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THE CO-OPERATIVE MOVEMENT IN KENYA:

THE EAGLE THAT WON’T FLY

By Mwangi Ngumo

The Co-operative Movement in Kenya traces its roots to the period immediately after the country’s independence when the World was divided largely into two adversarial camps: a capitalist West led by the United States of America and the United Kingdom, and a socialist East under the patronage of the former Union of Soviet Socialist Republics and the Peoples Republic of China. Both the people of Kenya and its leaders were under intense pressure to join either of the two camps. Its neighbours had already taken sides, with the Julius Nyerere-led Tanganyika opting to face East while Milton Obote’s Uganda soon followed suit with their Common Man’s Charter. Under the guidance of the Late Tom Mboya and the current President, Hon. Mwai Kibaki, the Kenya Government opted for what was essentially a middle of the ground position, a mixed system. In a paper entitled the Sessional Paper Number 10 of 1965, the thinking of the Kenya Government was summarized as “African Socialism”. With this Paper, the parastatal sector was born and the Co-operative Movement given new impetus.

The Movement did in fact grow and became a shining example of how common people can come together, pool their financial resources and assist each other with small loans that were, in time, to transform their lives. To-date, the Co-operative Movement in Kenya commands a substantial portion of this Nation’s wealth. The issue now is not whether or not the Movement can be a success, which undoubtedly it has been, but whether it can become an effective vehicle of winning economic independence from the neo-colonialists who have largely kept the wealth of this country in the same hands it was in prior to political independence. The Movement, continues to miss opportunity after opportunity to do this, and needs to re-focus and re-assess its capacity not just to mobilize financial resources, but also to manage them well for faster economic growth for the Nation and the welfare of its members.

The Movement will need, for instance, to review its legislative arrangements. The Government, through its Ministry of Co-operative Development, will need to quickly make up its mind whether its wants to control the Movement or facilitate it. We have no doubt that each Co- operative society or Union needs to be left alone to manage its own affairs as no amount of regulation from an external agency can guarantee that its resources are used for optimum benefits for their owners. But one must

also make sure that the capacity of the Society to manage its affairs indeed exists. Although corrupt and unethical practices have always bedeviled the Movement, the tendencies reached astronomical levels when the role of the Co-operative Officer was down-graded drastically without first ensuring that appropriate checks and balances existed within the Societies and Unions. Soon, members of the Central Management Committees (CMC’s) were paying themselves huge sitting allowances, were advancing themselves four or five loans concurrently without paying any, and investing members’ contributions in worthless undertakings in every town in the Country. The time taken between applying for a loan and getting it was becoming longer - for lack of funds, yes, but mostly due to favouritism and nepotism! The matter now requires the urgent attention of the anti-graft authorities in Kenya - if they can liberate themselves from the dungeons of the Goldenberg labyrinths and the Anglo-leasing rigmaroles.

It may also be necessary for the Movement to question the rationale of “one-member-one-vote” electoral practices instead of the “one-share-one- voter” arrangements that ensure that those who have more to lose have a bigger say in any undertaking. But even if that were not to happen, some minimum qualifications for election to be a member of a Central Management Committee should be agreed on. Such requirements should include, but cannot be confined to, the level of education. Members of CMC’s should also have experience in leadership and knowledge in management and must not have been associated with corrupt practices. Members must also be educated on the circumstances under which a conflict of interest could be said to arise in business transactions.

The Movement will also need to ensure that there is sufficient de-linking of ownership from control, and that the roles of the CMC’s are separated from those of Management. The large co-operative societies and unions have hired permanent staff to manage their affairs. But they have continued to interfere with the work of their staff, have insisted in having relatives employed in the societies, and even to protect non-performing employees depending on which camp the CMC member belongs to. Today, it is almost impossible to get a job in any Co-operative Society unless through the influence of a CMC member. In the highly-changing and competitive world of banking, employees who are hired on the basis of who and not what they know, and are utterly un-empowered to perform the duties they were hired to perform, cannot provide the needed edge.

Then, there is the whole issue of the business strategies that the societies employ. Like a moth that continuously gets attracted to a fire, the co- operative Societies have placed themselves on a direct collision path with mainstream banking, without blinking, and without the core competencies that mainstream banking have developed over the years. They have failed to capitalize on the advantages accruing from their core strength – the bond that comes from their common employment – and have chosen to perform tasks without the requisite legal, administrative, technological and managerial tools needed to make a difference. They have now been reduced to large scale customers of the main-stream banks, instead of working their way towards becoming worthy and parallel competitors in the banking industry by capitalizing on the benefits that accrue from their proximity to their customers and being faster in delivering services to them. In short, the Movement has become the eagle that won’t fly.

Perhaps the Movement will learn, and do so quickly before it becomes another case when Kenyans have to reminisce of the good old co- operative society days. But the horror of the AIDS epidemic, which remorselessly and unabashedly continues to ravage the membership of the societies, hangs over their future like a Damocles Sword. The society’s membership is dwindling rapidly, and the Leadership of the Movement must identify solutions to protect their financial base. This calls for a great deal of thinking and planning which must not be clouded by selfish considerations or the short-sightedness of the members of CMC’s. The Co- operative Movement has been a boon for this Country. Many people in this Country would not be where they are now were it not for the harvests of opportunities sowed in the garden of the Movement. It will be a sad day when Kenyans will compose a eulogy for the Movement and say, “She was such a Loving Mother. But God gives and God Takes. May she Rest in Peace”.

We cannot milk a cow, refuse to feed it, cry that it was a wonderful cow, and blame God for it. The matter of whether or not the Co-operative Movement can be re-organized and made beautiful again has nothing to do with our prayers – it is a matter for our hands, our minds, and our commitment. For once, let us leave The Almighty out of it.

(Mr. Mwangi Ngumo is the Executive Director of the Kenya Institute of Management and can be reached at mngumo@kim.ac.ke)