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How Policy Innovations Can Strengthen Cooperative Businesses in Kenya

Published 05/23/2023 by Global Communities

Kenya_USAID CLEAR Program partners_Women in Sustainable Energy and Entrepreneurship (WISEe)_Photo by Leonard Odini

By Maureen Gitau, USAID/CLEAR Program

Registration of cooperative businesses is a challenging issue for policymakers and stakeholders in the cooperative sector. Under Schedule Four of the Kenyan Constitution, cooperative development is a fully devolved function, meaning oversight for cooperatives was transferred from the national government to county governments, including the transfer of powers and funding. Devolution is important because it ensures that decisions are made closer to the local people, communities and businesses they affect. Some counties have taken up the registration of cooperatives at the county level, resulting in challenges related to 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.

Global Communities’ Cooperative Leadership Engagement Advocacy and Research (CLEAR), funded by USAID, Cooperative Development Program – has joined to strengthen efforts for the cooperative sector. To manage these concerns, the National Cooperative Development Policy, 2019 — approved by Parliament as Sessional Paper No. 4 of 2020 — provides that the national government is responsible for the registration and cancellation of cooperative societies. These registration issues are critical and call for policy innovations that make it possible for cooperative businesses to thrive. There is a 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, or decentralization, 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 a need to come up with solutions that are characterized by an empathic relationship with the concrete situation of the citizen — in this case, cooperatives.1

Advances in digital government-to-business (G2B) processes have the potential to automate and organize information much more dynamically, which would strengthen cooperative businesses, eliminate unnecessary red tape and simplify complicated administrative procedures and processes.

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, and do so on a platform where making payments towards the registration is easy and secure. This is easier said than done, though, as it not only poses a new way of working, budgeting and decision-making for policymakers but also 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 the country’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 environment where businesses can 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 can reduce the cost of doing business by developing and adopting simplified processes that improve access to services and create new channels for revenue collection. In trying to resolve the issue of registering cooperatives and increasing compliance, is there an opportunity to develop a digitized registration system? A digital system could help reduce duplication, ensure prioritization and tracking of applications, and minimize political interference in the registration process.

Reforms cannot operate in a vacuum. Sector stakeholders need to have open public-private dialogue on how this idea can be implemented. Advances in digital government-to-business (G2B) processes have the potential to automate and organize information much more dynamically, which would strengthen cooperative businesses, eliminate unnecessary red tape and simplify complicated administrative procedures and processes. This re-envisioned digital registration system would allow the Government of Kenya to play a more facilitative role in full view of the cooperative database at both levels of government as well as through shared decision-making.

Maureen Gitau is a Policy & Legislative Affairs Officer for Global Communities’ Cooperative Leadership, Engagement, Advocacy & Research (CLEAR) Program. Among the CLEAR program’s objectives are to support the devolution of cooperative government functions to the county level by developing county government-related policies and legislation. To encourage the devolution process, CLEAR facilitates policy dialogue between national and regional cooperative stakeholders in public, private, academic and development institutions.

Ms. Gitau received her Postgraduate Diploma in Law from the Kenya School of Law and her Bachelor of Law degree from Kenyatta University. She also holds Executive Certificates in Public Policy from Strathmore Business School and in Public Policy Making Process from the Kenya Institute for Public Policy and Research.

[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.”