The State Department for Co-operatives (SDC) was established in November 2016. Prior to this, it existed as a department under the then Ministry of Industrialization and Enterprise Development. It was created under Executive Order No.1/2016. Co-operatives have played a significant role in socio-economic development of nations for centuries and are a reminder to the international community that it is possible to pursue both economic viability and social responsibility. It is against this background that the United Nations (UN) declared the year 2012 the International Year of Co-operatives. By the end of 2017, there were 22,344 registered co-operatives with an estimated membership of 14 million. These co-operatives are active in financial intermediation, agricultural produce marketing and processing as well as provision of decent and affordable shelter. Kenyan co-operatives are envisaged to promote green investments especially in such sectors as transport, housing, wholesale and retail trade.
The International Co-operative Alliance (ICA) Blue print (The 2020 Vision) anticipates co-operatives as a business model that will provide economic, social and environmental sustainability and be the fastest growing form of enterprise. Its five (5) pillars of participation, sustainability, identity, capital and legal framework drive this. The ICA Africa Co-operative Development Strategy 2017-2020 recognizes co-operatives as a critical vehicle towards poverty alleviation and development in Africa. As co-operatives in Africa strive to support human development, they face various challenges such as low human resource capacity, weak economic base, extensive financial dependency from external sources, lack of internal capacity and poor governance. The strategy recognizes the sector as having high potential for facilitating financial growth and can therefore be transformed to lead social and economic development in Africa. Co-operatives have the potential in facilitating green investments to support economic growth.
The objectives that guide Kenya’s development agenda were first established in the Sessional Paper No. 10 of 1965 on “African Socialism and its Application to Planning in Kenya.” This paper promoted “Africanisation” in all spheres of the economy through political equality, social justice, human dignity including freedom of conscience, freedom from want, diseases and exploitation, equal opportunities; and high and growing per capita incomes, equitably distributed.
One of the outcomes of the Sessional No. 10 of 1965 was the enactment of the Co-operative Societies Act No. 39 of 1966. This accelerated the formation of co-operatives that facilitated the transfer of land to indigenous Kenyans, marketing of agricultural produce, and formation of financial institutions to support the co-operative movement.
Session Paper No. 1 of 1970 was the first co-operative development policy, in which government sought to consolidate the gains made in the co-operative movement. The policy was reviewed in 1975 when the government specifically recognised the importance of co-operatives as vital organs for mobilizing material, human, and financial resources for national development. It reiterated the government’s commitment to expanding co-operative activities in all spheres of social and economic development. A key milestone at this stage was the establishment of the Ministry of Co-operative Development.
The second co-operative policy was Sessional Paper No. 4 of 1987, whose theme was “Renewed Growth through the Co-operative Movement”. This policy reiterated the commitment of the government in enhancing the participation of Kenyans in the economy through co-operatives. The government recognized the private nature of co-operatives and adopted an advisory role.
Sessional Paper No. 6 of 1997 on “Co-operatives in a Liberalised Economic Environment” was the third co-operative policy. In this policy, the Government reviewed its involvement in the management of co-operatives and provided a legislative framework under which co-operatives could operate in a competitive economic environment. This led to the enactment of the Co-operative Societies Act No. 12 of 1997 that gave greater powers to the members of the co-operative movement. The Act was however amended in 2004, to restore some powers to the government to intervene in the management of co-operatives when necessary. In addition, the rapid growth of financial co-operatives offering front office services necessitated the enactment of the Sacco Societies Act of 2008 to regulate savings and credit co-operatives.
CoK, 2010 brought about fundamental changes in the management of public affairs. The CoK 2010 established two levels of government namely; the national and the 47 county governments. The functions assigned to the county governments under Fourth Schedule included co-operative development and regulation that was unbundled by the Transition Authority through Legal Notice No. 137 of 9th August 2013. One of the objects of devolution is to promote social and economic development and provision of easily accessible services throughout Kenya (CoK, 2010 Article 174). In doing so all actors will be guided by the principles and as espoused in Article 10 of the Constitution.
Cognisant of the devolved system of governance, the SDC has a policy which lays ground for the review of the legal and regulatory framework to facilitate the growth and development of co-operatives. It is acknowledged that co-operatives are private organizations that play an important role in public mobilisation to stimulate economic growth. Therefore, the role of the national and county governments remains facilitative in nature.
The ICA defines a co-operative as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise”.
Co-operative identity includes the co-operative principles and values. Co-operative policy and legal framework are guided by these values and principles, including most significantly, protecting and fostering the autonomy of co-operatives. As part of the international co-operative movement, all co-operatives in Kenya conduct their business in accordance with internationally shared co-operative values and principles.