Effective corporate governance remains central to the success of cooperative financial services like SACCOs in Kenya. Strong governance practices build trust and confidence among members, which is critical as SACCOs rely on member deposits for their operations. The SACCO Societies Regulatory Authority (SASRA), established by the SACCO Societies Act of 2008, oversees and regulates SACCOs in Kenya.
SASRA revised its Guidance Note which now encompasses the corporate governance frameworks for both Regulated SACCOs and SACCOs engaged in specified non-withdrawable deposit taking business and subsidiaries of Regulated SACCOs. The guidance note provides the minimum corporate governance standards to be entrenched by SACCOs.
We shall highlight some of the best practices recommended in the Guidance Note for application by the SACCOs.
A. By- Laws
- Regulated SACCOs are required to ensure that the By- Laws incorporate the cooperative values, ethical beliefs and principles.
B. Corporation secretarial governance
- SACCOs with assets exceeding 5 million are also highly encouraged to onboard a Company Secretary (CS) having sought approval from the Authority. The CS will assist the SACCO in providing professional corporate legal and governance services to the SACCO and such a facilitation in Board meetings as an ex-officio member without voting rights.
- Engaging professional corporate legal and governance services is an option for other Regulated SACCOs, offering valuable guidance to the Board and the SACCO as a whole.
c. Board Charter
- With an aim of staying relevant and address evolving challenges, the Board of Directors should conduct periodic reviews of the Board Charter. Further, the Board Committees should possess a charter outlining its mandate, responsibilities, and operating procedures.
d. Evaluation and Governance Audit
- The Board should also ensure they report on performance and evaluation of the members of the Board of Directors and Supervisory Committee.
- Regulated SACCOs are recommended to undergo governance and legal audits to assess its compliance with best practices and prevailing laws. These audits ensure the SACCO’s activities and operations adhere to the highest standards.
e. Policy
- SACCO By-laws and all its policies should also provide an adequate and effective framework for member representation and democratic control of the affairs of the Regulated SACCO Society.
- Regulated SACCO Societies are highly encouraged to establish a framework for appointing or electing a Nomination and/or Vetting Committee within their By-Laws or Electoral Policy.
- Ex officio members of the nominations committee may include the CEO who lacks voting rights, a representative of the Commissioner for Cooperatives development or the County Cooperative officee, any reputable institution of governance as the Regulated SACCO may determine such as ICS and any other respected member of the community in respect of which the Regulated SACCO operates.
- A regulated SACCO is recommended to have a Compensation policy and an Electoral Policy approved by its members.
Embracing good governance is fundamental for SACCOs to thrive as commercially viable and engines of socio-economic development.