EFFECTIVENESS OF THE SACCO GOVERNANCE MODEL

EFFECTIVENESS OF THE SACCO GOVERNANCE MODEL PAPER PRESENTED; AFRACA CONFERENCE-COTONOU,BENIN BY: Nicholas Agumba KUSCCO LIMITED-KENYA

INTRODUCTION • Exercise of authority • Exercising direction and human resources • How power and authority/ responsibility and accountability are allocated • System by which corporations are led

Intro cont… • It’s the responsibility of the Executive committee to take the lead in effective governance • The executive committees are accountable to SACCOS stakeholders

scope of the sacco governance model • Communities • Customers-quality products and services • Members • Political • Market existance,culture, values, technology, regulations…

Why Interest in SACCO governance? Community needs to reassure itself that; • Cooperatives business are viable • Cooperatives are held accountable • Societies are attractive to investment

Interests in SACCO govn… Members want to reassure themselves that; • Cooperative businesses operate in a transparent manner • Members rights, fairness and equitable treatment of all investors • There is corporate leadership, efficiency and probity

Interests in SACCO govn… • Executive committee members are interested because; • Their roles are becoming increasingly demanding and professional • They need to have adequate knowledge of the business they direct

Forces driving SACCO governance today • Corporate failures • World financial and economic crisis • Fight against money laundering, bribery and abuse of corporate power Globalization and economic liberalization

SACCO GOVN. MODEL • How do SACCOS ensure appropriate and workable balance between the roles of executive committee members and roles of management? • Should executive committee ensure strong and effective relationship between members and their cooperatives/ credit unions?

SACCO GOVN. MODEL cont… • Many countries have Sacco models attempts to address the raised issues. • KENYAN CASE: • AGM • Ex.commitee & sub committees • Members

SACCO GOVN. MODEL cont… Areas of focus in SACCO governance; • Leadership • Stewardship • Monitoring • Reporting

SACCO GOVN. MODEL cont… Types of governance model practiced by SACCOS • Guideline based model • Set of standards prescribed by committees/legal entity • Committees must focus on the ends and managements on the means • Values enshrined in the cooperative governance

SACCO GOVN. MODEL cont… • Committees can self asses e.g • Do committees play active roles in strategic planning? • Do committees play leading role in governance? • Is there an active audit committee with skills, in-depth members?

SACCO GOVN. MODEL cont… • Principle based model/ conference committee’s model • Identifies over arching principles of governance • Encourage committees to evaluate and choose own best practices • Use the principles and foundation as filters

SACCO GOVN. MODEL cont… E.G • Leadership and stewardship looks at strategic planning, oversight, risk management and succession • Service and fairness is confined to engaging and serving all stakeholders

cont SACCO GOVN. MODEL … The principle based model is indeed a summary of a single cooperative model which talk on • Democratic theory • Agency/ compliance theory • Partnership theory • Resource Dependency theory

SACCO GOVN. MODEL cont… The principle based model therefore help SACCOS to balance major tensions that cooperative governance must deal with; • Tension between committee members and experts, charged with driving performance of the cooperatives forward • Committees roles of driving organizational performance and ensuring conformance

SACCO GOVN. MODEL cont… • Cooperative values under the principle based model have been key in upholding normalcy and enhancing performance in SACCOS fraternity • The principles outline the fundamental tenets of cooperative direction and control • They have the capacity and have assisted SACCOS to experience relative levels of peace and stability within the membership and board ranks

RECOMMENDATIONS Consider the following to effectively enhance sacco governance model; • Own the governance model in your SACCO • Share the model with the members • Board members need to know why they want to be members • Roles

EFFECTIVENESS OF THE SACCO GOVERNANCE MODEL