Saccos challenged to work on risk management to safeguard wealth
Business
By
Nanjinia Wamuswa
| Dec 07, 2024
More than 90 per cent of cooperative societies in the country lack effective risk identification and mitigation strategies, a situation that stakeholders fear could lead to increased losses of members' funds if not addressed.
At the 3rd annual Cooperative Movement Stakeholders' forum held in Naivasha, cooperative players attributed the growing lack of strategies to the insufficient capacity of the board of directors and top management to handle existing risks, as well as their inability to identify emerging risks.
Alan Riungu, a risk management expert, pointed out that only a few cooperative societies have made efforts to implement effective strategies to address the risks threatening the survival of their business.
"Cooperative societies are facing threats ranging from climate change, cybercrime, fraud, weakening governance structures, insufficient knowledge among directors and management, as well as lack of succession plans," Mr Riungu said.
External shocks
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"Lack of sound risk identification and management strategies has left cooperative businesses vulnerable as both internal and external shocks increase. Therefore, it is up to cooperative leaders to implement comprehensive measures to mitigate these growing threats to remain operational," Riungu added.
He noted that cooperative societies have failed to put in place well-resourced, robust structures to guarantee business continuity, emphasising that current business realities require strong governance structures, equipped with both human resources and adequate resources.
Co-operative Alliance of Kenya (CAK) Chief Executive Officer Daniel Marube said the forum provided an opportunity for self-reflection, allowing participants to evaluate their actions, achievements and plans to propel cooperatives going forward.
Dr Marube said CAK was currently addressing risk management within cooperatives.
Safeguard resources
"As you know, cooperatives bring together the resources of millions of our members. Therefore, it is very important that we adopt the risk identification, management and mitigation programmes within our daily operations to safeguard the resources of our members," Marube said.
Speaking at the same event, Cabinet Secretary for the Ministry of Cooperatives and MSMEs Wycliffe Oparanya praised the cooperative sector as a cornerstone of socio-economic development in Kenya.
Mr Oparanya said the cooperative movement has witnessed remarkable growth, contributing significantly to job creation, wealth generation, financial inclusion and community empowerment.
"With over 14 million people engaged as cooperators and more than 500,000 employed in the sector, the role of cooperatives in shaping our nation's prosperity cannot be overstated," Oparanya said.
Despite many cooperatives upholding their values, Oparanya blamed a few that failed to adhere to good governance principles, resulting in financial losses and eroding public trust. This tarnishes the reputation of the entire movement, overshadowing the remarkable efforts of cooperatives committed to improving their members' livelihoods.
The CS said it is for these reasons that the government is putting in place measures to revitalise the cooperatives through the development and implementation of several legal frameworks to address the challenges facing the sector.