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

info@kuscco.com or call (020) 2730191, 2722927

(020) 2721274, 0722 206 331, 0734 699 974

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