Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya on Friday revealed the government’s plan to address the growing debt plaguing several cooperatives in the country.
Speaking during the SACCA Congress 2024 in Naivasha, Oparanya said that the government has established a committee to be chaired by the commissioner of cooperatives to audit increasing debts owed by cooperative societies to farmers.
“The government has established an audit committee to curb unauthorized loan applications by cooperative management, aiming to address the rising debt levels,” Oparanya said.
He noted that despite the government’s efforts to offset these debts, especially in the agricultural sector, they continue to rise due to mismanagement by cooperative officials, a problem he believes can be solved by establishing term limits for them.
A collage of Kenya Union of Savings & Credit Cooperatives (KUSCCO) Offices in Upperhill (left) and a person holding Kenyan notes (right)
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OAKAR SERVICES
“Governance has been an issue in our cooperatives and we found out that some directors stayed long there. It was our feeling that we should create a term limit of 3 years renewable once and you serve a maximum of 6 years and you come out,” He explained.
Acknowledging that the government has tried unsuccessfully to offset the debts, even paying Ksh4 billion of it, Oparanya said that the debts keep accumulating and the only solution would be serious oversight by the committee and ensuring that the top officials in such cooperatives do not stick around long enough to begin mismanagement of the funds.
“As a government, we cannot sustain this issue, so we must have a solution like having a committee within the office of the Commission of Cooperatives to look at any borrowing by any cooperative.”
“These cooperatives keep on borrowing because of mismanagement issues. When they were talking about it it was about Ksh6.2 billion now, it is over Ksh7 billion so even if the government clears the Ksh6 billion there will still be another Ksh1.2 billion accumulated,” Oparanya added.
“Debt is part of mismanagement. That’s why we are saying that we are going to have an eye on borrowing in cooperatives because some members are cubed into being told that we are borrowing to pay dividends when actually they are just borrowing for their own use,” he added.
The CS also emphasised the importance of transitioning from small lending by cooperatives to manufacturing to create jobs as well.
Cooperatives Principal Secretary Patrick Kilemi also highlighted the committee’s role in auditing and controlling borrowing while ACCOSCA CEO George Ombando pointed out that improved regulations could help reduce youth unemployment in Africa.
Coffee societies in Kenya have especially suffered the brunt of these unauthorised borrowing and funds mismanagement culminating in CS Oparanya firing the entire management staff at Kangunu Coffee Society in Murang’a 3 weeks ago.
CS of Ministry of Cooperatives and MSMEs Development, Wycliffe Oparanya during his swearing-in at State House Nairobi, August 8.
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PSC