The Diaspora Co-operative Movement - "One-Size-Fits-All" Approach Undermines Co-operative Principles

The idea of a co-operative society does not easily lend itself to monolithism.  The monolith as an organizational model undermines the principles upon which co-operative societies are built. The monolith, as a model, is imposing. It tends to view people as things, to place rules and processes above relationships and, it creates narrowly defined roles and purposes for people. This kind of model can potentially stymie the growth and development of Diaspora co-operative societies. Co-operative societies espouse democratic principles that give members leverage and choice over their pursuits and goals.  

Yet the idea conveyed in the co-operative minister’s “launching” of the Diaspora co-operative society during the just concluded Diaspora conference in Washington DC USA, suggests a monolithic perspective. Indications in the reportage about the minister’s communication lead to the impression that the Atlanta-based co-operative society he launched will be “the Diaspora co-operative society”.  If it is true that the ministry would prefer a monolithic organization compelling Kenyans living in the USA to all join one society, this would stand in total contravention of the law as well as the principles and practices of the co-operative movement. Co-operative societies are formed voluntarily by people who come together to pursue some common economic purpose.  Co-operatives work on the principle of self-help and are driven by common grassroots bonds to provide accessible and equitable support to the members. Co-operative societies are not, expressly, profiteering organizations. People join cooperative societies, not to earn profit, but to enjoy the benefits of affordable financial instruments, save for a rainy day and have some financial insurance against unforeseen events. People with common socio-cultural, economic orientations or preoccupations form as a group, pool and utilize their individual resources in the best possible manner to derive common benefits out of it.

The approach to handling the registration and facilitation of Diaspora co-operative societies ought to strategically follow universally acknowledged principles, practices and values of the co-operative movement. The way this initiative is advanced will unlock or undermine the potential to mobilize unmatched savings and investment resources. Those managing this initiative must exercise well-informed judgment in progressing the Diaspora co-operative movement idea. Their actions must be in compliance with the laws and policies governing co-operative societies. They must demonstrate even-handedness, equity and pragmatism. In short, the law must be applied with sensitivity to peculiarities in each situation. A “one-size-fits-all” approach does not and will not work.

Kenya’s co-operative movement is a great example of what co-operatives, as people-driven organizations, can contribute to national development. Up till now, the co-operative movement appears to be the first and the most concrete avenue for channeling Diaspora resources into the national economy. The co-operative society idea stands in sharp contrast to the humdrum monthly tally of Diaspora remittances. While the latter assembles information that acknowledges the significant injection of capital into the economy by the Diaspora, co-operative societies hold the promise of making possible a rational approach to channeling these resources effectively for greater mutual benefit.

Kenya’s savings and credit societies have grown exponentially. Records show there were 4,000 active SACCO Societies with a membership of approximately 3.0 million in Kenya in 2004 having share capital and deposits estimated at KShs 94 billion. SACCOs exist in rural areas, within formal organizations, governmental and non-governmental, as well as in the professions and trades including Jua Kali, the informal transport sector and within communities.
Central Bank of Kenya statistics show that Diaspora remittances totaled US $ 688,968, 000 between January and July 2012 alone. Remittances have increased over the years without any concrete policies incentivizing their sustained growth or any marketing strategies to enhance them. Through clear uncomplicated governance strategies that will effectively extend incentives to the Diaspora and promise to provide partner resources for Diaspora investment, the co-operative sector will be standing at the cusp of a new economic mobilization on an unprecedented scale. Not only will the Diaspora respond positively to targeted incentives for increasing remittances, the volume of these flows will tip the scales of investment capital in Kenya.

The Diaspora co-operative movement is a powerful idea that has grown side by side with the proliferation of Diaspora organizations. Most Diaspora organizations espouse welfare, development, community values and goals. The formation of savings and credit co-operative societies is part of this development. Typically, these organizations are formed within different localities based on social, professional and cultural affinities that exist between communities of Kenyans. Others are nurtured through relationships that develop and evolve among Kenyans living in different cities and states. The trust, social cohesion and convenience associated with the bonds formed between these peoples and communities undergird the formation their organizations. It is these local dynamics that raise the concerns about the ministry preferring that all Kenyans living in USA should join a single co-operative society formed in one state. This idea is as preposterous as it is impractical.

Consider that the Co-operative Societies Act's requirement is that any 10 people can form a co-operative society. How does the ministry of co-operative development anticipate compelling people to join a society without regard to their right of choice as Kenyans, as the law provides? Is one to imagine this will be achieved by denying the registration of any other society for the Diaspora? If the law does not prohibit registering more societies, why would the ministry? Registering co-op societies for those wishing to start them would be the surest mantra going forward.

In order to effectively open avenues for the registration of Diaspora co-operatives, the ministry should open communication channels with Diaspora communities wherever they exist. This would lead to informed assessments, findings and understandings of complexities inherent in the way these diverse communities are configured, the way they function, and the implications of these factors for establishing co-operative societies. Such a measure would also produce ideas and policies appropriate to and reflecting the peculiarities of the Diaspora. Here is a possible touchstone statement that would help break the ice and unravel important considerations,

“The ministry of co-operatives has recognized the vast economic potential of the Diaspora Kenyan communities for the co-operative movement in Kenya. Conservative estimates indicate that the Diaspora remittances to Kenya equal or exceed the levels of direct foreign capital flows into the Kenyan economy.  These remittances need to be channeled in a structured, value-driven way. The ministry considers co-operative societies as the most dynamic and viable vehicles for channeling Diaspora remittances into investments in Kenya. Through savings and credit co-operative societies, the Diaspora will be able to pursue multiple investment options and become part of the national revenue streams in Kenya.

Based on these considerations, the ministry of co-operatives is taking concrete steps to develop, standardize and operationalize the process of registering co-operative societies in the Kenyan Diaspora. Our goal is to encourage and facilitate the formation of savings and investment vehicles that will allow Kenyans living abroad to harness their earnings abroad and channel them more effectively into national development. Pursuant to this goal, the ministry recently established a study group to examine and come up with recommendations for opening this new frontier for co-operative development in Kenya. Findings and recommendations of this study group, due to be published shortly, show that the revenue potential from allowing the registration of Diaspora savings and credit societies, run into billions of shillings. New capital injected into the economy through Diaspora Saccos will double the investment revenue available locally and will, undoubtedly, accelerate national growth.

In view of this important national initiative, the ministry is announcing measures to allow Diaspora groups to apply for and to register co-operative societies that will be accessible to all potential co-operators. In particular, the ministry is keen on ensuring equitable opportunity for all Diaspora communities to register and run societies that will be appropriate for their respective geographic locations, needs and goals. Based on experience, co-operative societies founded on the basis of pre-existing relationships, affiliations and bonds, thrive more successfully than those built as monolithic organizational models. As a starting point, the ministry is hereby issuing broad framework guidelines and criteria for potential applicants, among others:

1. Reference to and compliance with the registration of co-operative societies provisions of the Co-operative Societies Act, CAP 490 Laws of Kenya;
2. Enacting goals and objectives targeting the promotion of the members’ economic interests;
3. Having a membership consisting of at least 10 persons who qualify for membership;
4. Incorporating cooperative principles in its bylaws

Further, the ministry is aware of the challenges posed by the expansive geographic locales in which Diaspora Kenyans reside and the diverse professional, social, economic interests that shape the choices individuals will make in forming or joining co-operative societies.

The ministry is prepared to work with all groups in the interest of managing these complexities and driving this initiative forward. The ministry envisages facilitating the formation of co-operative unions in future, thus allowing the structured partnership between individual Diaspora societies, as a measure towards harnessing economies of scale.
Other communication including update reports on registering Diaspora co-operative societies will be sent out in a monthly progress news bulletin starting next November, 2012”.

The ministry will, of course, follow a more competent protocol in issuing its circulars. However, the principle here is that some precedent measure to secure popular consensus around this initiative would help obviate basic concerns such as the inherent fear that the ministry may be imposing some not-so-well-informed preferences and ideas that may be at variance with the provisions of the law.

By William Yimbo

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