Cooperative Bank of Kenya Vice Chairman Macloud Malonza. Photo | courtesy.
Savings and Credit Cooperative Organizations (SACCOs) have been encouraged to increase investments in product development and embrace new technologies to withstand growing market competition, especially from commercial banks.
According to Cooperative Bank of Kenya Vice Chairman Macloud Malonza, commercial banks have increased product development efforts, aggressively targeting all depositor categories, 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,” Malonza noted.
He further noted that the intense competition has led to a shrinking market share, putting credit unions at a disadvantage.
“As leaders in the cooperative movement, we must urgently adopt new strategies by increasing investment in modern technology, product innovation and improving customer engagement,” he emphasized.
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 urged SACCO leaders to broaden their investment strategies, with a particular focus on Information and Communications Technology (ICT), while also addressing governance gaps that could hinder growth. He emphasized the importance of increased investment in research and development to better understand evolving market trends and to strengthen capacity building for deeper market penetration.
Malonza, who also serves as the Chairman of the Cooperative Alliance of Kenya (CAK), acknowledged the cooperative movement’s current annual growth rate of 10 to 15 percent noting that this positive trend reflects the existence of a largely untapped market with significant potential for financial inclusion.
Commissioner for Cooperatives David Obonyo commended 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 percent 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 a loan book exceeding Sh1.1 trillion.
“Kenya cooperative movement is home to some of the continent’s most outstanding institutions 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 strengthen governance within the cooperative sector, the government is developing a model based on a four-tier structure comprising primary cooperatives, secondary cooperatives, unions and apex bodies,” said Commissioner for Cooperatives, David Obonyo.
He reassured SACCO members that their deposits are secure, emphasizing that both the government and stakeholders are actively working to address governance gaps and ensure sound management.
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CAK chief executive officer Daniel Marube 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 revealed that the leadership of the cooperative movement is in talks with the government to acquire 100 acres in Ngong Forest for tree planting and agricultural activities
He also urged the stakeholders within the cooperative to intensify advocacy efforts and pressure members of parliament fast-track the passage of the Cooperative Bill 2024.
