CO-OPERATIVES URGED TO SEEK ALTERNATIVE FINANCIERS

There is need for co-operative societies to seek alternative financing options apart from banks that are currently charging high interest rates. According to head of financial services at Apex consulting George Njoroge co-operatives must start seeking finances externally through direct borrowing or through partnering with international institutions if they are to achieve their mandate of extending credit services to over 12 million members. The co-operative movement in Kenya consists of 13,000 registered co-operatives 6000 of which offer savings and credit services. As a result of its wide reach throughout the country the movement is highly capitalized with a share capital of Kshs.260 billion, total deposits of 240 billion and a loan portfolio of over 200 billion. The movement thus controls over 30% of the gross national savings and 45% of GDP. However the co-operatives also face heavy demands of credit from its 12 million members most of whom are in the agricultural sector mostly for inputs and value addition. But with just around 140 billion shillings in withdrawable deposits this is not enough. As a result the movement has resulted to sourcing funds from financing institutions such as banks which are currently charging rates of above 20% despite the onward lending by SACCOs rate of 12%. It is thus that the 1st summit for African SACCOs and Co-operatives has the primary theme of alternative financing from the current commercial and traditional sources. this is putting in mind that Kenya has a limited local supply of finance with the local capacity at 120 billion against an absorption rate of 280 billion. The organizers of the conference also hopes that Kenya can showcase itself a regional benchmark in a year set aside as the year for co-operatives.