Cooperative congress plots own bank to beat high interest rates

African cooperative movement leaders are planning to set up their own commercial bank to enhance financial access for the cooperative societies.

The leaders say establishing an African cooperative bank will boost liquidity levels of cooperative societies currently offering financial services, and enable them endure the cut throat competition in the financial sector.

The International Co-operative Alliance (ICA)–Africa Chapter Regional Director Chiyoge Sifa in a phone interview yesterday, said the bank will safeguard the cooperatives from high interest rates they face while borrowing from the commercial banks.

The idea to set up the bank is part of issues to be discussed during the forthcoming 11th Alliance Africa Regional assembly 2014 to be held in Nairobi early next week. Over 300 delegates from ICA member countries are expected to attend the meeting.

She said the plans to set up the bank conforms to the increasing financial needs by the cooperatives societies and changing dynamics in the global financial market.

“The idea was initiated last year and will be advanced next week with a view to ensuring the proposed institution is operational by 2016 in order to enhance to contribute to accelerating the development of financial inclusion in Africa,” said Dr Chiyoge.

Strategic plan

She explained that the establishment of a bank is part of the issues contained in a three-year strategic development plan of 2013-2016 to be launched next week. The plan seeks to elevate participation within membership and governance, enhance sustainability, image and identity, legal framework, and boost cooperative capital.

She pointed out that Kenya was chosen to host the meeting owing to its vibrancy in terms of its advanced cooperative movement, adding that  Africa has 17 countries with thriving cooperatives and some of them are among top 10 in the world.

According to the Sacco Societies Authority Chief Executive Carilus Ademba, local Saccos has accumulated assets of Sh405 billion, representing two thirds of the total assets of all the Saccos in Africa.

Kenya has 18 Saccos in the list of top 20 Saccos in Africa and is ranked 13 in world in terms of assets accumulation.

Mwalimu Sacco which as at end of 2013 had assets to the tune of Sh24.5 billion is the leading in Africa followed by Harambee Sacco at Sh17.6 billion.