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"id": 184716,
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"speaker_name": "Mr. Ombui",
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"legal_name": "Wilfred Moriasi Ombui",
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"content": "Thank you, Mr. Temporary Deputy Speaker, Sir, for according me this chance to contribute to this very important SACCO Bill. Mr. Temporary Deputy Speaker, Sir, as Members have said, SACCOs form a big proportion in terms of the Gross Domestic Product (GDP) of this country. They form a key sector that tries to eradicate or reduce poverty among the local communities. The SACCO movement has come a long way until this level now, where we have a SACCO Bill being discussed in Parliament. The SACCO Bill is a very important document and, with a few amendments, it can drive this country to greater heights in terms of reduction of poverty among the rural sector. The SACCO Bill No. 12 of 1997, which was preceded by the Sessional Paper No.6 of the same year, set the standards which all the SACCOs were supposed to follow, in order for them to develop and, at the same, advance in terms of the share capital for their members. The SACCO Bill of 1997, indeed, created an environment which, in most cases, was important in trying to allow SACCOs to manage themselves in order to advance the benefit to the members. But, unfortunately, some of the SACCOs never took off. Some SACCOs, where there was prudent management, as it was spelt out in the Sessional Paper No.6 of 1997, were able to take off and most of them now are like moving banks. Mr. Temporary Deputy Speaker, Sir, we do appreciate the amendments that were done. They gave birth to this Bill in the year 2004. At that time, the stakeholders were called to give their input as far the development of the SACCO Bill was concerned. Some changes were proposed. After going through this SACCO Bill, I found out that if we can make some changes in some specific areas, we could develop this Bill to become a very important document which can assist the development of SACCOs in Kenya. There are some areas which we should take into account, October 9, 2008 PARLIAMENTARY DEBATES 2655 so that we may not go against the principle of members controlling their institutions. The ultimate role of the SACCO is to ensure that members have a say, so that they can be able to control their finances. We should bear in mind that whatever is saved in the SACCOs is from the members. Mr. Temporary Deputy Speaker, Sir, the Bill provides for the SACCO Service Authority and the Board of Trustees. These bodies which have been mentioned here must be taken seriously in the sense that members must be supported. That way, they will be able to control the management of their SACCOs by ensuring that whoever is appointed to the SACCO Service Authority and the Board of Trustees is under their control. If the Minister for Co-operative Development and Marketing intervenes in a matter and fails to control these bodies, then there will be a total mess in the SACCOs. You might find that the individuals who are going to be appointed to run these specific bodies have no financial interest. If you do not have a financial interest in an institution, then you will not take care of it because there is nothing you will lose because you do not subscribe any funds to that institution. So, the composition of the individuals who are going to be appointed to these bodies must be taken into account. They must come from the co-operative movement. You remember that in the early 1980s, a lot of parastatals went under due to mismanagement. This is because the individuals who were running them did not have any financial interest in them. So, the most important thing is to ensure that people in control of SACCOs are appointed to these institutions. SACCOs are not at the same level in terms of management. We need to introduce minimum professional standards which are acceptable by the World Council of Trade Unions. All SACCOs must observe those professional standards. They were introduced in Kenya in 1984, but they have not been implemented yet. If we have to implement this law, we must make sure that all SACCOs have incorporated in their management structure the professional standards which will guide them so as to ensure that they are operating at an acceptable specific level. Mr. Temporary Deputy Speaker, Sir, the biggest problem facing the SACCO movement is double taxation. Most SACCOs which are formed from the formal employment derive money from remittances made by members. When the SACCOs operate, they make some surplus which is also taxed. When you go through the Bill, there are so many levies and penalties being introduced. We know that most of the SACCOs are managed by people who are not professionals. If we allow this to pass like this, it means that SACCO members will suffer unless the people elected to specific positions are knowledgeable as far as the penalties are concerned. I would like to request the Minister to revisit this issue. He needs to relook at the penalties and levies that are in this Bill so that they are either reduced or scrapped all together. These things can be introduced much later when SACCOs will have developed to a certain level. According to my experience, what I see here is that the Authority may not have the capacity to regulate and supervise all the SACCOs in Kenya. It requires enormous money for this Authority to be put in place. We will also be required to employ experts in this Authority who will be able to run the SACCOs. Mr. Temporary Deputy Speaker, Sir, moreover you may find that there is what you will call as duplication of services due to the fact that you have got the Department of the Commission of Co-operative Development in Kenya. Unless these duties are properly defined, then we have duplication of services and duties at the same time which may overlap each other. More importantly, the individuals who are going to be in this Authority, as I have said earlier, may not have any financial interest in the same. When you look at the Act, the SACCOs have not made a difference between shares and what you call the deposits. We request the Minister at this specific point to ensure that the management of SACCOs is able to differentiate between the shares and the deposit so that at any 2656 PARLIAMENTARY DEBATES October 9, 2008 given moment you may not create a conflict between the members and the management of these SACCOs. Mr. Temporary Deputy Speaker, Sir, on the side of the deposit which will not be surrendered to the Deposit Guarantee Fund, there is also some weakness here in the sense that there is no specification as to how much is supposed to be contributed by a member and at the same time from which specific vote because members are very much aware that whatever they have saved in the SACCOs, they are going to withdraw the whole amount at the end of the period. However, if some specific amount of money is kept in the Deposit Guarantee Fund, then that is going to be a big problem. I request the Minister at this specific point to ensure that this kind of deposit must come from the reserve of the SACCO but not from the members themselves because if we take the money from the members then we can just discourage them and this will defeat the principle or objective of unity among the members. Mr. Temporary Deputy Speaker, Sir, so, definitely we have to get the money from the reserve and it must be specified. The Bill gives a blanket cheque to the Authority to fix any specific amount of money that they may wish to. If we have people who do not have the morale of trying to ensure that members are saving for their own benefit, you can fix any amount. So, I request the Minister at this specific point to specify how much they are supposed to contribute at a given proportion in terms of percentage. If it is going to be too much, then it is going to affect the liquidity position of the SACCOs which at the same time will go against the principle of assisting the members of that specific institution. Mr. Temporary Deputy Speaker, Sir, we need to realise at any given moment that the SACCOs are basically meant to invest between 70 per cent and 80 per cent of their share capital in terms of loans to members and this principle must be clearly observed because it is internationally acceptable by the World Council of Credit Unions and at the same time, all those SACCOs which have observed this principle are now institutions which at any given moment of time you can admire and invest money in. At the same time, on the side of the board of trustees, the four individuals who are going to come from outside, as I have said earlier, have no financial interest in these institutions. I recommend that the individuals who are going to be appointed to this Board must come from the co-operative movement. The appointment can be done by the Minister but these individuals must be those people who are in the co-operative movement and who can assist the SACCOs to improve in their performance. At the same time, one of the greatest fears of that Deposits Guarantee Fund is that it might work in salvaging the dying SACCOs to the detriment of the vibrant SACCOs. It must be very specific as to when a SACCO is supposed to be saved, when it is going under. In some specific areas, you may find that the culture of taking money from the SACCOs without any proper repayment are making them go under. Likewise, total mismanagement of those SACCOs is there. So, in this case, if we are to assist all the SACCOs to grow, both vibrant ones and those which are starting, we must have a very clear rule that can guide the SACCOs in terms of management. We must set standards which must be legally observed. More importantly, the SACCOs need to be prepared before the law comes into effect. We must set standards and understand what type of SACCOs are going to be licensed, before licensing them. That can be done properly if the Bill is made to fit the needs of the members. At the same time, the stakeholders should also be allowed to give their contributions. I do appreciate that the Bill is good. But with some amendments, we can have it steering the SACCOs to greater heights and, at the same time, assist them to reduce poverty amongst the local people. Mr. Temporary Deputy Speaker, Sir, with those few remarks, I beg to support the Bill, but October 9, 2008 PARLIAMENTARY DEBATES 2657 with some amendments in the specific areas that I have mentioned."
}