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SECURING RELIABLE
CO-OPERATIVE CAPITAL
WHILE GUARANTEEING
MEMBER CONTROL
GEORGE OTOTO
MANAGING DIRECTOR
KUSCCO LTD
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INTRODUCTION
While secondary and tertiary co-operatives in Kenya
do not have as much capital as they would like to fund,
operate and sustain their activities, largely because
they may not directly be involved in the business of
producing and/or selling goods and services, they
nonetheless have great opportunities to tap to finance
their operations.
The following are some of these opportunities that can
be employed.
This presentation will highlight, among others the
following;
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1. What KUSCCO specifically has done
to raise capital to fund its operations
2. Case studies (short video clip
presentation)
3. Innovative strategies we have and
are using
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First, let me outline an abbreviated profile of
KUSCCO LTD
Brief Profile of KUSCCO
KUSCCO was established in 1973 as an umbrella
organization for all SACCOs in Kenya. The Union
has since remained the principal national
organization recognized as an institution
responsible for representing and speaking on behalf
of SACCOs. Our cross-cutting objectives in this
regard are summarized as:
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KUSCCO OBJECTIVES
1. Provide advocacy, lobby, advice and protect
SACCO- members against adverse legislation
and/or restrictions.
2. To act as the principal local and international
representative and mouth-piece of SACCOs.
3. Promote the organization and development of
viable SACCOs
4. Disseminate information concerning SACCOs
and co-ordinate their operating methods and
practices and foster Education and Training of
members, officials and employees.
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WHAT KUSCCO HAS SPECIFICALLY DONE
TO RAISE CAPITAL TO FUND ITS OPERATIONS
While borrowing is an alternative avenue to raise
capital for short term use, e.g. to fund
investments, KUSCCO has more or less and from
time to time borrowed for that purpose. However,
for long term operations and sustainability of our
activities, we have essentially funded our
operations from within.
The following are some ways we have done so:
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1. STRATEGIC PARTNERSHIPS WITH LOCAL
AND INTERNATIONAL DEVELOPMENT
PARTNERS
In tandem with one of our objectives,
namely to lobby on behalf of SACCOs, we
have from time to time, engaged
International organizations in funding
projects whose target beneficiaries are
SACCOs. Some of these International
Organizations have included, just to
mention a few, MESPT, YEDF, COOP
Africa, ILO, and USAID.
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As an example, in 2011, KUSCCO was awarded,
through a competitive Request for Application
(RFA) process, fund by COOP AFRICA/ILO. This
fund went directly to supporting our SACCOs in
improving, strengthening, and restructuring
their operations specifically in Market value-
chains and ICT infrastructure.
Now the SACCO is exporting members produce
to neighboring country (Uganda) and has greatly
streamlined its ICT functions. This type of
SACCO-support creates a strong-bond with us,
thus strengthening our relationship with
SACCOs
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SHORT VIDEO CLIP
The following is a short video-clip showing the
then Project Manager at KUSCCO being
interviewed with regard to the project by
Independent consultant from COOPAfrica/ILO
expounding on the progress of the project)
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2. COLLABORATION WITH GOVERNMENT
OF KENYA
One of the key pillars of Vision 2030 is empowerment and
creation of employment opportunities for youth through
Youth Enterprise Development Fund. KUSCCO has
collaborated with the government in ensuring this
important milestone in our economic development is
achieved. We have developed and created products for
youth to engage in viable business ventures thus off-
loading, as it were, the burden on the corporate sector, of
job-creation for the youth. In turn, we are able to generate
income to sustain our operations accordingly.
As at this moment, we have given out Kshs 20 (Twenty)
Million in loans to youth for business ventures, some as
simple as Hair-salons, Cyber-cafes’, mobile phones and
electronic accessories, Cereals, Second-hand clothes,
Motor cycles, Taxis, etc.
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3. SPECIFIC SACCO- TARGETED
INITIATIVES
At KUSCCO, we have developed and
refined over the decades, products
and services finely tailor-made to fill
in “gaps” in the SACCOs.
Enumerated here below are some of
these product/services:
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THE CENTRAL FINANCE FUND
This is the inter-lending facility for
SACCOs affiliated to KUSCCO. It
mobilizes funds within the SACCO
Movement, extends the credit to
individual SACCOs accordingly. The
program also offers attractive interest
rates on the deposits made by SACCOs.
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RISK MANAGEMENT SERVICES
Risk Management Services provide
SACCOs with a Fund that gives
them mutual protection against loan
losses. This enables SACCOs to co-
operate horizontally and also spread
their risks among fellow societies.
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EDUCATION AND TRAINING SERVICES
Through the program, SACCO
officials, staff and members are
educated on governance issues,
financial management, Human
Resource, taxation, asset and
liability management among others.
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KUSCCO HOUSING FUND
The KUSCCO Housing Fund started
in the year 2000, is arguably one of
Kenya's cheapest housing loan
schemes. The Union has disbursed a
total of Kshs. 303 million to date to
individual SACCO members to buy
land, purchase a house or for house
construction. 15
RESEARCH AND CONSULTANCY SERVICES
Some of the consultancy services provided
to our affiliates and individual members
include strategic planning, feasibility
studies, training needs analysis,
curriculum development, salary and
benefits survey, job description and
evaluation, organizational development
and restructuring among others.
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CORPORATE AFFAIRS AND MARKETING
DEPARTMENT
This department deals with management of
Corporate Affairs, Corporate Social
Responsibility, Media Watch and Corporate
Image. Other functions include Guest Relations,
Brand Management, Marketing, Recruitment of
New SACCOs and Affiliates and Sourcing for
New Business Ventures.
It publishes ‘The SACCO Star’ magazine on a
quarterly basis as a medium for creating
awareness and as an extension of advocacy.
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4. INTERNATIONAL CONSULTANCY (EASTERN
AFRICA)
KUSCCO has and continues to conduct consultancy
activities in the cooperative sector of other countries. For
instance, in August 2014, we carried out Feasibility Study
for Front Office Services Activity for establishing deposit –
taking wing of TANESCO SACCOs in Dar – es Salaam –
Tanzania. We are expanding our catchment area in other
countries including Swaziland, Ethiopia, and South Sudan.
These services and products are charged at very affordable
fees based on the cooperative model of Cooperation among
cooperators. In this way, KUSCCO is able to sustain its
operations.
In view of the foregoing, therefore, secondary co-operatives
can employ similar initiatives in their sectors to create
operational capital.
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2.5 GENERATING CAPITAL AT
SACCOS/COOPERATIVES LEVEL
SACCOs are either in Marketing or Produce business most of
them with highly developed market-value chains locally or
internationally. For instance, Agri-based SACCOs (dairy, tea
and coffee) majority of them in Central and Rift Valley regions of
Kenya, have member-based producers, delivering produce to the
SACCOs-owned processors or corporate or government processors
for packing and marketing.
On the other hand, Non-Agri-based SACCOs, (such as employee-
based SACCOs, Transport SACCOs, etc) have Front-office
services offering Savings and Credit facilities with a well-
established products/services portfolio. Some SACCOs have a
common-bond whilst others have an open-bond.
Housing Cooperatives are investors in real-estate, a fast-
developing sector in Kenya. Not only do they buy land and sell at
competitive rates to members and non-members as well, they
also, in some instances, construct housing estates for sale.
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CONT.… In addition, SACCOs can, and some have, diversified their
income streams to include investment in shares of NSE-
quoted companies, shares/equities of secondary
cooperatives (e.g KUSCCO, CIC-group), share in
cooperatives bank and in government bonds. These earn
annual handsome dividends and other incomes.
Further, SACCOs can, and some, have invested in short-
term securities in cash and cash-equivalents including
fixed deposits.
All these activities generate abundant income to sustain
operations.
In a nutshell, primary SACCOs, when properly managed,
are able to generate own capital for operations and
sustainability.
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END
Thank you
For more information, please email
[email protected] or call (020) 2730191, 2722927
(020) 2721274, 0722 206 331, 0734 699 974
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