Kenya has the most profoundly developed cooperative movement in Africa , one with great potential to contribute to an economic revolution.

Many Kenyans are oblivious to the impact that cooperatives have had on our economy, but they are doubtlessly familiar with some of the following:

• The Cooperative Bank
• The Cooperative Insurance Company
• Teachers Saccos
• Matatu Saccos Associations
• Equity Bank - Before a building society
• Kenya Cooperative Creameries
• Kenya Planters Cooperative Union

For all the praise in the world, Kenya's co-ops are not exactly having the time of their lives. What ails them and how can they be returned to influence?

As the Kenya Bus Service (KBS) was going under, Kenyan Saccos had over 130 billion shillings mobilized as savings. While roads in Kenya are in dire need of expansion and repairs funded by tax revenues and development aid,  Saccos sit on untold wealth that would almost literally pave the streets with gold. Other infrastructure projects that would turn around the country's economic fortunes like the communication fibre-optic cable remain incomplete even as savings in the form of 'Cooperative Infrastructure Bonds' could be used to serve the country's interests while earning a decent return for the Sacco members- a multiple blessing to the country as Sacco's wide memberships ensure a more democratic appreciation of national wealth gains.

All over the western world from primary financial markets to secondary financial markets, savings mobilization precedes other instruments of project financing including even debt. It is upon the expectation of future cash-flows that debt is leveraged or equity in a firm is staked by the stakeholders. To simplify this assertion; you lend somebody money with an expectation that they will afford to pay as per your covenant a minimum payment whether from their salaries, businesses revenues or from existing savings.

In this regard then, Saccos and cooperative members with known avenues of earning some cash and mobilizing it into savings would be at great advantage if such savings were loaned out or invested in projects that would offer superior rates of returns in a predictable fashion. In a country like ours, with an urgent need for an infrastructure revolution the government can turn these investments to the advantage of the many, offering to coop owners a better return on their investments than would otherwise be realized. For example, rather than have the Rift Valley Railways take a controlling stake in the Kenyan-Ugandan Railway, why not balance its stake with one from the Saccos?

To do this, however, legislation needs to be in place that would protect the cooperative members. Also some depth of education needs to be carried out along these lines. So far the cooperative college in Karen only offers education to Diploma level. Merging this institution or creating collaboration avenues with the universities would allow broader and deeper courses with degree awards at the end.. These would be geared towards producing efficient and savvy managers of cooperatives and Saccos. Indeed having several government funded finance/economics graduate candidates in masters or PhD level researchers study the application of Coop- Saccos resources in rapid economic development of our country could harness even greater potential than is presently conceived. Such homegrown solutions have been proved especially effective in other countries, for example the South Koreans strategy of funding the Chaebols and thus developing such global industrial giants such as Hyundai , Samsung and Daewoo.

In the West and especially the US, UK and Australia , venture capital firms, mutual funds and other institutional investors have been used by the pension holders funds institutions to allocate their mobilised savings from salaried employees to various investments through either debt instruments or taking up equity stakes in early stage ventures (usually the role played by venture capitalists in the US and other economies).

The power of secondary markets are harnessed through private buy-outs (where other corporations can buy in or have a joint-venture) ,whether on the New York Stock Exchange or in London's FTSE). Cooperatives and Saccos in our country represent such 'mobilised savings stop shops', but much of their resources are only utilized by members borrowing amongst themselves. There is nothing wrong with this as such,but this wealth could be further utilised if the portfolios were expanded into taking direct stakes in other SME's, Real-Estate development (which has been done to some extent) and provision of Debt instruments to government infrastructure projects.

This obviously requires expertise in investment management, a capacity that needs to be developed. For example, the Kenya Coffee Planters Union (KPCU) has for years remained an exporter of raw-coffee even as there was an opportunity to mobilise members funds in creating a coffee processing entity and grow their brand internationally much like Nescafe and Starbucks have. Remaining at the raw-coffee dealer has only hurt its members when raw coffee prices fell due to over-supply by Vietnam and the fact that though unique, Kenya's Arabica coffee is not branded. Such strategies need to adopt a capitalistic approach balanced with the social cause that KPCU serves. In the same breadth KPCU through its regional or locally owned coffee processing cooperatives would have diversified coffee farmers savings by investing in other areas of the economy through the NSE or even taking direct stakes in companies such as Mumias or even rural energy provider entities -a venture that some KTDA facilities have gone into. These energy plants would be powered by coffee husks which may alternatively be used to develop organic fertilizer brands.

Such measures would have seen a continued quality of life enhancement of its members who after the 1980' coffee crash suffered huge losses and a drop in their quality of life. Farmers who previously had started building semi-permanent to permanent houses could not now even afford meals. Such adversity can be avoided in future if these cooperatives diversify at the mobilised-savings resource allocation level or in the industries they participate in by adopting more superior and efficient investments management strategies. To get this right, certain legislation is necessary as is a deepening knowledge of how these strategies can be executed.

The onus is upon the ministers of Finance , Planning and that of cooperatives to take up this challenge and their bureaucrats to create a new economic order in rural Kenya.