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independence, education, training and information, cooperation among Cooperatives and concernfor Community (Gunga, 2009).The benefits which can accrue from adherence to the (ICA) principles include; enablingentrepreneurs achieve economies of scale, bargaining power and capacity to invest in moreadvanced stages of the value chain including storage, processing, marketing and distribution ofproducts and services (Gunga, 2009). Through cooperatives, transaction costs are reduced andrelationships with commercial enterprises are built. In addition, as community institutions,cooperatives devolve decision making to the community level, build social capital, nurturecommunity spirit and pride (Reynolds 1998). Today many governments expect cooperatives toinform policy making and engage in advocacy while the cooperatives themselves seek a more7
pronounced, active and permanent role in decision-making (Mercoiret 1999). The shared spirit ofcooperation and empowerment leads to engagement in larger projects for the economic gain ofthe societyThe evolution of co-operatives worldwide is traced from time immemorial, beginning from theday individuals first joined hands for the advancement of common aspirations (Republic ofKenya 2007; International Monetary Fund 2007; The Kenya High Commission in the UnitedKingdom 2007). In Kenya, the co-operative movement in its modem state started in 1908.However, without a specific co-operative legislation at the time, the first society was registeredunder the business practices ordinance as legislated in the U.K, adopted in India and practiced inKenya. It was not until 1931 that the first societies’ ordinance was enacted. Immediately afterindependence in 1963, the government of Kenya embarked on a deliberate policy of Africanizingthe economy whose major policy statement was contained in the Sessional Paper No. 10 of 1965.This policy document identified co-operatives as having the suitable institutional frameworkthrough which the indigenous Kenyans could participate in economic management anddevelopment upon attainment of self-rule. This saw a rapid growth and expansion ofcooperatives in Kenya2.2.1 Evolution of SACCOS in Kenya The first SACCOs were registered in Kenya in 1964 after the country became independent in1963. In the following years, several SACCOs based upon common bonds linked to residence,occupation and churches were formed. However, in 1969 the government required that SACCOsbe strictly based on a secure crop or employment relationship. A check off system wasintroduced to help SACCOs receive payments directly from employers, processors (cooperatives,parastatals or private companies) and marketing organizations. This system ensured that a8
member’s income would have automatic deductions to repay loans and was a significant factor inthe development of SACCOs.