Understanding a Co-operative Society

What is a co-operative society?

A co-operative society is an association of persons who have come together with a common purpose of pooling their resources together for mutual economic and social benefit.

Types of co-operatives societies in Kenya

a) Savings and credit co-operative societies

These are formed to provide financial support to members. They accept deposits from members and grant them loans at reasonable interest rates in times of need.

b) Housing co-operatives societies

These are co-operative societies formed to provide residential houses to members. They purchase land, develop it and construct houses or flats and allot the same to members. Some societies also provide loans at low rates of interest to members to construct their own houses.

c) Consumer co-operative societies

These societies are formed to protect the interest of general consumers by making consumer goods available at reasonable price. They buy good directly from producers or manufacturers thereby eliminate middlemen in the process of distribution.

d) Agricultural/marketing/farmers co-operatives

These are formed by small farmers to work jointly in marketing their produce and thereby enjoy the benefits of large-scale farming.

e) Producer co-operative societies

These societies are formed to protect the interest of small producer by making available items of their need for production like raw materials, tools and equipment, machinery, etc..

f) Multipurpose co-operative societies

These are co-operatives that deal with more than one activity. The Ministry of Co-operative Development and Marketing discourages the formation of such co-operatives as their overall performance has been found wanting.

What are the objects of a co-operative society?

The main object of a co-operative society is to organize and promote the economic interest of its members in accordance with the Co-operative Principles and Values. The specific objects include:-

• promotion of thrift among members-opportunity for accumulation of savings/deposits; loans at fair and reasonable rates of interest
• to provide opportunities for members to improve their economic and social conditions
• perform those functions and exercise powers designated for Co-operatives Societies under applicable by-laws.

The Co-operative Values:

• Self-help
• Mutual responsibility
• Equality
• Equity
• Honesty
• Openness
• Social responsibility

The seven universal co-operatives principles:

• Voluntary and open membership
• Democratic member control
• Economic and participation of members
• Autonomy and independence
• Education, training and information
• Co-operation among co-operatives
• Concern for community

Structure of co-operative movement in Kenya

The co-operative movement in Kenya is divided into four distinct divisions namely:-

a) The National Apex:

Kenya National Federation of Co-operatives Ltd (KNFC)- defunct, was formed on 28th April 1964 as the Apex Co-operative organization of the Kenya Co-operative Movement with the mandate to lobby, advocate for, network, collaborate and unite all co-operatives in Kenya. It has been replaced by Co-operative Alliance of Kenya that was inaugurated in 2010.

b) National Co-operative Organizations:

• The Co-operative Bank of Kenya
• The Co-operative Insurance Company of Kenya CIC
• Kenya Union of Savings and Credit Co-operative KUSCCO
• Kenya Rural Sacco Societies Union Limited KERUSSU
• National Co-operative Housing Union Ltd NACHU
• Co-operative Collage of Kenya
• Kenya Planters Co-operative Union KPCU-registered both as a company and a co-operative society
• New Kenya Co-operative Creameries Ltd KCC

Secondary Co-operative Societies:

Comprises of all co-operatives unions countrywide.

Primary Co-operative Societies:

Comprise over 12,000 primary co-operative societies registered countrywide.

Registration of Co-operative Societies

Pre-requisites

The co-operative Societies Act, Chapter 490 of the Laws of Kenya, states that for a society to be registered with or without limited liability, it:

• has to have its object as the promotion of the welfare and economic interest of its members and
• has incorporated in its by laws the co-operative principles

Essentials for registration of a co-operative societies

For a society to be registered under the Act, it must:

• in the case of the primary society, consist of at least ten persons all of whom shall be qualified for membership of the co-operative society
• in the case of a co-operative union, it consists of two or more registered primary societies
• in the case of an apex society, consist of two or more secondary societies

Procedure for registration

• an application is made to the commissioner for co-operatives development in the prescribed form and signed by at least ten would be members
• the application is accompanied by four copies of the proposed by-laws of the society in English and the person or persons by whom or on whose behalf such application is made, shall furnish such information with regard to the society as the commissioner may require
• if the commissioner for co-operatives development is satisfied that a society has complied with the Act and any rules made there under and if the proposed by-laws are not contrary to the Act, he may register the society and its by-laws.

Registration Documents 

• The proposed by-laws in four copies
• Filled application for registration form in four copies
• Supplementary information form in four copies (if any)
• Economic appraisal in four copies
• In case of salaried workers with check-off agreement with employer, a letter from the employer is needed.

ESSENTIAL ELEMENTS OF AN EFFECTIVE AND VALID MEETING IN SACCOs

The following requirements have to be observed in an effective and valid meeting:

•   there must be notice of the meeting.   in case of general meetings, there must be 15 clear days written notice (section 27 of the Act). the notice should clearly indicate

•   the nature of the meeting

•   the date of the meeting

•   the place of the meeting

•   the time of the meeting

•   the agenda of the meeting

•   the notice should be by a person authorized to do so.

•   the notice must be circulated to all members.

•   notice of the meeting must be read and adopted at the start of the meeting.

•   there must be a quorum; that is, the minimum number of members required before a meeting can continue with business.

•   the meeting must be chaired by the person authorized to do so by law. It is usually the chairman and in his absence the vice-chairman. If both are not present, then any member elected by the majority of members present shall preside.

•   the meeting must be conducted following the order of the agenda.

•   Minutes of the previous meeting must be read, confirmed and signed by the chairman before proceeding with the meeting.

•   voting must be carried out in a democratic manner and in accordance with the by-laws.

•   the chairman must control the meeting and act in the best interest of the society.

•   After each discussion, the chairman must announce the decisions arrived at (resolution) to enable the secretary enter a proper record.

•   Any report presented must be adopted before it is discussed.

•   Each resolution passed should be proposed and seconded. For resolutions passed that require action to be taken,  the meeting should:

»   identify who to act (action persons).

»   Give time limit by which action should be taken (action deadline).

»   identify and allocate required resources to enable implementation (resource allocation).

•    Minutes of the meeting must be clearly written.

Minutes and Minutes Writing

Minutes are a summary of the main points discussed/arrive at during a meeting. they are not a record of everything that was said.  Minutes should provide a clear and concise indication of what actually happened, that is agreements reached and resolutions passed.

Minutes are only valid after they have been read and signed by the chairman and the secretary on behalf of the members who attended.

Purpose of Minutes

•   reference - Minutes serve as a record for future reference of what was discussed and agreed upon in a meeting.

•   Evidence - Minutes are used as evidence in case of litigation in a court of law. this is to
promote or protect the interests of the society when appropriate.

•   disputes - Minutes are used to settle disputes in case of disagreements on what was agreed on in the past

•   Allowance - Minutes are used to support payment of the sitting allowance of committee members in societies in  accordance with approved budget

Layout of Good Minutes

The layout of minutes should consist of the following:

•   name and address of the organization

•   title, nature, date, place and time of the meeting e.g. Minutes of the management committee meeting held on 10th July 2007 in the co-operative society’s boardroom from 10.00 a.m. to 1.00 p.m. (in capital letters)

•   names and designations of those in the meeting.   these can be categorized as present,
present by invitation, in attendance. Also record those who are absent with apology and
those who are absent but have not sent any apology.

Actual Proceedings of the Meeting

Start by recording the actual proceedings of the meeting.  Always start by numbering each minute from the last minute during the same year.  For example when recording the 3rd meeting of the year where the last minute number of the previous (the second) meeting was 18, start with number 19 e.g.

Min. no. 19/3/2007:  READING AND CONFIRMATION OF THE PREVIOUS MINUTES

The minutes of the previous meeting held on 8th February 2006 were read and confirmed as a true record of the proceedings of that day.  This was proposed by ……………….…… and seconded by ………..………………..

If there are any amendments to be made before confirmation, they should be made and the minute written for example as follows:

The minutes of the previous meeting held on 8th February 2007 were read and confirmed
as true record of the proceedings of the meeting with the following amendments:  (if any)

EX-MINUTE: ………………………………………………...………….

Minutes are always written in logical order from the first to the last one. Each minute title should be written in capital letters and underlined, as in the example above.

Min. no. 20/3/2006:  MATTERS ARISING FROM THE PREVIOUS MINUTES

If any discussion is raised on any of the previous minutes, record it by reference to the minute e.g.

EX-MINUTE:  13/2/006 - The chairman explained that the society could not repair the machines as agreed due to delays in processing tender documents.

EX-MINUTE: 17/2/2006 - The meeting agreed to re-allocate 50% of the money meant for committee training members’ education after realizing that this was the main bottleneck in the progress of the co-operative society.

Note: Every letter calling a meeting should have the first agenda, Reading and confirmation of previous minutes and the second as Matters arising from previous minutes.  The last item of the agenda should be; Any other business.

Ending Paragraph

In a separate paragraph after any other business, conclude the meeting with:

There being no other business to discuss, the meeting ended with prayer at………….
or:

Due to inadequate time, the chairman decided that all agenda of the meeting could not be discussed and some matters were therefore referred to the next meeting.

The society should maintain a minute file where all valid minutes are kept.  Copies of minutes may be sent to relevant offices for information and any necessary advice.

The supervisory committee will follow the same procedure of convening and conducting meetings.

EXCERPT FROM: Savings and Credit Co-operative Societies; Start-up Kit (Swiss Contact and Department of Co-operatives).

WE ARE 386 ON OUR FACEBOOK PAGE!!

Thanks for joining this page and for visiting the main site. Now we are 386. That's is incredible. We can form a co-operative society a savings and credit type (Sacco), and the law requires only ten people. Only ten!!

CAN WE REGISTER IT?

Lets assume we all want to form a co-operative. We call it Facebook Sacco. Our area of operation is Republic of Kenya. We all agree on postal and physical address of our society. Our common bond is Facebook users who have liked "Co-operative Movement in Kenya" (am sure commissioner won't buy that!!!). The entrance fee/registration fee we all agree to set it at Ksh. 500. We also agree that one share is Ksh. 20 (i.e. nominal value of one share) and the minimum number of shares is 100 and therefore the non-withdwable share is Ksh. 2000 and we set transfer of share fee at Ksh. 200. We all unanimously agree also that our minimum monthly contribution (deposits) should be Ksh. 2000.

If we all pay the entrance fees, we will have Ksh. 193,000. This is more than enough for registration and buying few stationary for our society and also remain with some cash that we can loan to our members! Saccos don't give loans until they are six months old, also members don't qualify for loans until they are six months old and have been contributing consecutively. We are all contributing Ksh. 2000 per month so every month our account will be reading Ksh. 772,000. In six months, we shall have savings of  Ksh. 4,632,000! Now after six months we can loan to few of our members. Of course by then we will have a loan policy that will control loan granting, repayment terms, etc.

Who is not feeling all nice now? Questions?

WHAT IS A CO-OPERATIVE?

"The people's welfare can best be secured by institutions organized by the people themselves, because these institutions are most likely to possess the characteristics that appeal to the people and therefore the stability to perpetuate their services"- Alphonse Desjardins.

What is a Co-operative?

A co-operative is define as an autonomous association of persons united voluntary to meet their economic, social, cultural needs and aspirations through a jointly-owned and democratically controlled enterprise. A co-operative may also be defines as a business owned and controlled equally by the people who use its services or who at it, who are referred to as members (International Co-operative Alliance).

Like companies co-operatives are economic organizations whose income generating activities are devoted to the economic and social welfare of their members by providing services which enable individuals to improve their personal skills and economic means for self advancement.

Co-operative is an idea, a thought, a certainty that yes we can, that anything the human mind can believe, the human mind can achieve. It is also important to note that "every individual forms his own estimate of himself and that basic estimate goes far towards determining what he or she becomes. You can do more than you believe you can. You can do more than you believe you are. Belief stimulates power within yourself. Have faith in faith. Don't be afraid to trust faith."

Co-operative approach implies:-

• Treating people as origin of action, not as objects to be manipulated or serviced
• Encouraging people to work together and help one another solve mutual problems
• Designing useful structures, processes, products and services so as to meet people's needs rather than profit making purposes alone.