This blog was originally published in Marketlinks
In Kenya, the law governing cooperative businesses predates the 2010 Constitution. As a newly decentralized nation with 47 ‘distinct but interdependent’ counties, the 1997 national cooperative law needs to change to reflect the new government structure. What is harder to agree on is how. It is important to get it right because cooperatives are key contributors to Kenya’s economy. Cooperatives and credit unions provide 31% of Kenya’s gross domestic product (GDP) and 63% of its population are members or receive some benefit or service from cooperatives1 . A stronger cooperative sector could enhance the nation’s economy while also strengthening the social fabric.
Cooperatives require a legal and regulatory framework that enables them to thrive as autonomous, member-focused businesses that drive community wealth generation and empower new leaders. A critical part of this process is providing cooperatives, as well as private and public cooperative stakeholders, with opportunities to actively participate in and contribute to a more robust enabling environment. Supportive public policies reduce market frictions that prevent cooperatives from competing with other private sector entities – especially where cooperatives are struggling to thrive in underserved markets. Some examples include 1) creating opportunities for cooperative loans or tax structures that account for their unique capital and shared ownership structures, 2) reducing government interference in elections or business plans, and 3) enacting supportive regulations that recognize cooperatives as diverse markets players and make appropriate accommodations. In growing economies, cooperatives are often considered a monolithic sector despite their very different needs. A housing cooperative with 30 members, an agricultural producer cooperative with 1,500 members, and a small worker cooperative start-up with 4 employees are often all subject to the same regulations under ‘cooperative law’. This is where the United States Agency for International Development (USAID) Cooperative Development Program (CDP) has made important contributions across cooperative sectors globally and most recently in Kenya.
Much of the vital work of engaging cooperative stakeholders happens at the county level where the cooperatives are most present and vocal. USAID CDP implementer Global Communities has worked with Kenyan partner Strathmore University Business School (SBS) to develop a 5-day, 40-hour executive education program tailored for cooperative stakeholders, policymakers, and public sector officials to rigorously analyze the cooperative context. More than 260 county cooperative officials, as well as the private sector and non-governmental organizations across 28 counties, graduated from the Public Policy Making Processes course having debated each other on policy development, considered opportunities for fighting corruption, and thought through change management strategies for their countries. Participants were also exposed to topics including gender equality, a variety of cooperative business models, and negotiation tactics.
Despite being empowered by the 2010 Constitution, counties are not able to finalize their own policies and legislation without an updated national cooperative bill to align with. In 2019, the Government of Kenya developed the National Cooperatives Development Policy to provide a framework for regulatory reform. This policy was rigorously debated and adopted by Parliament in 2020, but there are key conflicts with the constitution that created significant disharmony in the sector and still require intense collaboration and dialogue before a draft Cooperative Bill can be presented to Parliament.
USAID CDP implementing partners NCBA CLUSA and Global Communities collaborated to facilitate a broad range of legal assistance, key meetings with stakeholders, and mobilization efforts for cooperative leaders across Kenya to participate in this law reform process. As a result, several enabling provisions were incorporated into the draft national bill that promotes cooperative autonomy and increases the inclusion of women and youth. The organizations have also contributed to a more broad-based, public comment period where Global Communities worked with county officials to expand public participation to the drafting phase. Often, public participation occurs only after a bill has been submitted to the Kenyan Parliament, but the reality is that it is often challenging to make changes to an already debated piece of legislation. To influence the bill with meaningful content, those affected by the policy, the cooperative members, need to be included in the drafting stages. To date, 306 formal comments have been submitted and more than 500 participants attended the 6 regional public participation meetings. The CDP provided logistical and financial support, helped develop and disseminate educational materials with the layperson in mind to enhance parity and inclusion in the process, and created a virtual engagement platform to enable higher levels of participation. This signals the power of convention and highlights the range of opportunities available to support stakeholders to contribute to the policies and legislation that influences them.
Here are some of the lessons learned from this policy and advocacy experience to date:
- Combine strong technical expertise with global best practices and knowledge of the local context. In this case, the CLARITY2 cooperative law analysis tool, implemented by NCBA CLUSA, and a legal team from Kenya’s State Department of Cooperatives determined what elements of Kenyan cooperative law were enabling and disabling for cooperatives. The CDP also leveraged local knowledge by engaging expert consultants in Kenyan cooperative law and constitutional law. These were critical elements in developing trusted partnerships in the process.
- Engage stakeholders who are key to advancing law reform efforts, as well as those who might pull in a different direction. The CDP worked with State actors, cooperative leaders, county governments, apex organizations, academia, and others. Close partnerships were developed in the Council of Governors, the institution that debates national policies and intercounty policies and informs the development of new legislation. External cooperative legal expertise was engaged by NCBA CUSA to consider elements of the national bill’s enabling provisions against international best practices.
- Partner with known advocates and professionals to garner trust. Partners earned their seat at the drafting table by being available for consultations with the State Department of Cooperatives, the Council of Governors, and the Cooperative Alliance of Kenya among others by providing technically sound and vital legal input from business and cooperative law to constitutional law and through consistent follow-up support. When the 306 public comments were being tallied, a Global Communities legal partner was trusted by all members of the National Cooperative Taskforce to accurately tabulate them. The CDP teams focused primarily on engaging cooperatives, providing educational materials, and ensuring all voices were heard and considered.
- Use a variety of communication platforms to engage different stakeholders. CDP thought first about the target audience and then used a variety of mechanisms to best reach them, including a briefing sheet identifying enabling and potentially disabling provisions, reviews of the cooperative bill using the internationally recognized CLARITY Cooperative Law Assessment tool, and the Public Policy Making Process, personalized emails, consultations, and social media.
- Amplify the voice of cooperatives, especially small, rural cooperatives; work collaboratively across the sector. The CDP partners employed the ‘thinking and working politically’ approach which here translated to understanding relationships and power dynamics, identifying, and working with ‘gatekeepers’ and policymakers while keeping a keen eye on system actors who need their voices elevated. In this instance, the implementing partners had a bigger impact in part because they pooled financial and human resources and engaged a wide range of non-state actors. Throughout, the implementing partners focused on their primary role as a partner and conveners, and facilitators promoting and elevating local actors, rather than shaping the content itself. Having already completed the Public Policy Making Processes course, many county officials were able to review and make informed public comments and advocate for the voice of their local cooperative leaders to be included in the process.
Hand in hand with their work to strengthen cooperative business development and the cooperative ecosystem, USAID CDP implementers made strategic and critical contributions to the cooperative law reform process in Kenya by using the strategy outlined above, staying true to the democratic process and the Constitution, and bringing in international best practices to avoid myopia. The process is multi-year, iterative, and facilitative; it includes a wide range of partners who all need a seat at the table and requires continuous education, patience, and perseverance. If successful everyone will benefit from a new framework for cooperatives across Kenya. Cooperatives promote inclusion and equity within economies in the U.S. and around the world, and through critical funding and support to core policies, the U.S. can play a foundational role in advancing cooperative businesses and supportive policies globally. A harmonized policy and legislative environment can enable cooperative businesses to thrive, drive community wealth generation and reinforce household and community resiliency—and USAID can and should deepen their engagement by playing a strategic role in supporting and promoting an equitable cooperative enabling environment.
This blog is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of Global Communities and NCBA CLUSA and do not necessarily reflect the views of USAID or the United States Government.