What is a cooperative?

WHAT IS A COOPERATIVE?

A cooperative is an organisation that is owned and run by its members. Cooperatives are run to meet the needs of their members, and are run democratically. This means each member has an equal vote in how the organisation is run. There are different types of cooperatives, including:

  • Producer cooperatives, where small producers come together to buy equipment, sell their goods, or borrow money to invest. Often it is cheaper to work together than to do everything by themselves. For example, there might be expensive equipment that is not needed all the time, and can be shared. Producer cooperatives are often created by farmers.
  • Worker cooperatives, where businesses are owned by the workers, rather than by an owner or by shareholders. In a worker cooperative, workers can make decisions over how the business is run. Profits made by a cooperative are shared by its members.
  • Consumer cooperatives, where consumers come together to buy things they need, such as food or electricity. By buying enough for all its members at once, a cooperative can get much cheaper prices.

Credit unions, which are like banks but controlled by the people who deposit money. They provide loans and other financial services to their members. Credit unions lend money to help their communities – for example, through lending to small businesses. This is different to banks, which lend money to make profit.

COOPERATIVES IN KENYA

Kenya has the largest cooperative movement in the world. Cooperatives make up 45 percent of the Kenyan economy. At least eight million Kenyans are members of a cooperative, and another 20 million depend on them.

Cooperatives started in Kenya during British rule, when black Kenyans could not be members. However, cooperation among farmers was common before this, and since independence cooperatives have been very important in the economy.

The most important cooperative activities are finance and agriculture. SACCO’s (Savings and Credit Cooperative Organisation) are the fastest growing sector of cooperatives. The members of a SACCO often have a common bond, such as living in the same community. They pool their savings and lend money to each other at reasonable rates of interest. It is democratic, so members decide how their money is used. SACCO’s can provide people with finance and other banking services at a lower interest rate. They are especially useful for communities without good access to loans from established banks, or where money can only be borrowed at very high rates.

Cooperatives are supported by government policy. This is important – even if not on purpose, government laws will either benefit or harm cooperatives. As well as government support, Kenyan cooperatives have organisations to support their interests. All Kenyan cooperatives are part of the Cooperative Alliance of Kenya.

Cooperatives are a good way for ordinary people to improve their economic position – people can afford things as a group that they cannot as individuals. This is especially true in farming, where many producers are not big enough to afford the best equipment by themselves. They also have huge potential in finance, both to borrow from outside the community and for communities to invest in their own businesses.

CONCLUSION

Cooperatives are run by their members for their members, so can often do things that companies find unprofitable. They are a great tool to improve local economies.

WILLIAM GOLDEN

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