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Cooperative Society in Kenya
Cooperative Society in Kenya
So far you I assume you have learnt about sole proprietorship, partnership and joint stock
Company as different forms of business organisation. You must have noticed that besides
many differences among them in respect of their formation, operation, capital
contribution as well as liabilities, one common similarity is that they all engage in
business activities to earn profit.
Without profit it is impossible for them to survive and grow. But there are certain
organizations which undertake business activities with the prime objective of providing
service to the members. Although some amount of profit is essential to survive in the
market, their main intention is not to generate profit and grow. They pool available
resources from the members, utilise the same in the best possible manner and the benefits
are shared by the members.
Let us know more about them.
Objectives
After studying this report, you will be able to:
explain the meaning of co-operative society;
state the characteristics of a co-operative society;
describe the procedure of formation of a co-operative society;
identify different types of co-operative societies;
discuss the advantages and disadvantages of a co-operative society; and
assess the suitability of co–operative society form of business organisation.
i. Open membership
The membership of a Co-operative Society is open to all those who have a common
interest. A minimum of ten members are required to form a cooperative society. The Co–
operative society Act does not specify the maximum number of members for any co-
operative society. However, after the formation of the society, the member may specify
the maximum number of members.
Kenya
Kenya co-operatives put their contribution to GDP at 45% with 31% of national savings
and deposits.
They have:
• 70% of the coffee market
• 76% of the dairy
• 90% of pyrethrum and
• 95% of cotton.
Kenya 1 in 5 is a member of a co-operative or 5.9 million and 20 million Kenyans
directly or indirectly derive their livelihood from the Co-operative Movement.
Advantages Disadvantages
Suggestions
Large-scale enterprises in the cooperative sector require huge funds.
Cooperatives should be encouraged to enter capital market and mobilize funds by means
of deposits, debentures etc.
The state governments can act as venture capitalists
Cooperatives can evolve deposit-insurance scheme, to instill confidence among
the depositors, both in urban and rural areas. Effective deposit mobilization will
help them to build their own bendable resources, for profitable and diversified
lending.
In order to complete in the new economic environment, it should intensify its
linkages with NGOs or Self-help Groups and promotional bodies to attract funds
and other forms of assistance from international agencies like world bank,
Expert Recommendation
o Incorporates co-op principles
o Ensures autonomy & independence of co-ops
o Specifies role of federation
o No Gov’t control – participation in equity
o Incorporates provisions for self-regulation
o Enables co-ops to create their support services e.g. audit
HRD; consultancy, financial systems
o Incorporates provisions for simplifying registration; mergers; division; liquidation
Conclusion
o Malthusian theory suggests the relationship between population growth and food
production (production of food grains in G.P. while population growth is in A.P.).
So this creates disequilibrium between subsistence need and population growth in
developing countries .So in this regard tendency toward primary sector can
minimize this problem with proper cooperation.
o Cooperative Society is one of the largest sectors with more employees than in any
country in the world.
o Much can be done to improve efficiency in cooperative society with proper
management implementation and Government policies.
o The Corporate culture will also bring sustainable efficiency and thereby
cooperatives can compete with strong private players.
o Professionalism in the management of the cooperative enterprises will upgrade
the quality of the staff with latest developments and also develop a proper and
cordial relationship between the managers and members of board of directors.
There must be proper and continuous training for both cooperative leaders and
profession executives.
o There are a number of agricultural commodities like rice, sugar, fruits, vegetables;
spices etc. that have strong competitive advantage in export markets. Agricultural
cooperatives can take this advantage in foreign market.
o The leadership with vision, dedication, commitment and above all innovative
approach can help in preserving Cooperative Identity in an Era of Competition.
Quote
“Peace and social well-being are not only relevant to cooperatives but co-operatives are
relevant to the peace making process in communities and societies throughout the world.”
Hillary Odido 2008
Reference: Sources
• http://www.ica.coop/al-ica/
• http://www.ibef.org
• Annual Reports : http://www.ica.coop/publications/ar/index.html
• ICA2005
• ICA2006
• http://www.iffco.nic.in
• Book: Managing The Cooperative Difference : by Peter Davis