How innovation can strengthen cooperative business- a policy perspective

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By Maureen W. Gitau, Policy & Legislative Affairs Officer – USAID/CLEAR Program

Registration of cooperative businesses is one of the challenging policy issues for policymakers and stakeholders in this sector. Under Schedule Four of the Kenyan Constitution, which outlines the devolved system of government, cooperative development is a fully devolved function. Some counties have taken up the registration of societies at the county level presenting  numerous challenges including dual registration, lack of clear guidelines on registration of cooperatives doing business in more than one county and how to maintain cooperative registries at both the national and county levels. To manage these concerns, the National Cooperative Development Policy, 2019 provides that the national government will be responsible for the registration and cancellation of cooperative societies.   These issues of registration are critical and call for policy innovations so that cooperative businesses can thrive. There is dire need to institute novel procedures for documentation and data management of cooperative businesses’’ registries.

Christiansen J. & Bunt L. (2012) advocate for the need to make the best possible use of public resources to create better outcomes for the population rather than merely ensure ‘service delivery.’ The intention of devolution to bring services to the people is not enough when marred by inconsistent procedures and processes. The inconsistencies are made worse by lack of access to information thereby disincentivizing compliance. There is need to come up with solutions that are characterised by an empathic relationship with the concrete situation of the citizen, in this case the cooperatives.[1] A co-operator in Kenya should be able to register a cooperative business in the shortest time possible, have access to information with clear guidelines and rules as to how to  register a society and on a platform where making payments towards the registration is easy and secure. But this is easier said than done, it not only poses a new way of working, budgeting and decision making for policymakers but also becomes a new way of thinking about how to incorporate innovations in policies.

In 2014, regulatory and legal reforms aimed at enhancing and promoting the ease of doing business in Kenya, realized it was important to make Kenya’s business sector more competitive by streamlining and automating the business registration process.[2] These reforms targeted incorporation and insolvency of companies in Kenya with a view to create an enabling environment for business to thrive. The success of doing business in Kenya through the Business Registration Services (BRS) online platform provides a precedent for similar reforms in the cooperative sector.

Rather than maintaining the status quo, can public interventions create explorative processes that uncover and make use of untapped potential? The national government  has an opportunity to develop reforms aimed at facilitating the reduction of the cost of doing business by adopting simplified processes to enhance access to services and open new channels of revenue collection. In trying to resolve the issue of registration of cooperatives and increased compliance, is there an opportunity for the development of a digitized registration system? A digital system will help reduce duplication, ensure prioritization and tracking of applications and will help minimize political interference in the registration process.

Reforms cannot operate in a vacuum. Sector stakeholders need to have open public and private dialogue on how this idea can be implemented. Advances in digital business processes have potential in automation and organising information much more dynamically, strengthening cooperative businesses, eliminating unnecessary regulations, and simplifying complicated administrative procedures and processes. This re-envisioned digital registration system would allow the State to play a more facilitative role through shared decision-making.

[1] Christiansen J. and Bunt L. (2012) ‘Innovation in policy: allowing for creativity, social complexity and uncertainty in public governance’ Nesta.

[2] Gathuma K. and Mwakio S. ‘Reforms in the ease of Doing Business in Kenya’.