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close this bookThe Work of Co-operatives (Transafrica Press, 1991, 16 p.)
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Transafrica Press

The milk industry in Kenya has been organised through the co-operative movement from its earliest days.

In the old days, how did people break new ground for planting crops? How did they thatch their houses?

The answer is that they worked together. In most parts of Kenya, when there were big jobs to be done, people did not try to do them alone. The custom was to join together and work as a team until the jobs were completed.

Co-operation is nothing new for Africa. In fact it is a normal African way of doing things. But the modern world is a complicated place. Modern forms of Co-operation have to be complicated also.

Someone who knew only self help groups of the old kind might be puzzled by the modem co-operatives. He would ask many questions. What are these bodies that make profits but are not trading companies? They own capital, but are there no public share-holders investing their money?

There are several different kinds of co-operatives in Kenya. There are big national organisations, such as the Kenya Co-operative Creameries, or the Kenya Grain Growers Co-operative Union. There are little local societies that just sell the eggs laid by their members' chickens. Some co-operatives sell, others buy, and many do both.

In this book we will look at some of the ways in which co-operatives help the nation to develop. We shall start by going on an imaginary journey up-country. We are going to visit a farming co-operative.

Our invitation asked us to call at the office at Kagoi at 10 o'clock. A little before 10 we were driving along the main road when we saw the Kagoi signboard. We turned off on to a farm road. It had a stone surface.

After a few hundred metres we came to the top of a small hill. There were eight or ten buildings round a wide turning circle. We stopped outside a long low building marked 'Office'.

The door opened and a smiling face looked out. It was our host, Mr. Samson. 'Good morning,' he said, as he walked towards us. 'I'm sorry our manager has had to go to provincial headquarters. But he asked me to welcome you and show you around.'

'Good morning, Mr. Samson,' we replied. 'Please thank the manager for us,' I went on. 'It's very kind of him. I don't think you've met my colleague, have you ? This is Mr. Daniel.'

'How do you do?' said Mr. Samson as he shook hands. 'My name's Samson. I look after the accounts here in the office. Would you like some tea? Or perhaps when we get back?'

'I think I'd like some later, thank you,' Mr. Daniel replied. 'It's still quite early.'

'All right,' said Mr. Samson, 'we'll look around first. Let's use the Land Rover. You needn't lock your car. It will be quite safe here.'

We climbed into the Land Rover and Mr. Samson drove off. We passed fields where cows were grazing, and then several ridges planted with tea.

From time to time we saw a house with smoke rising from its chimney. As we climbed a long hill we saw fields of white daisies on each side of us. Some women were picking the flowers and dropping them into baskets.

'Our scheme has been going for more than twenty years,' Mr. Samson explained. 'It's doing very well, really. We have about 300 hectares altogether. Originally there were two farms here that belonged to European farmers, and a strip of land on the edge of the forest reserve. The Government put it all together and started our scheme.

Pyrethrum is another Kenyan cash crop which is grown by smallholders and marketed through co-operative societies.

'We had quite a big loan from the Settlement Fund Trustees to begin with, but gradually we paid it off. Now our members have bought or are buying their own plots; we've turned ourselves into a marketing co-operative, as many of the old farm purchase schemes have done. But we still run most of the original services.

'We have 47 members altogether. Many of them used to work on the old European farms. Some of them used to work in the forest. And a few of our people are new to the district

'We produce a lot of milk here. Most of our members keep cows, and a few have quite big herds. They have to bring the chums in to our central dairy, near the office. Then we send the milk in to the creameries twice a day. We have two 7-ton lorries that belong to our co-operative.'

'What about crops?' I asked. 'We've seen a lot of tea growing, and some women picking pyrethrum. Do you produce anything else?'

'Tea's the most popular crop,' Mr. Samson answered. 'Nearly everybody grows some tea. Pyrethrum grows well on the higher parts of our land. We're getting a good price for our pyrethrum these days. The only other crop we grow seriously is maize. There's quite a lot of maize on the lower part of the scheme. We'll be coming to that soon.'

We drove slowly round the area in a long circular tour. There were a few deep valleys filled with forest trees. Most of the houses we saw had small gardens where vegetables were growing. All the rest of the land was taken up by plantations of tea, or fields of pyrethrum, or paddocks where cattle were grazing. Everywhere the settlers and their wives were hard at work.

'I haven't seen many children,' said Mr. Daniel. 'I suppose they must be in school. How far do they have to go?'

'We've got our own primary school on the scheme,' said Mr. Samson. "That's it, on the hill up to the office. Our children all go there, and children come from other farms in the neighbourhood.

'We have our own dispensary too. Both the dispensary and the school were self-help efforts. We built them in the early days of the scheme, and we're very pleased with them. They've done well.'

The Land Rover stopped at the side of the office and we all got out. Mr. Samson led the way into a long high building near by.

"This is one of our stores,' he said. This store is for incoming goods -the things we buy in big amounts for our members.'

The Kenya Grain Growers Co-operative Union (KGGCU) supplies all the farmers needs from salt to seeds and from harrows to hoes.

On one side rolls of fencing wire were stacked. Beyond them were rolls of barbed wire, then a lot of cans of lubricating oil, cartons of scrubbing brushes and bags of fertiliser.

On the other side there were sacks of cattle feed, meal for chickens, cartons of soap and Dietz lamps in boxes.

'Where do you buy all these things?' I asked. 'And how do you pay for them?'

'We buy them from various places,' replied Mr. Samson. 'We get a lot of our stuff through the Kenya Grain Growers Co-operative. We get a discount of 10% for quantity on most items, and we usually get another 2 % off for paying cash.

'We use our scheme's central funds to buy, and we try to pay cash for everything. Then we can sell the things to our members as they need them.'

'Do you pass on to your members the saving you make?' asked Mr. Daniel. 'Or do you make a profit here?'

'We pass on most of the saving,' said Mr. Samson. Of course we have to charge members their share of the transport and office expenses. They must contribute something to our central funds. But they still buy their supplies more cheaply than they could get them in a shop. And they buy them here, near their homes.'

Do your members pay cash for everything?' I asked.

'No, they don't,' Mr. Samson answered. 'All these things are issued to them on credit We keep a careful record, and they're charged at the end of each month. I'll show you the system when we get back to the office. There's a separate book for each member of our co-operative. Each settler has his own financial records.'

The next store we entered was almost as big. Most of it was filled with bags of maize. On one side two pumps and some other machinery were lying.

'This store is for things going out,' Mr. Samson explained. 'All that maize is produced by our members. It's waiting for transport to the rail way station. The machinery has got to go to the factory for repair. That's waiting for transport too. We can do most repairs in our own workshop, but some of the big repair jobs have to be sent away.'

'Is that your workshop?' asked Mr. Daniel as we came out of the store. He was pointing to a building with a big covered area in front. Someone was washing its concrete floor with a hosepipe.

'Oh no,' said Mr. Samson. 'The workshop's over the other side, behind the garage. Can you see it, where the lorry's standing?'

'Yes, I can see,' Mr. Daniel replied. 'Of course, this must be your dairy.'

'That's right,' Mr. Samson went on. 'The milk is brought in here twice a day. Come through and see the cooler working.'

The big cooling machine was humming as it chilled the milk. 'That's a fine new machine,' I said. 'Do all your members use it?'

'Oh yes,' Mr. Samson replied. 'We couldn't send our milk out in good condition unless we cooled it first. Members bring their cans to this dairy on donkeys and bicycles and handcarts. Then when the milk has been cooled, our big trucks take it to the creameries.'

'What about payment?' I asked. 'When do members get paid for their milk?'

'At the end of the month,' said Mr. Samson. 'At least they get credit that depends on the weight of the milk they've brought in. The creameries pay our society. Their cheque comes later.

'Come back to the office now. But on our way let's just visit the shop. It's run by one of our members.'

The shop was a cheerful place with several customers looking around. It was like the general store in a village. There were millet and maize and sugar on sale, cooking oil and honey, paraffin and soap and children's dresses. The shopkeeper told us he kept nothing strange in stock. He simply kept what members asked for and wanted to buy.

When we left the shop Mr. Samson pointed out some of the other buildings. One was a butchery. Another was a posho mill. There was even a small bar and hotel. It had two rooms where visitors could stay. But mostly it was used as a club by the settlers in the evenings.

Back at the office we were shown some of the accounts. First of all Mr. Samson brought out some of the books of the whole cooperative. There were ledgers and order books and receipt books, invoices and payment vouchers and cash sale slips.

'Those are the financial records of the whole co-operative,' Mr. Samson said, 'and here's the record book of one of our members. These are her bills for what she's had from the store. These are her deductions for transport, and the society's commission on what's been sold.

'Then on this page it shows her earnings. There's quite a big credit for milk, as you can see. And this is her share of the payment for tea.

'The society gets the cheque from the tea factory. Then it divides the money among the members according to the amount of tea they've brought in during the month.

'But our maize isn't pooled in that way. When a member grows maize, he or she just gets a cheque for the number of bags he or she brings in.'

A clerk came in and handed round of cups of tea. We didn't break off our conversation.

'It sounds like a good system,' I said. 'Thank you for giving us the details. May I ask if your accounts are inspected sometimes?'

'Indeed they are,' said Mr. Samson. 'We get a lot of help from the Commissioner's staff, and also from our auditors.'

'What Commissioner?' asked Mr. Daniel.

'The Commissioner for Co-operative Development,' said Mr. Samson. 'The Commissioner has powers to supervise the finances of co-operatives under the Co-operative Societies Act of 1966. Parliament passed that act because some co-operatives were being mismanaged, and funds were being misused. For many years co-operatives had to get a signature from the Commissioner's representative on any big cheque they wrote, but that regulation was cancelled a few years ago.

'I must say we've never had any trouble here. They usually approve straight away our plans for expenditure.'

Mr. Daniel was looking at his watch. I knew he had another appointment soon. So I stood up.

'We've taken a lot of your time, Mr. Samson,' I said, but we're very grateful. Would you mind if I made a story out of this trip? I think people would like to read about it.'

'Not at all,' he answered. 'I'm sure our members would be pleased. They're very proud of Kagoi.'

'And thank you for the tea,' added Mr. Daniel. 'I learned a lot that I didn't know. Thank you, and goodbye.'

'Goodbye,' said Mr. Samson as we drove off. 'Come again when you can.'

The children were just coming out of school as we passed. They were running home for lunch. 'Look how well dressed they are,' said Mr. Daniel. 'Their families must be making a good living on this scheme.'

There have been co-operative societies in Kenya for a long time. The first one in the records was founded by some European farmers in 1908. It was called the Lumbwa Farmers' Co-operative Society.

The Kenya Farmers' Association began in 1923. It was started as a company. Later a law was passed allowing co-operatives to be registered, and hen the K.F.A. became a co-operative.

A few years later the Kenya Planters Co-operative Union was formed to help farmers sell their coffee. So were the Kenya Co-operative Creameries to help dairy farmers to market their produce.

The K.P.C.U. and K.C.C. are still big national organisations. So is the Kenya Grain Growers' Co-operative Union, into which the K.F.A. has merged.

District co-operative unions began to flourish a little later still, in the 1940s, when co-operatives were no longer restricted to European farmers. The unions started when farmers in the reserves got together to sell their coffee. The earliest district co-operatives were in Embu, Kisii, Teita and Meru. Soon African farmers were joining together in societies to market other things as well - pyrethrum, cotton, pigs, chickens and many more.

Most of these societies existed to help farmers to sell their produce. They were what are called marketing co-operatives, or producers' co-operatives. They did well, and their numbers increased. By the time of Independence in 1963 there were roughly 600 of these societies in the country with about 200,000 members.

A lot of societies were also started to help their members to buy things. These cooperatives bought goods cheaply by buying in big quantities, and then sold them to members for less than they would cost in the local duka. The name for such a society is a consumers' co-operative.

Some of these consumers' co-operatives did well, but others were not well supported. The trouble was that members had to pay cash to their society. But the local duka, even if it charged more, often allowed customers to buy on credit. So many people preferred the duka.

Settlement co-operatives like Kagoi grew up fast in the years after Independence. The Government bought the farms of large numbers of European settlers. It wanted to settle landless citizens on this land.

There were not many Africans farmers who could afford to buy a big farm by themselves. But if groups of them got together and pooled their money and equipment, they could manage.

The Government therefore encouraged citizens to join together in co-operatives. The Settlement Fund Trustees were ready to lend them money to get started. And so settlement co-operatives began to increase in the highlands. Usually they sold members' produce and bought supplies for them as well. Like Kagoi, they were both producers' and consumers' co-operatives.

The older kinds of co-operatives also increased. Individual farmers and others continued to come together and form small local societies. These primary societies, as they are called, exist all over the country.

The difficulty with primary societies is that usually they are small and do not have much money. So primary societies are encouraged to join together and form a co-operative union, often covering a whole district.

Individual farmers belong to a primary society. Primary societies belong to a union. A union, being stronger, can often do things that a primary society cannot. For example, it might raise a loan from the bank to buy a lorry, or a tractor, or some other big piece of equipment. It could then hire the lorry out to the small member societies.

Co-operatives unions do not need to approach the commercial banks for loans. Nowadays they have their own bank. The Co-operative Bank of Kenya Ltd. has its head office in Nairobi. Its job is to provide banking services for cooperative societies and unions.

Co-operatives have become a very important part of life in Kenya. You may wonder whether there is any national organisation which brings them all together. In fact there is. It is called the Kenya National Federation of Co-operatives, and was started in 1964.

Most of this country's co-operative organisations belong to the K.N.F.C. It aims to provide information and news about the work of co-operatives in Kenya. It also provides education and training in the way to run co-operative societies and unions. The K.N.F.C. is the spokesman for Kenya's co-operative movement internationally at meetings overseas. Several of our national cooperative organisations also have their own links with co-operators overseas.

Although farmers' societies and unions are the biggest part of the movement, co-operatives are not limited to agriculture. There are fishermen's co-operatives, co-operatives for handicrafts set up by artisans, and housing co-operatives, mostly set up by city dwellers.

The fastest-growing part of the co-operative movement at present is the formation of co-operative savings and credit societies, known as SACCOs. Most of the big government departments, parastatals and commercial firms now have their savings and credit societies, and more and more groups of rural workers are starting them. Such societies collect members' savings and invest them, and from their assets they can then offer loans to members to help them with unusual expenses, such as building a house or meeting medical bills. The national organisation for all the bodies is K.U.S.C.C.O., the Kenya Union of Savings and Credit Co-operatives.

In recent years the number of national co-operative organisations has increased with the setting up of the National Co-operative Housing Union Ltd. (N.A.C.H.U.), the Co-operative Development Information Centre (C.I.S.), and the Jua Kali and Kazi Co-operative Union (J.K.K.C.U.), which helps the staff of open-air workshops and also groups of unemployed or under-employed workers.

The Kenya Government is very concerned to improve life in the rural areas of the country. To improve their production farmers need credit to buy such things as seeds and farm tools and machinery. In order to help them the Government has chosen co-operatives as the organisations through which farmers can obtain credit, and many co-operatives have set up banking sections. The Co-operative Bank of Kenya Ltd. is the body entrusted with the lending of money to co-operative organisations. It provides short-term and medium-term loans to co-operatives which are its members.

Members who join a primary co-operative society know they have to work hard with their fellow members to make it a success. But they can take out as well as put in. Their society will probably be able to provide services to its members. These services may include such things as transport and storage of produce, and the processing of crops in coffee factories or cotton ginneries.

Primary societies join together to form co-operative unions. These unions may be on a district basis, covering several different crops (these are known as district unions), or they may be groups of societies all dealing with one crop and known as commodity unions. Co-operative unions provide other services to their member societies in the way of education and staff training; they may arrange for the buying of seeds and fertilizers; they can arrange for credit and banking services; and they may give help with storage facilities, accounting and insurance.

The co-operative movement in Kenya is a very big nationwide organisation. It is quite complicated. The diagram may help you to see better how it works.

Running a big co-operative is difficult work, as we saw at Kagoi. But the affairs of co-operatives are managed better now than they used to be. For this improvement members have to thank not only their own efforts but also their National Federation and the nation's Co-operative College at Langata.

Most of the money to build the Co-operative College was given by the governments of Sweden, Norway, Denmark and Finland. These four Nordic countries are Europe's experts on the co-operative movement. In the last century they were fairly poor countries. Now their farming has made them rich. And much of their farming is done by co-operative methods.

Advisers from the Nordic countries are still helping co-operative societies and unions in the provinces of Kenya. They are still helping with training courses at the Co-operative College. This is where the officers and members of our societies go to learn the methods of good management.

There are now more than 5000 co-operative societies in Kenya, and between them they have about two and a half million members. The annual turnover of the business they do was estimated at seven billion shillings at the end of 1989. By then they were responsible for more than 60% of the country's whole agricultural production. Agriculture is the first industry of Kenya, and much of its success is due to the nation's co-operatives.

The Co-operative Movement in Kenya


KNFC - Kenya National Federation of Co-operatives Ltd.
CBK - Co-operative Bank of Kenya Ltd.
KGGCU - Kenya Grain Growers' Co-operative Union Ltd.
NACHU - National Co-operative Housing Union Ltd.
KPCU - Kenya Planters' Co-operative Union Ltd.
KCC - Kenya Co-operative Creameries Ltd.
KCCU - Kenya Crafts Co-operative Union Ltd.
CODIC - Co-operative Development Information Centre
JKKCU - Jua Kali and Kazi Co-operative Union.
CIS - Co-operative Insurance Services
KUSCCO - Kenya Union of Savings and Credit Co-operatives Ltd.