By Nicholas Waitathu
Co-operatives and Savings and Credit Cooperative Organisations (SACCOs) should modify their business models to incorporate artificial intelligence (AI) among other technologies to endure emerging global business disruptions.
Cooperative societies must embrace emerging technologies, strengthen corporate governance and continuously acquire new skills to remain competitive amid rapid changes in the international business environment,
Institute of Directors Kenya (IODK), chief executive officer, Prof. Charles Mayaka noted that the global business environment is changing fast, requiring cooperatives to embrace new and receptive strategies to accommodate the emerging developments.
Owing to the shifting international business atmosphere, the co-operatives and Saccos input in the local economy need to be supplemented with competitive and focused approaches to tame increasing distractions.
“The global business environment is increasingly changing, a situation elicited by emergence of artificial intelligence, geopolitics, climate change, demographic variations, mis-information and dis-information,. This trend requires the directors and managers to rework on their business models to capture the new situations,” said Prof. Mayaka.
He was speaking in Naivasha during the opening of a three-day leadership forum organized by the Co-operative Alliance of Kenya bringing together board members, supervisory committee members and chief executive officers from dairy, coffee, financial and youth cooperatives.
Modification of the business models, Prof. Mayaka stressed, will equally dictate deepening capacity building of the directors and top management to elevate them to the current realities.
“Adopting AI and other technologies will guarantee efficiency and enhance the governance framework in the institution,” he said.
Cooperative Alliance of Kenya, Chief Executive Officer, Daniel Marube said the liquidation of the Kenya Union of Savings and Credit Co-operative Societies (KUSCCO) has provided important lessons for the cooperative movement.
He said the KUSCCO crisis should prompt cooperatives to strengthen governance, auditing and risk-management systems to safeguard members’ funds.
“We need to learn from the mistakes of the past and move forward by adopting more technology, strengthening audits and giving audit committees greater responsibility,” said Marube.
He urged cooperative leaders to identify risks early, including fraud, cybercrime, poor financial reporting and failure to meet tax obligations to ensure their institutions remain optimal in business.
Marube said cooperatives could explore shared services focused on forensic auditing, interblending and legal services to access specialized expertise while reducing operational costs.
A Senior Manager in charge of Tax and Legal with Deloitte and Touche Deloitte East Africa Ann Magondu said taxation had become increasingly important as cooperative operations and membership structures evolved faster than existing tax laws.
She said 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.
“Cooperatives today are not the cooperatives of yesteryears. 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,” said Magondu, urging leaders to make taxation part of their strategic planning.