is tof t he of f icers of t he s ociet y,t hati s ot her the
commi tteemember sandt hes taf f.
Finall
y,t he managementcommi t
tee i s empower ed t o do al l ot her t hings
necessar yt oachi evet hes oci ety’ sobj ect i
ves (aims )wi thoutvi ol ati
ngt heact ,the
rule,andt hebyl awsot hes oci etyt hecommi tteeisr equi redt okeepmi nutesof
thepos siblet oknow t hedeci sionsmadebyt hecommi ttee.
Theper for manceoft hemanagementcommi tteei nof ficewi llbej udgedbyt he
member satt he annualgener almeet ing.Ther ef ore,i ti si mpor t
antt hatt he
commi tteeexpl aint hevar iousdeci si
onsi thast akenont hevar i
ousmat terst othe
member si nor dert ocr eat eamut ualunder standi ngi nt hes oci ety.

28
LESSONSEVEN
MANAGEMENTOFCO- OPERATI VESOCIETI ES
7.
1 I NTRODUCTI ON
Managementhasgr eat
lyimprovedasco-operati
veshavelarge,mor ediver
sif
ied,
and inintegrated tomat chsi
mi l
aradvancesi nthemar ketpl
ace.I ntheearly
years,localco- operat
ivesmanager snotonlys upervi
sed operati
onsbutal so
maintai
nedaccount ingrecords.Wait
edoncus tomer
s,andsweptf loors
.Manyco-
operati
vesf ail
edbecaus eofineptoper
atingmanagementandpoormoni tori
ng
bytheboar d.

7.2 MANAGEMENTFUNCTI ONS

Over all,managementembodi esfourf unct ions :planni ng,or ganizing,mot ivat i
ng,
andcont rolling.
Pl anni ng det er minewher etheor gani zat i
oni sgoi ngand how i twi llget
there.I ts etsor gani zationalobj ecti
vesand goal s ,f orecastst he envir onment
whichobj ect ivesmus tbeaccompl ished,anddet ermi nest heappr oachbywhi ch
object ivesand goal sar etobeaccompl ished.Pl anni ngi sus ed todet er mi nea
policyand t hepr ocedur esf orput t
ingi ti ntoef fect.Pl anningus uall
ycons ider
sever alal ter natives.Eachs hould bej udged ont hebas i
sofi tseconomi cor
compet it
iveef fectandaccompanyi ngpr obl ems .Al so,i tmus tbecons ist
entwi th
co-oper at i
ve pr i
ncipl es and t he as soci ation’s obj ect i
ves .Pl anning hel ps a
managers hapet hef ut
ur eoft heor ganizat i
onr athert hanbei ng caughti nan
endl esst rapofr eactingonl yt ocurrentcr isesorpr oblems .
Or gani zi
ngi sconcer nedwi t
hdet er mi ningt hes peci fi
cact ivit
iesneededt o
accompl i
s ht hepl annedobj ecti
vesandgoal s,gr oupingt heactiviti
esint ol ogical
patter n,f ramewor k,ors tructure,assigningt heact iviti
est ospecificpos i
tionsand
peopl e,and pr oviding meansf orcoor di nat i
ng t heef f
or t
sofi ndividual sand
29
groups.
Motivat
ingconcer nst hepeopl es i
deoft heor ganizati
on.Co-operati
vei s
people-
drivenor ganizati
onf r om thestandpointofbot hempl oyeesandmember s
.
Manager smus thave l eader ships ki
llsand be ef fecti
ve communi cat
ors.The
manager ’
sabi l
it
yt oi nfluencemember sthroughl eadershipwi llhel
pdet er
mi ne
theextenttowhi chbot hi ndi
vi dualsandt heentireorganizationaccompl i
shtheir
goals.
I
ncont r
olling,managementmoni t
orst heprogressofpl annedacti
viti
es.If
progressislagging,neces saryadj ustmentsar emade.Cont rollingist
hecheckup
partfamanager ’sjob.

7.3a)Managementcommi tt
ee
Themanagementcommi tt
eer epres
entsmemberswi t
hinthef r
amewor kwi t
hinthe
offici
alboar dofdi rect
ors.Al lcorporat
epowersoft heco-operatives,otherthat
those
Specificallyconfer
reduponmember sarevet
tedinitsdirect
or s
.Thes epower sa
dnr espons i
bil
it
iesareoutli
nedi ntheby-laws
.Thr eemaj orr esponsibil
it
ieshave
tos etpolici
es,employgener almangert ocarrythem out,andt heneval uatethe
manager ’
sperformance.

Tenmor es peci fi
cmanagementr es
pons i
bili
ti
esoft hemanagementar e:
 Funct ioni ngast rusteef ort hemember sins afeguar dingas set
si ntheirco-
oper at ive
 Det ermi ning t hemi ssion oft heco- operati
veand s etti
ng objecti
vesand
gener alpol icies
 Def iningandadopt ingl ongr anges t
rategicplan
 Empl oyi ngacompet entmanager
 Pr eser vi ngt heco- oper ativechar act
eroft heor ganization
 Requi ringaccountandr ecords
 Appoi nt inganout s i
deaudi tor
 Cont rol lingt het otaloper at
ion
 Dis t
r i
but ingcor por atenetear ningsors avings
 Redeemi ngequi ti
esi nanexpendedmanner
LESSONEI GHT
CO-OPERATI VEORGANI ZATI ONALSTRUCTURE
8.1 INTRODUCTI ON
Thes t
ruct uregi vest hechai nofcommuni cati
onandhel pi nunder s
tandinghow
theco-oper at ivei sor gani zed.Thei nternati
onalco- operatives tr
ucturegi vesan
i
deaonhow t heco- operativesal l
overt hewor l
di sorganize.

8.2 I NTERNATI ONALSTRUCTURE

Defini
tionofabbr evi
at ions
ACCOSCA The Af rican conf erence of co-oper
ati
ve s
avi
ng and cr
edi
t
Associati
ons
CBK Co-operativeBankofKenya
CIC Co-operativei nsurancecompany
ICA Int
ernationalCo- oper ativeAll
iance
KCC KenyaCo- oper ati
veCr eameri
es
KCCU KenyaCr af tCo-oper ati
veUnion
KERUSSO Kenyar ur als accos ocieti
esUnion
KPCU KenyaPl ant er
sCo- oper at
iveUnion
30
KFA KenyaFar mer sAssociati
on
CAK Co-operativeAl l
ianceofKenya
KUSCCO KenyaUni onofSavi ngandCr editCo-oper
ati
ves
NCCU NairobiCof feeCo-operativeUni on
NCCU NairobiCons umerCo- operativeUni on
NACHU NationalCo-oper at
iveHous ingUni on
WOCCU Wor ldcounci lofCreditUnion
ICI
F Int
ernationalCo-operativeIns uranceFeder at
ion

8.
3 CO-
OPERATI
VELEVELSI
NKENYA

APEXLEVEL

COUNTRYWI
DELEVEL

SECONDARYLEVEL

PRI
MARYLEVEL

MEMBERS

Primar ylevel
Thet erm pr i
mar ys ocietyhasbeendef ined byt heactt omeanr egistered co-
oper ative societ y whos e member shi
pi sr estrict
ed toi ndividualper son .these
individual shaveacommoneconomi cinterestandes ir
est opromot ethesei nt
erest
bypul lingt heirr esour cestoget herandwor kingasat eam inor dertomi ni
mi ze
thecos tofdoi ngt hes amet hi ngasani ndividual .
Itisf ormedbyatl east1 0peopl eormor ewhohavecomet ogethertopur suetheir
socialeconomi cgoal sasagr oup.Ther ear er estri
cti
onsont ypeands i
zeofco-
oper ative soci ety asl ong ast hey conf irm wi t
ht he act ,rulesand by- l
aws .
Exampl e
 I ncof f
eegr ower s,they j oi
nt ogetherand agr eet ocol lecttheircof fee
produce,pr oces sands ellitjoi
ntlyt hroughanor ganizedmar ket.
 Ar t
isan by i n bul kt he mat eri
al sneces saryf ort hei
rt rade since bul k
purchas eat t
ractdi scount .Theyor ganizer el
iablemar keti
ngout l
eteas ily
as a gr oup s i
nce t hey wi ll produce mor et han ift hey wor ked as
31
 i
ndivi
duals
.
 I
ndivi
dualsmay als
of or
m saccoswhich wi
llenabl
est
hem poolt
hei
r
moneyfrom whi
cht
heycanborr
ow int
heti
meofneed.

Secondar yl evel
Two or mor e pr imar y co- oper at i
ves may come t oget her tof orm a co-
operative uni on or di s t
r ictco- oper ative uni on dependi ng on t he ar ea of
operation.Thi si st hes econdar yl evel .Thewor ds econdar ycomesaf terwhat
isprimar y. member shipt her efor ei sr es trictedt opr i
mar yco- operatives ociety.
Thegover nmentpol icyencour agespr imar yco- oper at ives ocietyt oaf fili
at e
todistrictco- oper at i
veuni on.
Thisi st o avoi d havi ng many di strict uni on whi ch may not oper at e
economi cal lydi etol t dr eas onsandover headcos t.
Adi str
ictcanhaveasmanyuni onsaspos s i
bl edependi ngont heact iviti
eseg
inmer ut her ear ethr eeuni onsnamel y:
 Mer ucent ralcof feef armer sco- oper at i
veuni on
 Mer ucent raldai lyco- oper at iveuni on
 Mul tipur pos eco- oper ati
veuni on
Co-operativeuni onspr ovi det hef ollowi ngs er vicesont heiraf fi
liat
ed pr imar y
societ
ies.
 Mar ket ingt hepr oduceoft hes oci ety
 Educat ingt hemember scommi tteemember sandempl oyees
 Suppl yt hef ar mi nput ,andencour agi ngs oundf ar mingpr actices
 Loani ngt omember sthr ought hei rco- oper atives ocieti
es
 Or gani zingands uper visinga cent ral i
zedaccount ings ervices
 Sel ect ing and appr ovi ng t he appoi ntment of al l manager i
al
account ingandt echni cals taff
 Co- oper at i
ngt hevar iesact ivitiesofmembers oci et
ies
Nationall evel
Att hislevelt heco- oper ativeor gani zat i
onar ea ofoper ationi scount ry wi de
hencecal ledcount rywi deco- oper atives .Thi si ncl udes .
 KCC
 KFA
 CBK
 KPCU
 NACHU
 KUSCCO
 CI Cf or mal lyCI S
 KCCU
Apexl evel
Att hehighes tl eveloft heor gani zat i
onals truct ureoft heco- operativemovement
in Kenya i st he apex body.Thi si st heCO- OPERATI VE ALLI ANCE OF CO-
OPERATI VES.Tot hisbodyar eaf filiat edt hepr imar yco- oper ati
vess ocieties,co
-operati
veuni onand count ry- wideco- oper at iveor gani zat i
ons .Thi sf eder ati
on
namei sabbr evi at edt oCAK
Apex s ociety asdef ined by t heacti st her egis tered s oci ety undert heactt o
promot e co- oper at ive devel opmentand pr es entt he i nter estof co- operative
societ
yl ocal lyandi nter nat ional ly.
TheCAKr egi ster edi nApr il1 964i st heapexs oci etyi nco- oper ati
vemovementi n
Kenyaandt her ef or et hehi ghes tlevel .Themember shipcompani esmai nlyof
 Nat ionalco- oper at i
veor ganizat i
on
32
  Di
str
ictuni
on
 Pr
imaryco-oper
ati
ves
oci
eti
es.

Itact sasal inkbet weenco- oper ati

vesi nKenyaandi nt ernationalco- oper ati
ve
movement .
Obj ectives
 Gat herco- oper at iveopi nion
 Educat et hemember soft hecur rentco- oper ativemovement
 Pr omot et hepos s ibilityomi sappl yingr esources
 Guar dingands uppor tingt heco- oper ativei nteres t
 I mpr ovet heper f ormanceofaf filiatesor gani zat i
on
 Maki ng avai labl er es our ces and s er vicesbeyond t he capaci ty oft he
indivi dualmember sor gani zation
 Toactasaguar di an andmout hpi ecet oal lKenyanco- oper ati
ves
 Tos af eguar dt heco- oper at ivepr i
nci plesi nKenya
 Toadvi cet hememberonal lmat terr elatingt oco- oper ati
vesr egistrat i
on,
promot ionandf or mat ionofnew co- oper atives.
 To encour age and es tabl i
shment of s atisfact ory account and audi t
standar dappl icabl et ot hemovement
 Togi vepubl icityt oandpr es entt hemovementt oal linternat i
onalmat ters.
 Tocol lectand compl et eco- oper at i
vess taticf oref fectiver unning and
managementofco- oper at i
veaf fairs
 Topl anandwor ki no- oper ati
veeducat i
oni nconj unctionwi t
ht hemi nistry
ofco- oper ativedevel opmentaswel lasco- oper at i
vecol legeofKenyaand
KI E
 Tounder standt hes uppl yofmer chandi seandi nsur ances er vices
 To pr omot e col labor at i
on bet ween co- oper ative t hroughoutt he count ry
andi nternat ional ly
CAKpr ovides er vicesl i
ke
 Co- oper at ivemer chandi ze- pur chas eofs eeds
 Co- oper at ivepr intingpr es s
 Cooppr omot iont hr ough“ ms hirikawaKenya”
 Audi ting
 Of f i
ces uppl y
 Pl anni nganddevel opment
 Legals er vices
 Cons ul t
ancys er vices
 Fi el ds er vices
 Pr icemount ing
 Mar kerr es ear ch.
Itunder takesdut yt ogener al l
ypr omot eco- oper ativesi nterestandi mpr oveco-
operat iveper for mance.I ti st hemout hpi eceoft heco- oper ativeatnat i
onaland
int
er nat i
onalf orum.
8.4 FUNCTI ONSOFVARI OUSCO- OPERATI VEORGANI ZATI ON

Di
str
ictco-
operati
veunions
Di
str
ictco-
operati
veunionandot herco-
operat
iveuni
onswhichcarryouts
imil
ar
t
ypesofactivi
ti
esaffi
li
atethems el
vesonthecount
rywideunion.Todaywehave
t
hefollowi
ngcountrywideco-operati
veuni
on.

Kenyapl
ant
er’
sco-
oper
ati
veuni
on
33
Thisi sthe uni
on to which cof f
ee gr owi ng indi
vidual’
sfarmers,pri
mary co-
operati
ves,
Co-operati
veuni onsanddi stri
ctco- operativeunionsar eaffi
li
ated.Theuni
on’s
namei sabbreviatedtoK.P.C.U
Thef uncti
onoft heKenyapl anterco- operativeunionis:
 Storingcoffeepar chmentdel iveredbys oci
eti
esandunion
 Mi ll
ingthecoffee( poli
shingandgr adi
ng)
 Payi ngmember sf ortheircof f
ee

Kenyauni onofs avingandcr editco-operatives

Thisist heuniont owhi chal lurbanSACCOsi saf fili
ated.Theuni onnamei s
abbreviatedtoKUSCCO.
Thef uncti
onsare:
 Providingcent rali
zedbookkeepi ngs ervices
 Providing educat i
on to member s oci
ety and t hei
r management
commi ttees
 Providingbookkeepi ngservicesf ors mallers ociet
ies
 Supervis i
ngandadvi si
ngaf fil
iateds ocieti
es
 Acti
ngast hel i
nkbet weent heaf f i
liat
eds oci et
y’sandgovernment
andot herco- operati
ve’
sor ganizations.

Kenyarur alSACCOsuni
on
Thisistheuni ont
owhichal
lrur
alSACCOsi
saf
fil
iat
ed.Theuni
onnamei
s
abbrevi
atedtoKERUSSU.

Kenyacraftco- operat
iveunion
Thi
sisuniont owhi chhandcraf tco-operat
ivesar
eaf fi
li
atedt
o.Theuni
onname
i
sabbreviatedKCCU
Thefunct
ionsar e;
 Col lectmember spr oducts
 Mar ketmember s’pr oduct
s
 Pr ovi demember swi thworkingtool
sandequipment
 Fi ndingreadymar ketsformember sproduct
s

Kenyaco- oper
ativecr eamer i
es
Thisuni onisregis
tered underbot ht hes ocieti
esactand t hecompany’ sact.It
operatesasal i
mi t
edcompany.I tistheuni ont owhichdai l
ydist
rictunion.Dail
y
co-operati
veunions,pr i
mar y dail
y co- operati
ves ociet
iesand i
ndividualdai l
y
farmer sareaffi
li
ated.Theuni onnamei sabbr eviat
edasKCC
Thef uncti
onsare
 Buyi ngmi l
kf r
om member s
 Proces si
ngmi l
kt omakedai lyproducts
 Distribut
ingdailypr oducts .

Thenati
onalhous ingco-oper at
iveunion
Thi
sisuni ontowhi chpr imar yhous i
ngco- operat
ivesar eaf f
ili
ated.Theunion
nameisabbreviatedtoNACHU.
Thefunct
ionsare:
 Tor enderpr ofessi
onals ervi
cestot heco-operati
vemovementi nall
housingmat ter
satr eas
onablecos t
s.
 Thes es ervi
cesi ncludesurveyingdes i
gn,construct
ionandvaluati
on.
34
Kenyagr aingr ower ’
sco- oper
ativeunion
Thisistheuni ont owhi chindivi
dualgr ai
ngr owers
,societ
ies,andunionnamei
s
abbreviat
edt oKGGCU.
Thef unct
ionsar e:
 Dist
r ibuti
ngs eedsandf erti
li
zertothemember s
 Collectingmembercer ealsandpr oduceandpayingt hem f
orit
 Selli
ngf armi nputst
omember s
 Provi ngcreditt omember stopurchasefarminputs.

Co-
operativei ns urancecompany
Functions
 Pr ovide i nsurance covert o empl oyee and member sofvar i
ousco-
oper ativeor ganizati
on
 I tinsur eco- operati
vepr oper t
y(vehiclebuil
ding)
 I tens ur emember sdepos i
tsandl oan
Whysocietiesr unawayf rom CIS
 Hi ghpr emi um beyondofs ocietymean
 Soci etypr opertyopent ovar iousr i
sksands ociet
iescantinsur
ealloft
hem
 Expens ewhi chcan’ tbequal ifi
ed
 Reducedear ni
ng
 Compl i
cat edr ecoverypr ocedur e(companyandco- oper
at i
veact
)
 Compet i
tion
 Pr efert oi nves tmoneyt hanins ure.

Thefuncti
onsare:
Renderins
uranceser
vicest
otheco-
oper
ati
vemovement
.

Theco-operati
vebankofKenya
Theco-operati
vebankofKenyai sregi
ster
edunderbot hco-oper
ati
vesoci
eti
es
actandt hebanki
ngact
.Itcater
sforbothco-oper
ativessoci
eti
esanduni
onwho
aresharehol
dersi
nthebank.Thebanknamei sabbreviat
edtoCBK

Althoughtheco- operat i
vebankofKenyai sr egist
eredundert heco-operat
iveit
operatesundert hebanki ngact ,and isnotr eall
yaco- operati
veunion.Itisa
bankf ortheco- oper ativemovement .Thisiswhywer egar ditasacount rywi de
organizat
ion. Therefor e,it
sf unct
ionsare;
 Tos afeguar ds ocieti
esanduni onsmoneyi nf orm ofpos i
ts
 Tol oanf undst os ocieti
esanduni ondevel opment
 To channelext ernalgr antsand ot hercr editf inancest osociet
iesand
uni
ons
 As si
s tthetrainingofempl oyeesofs ocieti
esanduni onsinbankingtrai
ning

ACOSCCA
Aims
 Topr
esentAf
r i
cancredi
tunionatalli
nternat
ionalcr
edi
tfor
um
 Topr
omotepublicrel
ati
onwi t
hothergovernment,UNO,
ILOetc
 Toprovi
definanci
aland techni
calassis
tancet omembersuni
onand
35
 soci
eti
es
 Topr ovideeducat iontocooperativeaffi
li
atesonco-oper
ati
vemat
ter
s
aswel lasot hergeneraltypebusinesseducati
on
 Torepr esentco-operat
iveunioninter
nati
onalaf f
air
s.

Obj
ect
ives
 Promot
ionanddevel
opmentofsaccoorcr
edi
tuni
oni
nAf
rica
 Organi
zeins
urances
ervi
cesetc

WOCCU
It’
s an apex t rade as sociat
ion and devel opment or gani
zation of
int
er nationalcr edi tunions ystem .i
tsequival entoft heI CA
Obj ectives
Promot i
onofs accoi nthewor lddoingco- oper ati
vepr i
nci pl
es
Itpr esentswhati tcons idert obes pecializedi nterests accowhichar enot
adequat elyrepr es entedbyI CA
N/Bi tisaf f
ili
at edt oaf f
ordablef inancials ervicest hroughoutthewor ld.
itisanadvocat epl atformf orinnovatordevel opmentagencyf orcredit
union/nat i
onalcr editunionet c
Mor et han90count i
est hroughthewor ldar epr esentationbyWOCCU i .e.
737000s accoss er vingover1 12millionmember s

Theor
gani
zat
ionals
truct
ureofco-
oper
ati
ves
oci
eti
esr
evol
ves3maj
oror
gans

Generalmeet i
ng
Generalmeet ing i
nco-operat
ivesmay becl
assi
fied i
ntoAGM and SGM.The
gener
almeet i
ngonet hesupremedecisi
onmaki
ngaut hor
ityoft heco-
operat
ive
astheycons istofmeetingofal lt
hemembersoft hesociet
ies
.I ti
sindeedthe
mostsigni
ficantorganofthecooper
ati
ve.

Managementcommi ttees
Thiscommi tt
eeisal sorefer stoast heexecuti
vecommi ttee.i
tist hegover ning
bodyofacooper ati
ves ocietytowhom managementpower sar econf used.The
rol
eoft heMCi st otakemaj ordecisionandnottodiscussrouti
neandt echnical
operati
onaldiffi
culti
eswhi ch can bedeal twith by ot
hers ub-commi t
teeand
offi
cersoft hesociety.theactempower sthemanagementcommi t
teet os ub-
delegateit
sdut i
esand r esponsibi
li
ty and thi
sitdeal stos ub-commi t
teeand
offi
cersofthesociet
y.

Managerandot hers taff

Thes ocietycannotr unitsaffai
rswi thoutprofes
sionalstaff
.Or dinarymember s
oft hes ociet
yar ei gnorantofhow t hetechni
caloper ati
onoft hesocietyisor
shouldbecons i
dered.I ti
st heworkofhemanager sandot hers t
afftor unthe
profes si
ons,routi
neandt echni
calas pectsofthes oci
etyincludingacqui s
iti
onof
thes ociety’
sfunds ,aftertheapprovalofG. M whent heyaret hepersonsbehind
thewheel soft hecooper ati
ves oci
etyi napr ofessi
onalcapaci tyotherthanby
wr i
tet omember s
hip.

LESSONNINE
CO-OPERATI
VEANDTHEGOVERNMENT
36
9.
1 REASONSFORGOVERNMENTI
NVOLVEMENTI
NCO-
OPERATI
VES

 Co-oper ati
vecan’ tbel eftint hehandsoft hemember swhomaybehavi ng
chatteredi nterestbecaus eoft heirimpor tancet ot hecount ry.
 Co-oper ati
vesar ef acedwi thinadequat emanagements killsr esul t
ingt opoor
management
 Co-oper ati
vesar el ikel yt omi sus ethef undandot herr esour cesduet ol ackof
co-operativecommi tmentandknowl edge.
 Thegover nmenti snon-par tisanand i sther eforebet terpl aced t or esolve
conflictaris i
ngi nco- oper ativesl ikedi s putesands tr
ikes .
 Gover nmentai msati mpr ovingt hel ivesofpeopl eandco- operativesl aya
ferti
legr oundf orgover nmentt ocal cul ateitsi deas .
 Gover nmentwantt oens uret hats oci etiesoper ateaccor ding tot hewr it
ten
laws ,by l egislation,r egistration and annualr etur ns and t hatt hey hol d
meet i
ng i ndemocr at icway
 Gover nmental soi nter venest ot rai
nco- oper ativeper s onnelt ot ackl euni que
areasi nbus i
nessvent ure.
 Gover nmental so want st o ens urei nf rast
r ucture and ot herf acilit
ies that
woul dboos ttheoper ationoft heco- oper ati
vemovementar ei npl ace.
 Gover nmental so want st o ens uret he s tandar dizat ion of oper ation,t he
standar d account ing s ys tem i n co- operat i
ve ens ur es compani on and
enhancementeducat ion and t raining becaus e ofi dent icaldocument sand
formul ati
onofs tandar dizedaccount ings ystem
 Gover nment can have ways of per suadi ng member s’par ticipation by
awar dingpr i
cesandf i
nanci alas sistance.
 Appoi ntmentofof ficeri nmi nistryandunderCCD t oens urepr operbookof
account ,propermeet ingaudi t
inganddi stri
but ionofr es our ces .

9.
2 METHODSOFGOVERNMENTI
NVOLVEMENTI
NCO-
OPERATI
VES

1)For mul at i
onofpol icy
 For mul ationofco- oper ati
ves ociet
yactCap490whi chisunderr evi
ew
now andt hen.
 Al s ot hef ormul at i
onofSACCO Acti n2008
 Subs idiaryl egislationmadeby mi ni
sterr esponsi
bleforco- oper at
ive
devel opment
fr om t imet ot ime
2)Pr omot ionofco- oper ativet hr
oughf inancingandgi vi
ngadvi ce
3)Pr ovideco- oper ativemanagements ystem wher et hegovernmentempl oys
P.C.O,D. C.O andC. O whomakes urethatco- operatearerunaccor dingto
thepr ovi sion.
4)Pr ovis ionofaudi t
I
nt hemi nistryofco- oper at
ivet herear eaudi ti
ngdepar t
mentt hataudi t
all
Co- oper atives.
5)Ar bitrat ion,
Gover nmentpr ovi def ormeanandwaysofs ett
lementofdi sputesi nco-
oper at ivesbypr ovidingt heco- operati
vet ribunal.
6)St andar dizedofaccount
Gover nmentens ur esco- operati
vesar es tandardizedinit
soper ation.
37
 7)Regi
str
ationofco-operati
ves
8)Li
qui
dationofco-operati
on
9)Amalgamat i
onanddi vis
ionofco-
oper
ati
ve.

9.
3 I NFLUENCESOFGOVERNMENTI NVOLVEMENT
Dis
advant agesofgover nmentinvol vement
 Pol iti
calinf luence
TheMi ni
s terofco- operat
ivei spolit
icalf i
gureandhenceal otofinf
luence
incooper at i
ves
 Commi ss
ionerf orCo-oper
at i
veDevel opmenti salsoapol i
ti
calappointee.
 Ext reme power sofCCD deni esmember sf reedom t o controltheirco-
operatives
 Gover nmentdeny member sinteresti n controland managementofco-
operatives
 Member s ar ef orced to oper atet hrough nat ional wi de co-operati
ve
organizationl ikeCICet cwhichar ecos tlyandunneces sary.
Posit
ivei nfluenceofi nvolvement
 Bet termanagement ,resul
tingt ofewerofl i
quidateds ociet
ies
 St eadygr owt hofmember ship,Sharescapi talandt urnover .

Negati
vei nfluenceofi nvolvement
 Weakeneddemocr ati
ccont r
olt hrough,CCDhavi ngpowert ovotealldecisi
on
made by Gener al.Meeti
ng,CCD havi ng powert oinspect
,inquir
ei nt
ot he
affairsofs ociety,removingel ectedcommi t
teeandreplacingthem wit
hhi s.
etc
 Maki ngco- oper ativetopur suenar row economicgoalattheexpenseofs oci
al
dimens i
on.
 Ineffecti
ve member s
hip par ti
cipation due to gover
nmenti nt
erferi
ng with
decisionmaki ngi nco-operatives.
 Increasecos tofoper ati
onthr ought axati
on

Rol eofgover nmenti nco- oper atives

Gover nmentpr ovides nat ionalobj ect i
ve and gui deline t hrough t he nat ional
devel opmentpl anands es sionpapert ogui det hedevel opmentofco- operati
ves.
Thegover nmenthasr egisteredt heco- oper ativesasanappr opriateins ti
tuti
onf or
fosteringnat ionaldevel opmentondomi nantr uralagr icul turaleconomyaswel l
otherar eass uchasmar ketingvar iouspr oduct s,mobi l
izat ionofs avi ngthrough
Saccoandvar iousdi s
trictsbanki ngs ystem.Ass tat edi ns es s
ionalpaperno1 0o
f1970,co- operative shave been r ecogni zed by gover nmentasan i mportant
vehiclef orimpl ement ation,i ndi gitizat i
onpol icy( r ecogni zingt her ightofl ocal
peopl e)
Gover nmentenact st helaw gover ningt heco- oper ativesl ike1 9662004and2005
actand2004r ulest ofaci li
tatet hes moot hr unningofco- oper ati
ves .Gover nment
also
Re-or gani zeco-oper atives-amal gamat ion/di vision
Give pr e-co-
oper ative educat i
on t o publ ic,chi ldr en and s t
udent sf orgener al
awar enes sandcar eerpr ospect ive
Faci l
itate educat i
on and t rai
ni ng pr ogramme f or member ’s empl oyees and
commi ttees.
Encour age and gi ve cr edi t as si
stance.cr editf r om CBK,gover nment , non
38
governmentor ganizati
onanddonor setc
Legislat i
on(provide)whichIsl egalfr
amewor kofco-operatives
Provider egis
trati
ondetails(how toregis
ter)
Mar keting–pr ovidemar ketingf oragr
icult
ur alproducee.g.CBK
Procur ementofr aw materials
Techni calknowl edge(super vi
singtheoperation)
Financi alassist
ancee.g.loanf ordevelopment
Auditingar r
angementf oraudi t
ingandempl oymentofs t
af f
Ensurequal ifi
eds t
aff.

9.4 ROLESOFGOVERNMENTI NMANAGEMENT

InKenya,t hemi ni
s tr
yofco- operativedevel opmenti sr espons ibl
ef or:
 Pr omot i
on
 Gui del ine
 Super vision
 Cont r
oloft heco- oper ativemovement
Thef unct i
oni scar ri
edoutbyt hemi nist r
y,throught heof ficeoft hecommi s
sioner
fort he co- oper ative devel opment ;t hisi s char ged wi tht he res pons i
bi l
ity of
registeringal lco-oper ativeor ganizat i
ons ,whichwi s
ht ocar ryoutbus ines sasco-
oper atives ociet i
es.
Thes peci fi
car easofwhi cht hemi nis t
ryofco- operativedevel opmenti sinvol ved
are:
Theel ectionofcommi tt
eet hemi nisterialof fi
cerspr esidesoverands uper visethe
electionoft hemanagementcommi tteebyat tendingal lt hegener almeet ingt hat
arehel d by var iouss oci eties.Thei rmai n dut yi st o ens urethatt hegener al
meet ingsar ehel di naccor dancewi tht hepr ovisi
onsoft hes ocieti
esbyl aws .
Whoat tendst hegener almeet inghast oens uret hatitispr operlyconduct edand
alltheagendaar edi scuss edwi t
hint her equirement soft heco- oper ativeact .
Heal sohast oens ur ethatonl yt hemember swhoar eel i
gibl eformember shipin
the managementcommi ttee ar e elect ed.In or dert o do al lthi s,gover nment
officerhast ochai rt hemeet ingwheni tcomest ot heel ecti
onoft hemanagement
commi ttee.

Ot
herf unct ionst hemi nis t
ryofco- operativedevel opmentcar riesoutare:
 Interpr et ationandenf orcementofco- oper ati
vel aw:onceagr oupofper sons
has r egi stered as a co- oper at i
ve or gani zation,i toper ates under t he co-
oper at i
ves ocietiesactandr ul es.Themi nist
er ialofficialsar echargedwi th
thedut yofi nterpretingt heco- oper ati
vel aw tot hemovementandenf orcingi t
.
Thi si sus ual lydonedur ingt hegener aland commi tt
eemeet ing.Wi thi
nt he
mi ni
s try,t her eisal egals ecti
onwi thpr ofes si
onalqual if
iedl awyerwhocar ry
outt hist as k.
 Inves tmentgui deline:t hemi ni str
yofco- oper ativedevel opmental sopr ovi des
the co- oper ative movementwi t
ht he i nves t
mentgui deline fort he pr oject
invol ving capi t
al expendi ture whi ch mus t al so be appr oved by t he
commi ssionerf ort heco- oper at i
vedevel opment .Inthisr egard,themi nistry
has pr epar ed and i ssued an i nves t
ment gui deli
ne t ot he co-oper ative
movementt oens ur et hatonl yeconomi cal lyvi abl eprojectsar eunder takenby
themovement .
 Loanpr oces singandappr oval :themi nist
r yiss upposedt oens urethatl oans
aregr adedf ort hepr oduct i
veandpr ovidentpur poses.Thi siss oespeci ally
wher el ar geamountar einvol ved.
39
 Account sandf i
nanci alcont rols :ther eincl udest hes tandardizedaccount i
ng
systemsf ort hegener all edgerandaccount ingf ormember s’trans actionsf or
themos ti mpor t
antcr opsandact i
vities.
 Audi t
ingoft hes ociet i
esbooksofaccount s:thef inalaccount sofco- oper ati
ve
organizat i
onar er equi r edt obeaudi tedatt heendofever yf inanci alyear ,
andi tist hedut yoft hemi nistryt oei t
hercar ryoutt hisfunctionorappoi nt
private audi tf irmst o do t hisj ob.Thi st as ki ses senti
alasa meansof
ascertaining whet hert hes ociety hasbeen oper ating ata pr of i
t,nor mal ly
calledas urpl us,oral os s.
 Anybus inessor gani zat ionmus tas ses swhet heri tismeet i
ngi t
sobj ectivesor
not.Plansf ort hef utur ear eus ual lybas edont hepas tandpr es entact ivit
ies
oftheor gani zat i
on.
 Inquiry and i nspect ioni ntot heaf f
ai rsofco- oper at
iveor ganizat ion:when
compl aintsar e,orhavebeenr ai sedbyt hemember s,thecommi ssionercan
orderani nves t
igationi ntot heaf fairsoft hats oci etywhi chisunabl et ocar ry
outi t
s dut i
es accor di ng t ot he r ul es and by- laws of t he soci ety.I ft he
invest
igat ionr epor ts howst hatt hes ocietyi snotpr opertymanagedaccor di
ng
tother equi rement sment ionedabove,t hecommi ssionerisempower edbyt he
co-operatives ocietiesi sr unf ort hebenef itofi t
smember swhof or medi t
.

9.
5 I
MPORTANCEOFCO- OPERATI VESI NTHEEYEOFGOVERNMENT
 Theyar et oolsofeconomi cgr owth
 Providef ertil
egr oundf ort hegovernmenttocalcul
atei
t'
seconomic
ideas
 Co-oper ativescat erfort hepoorandl ow earner
s
 Theypr ovi deunityint hecount r
y
 Createempl oyment
 Promot ei nternati
onalr el ation
 Mar ketingf armerspr oducei naboard.
 Mor eas s
et sacqui si
ti
onf ors uchco-operati
vesduetolargecapi
tal
outlay
 Taxat ion
 Distri
but i
onofl ocalres our ces
 Devel opmentofi nfrastruct ure
 Reducer egi onaldispar i
t i
es

40
LESSONTEN
SACCOSREGURATORY AUTHORI
TY

1
0.1 I
NTRODUCTI
ON

The Actest
abl
ished an aut hor i
tyt o be known as t he SACCO SOCI ETIES
REGULATORY AUTHORI TY ( SSRA) .
TheAut hori
tys hallbeabodycor por
ate
wit
h per
pet
uals uccession and a common s ealand s hallbe capablei nit'
s
cor
porat
enameof–
 Suingandbei ngs ued;
 Taki ng,pur chas ingorot her
wis eacquiringhol di
ng,char
gingand
disposingofbot hmovabl eandi mmovabl epr oper
ty;
 Bor r
owi ngorl endi ngmoney.
 Enter i
ngi ntocont r acts
;and
 Doingorper formi ngal lsuchot herthingsoract snecessaryfor
thef urt
her anceoft heprovisi
onsoft hisAct .

1
0.2 OBJ ECTI VESANDFUNCTI ONS
Theobjectsandf uncti
onsoft heAut hori
tyshallbe;
 Li cenceSaccos oci
etiest ocarry outdepos it– taking businessin
accordancewi t
ht hi
sAct ;
 Regul at
eands uperviseSaccos ocieti
es
 Hol d,manage and appl ythe Gener alf und of the authorit
yi n
accordancewi t
ht hepr ovis
ionofthisAct ;
 Levycont r
ibuti
onsinaccor dancewi ththisAct;
 Doal lsuchotherthingsasmaybel awf ul
lydirect
edbyt heMi ni
ster
;
and
41
  Perf
orms uchot
herf
unct
ionsasar
econf
err
edoni
tbyt
heActorby
anyotherwri
tt
enLaw.

10.
3 BOARDOFTHEAUTHORI TY
Theover s
ightf uncti
onandmanagementoft heaut hori
tyshal lvestinaBoar dof
t
heAut hori
tywhi chshallcompr ise;
 Thechai rmant obeappoi ntedbyt heMi nist
erfrom amongs tt
hemember s
appointedunder
 Theper manentSecr etar yt otheTreasuryorhi srepresent
ative;
 Thecommi ssi
onerf orco- operati
vedevel opmentorhi srepresent
ative;
 TheGover noroft heCent ralBankorhi srepresentat
ive;
 Fourmember s,notbei ng publ icofficers,appoint
ed by t heMi nis
terby
virt
ue oft hei
rKnowl edge,and pos sessi
on ofa mi nimum oft en years
experience,i n co-oper ative pract
ice and management ,law f inance or
economi cs;and
 Thechi efexecut i
veof f icer

A memberoft heBoardappointedunders ubsectionshal

lhol doffi
cef oraterm
ofthreeyearsands hallbeeligibleforre-appointmentforonemor eterm ofup
tothreeyears.
Thememberoft heboardappoi ntedshal
lbeappoi nt
edatdi ff
erentti
messot hat
therespect
iveexpir
ydat esoftheirter
mss hallfallatdif
f er
entti
mes.

A per
sons hallnotbequal i
fiedf orappoi nt
mentasamemberoft heBoar d,if
t
hatpersonis–
1.Amemberoft heNationalas semblyorofal ocalauthorit
y;
2.Adi r
ectororemployeeofaSaccos oci
etyorofaco- operati
vesociety;
3.Audi torofaSaccos ocietyorofaCo- operativesoci
ety;and
4.Aper sonwhoisprohibitedf r
om beingadi rectorortotakepar ti
nt he
management of a co- operat
ive or financial inst
ituti
on by t he
Commi ssi
onerundert heCo- operati
veSoci eti
esAct2005 orby t he
CentralBankofKenyar especti
vely.

AmemberoftheBoardappoi nt
edunders ubs ectionmayber emovedf rom office
byt
heMini
ster
,ift
hatmember ;
1.Acceptsanyof fi
cet heholdingofwhi ch,ifhewer enotamemberof
theBoardwoul dmakehi mi neli
gi blef orappointmenttotheof f
iceof
amemberoft heboar d.
2.Failstodischarget hef uncti
onsofhi sof fi
cewhet herari
s i
ng from
infi
rmit
yofbodyormi ndoranyot hercaus e;
3.Conducthimselfinamannernotbenef i
ti
nga.memberoft heBoar d;
and
4.Becomessubjecttoanydi squali
fications etoutabove.

A memberoft
heboardappoi
ntedmayr
esi
gnof
ficebygi
vingaf
our
teendays
not
icet
othemi
nis
ter
.

10.
4 POWERSOFTHEBOARD
The boards hallhave allthe power snecessar
yf orthe per
formance i
fit'
s
funct
ionsundertheActand,i
npar ti
cular,s
hallhavethepowerto–
 Supervis
e,contr
oland admi ni
sterthe ass
etsofthe author
iti
esi
ns uch
42
 mannerand f ors uch pur pos e aswoul d bes tpr omot et he obj ectsand
functionsforwhi cht heAut hor i
tyisestabli
shed;
 Openandoper atebankaccount s;
 Determi neprovis i
ont obemadef ortheAut hority’scapi talandr ecurr
ent
expendi tur
eandf ort hereservesoft heAut hor i
ty;
 Awar dcontracts;
 Enteri ntoassociationwi thot herbodiesoror gani zati
onswi thinorout side
Kenya t he Boar d may cons ider des i
rabl e or appr opr iat
e and i n
furtheranceoft hepur poseforwhi chtheAut horit
yi ses t
abl is
hed;
 Investf undsoft heAut horit
ynotcur r
entlyr equiredf orit'spur pos einthe
manner;and
 Recei ve grantsordonat ionsand make l egiti
mat e disburs ement sthere
from f or the f urt
her ance of t he objects ad f unctions f or whi ch the
Author i
tyisestabl i
shed.

1
0.5 AFFAI RSOFTHEBOARD
 The Boar d may appointcommitteesfr
om among i
tsown member sor
other
wi s
e,to carry outsuch generalorspeci
alfunct
ions as may be
speci
fiedbyt heBoard.

 Theboar dmay,byr esoluti

on,eithergener allyori nanypar ti
cularcas e,
delegatet o any commi t
tee of t he Board or to any member ,of fi
cer,
empl oyee,oragentoft heperformanceofanyoft hef uncti
onsordut iesof
theAut horit
yundert heActorunderanyot herwr i
ttenLaw.
 Exceptf orpur pos esoft heper f
or manceofhi sdut i
esort heexer ciseofhi s
power sundert heAct ,orwher er equiredunderanyot herlaw todos o,any
offi
ceroranyot herempl oyeeagentoft heauthori
tys hallnotdi sclos
eany
inf
or mationwhi chhehasacqui redi nt hecourseoft heper formanceofhi s
dutiesort heexer cis
eofhi spower sinaccor dancewi ththeAct .
 Anyper sonwhocont ravenescommi t
sorof fenceandi sl i
abl etoconvicti
on
toaf i
nenotexceedi ngonehundr edthousands hil
lings,ortoi mpr i
sonment
forat erm notexceedi ngoneyear ,ortoboths uchfineandi mpr isonment.

Thecommons eal
 Thecommons ealoft heAut hori
tys hallbekepti ns uchcus t
odyast he
Boar dmaydi r ectands hallnotbeus edexceptont heor deroft heBoard.
 Thecommons ealoft heaut hori
tywhenaf fixedt oadocumentanddul y
authent icated s hal lbej udici all
y and of ficially noti
ced and unl essand
untilt hecont rar yi spr oved,anyneces saryor deroraut hori
zat ionbythe
boar dands hal lbepr esumedt ohavebeendul ygi ven.
 Thecommons ealoft heaut hor i
tys hal lbeaut henti
catedbyt hes i
gnat
ure
oft hechi efexecut i
veof fi
cerandt hechai rpersonoft heBoar doranyone
otherof fi
ceraut horizedbyt heBoar di nthatbehal f.
 Al ldocument sot herthant hos erequiredbyl aw tobeunders eal ,madeby,
andal ldecisionsoft heAut horitymaybes i
gni f
iedundert hehandoft he
chai r
per son,i nt hecas eofa deci siont akenata meet ing atwhi chthe
chai r
per soni snotpr esentundert hehandoft heper sonpr esi
di ngatsuch
meet ing.

43
ASSI
GNMENT: DI
SCUSS THE CURRENT TRENDS I
N CO-
OPERATI
VE
MOVEMENT(20MKS)

44