“The people’s welfare can best be secured by institutions organized by the people themselves, because these institutions are most likely to possess the characteristics that appeal to the people and therefore the stability to perpetuate their services”- Alphonse Desjardins

1. CO-OPERATIVE CORPORATE
GOVERNANCE
BY JAMES MWASI
EDITED BY STEPHEN MWANGI

2. A co-operative is an autonomous association of
people who have gathered in a voluntary way in
order to satisfy their economic needs as well as,
social and cultural aspirations by means of a
joint owned and democratically-managed
venture
So we can say co-operatives are people made,
people lead, people financed, people governed.
What is a co-operative?

3. “The people’s welfare can best be secured by
institutions organized by the people themselves,
because these institutions are most likely to
possess the characteristics that appeal to the
people and therefore the stability to perpetuate their
services”-
Alphonse Desjardins

4. Co-operative is a system. For a co-operative
society to succeed it has to learn, it has to be
a learning organization. It has to expand its
ability to create its future through viewing itself
as a system. A system is defined as a
collection of parts that interact with one
another to function as a whole.

5. However a co-operative just like any
other systems is not the sum of of its
parts, it is the product of their
interactions. And therefore when this
system is taken apart, it losses its
essential properties and so do the
parts.

6. The manner in which power is
exercised in the management of
economic and social resources for
sustainable human development.
There is a growing consensus that most
cooperatives in developing countries
collapse due to weaknesses in
governance.
Governance

7. 1. What characterizes governance in our own
society?
2. What role have we played for the governance of
our society to be what it is today?
3. Are you proud of the governance in your society or
does it haunt you?
4. Is it a governance that you want to be associated
with even 10 years down the line or you would it
rather changes?
Governance in our society

8. 5. Do you think it makes people want to
associate with your society and do business
with you or does it make people cautious if not
avoid your society?
3. What are you doing to ensure a standard of
good governance you would be proud to talk
about?
Good governance is the heart of any organization.

9. 1. Members willingness to save their money
with the society
2. Members agreeing to leave their deposits
with the Sacco
3. Other staff members willing to join the
Sacco
4. Enhanced business to business
relationship
What shows confidence
in co-operatives?

10. 1. The manner in which the power of a
corporate entity is exercised in the
stewardship of the society’s total portfolio
of assets and resources to protect and
cause to grow members fund.
2. Refers to the processes by which
cooperatives are directed controlled and
held responsible
Corporate governance

11. 3. Corporate governance is the set of
processes, customs, policies, laws, and
institutions affecting the way a cooperative is
directed, administered or controlled.
4. Corporate governance also includes the
relationships among the many stakeholders
involved and the goals for which the
corporation is governed.

12. The principal stakeholders are:
1. The shareholders/members
2. Management (staff)
3. The board of directors
4. Customers
5. Donors, potential investors and strategic partners
6. Creditors (e.g., banks, bond holders), suppliers
7. Regulators (MOCD&M and SASRA).
Participants in Corporate
Governance in co-operatives

13. 1. Guards the reputation of the society
2. Positions the society well among other players
3. The society remains relevant, legitimate and
competitive;
4. Contributes to the growth and survival of the
society
5. Enhance the accountability and performance of
those entrusted to manage society affairs
6. Promote efficient and effective use of limited
resources.
Importance of good
governance

14. ● Accountability-shareholder engagement,
CSR, compliance
● Efficiency and effectiveness
● Probity (adherence to the highest
principles and ideals) and integrity-
leadership that is honest, faithful and
diligent
Pillars of good governance

15. ● Responsibility-leadership that is
representative and conscious of its
obligations
● Transparent and open leadership with
accurate and timely disclosure of
information relating to all economic and
other activities of the Society

16. ● The survival, growth and the future of any
institution is dependent on good governance.
● This is dependent on a membership that is
alert, interested and objective in discharging
their
mandates as the supreme authority of the
society in a sober and business like manner.
Fundamental fact

17. ● The supreme authority of a Society
society is vested in general meetings.
(Coop Soc. Act section 27)
● In exercising the responsibilities of the
supreme authority, members shall jointly
and severally ensure that only credible
members are elected to the board of
directors.
Members role in good
governance

18. A committee by the people and for the
people Must be seen to:
● Be fully representative-Gender
● Reflect the diversity within
● Articulate the wishes of the
members
Board of directors

19. ● The Board should ensure that the
society complies with all relevant laws &
regulations,
● Appointments to the Board of Directors
should, through a managed and effective
process, ensure that a balanced mix of
proficient individuals

20. Societies should develop:
1. Code of conduct
2. Service charter
3. Policies –human resource, credit,
investment, savings, liquidity, information
preservation, dividend and risk management
policies
How to institutionalize good
governance

21. They are at the heart of ensuring survival
● Do we have a clear picture of where the society is
going?
● Does it depend on us to move the society?
● Can you say for sure whether the society will
survive the next five years?
● This calls for the society to develop a strategic plan
Failure to plan is planning to fail
Strategic issues

22. Budget
To be prepared three months before the end of
the preceding financial year.
● Questions:
1. Do you understand it or you just approve?
2. Do you follow to see its obeyed?
Other instruments of good
Governance

23. To be presented to members within four
months after the end of the accounting
period (sec 25).
● Questions:
How timely are your accounts?
Do you get it within a reasonable period
before AGM?
Audited Accounts

24. The Sacco Society shall have a credit
policy consistent with the Act,
regulations and any other applicable
law. The policy shall contain the
following:
Credit management

25. -Loaning procedures and their documentation
-Eligibility requirement for a loan
-Permissible loan purposes and acceptable
collaterals.
-Terms (loan types, interest rates, frequency of
payments) and conditions
General lending
procedures

26. -Terms and conditions of insider lending.
-Maximum loan approval levels for each officer and
committees.
-Guarantee requirements.
-No director or employee of a Sacco or immediate
family members may receive preferential treatment
in connection with any loan made by a Sacco.
Disclosures

27. 1. Continuous monitoring-Extension services
2. Guidance and advisory services
3. Training and education
4. Inspections (sec 58)
Ministry responsibility in
good Governance

28. 5. Inquiries (sec 58)
6. Surcharge (sec 73)
7. Settlement of disputes (sec 76)
8. Elections
9. Regulation and supervision

29. 1. Exaggerated expenses
2. High committee
allowances/remuneration
3. Unmanaged risks
4. Lack of morale
5. Conflicts
Indicators of bad governance

30. 6. Unachieved objectives
7. Laxity
8. Stagnant growth
9. Poor flow of information
10. Lack of successful leadership.
11. Manipulation of members

31. ● Good governance is an effort
of all of us in the society.
● “It takes good people to do
nothing for evil to prevail.”
Conclusion

32. THE
END