Cooperative societies... merge them and let them grow

Every week, we read about the referral of a cooperative society’s board of directors, or some of its members, to the Public Prosecution or to the “Nizahat” (Integrity) Authority for investigation, due to embezzlement or other manipulations.

Here, it is necessary to state that the function of these institutions is not limited to selling goods and generating profits; they play a primary social role. In this regard, it is worth noting that Sheikh Jaber Al-Ahmad, may God have mercy on him, visited China in the mid-1960s, where he observed the modern cooperative societies’ model, with its slogan “The owner is a consumer.” He then worked to modernize these institutions in Kuwait in alignment with this slogan.

Since that day, successive Kuwaiti governments have allocated land parcels to these institutions for investment and development, while the law has recognized their social role within their designated areas, whether through contributing to street cleaning and beautification, organizing social activities, or supporting education through public libraries and assisting students in their studies.

The resources provided by the state transformed these institutions into a vital economic pillar in the country. Unfortunately, however, some exploited them for private interests, especially after Kuwait’s liberation from the Iraqi invasion. At that point, they began to deviate from their original path, becoming sources of personal wealth or stepping stones to parliamentary seats and other positions, particularly when the “virus of nepotism” infiltrated all state institutions, including these cooperatives.

In recent years, the deviation has become so severe that referrals to prosecution have become routine. This indicates that a fundamental change is necessary for the 73 cooperative societies to rid themselves of the burdens of embezzlement, manipulation, and other misconduct.

This calls for thinking outside the box. In many countries, such institutions own their own farms and food factories, operate internationally, and hold shares in local or global stock markets.

In Kuwait, economic reports indicate that these cooperatives generate an annual revenue of 1.3 billion Kuwaiti dinars, with profits ranging between 15% and 25%. Consequently, investing in them could transform them into a significant economic force, provided there is a sincere vision for managing these institutions.

However, continued manipulation and embezzlement will lead to their impoverishment and insolvency, as happened in one local cooperative society.

After the Ministry of Social Affairs reviewed the society’s losses, its management was handed over to the private sector in 2017, following the registration of a deficit amounting to 9 million dinars. Management was entrusted to a company that managed to restart operations and generate profits.

Resolving the nuisance caused by the deviations in cooperative societies requires considering converting them into large corporations or partnering with the private sector to drive development, in line with global practices.

If this were to happen, the pressure on the Ministry of Social Affairs would ease. This ministry appears to have devoted itself almost exclusively to monitoring these cooperatives, despite having other, more pressing concerns beyond this sector.

Thus, we reiterate: when the owner was also a consumer, when there was a vision to assist citizens, and when intentions were sincere, cooperative societies achieved leadership. This is why everyone in Kuwait welcomed the establishment of the first private cooperative society in 1962, as it had a clear goal of serving society. Today, however, the compass has fundamentally shifted, necessitating a change in mindset.