co operative corporate governance

CO-OPERATIVE CORPORATE GOVERNANCE

CO-OPERATIVE CORPORATE GOVERNANCE

BY JAMES MWASI

EDITED BY STEPHEN MWANGI

A co-operative is an autonomous association of people who have gathered in a voluntary way in order to satisfy their economic needs as well as, social and cultural aspirations by means of a joint owned and democratically-managed ventureSo we can say co-operatives are people made, people lead, people financed, people governed.

What is a co-operative?

The peoples welfare can best be secured by institutions organized by the people themselves, because these institutions are most likely to possess the characteristics that appeal to the people and therefore the stability to perpetuate their services-Alphonse Desjardins

Co-operative is a system. For a co-operative society to succeed it has to learn, it has to be a learning organization. It has to expand its ability to create its future through viewing itself as a system. A system is defined as a collection of parts that interact with one another to function as a whole.

However a co-operative just like any other systems is not the sum of of its parts, it is the product of their interactions. And therefore when this system is taken apart, it losses its essential properties and so do the parts.

The manner in which power is exercised in the management of economic and social resources for sustainable human development.There is a growing consensus that most cooperatives in developing countries collapse due to weaknesses in governance.

Governance

1. What characterizes governance in our own society?2. What role have we played for the governance of our society to be what it is today?3. Are you proud of the governance in your society or does it haunt you?4. Is it a governance that you want to be associated with even 10 years down the line or you would it rather changes?

Governance in our society

5. Do you think it makes people want to associate with your society and do business with you or does it make people cautious if not avoid your society?3. What are you doing to ensure a standard of good governance you would be proud to talk about?Good governance is the heart of any organization.

1. Members willingness to save their money with the society2. Members agreeing to leave their deposits with the Sacco3. Other staff members willing to join the Sacco4. Enhanced business to business relationship

What shows confidence in co-operatives?

1. The manner in which the power of a corporate entity is exercised in the stewardship of the societys total portfolio of assets and resources to protect and cause to grow members fund.2. Refers to the processes by which cooperatives are directed controlled and held responsible

Corporate governance

3. Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a cooperative is directed, administered or controlled.4. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.

The principal stakeholders are:1. The shareholders/members2. Management (staff)3. The board of directors4. Customers5. Donors, potential investors and strategic partners6. Creditors (e.g., banks, bond holders), suppliers7. Regulators (MOCD&M and SASRA).

Participants in Corporate Governance in co-operatives

1. Guards the reputation of the society2. Positions the society well among other players3. The society remains relevant, legitimate and competitive;4. Contributes to the growth and survival of the society5. Enhance the accountability and performance of those entrusted to manage society affairs6. Promote efficient and effective use of limited resources.

Importance of good governance

Accountability-shareholder engagement, CSR, compliance Efficiency and effectiveness Probity (adherence to the highest principles and ideals) and integrity-leadership that is honest, faithful and diligent

Pillars of good governance

Responsibility-leadership that is representative and conscious of its obligations Transparent and open leadership with accurate and timely disclosure of information relating to all economic and other activities of the Society The survival, growth and the future of any institution is dependent on good governance. This is dependent on a membership that is alert, interested and objective in discharging theirmandates as the supreme authority of the society in a sober and business like manner.

Fundamental fact

The supreme authority of a Society society is vested in general meetings.(Coop Soc. Act section 27) In exercising the responsibilities of the supreme authority, members shall jointly and severally ensure that only credible members are elected to the board of directors.

Members role in good governance

A committee by the people and for the people Must be seen to: Be fully representative-Gender Reflect the diversity within Articulate the wishes of the members

Board of directors

The Board should ensure that the society complies with all relevant laws & regulations, Appointments to the Board of Directors should, through a managed and effective process, ensure that a balanced mix of proficient individuals

Societies should develop:1. Code of conduct2. Service charter3. Policies human resource, credit, investment, savings, liquidity, information preservation, dividend and risk management policies

How to institutionalize good governance

They are at the heart of ensuring survival Do we have a clear picture of where the society is going? Does it depend on us to move the society? Can you say for sure whether the society will survive the next five years? This calls for the society to develop a strategic planFailure to plan is planning to fail

Strategic issues

BudgetTo be prepared three months before the end of the preceding financial year. Questions:1. Do you understand it or you just approve?2. Do you follow to see its obeyed?

Other instruments of good Governance

To be presented to members within four months after the end of the accounting period (sec 25). Questions:How timely are your accounts?Do you get it within a reasonable period before AGM?

Audited Accounts

The Sacco Society shall have a credit policy consistent with the Act, regulations and any other applicable law. The policy shall contain the following:

Credit management

-Loaning procedures and their documentation-Eligibility requirement for a loan-Permissible loan purposes and acceptable collaterals.-Terms (loan types, interest rates, frequency of payments) and conditions

General lending procedures

-Terms and conditions of insider lending.-Maximum loan approval levels for each officer and committees.-Guarantee requirements.-No director or employee of a Sacco or immediate family members may receive preferential treatment in connection with any loan made by a Sacco.

Disclosures

1. Continuous monitoring-Extension services2. Guidance and advisory services3. Training and education4. Inspections (sec 58)

Ministry responsibility in good Governance

5. Inquiries (sec 58)6. Surcharge (sec 73)7. Settlement of disputes (sec 76)8. Elections9. Regulation and supervision

1. Exaggerated expenses2. High committee allowances/remuneration3. Unmanaged risks4. Lack of morale5. Conflicts

Indicators of bad governance

6. Unachieved objectives7. Laxity8. Stagnant growth9. Poor flow of information10. Lack of successful leadership.11. Manipulation of members

Good governance is an effort of all of us in the society. It takes good people to do nothing for evil to prevail.

Conclusion

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co operative corporate governance

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