Reports are published weekly detailing how the board members and administrators of various cooperative societies are investigated by Kuwait Anti-Corruption Authority (Nazaha) or referred to the Public Prosecution on allegations of financial manipulation and embezzlement. It is essential to recognize that these organizations were never meant to operate solely for retail sales and commercial gain, as their foundation is deeply rooted in social service.
This guiding philosophy dates back to the mid-1960s, when HH the late Sheikh Jaber Al-Ahmad observed China’s modern cooperative model. Impressed by the core concept that “the consumer is the owner,” he was keen to transform and modernize the cooperative sector in Kuwait to reflect such vision. Based on this principle, he led efforts to update the cooperative system of Kuwait to ensure it fulfills its broader civic mission. Over the years, successive governments have allotted land for cooperatives to promote investment and development.
Under the law, the civic and social responsibilities of cooperatives in local communities are formally acknowledged, involved in certain tasks like street beautification, neighborhood sanitation, organizing social events, developing education through public libraries and offering academic guidance to students. Supported by state resources, cooperatives evolved into the main economic pillar of the nation. Regrettably, self-serving individuals began to exploit cooperatives for personal enrichment, which became a trend after the liberation of Kuwait from the Iraqi invasion.
Deviating from their main purpose, the cooperatives were increasingly used as avenues for accumulating private fortunes or securing parliamentary seats and influential posts. This deterioration worsened when ‘wasta’ (nepotism and cronyism) infiltrated public institutions, including the cooperative sector. Lately, instances of misconduct surged, up to the point that legal referrals became a regular occurrence.
This widespread malpractice underscores the urgent need for a sweeping overhaul to rid the 73 cooperative societies of embezzlement, fraud and systemic corruption. Unconventional thinking is necessary to overcome these challenges. Throughout the world, similar entities directly manage agricultural estates and food production facilities, maintain international operations, and actively invest in local and foreign financial markets. Local economic data revealed that Kuwait’s cooperative societies generate about KD1.3 billion in annual sales, yielding strong profit margins of 15 to 25 percent.
These cooperatives have the potential to become a major economic powerhouse through strategic leadership and genuine commitment to implementing reforms.
On the other hand, allowing financial mismanagement and fraud to continue will trigger financial ruin and bankruptcy—an outcome already visible in the local cooperative sector. When the Ministry of Social Affairs uncovered a deficit of around KD9 million in a troubled cooperative, it transferred operational control to a private firm in 2017.
Under private stewardship, the cooperative was turned around, restoring operational viability and profitability. Kuwait should adopt proven international strategies by converting cooperative societies into major corporations or using public-private management models to permanently eliminate recurring administrative anomalies. In order to address issues stemming from malpractice in cooperative societies, converting them into major corporate entities or partnering with the private sector should be explored, following international best practices.
This transition will also ease the burdens of the Ministry of Social Affairs, which seems consumed by monitoring cooperatives despite its other major responsibilities. When the community-based cooperative in Kuwait was founded in 1962, it earned full support due to its mission to serve the public. We reiterate that cooperative societies played a pioneering role when the owners were also the consumers, along with genuine intention and a clear vision to help citizens. However, the focus appears to have been redirected completely; hence, the need for a paradigm shift.
