Cooperative societies urged to adopt technology

Joseph Nyagah, Kenya's minister of cooperatives development and marketing, has urged savings and credit societies to adopt technology to avoid collapsing.

"Technology is necessary for the societies to remain relevant in the face of increased competition from the banks," said Nyagah. "Some societies are too small, with low capitalization and poor leadership, making them ineffective and unable to meet objectives."

Banks are now offering financial packages to low-level earners, customers formerly catered to by the credit societies, and societies will have to develop innovative ways to retain these customers, Nyagah said. He noted that technology will help the societies minimize their wage bills and improve competitiveness and service delivery to rural areas.

There are more than 12,000 registered savings and credit cooperative societies (SACCOs) in Kenya, and Nyagah advocated mergers among smaller ones in order to meet the costs of computerization.

He drew an analogy to the evolution of the cooperative movement in developed countries, where SACCOs adopted technology to guarantee survival of their business model in the face of competition from banks.

Nyagah made his remarks during celebrations to mark the 100 anniversary of SACCOs in Kenya.

Local software developer Chris Gathingu agreed that technology would give the societies a competitive edge, and software can be customized for use in local languages. He does, however, foresee some problems.

"The cost of most proprietary software is very high for small societies to afford," Gathingu said. "The SACCO leadership may also not be aware of the advantages of adopting technology. The government needs to do more than talk, and training is needed."

In the past, SACCOs have suffered from mismanagement of funds due to poor leadership and lack of a strong regulatory framework. The minister announced that the government is strengthening the regulatory framework to ensure good governance and accountability in SACCOs.