Savings and Credit Cooperative Organizations (SACCOs) have been urged to intensify investments in product development and adoption of new technology to support efforts to endure the current market competition, especially from commercial banks.
Cooperative Bank of Kenya vice chairman Macloud Malonza observed that commercial banks have mounted a cutthroat competition through intensive product development, targeting all depositors, especially those in formal employment.
“We have witnessed a thorough business rivalry from the big boys in the money market, a trend putting more pressure on the financial cooperatives. The commercial banks, owing to their modern and high expertise and increased liquidity, can penetrate more business segments,” said Malonza.
He added, the cut-throat competition has contributed to the market cake shrinking and to the disadvantage of the credit unions.
"Therefore, as the cooperative movement leader, we need to fast-track new approaches based on increasing investment in modern technology, product development and enhancing our customer approach,” he added.
He made the remarks during a leaders' meeting and launch of Ushirika activities at the Kenya Bankers Hall on Friday, under the theme "Cooperatives driving inclusive and sustainable solutions for a better world."
He advised the leadership of Saccos to widen their scope of investments, especially targeting information and Communications Technology (ICT), as well as avoiding gaps that can lead to poor governance. Further, he said the cooperatives need to spend more on research and development, and hence fully understand the changing market dynamics and enhance capacity building to deepen the market.
Malonza, who is also the chairman of Cooperative Alliance of Kenya (CAK), however, acknowledged the current growth of between 10 and 15 per cent annually of the cooperative movement, saying the trend confirms of high rate of untapped market segment in terms of financial deepening.
Commissioner for Cooperatives David Obonyo hailed the contribution of the cooperative movement to the country’s economic growth, especially in rural wealth creation.
In 2024, he noted Saccos subsector recorded a 10 per cent growth despite prevailing business realities. In terms of deposits registered during the review period, Saccos received Sh1.2 trillion, assets reached Sh1.8 trillion, and the current loan book stands at over Sh1.1 trillion.
“Kenya cooperative movement has some of the best institutions on the continent, for example, Co-operative Bank of Kenya, Kenya Union of Savings and Credit Co-operatives Ltd (KUSCCO), CIC Insurance and the National Co-operative Housing Union (NACHU).
To improve governance, the Government is working on a model to move a four-tier sector - primary, secondary, unions and apex bodies,” said Obonyo.
He assured members that their deposits in Saccos are well managed, saying the Government and other stakeholders are working on strategies to fill gaps that might lead to poor governance.
CAK chief executive officer Daniel Marumbe dispelled the perceived perception that cooperatives are struggling with bad governance.
“Following Government interventions and reforms in the last few decades has helped in reducing cases of resource mismanagement in the cooperative movement. Currently, we are proud that there are already in place sound regulatory initiatives, for example, the SACCO Societies Regulatory Authority (SASRA), “said Marube.
He confirmed that the cooperative movement leadership is negotiating with the Government to secure 100 acres in Ngong forest to grow trees and even crops.
He called on cooperative movement players to renew and exert pressure on members of parliament to fast-track enactment of the Cooperative Bill 2024.
