The Institute of Directors Kenya (IODK) has challenged cooperative societies in the country to embrace emerging technologies, strengthen corporate governance and continuously acquire new skills to remain competitive amid rapid changes in the business environment.
IODK Chief Executive Officer Prof. Charles Mayaka underscored that cooperative societies’ boards could no longer rely on traditional approaches to running their institutions as technological, economic, environmental and demographic changes continue to reshape the sector.
He challenged directors and senior managers in the cooperative movement to anticipate emerging risks and put in place mitigation measures instead of waiting for challenges to threaten their institutions.
“Change is the only constant and unless the leaders are well prepared and able to anticipate the changes, they will be overtaken by events,” said Prof. Mayaka.
He was speaking in Naivasha during a three-day leadership forum organized by the Co-operative Alliance of Kenya (CAK), bringing together board members, supervisory committee members and chief executive officers from dairy, coffee, financial and youth cooperatives.
Prof. Mayaka said technology presented both opportunities and risks, with artificial intelligence (AI) and digitization capable of improving efficiency and reducing operational costs when properly deployed.
The theme of the forum was dubbed, “Leading Future-Ready Cooperatives and SACCOs: Governance, Digital Transformation and Sustainability in a Disruptive World.”
However, he cautioned leaders against allowing AI to replace human judgement, saying directors and managers must retain responsibility for decisions made using emerging technologies.
“We cannot remove the person in the loop because ultimately the responsibility for the decision remains with the manager, CEO or director,” he said.
He urged cooperative boards to establish governance frameworks for emerging technologies to guard against cyber-security threats and other risks.
Prof. Mayaka said climate change, inflation, geopolitical tensions, changing demographics and shifting employment patterns were also forcing cooperatives to rethink their traditional business models.
He observed that younger consumers were increasingly technology-oriented and expected faster and more personalized services, particularly from financial institutions.
“The current consumer in the cooperative is not the old consumer. So, the old business model can no longer work. We need to have newer business models,” he said.
He encouraged cooperatives to involve members in developing products and services through co-creation and greater customization, while urging directors to remain curious, innovative, agile and resilient.
On climate change, he said extreme weather events could disrupt the livelihoods of cooperative members, particularly farmers, affecting their ability to save, borrow and access cooperative services.
Prof. Mayaka called on boards to incorporate climate-related shocks and other emerging risks into their business strategies.
CAK Chief Executive Officer Daniel Marube said the recent liquidation of the Kenya Union of Savings and Credit Co-operative Societies (KUSCCO) had provided important lessons for the cooperative movement.
He said the crisis should prompt cooperatives to strengthen governance, auditing and risk-management systems to safeguard members’ funds.
He urged cooperative leaders to identify risks early, including fraud, cybercrime, poor financial reporting and failure to meet tax obligations.
Marube also called on Parliament to expedite consideration of proposed amendments to cooperative legislation, saying a stronger legal framework would enhance governance, accountability and transparency.
The CEO said cooperatives could explore shared services such as forensic auditing and legal services to access specialized expertise while reducing operational costs.
Tax Advisor, Ann Magondu said taxation had become increasingly important as cooperative operations and membership structures evolved faster than existing tax laws.
She added that SACCOs were particularly affected by gaps between their modern business operations and provisions contained in tax legislation, resulting in disputes with the Kenya Revenue Authority (KRA), some of which have reached the Tax Appeals Tribunal and courts.
“Tax is about cash flow. If you don’t do it right, you do away with your cash flow, which in the end has an implication in terms of what you distribute back to the members,” she said.
Magondu called for greater engagement between cooperatives, KRA, Parliament and the National Treasury to ensure tax policies keep pace with changes in the sector.
By Wangari Ndirangu
