Page 52 - Issue 48_press_efile

EXPERTS LOUNGE

The Diary of a Man who
Once Ran the Union…

By John Ngalu Otido

Lead consultant at Triangular Link Services. He has previously served as the
Managing Director at KUSCCO LTD (1974-1981) and the CEO at ICPAK (1993-1994).

Money; the stock in trade of SACCO Societies

We live in a money economy where complex transactions
make up the commercial lives of citizens.

Money facilitates specialization and exchange, the two key in German armies during the World Wars. Gold, silver and bronze
movers in economic development and improvement of welfare were for a long time used as money by the nations of the world.
of the people. Money is not an economic resource such as land,
labor, capital, entrepreneurship, and technology. Wide acceptability of what is regarded as money is a paramount
foundation of its value in the present age; this acceptability has
Nevertheless, it plays a vital role in the production of goods and government backing making the present money commonly
services. Like other business organizations, SACCO Societies referred to as ‘fiat’ money.
need and use money to transact business. A SACCO Society
without money is as good as dead. The Kenya shilling is fiat money as its value and other
characteristics have the Kenya Government backing. This
Money is the stock in trade of SACCO Societies in the same way backing is clearly indicated on all our Central Bank of Kenya
sugarcanes are the stock in trade of sugar mills. As financial notes as legal tender for say a hundred shillings. This in simple
institutions (Intermediaries) SACCO Societies collect savings terms simply means that the Government of Kenya guarantees
from members in form of money into a pool and lend it to the that the note in question can be used to settle a debt up to a
same members as loans at a cost commonly referred to as interest hundred Kenya shillings.
and reward the savers by way of dividends also expressed in
terms of money. Staff Salaries, Board allowances, purchases of As a medium of exchange money is used to assign values to
fixed and current assets are all paid for using money. the goods and services being exchanged. These values are
commonly referred to as prices. A price of a good or service
As an economic concept, money is anything that is widely is its exchange value in terms of money. I have in this article
accepted as a medium of exchange. Money offers all the known deliberately left our complications touching on inflation. Money
solutions to the cumbersome barter trade. can also be used to store value (wealth). Wealth is excess of
what you own against what you owe.
Any item can be used as money so long as the same is widely
accepted in settling debts. Seashells and cowries were in the
past used as money. Cigarettes were used as money by soldiers

50| SACCO Star Magazine