To keep my sanity, I resigned to treating Sacco’s like my local church. In church, you only grow spiritually if you don’t move too close to the decision making organs. That way, you don’t ask your pastor why the church spent ten shillings to buy an item that costs two shillings in the streets. You also maintain your perception of the leadership as custodians of virtue and godliness.

Sadly, my work involves visiting Sacco’s, advising on decision making and generally participating in their governance. One thing that has been clear is that decision making is hardly motivated by common good. Like in politics, vested interests almost always inform every process and objective.

Could it be that I have been too close to Sacco’s and that proximity has clouded my judgment? Am I judging the movement too harshly?

I don’t think so.

According to the Sacco Regulatory Authority (SASRA), the Sacco movement faces a number of challenges that manifest in financial losses. Some of the challenges are; weak governance, low uptake of ICT solutions, low level managerial capacity and lack of institutional capacity development.

Corporate governance within societies is generally very weak. This could be because members assume they know each other well enough and do not need to develop guidelines for managing recurrent issues. It could also be by selfish design to leave a lot of room for discretion. A number of societies genuinely find it too expensive to engage professionals who could help develop structures for sound governance. For whatever reason, this results in inconsistency in making decisions, making wrong decisions as well as room for deliberate embezzlement of funds.

In my opinion, low uptake of ICT solutions is the biggest hurdle to taming greed and corruption within cooperative societies. With a good system, data integrity is enhanced making it difficult to perpetrate fraud. Quality of reports available to decision makers would also be greatly improved thus eliminating the possibility of concealing questionable transactions.

Have you ever called your Sacco to inquire about your loan balance only to be taken round in circles?

This simply means the records are horribly kept. I used to belong to a Sacco where people took loans they never paid because ‘zilipotelea kwa vitabu!’. The employees then took advantage of the poor records to loot and enrich themselves. What used to happen is that a member with an existing loan of say KES 50,000 would apply for a loan of KES 100,000 and request for the smaller loan to be cleared. The employees then granted the new loan, subtracted the balance of existing loan but never cleared it. That money ended up in their pockets. Occasionally, huge loans were granted and the files destroyed resulting in losses.

Next time you don’t get a straight answer to a direct question from your Sacco, be very afraid. It could mean someone is doing a quick calculation to determine what to tell you.

I have been to Sacco’s where employment is based purely on nepotism. The recruitment process is blind to skills and competence. Clearly, such employees have no capacity to run the institution professionally. They also have no incentive to do so as their jobs are safeguarded by virtue of who they know.

There are Sacco’s that start off very well. However, as they grow, they do not develop their institutional capacity. It is expected that with growth, institutions become more complex and require to improve their systems, procedures and processes. Without this, the existing capacity becomes inadequate.

As I argued at the start, sometimes you maintain your peace if you don’t peek too close to the sanctum of power. However, how then do you push for transparency if you remain ignorant? That's the question for 2013.