Improving Cooperative Performance in Kenya

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By Pamela Kaburu (M&E Specialist) with contribution from Ashley Holst (Technical Specialist-Cooperatives & Inclusive Business) & Stephine Ogutu (Communications Specialist)

The vibrant and dynamic cooperative movement in Kenya is a key player in the economy. According to the Cooperative Alliance of Kenya (CAK), the cooperative sector employs more than 550,000 people and provides opportunities for entrepreneurship to many. However, many cooperatives face common challenges associated with poor financial management, leadership and governance among others.

Global Communities, through the USAID-funded Cooperative, Leadership, Engagement, Advocacy and Research (CLEAR) Program, seeks to improve the performance of cooperative business (CBs) in the housing and worker/service industries in Kenya. The program works collaboratively with cooperatives to conduct a capacity needs assessment to understand their current status across five dimensions-membership, governance, management, service/production and marketing. The scores of the assessment analysis are consequently used to develop tailored capacity strengthening initiatives to address needs of CBs. The scores are also used comparatively over time to assess if there are changes in cooperative performance and business operations.

To track performance among CBs, CLEAR adopted the Cooperative Performance Index (CPI) tool originally developed and tested in 2012 in Rwanda under Global Communities’ USAID-funded EMIRGE program. In 2020, the tool supported baseline assessment of four CBs within CLEAR portfolio; one housing and three service cooperatives. The CPI tool was used to capture the performance of the CBs in the five key dimensions which are particularly relevant in the Kenyan context. Strategic questions were designed around the five areas with an intention of  teasing out subtle differences between nascent, growing and mature cooperatives along the cooperative growth spectrum.

Upon collection and analysis of the data, results were organized and presented in scorecards and disseminated to the CBs. The scorecards captured the summary of the CPI results for both the board and members which identified areas where boards and members were in disagreement. Such differences in scores may also identify areas of distrust, lack of transparency, or gaps in information sharing.

The scorecards were designed to not only present the results to the cooperatives but also act as factsheets of the status of the CBs on the selected 5 cooperative dimensions. They contain the summary of the performance of the CBs at a glance in all areas of business operations. The CPI scorecards were beautifully designed and rich in the information of the CBs which can be shared with interested business partners, donors, investors and any interested new members.

The CLEAR CPI findings revealed that each CB has unique challenges and certified that each has its own growth journey. Structures and systems that have been adopted and put to use for the daily cooperative business operations help a cooperative score highly. For instance, those cooperatives with financial and governance systems, by-laws, business plans and other crucial elements in place are more likely to perform better than their counterparts who run their businesses informally. Another pointer to positive performance is understanding the most appropriate business model for a CB. This is a prerequisite for better performance as it ensures all efforts are geared towards the achievement of the defined goal of the CB.

Based on the findings, some of the best practices that can be adopted to improve the performance of other CBs include:

  • Transparent & Regular Communication with Members: Holding regular, all-member meetings with a clear agenda and action plans that are executable. One of the notable gaps realized across the four CBs was the disparities that exist between the board and the members. In some instances, members had strong opinion that sharply differed with their board of management even on issues like the existing systems. This portrayed broken communication between the two groups which can be mended through regular and transparent member meetings.
  • Public Governance Policies: Members’ understanding of governance documents (such as by-laws, policies etc) and systems for operations ensure successful management. Governance documents must also be in tune with the specific business model and clearly outline roles and responsibilities. Having the right systems in place also ensures accountability on the part of board of governors and managers to their members.

This type of assessment is critical in helping CBs to streamline and formalize their operations better to make it easier for them to attract support from potential investors and development partners thus improving their businesses performance and growth. Having sound systems and structures in place engrains resilience in the DNA of businesses making it possible for them to withstand economic shocks. CLEAR hopes to expand reach to more CBs both in housing and service industry as well as continue to partner with other cooperative development organizations in Kenya to further impact.

The CPI scorecards can be adapted to all industries and not just limited to service and housing cooperatives hence the open invitation to partnership with other cooperative development organizations (CDO) that are looking for an in-depth understanding of their cooperatives and interested in tracking the progress over time for evidence based impact.

CLEAR is funded by the USAID under Cooperative Development Program (CDP) and implemented by Global Communities to build capacity of cooperatives, support creation of the right legal environment for cooperatives’ growth and conduct studies designed to strengthen the sector.