NEWS FROM VARIOUS MEDIA HOUSE REGARDING THE CO-OPERATIVE MOVEMENT SINCE JANUARY 2013 TO AUGUST 2013

August 2013

Table of Contents
CIC Insurance group............................................................................................................................................3 CIC Insurance in talks for Sh1.2bn expansion cash .......................................................................................4 Discipline pays dividend for Nakuru youth Sacco..........................................................................................6 Kiambu Sacco to open Nairobi branch ............................................................................................................8 Biashara Sacco Society to open new branch in Embu ..................................................................................9 Kitui Sacco launches irrigation scheme ........................................................................................................10 Narok Teachers Sacco records growth in assets ..........................................................................................11 Bingwa Sacco boss fined for fight at AGM ....................................................................................................11 Harambee Sacco posts 21% income rise........................................................................................................12 Harambee Sacco recovers Sh3.4bn from bad loans ....................................................................................14 Societies woo Kenyan investors in diaspora .................................................................................................15 Saccos to lend among themselves .................................................................................................................16 Transport Sacco adopts IT system to enhance the control of vehicles ...................................................17 Safaricom Investment Society ........................................................................................................................18 Safaricom Sacco unveils Sh1 billion housing project in Mlolongo ............................................................19 Sacco reverses decision to triple tax on dividends .....................................................................................20 SOT Tea Growers Sacco plans to build Sh146m tea factory ......................................................................22 Saccos to lend among themselves .................................................................................................................23 Central Bank retains base lending rate at 9.5 per cent ............................................................................23 Loan guarantees a double-edged sword for Sacco Societies ....................................................................25 Banks must take MPC cue and offer cheaper credit...................................................................................27 CBK cuts key lending rate to 8.5pc ...............................................................................................................28 Teachers clash with Sacco officials over low dividends ............................................................................29 Afya Sacco seeks CBK licence for conversion to micro-lender .................................................................30 Church Sacco bets on property market ........................................................................................................31 Co-op overtakes BBK, StanChart in earnings race ......................................................................................32 Coop Bank profit up by 17pc ..........................................................................................................................34 Co-op Bank targets counties with Sh500m growth plan ............................................................................36 Sacco officials face prosecution over Sh70m scandal ................................................................................38 Banks lose out to Saccos on lucrative youth, women loans ......................................................................39 Stima Sacco to issue cheque books to members .........................................................................................41 Stima Sacco hires 14 to boost services and grow revenue base ...............................................................42 Mwalimu Sacco ups financial deepening with opening of Eldoret branch ..............................................43 1

Mwalimu Sacco opens loan-book lead over rivals .......................................................................................43 This is what youve lost by ignoring the Sacco AGMs .................................................................................45 Bungoma Sacco rebrands .................................................................................................................................47 Asili Sacco assistant accountant charged with Sh22m theft .....................................................................48 Kakamega Teachers Sacco to pay Sh1.4m for unlawful sack ....................................................................49 Mwalimu National Teachers Sacco rolls out housing project ..................................................................50 Benefits of using Sacco savings scheme to plan retirement .....................................................................51 Saccos weighing up youth schemes ...............................................................................................................53 Saccos eye bonds market to raise capital amid lean times ......................................................................54 Machakos Sacco cautions against rogue land sellers ..................................................................................55 Insurance, Sacco fees to attract 10% tax .....................................................................................................56 Sony Sacco to open front office services this year .....................................................................................57 Murang'a boda boda men launch Sacco.........................................................................................................58 KUSCCO named best Sacco with highest growth rate ................................................................................58 Teacher dies at Sacco office ..........................................................................................................................59 How Sacco Societies can retain senior citizens as lifetime members .....................................................60 MP Gideon Mwiti Irea denies role in Sh780m pyramid scheme.................................................................61 Judge declines to reverse orders on ex-Sacco staff ...................................................................................62 Order on teachers pay saves lenders from defaults .................................................................................63 MP accused of promoting ponzi scheme .......................................................................................................66 Kililfi Teachers Sacco Rebrands .....................................................................................................................66

CIC Insurance group

A section of CIC Insurance policyholders are expected to own a piece of the underwriter through its co-operative society in a new plan set for approval this month. The offer to the policyholders, called mutualisation, will give them a stake in Cooperative Insurance Society Ltd (CIS), the 75 per cent strategic owner of the listed CIC Insurance Group. The strategic share is locked in for five years (up to 2018) under a listing agreement with Capital Markets Authority with the balance floated at the Nairobi Securities Exchange. The stake still gets share of the profit. The move would see the profits earned shared with policyholders in form of dividends and reduced premiums. It is expected to hasten expansion of the company business, especially through cooperative societies. Last year, the listed firm reported a Sh1.4 billion profit after tax putting the CIS share of the earning at about Sh1.05 billion. Corporate affairs and communications manager Michael Mugo said that the insurer had entered into an agreement with International Cooperative and Mutual Insurance Federation and it expects the deal would boost CICs footprint in the country. The federation is a global trade association representing more than 220 co-operative and mutual insurers from over 70 countries worldwide. We know this is a new concept in Kenya but we have done enough research and established its a potential, though unexploited area in the insurance industry, Mr Mugo told the Business Daily. Cooperative Insurance Society will now raise capital largely from its members making them the majority owners of the stock. Mr Mugo said the cooperative society would offer members mortgages through savings. CIC Insurance comprises 1,550 cooperative societies and 6,177 individual owners. The company changed its shareholding structure ahead on its listing last year. It was once known as Co-operative Insurance Services Limited (CIS) but later changed to the Cooperative Insurance Company of Kenya Limited in 1999. The change of name was part of the companys market repositioning for growth as it plans to expand to Uganda and Sudan with the societies expected to benefit from the move.

CIC is one of the most aggressive insurers, targeting the small and medium enterprises which account for most of the growth in business. One of the large owners of CIS is Co-operative Bank of Kenya with just above 40 per cent. The insurer, which listed mid last year at Sh3.50, closed Thursday at Sh5.55 a share although it has previously touched a high of Sh7.

CIC Insurance in talks for Sh1.2bn expansion cash

Elizabeth Wanjiru (of Citizen TV programme Mother-in-law), Vision 2030 secretariat director general Mugo Kibati (centre) and CIC Insurance Group CEO Nelson Kuria during the insurers launch of an annuity plan for retirees in Nairobi June 26, 2013. CIC is eying expansion into South Sudan. Photo/SALATON NJAU NATION MEDIA By GEORGE NGIGI Posted Wednesday, June 26 2013 at 19:14 In Summary

The insurer has plans to open shop in South Sudan by the close of the third quarter this year in a joint venture with the government of that country, which will hold a stake in trust for the co-operative movement. CIC Insurance will be joining Britam and UAP in South Sudan and Jubilee, Britam and UAP in Uganda, and is also eyeing expansion into Tanzania and Malawi.

CIC Insurance is in talks with financiers for a Sh1.2 billion capital boost to fund expansion into South Sudan and Uganda. The insurer has plans to open shop in South Sudan by the close of the third quarter this year in a joint venture with the government of that country, which will hold a stake in trust for the cooperative movement. The co-op movement is, however, yet to be set up in the new state. CIC Insurance has also set a target of expanding into Uganda before the end of the first quarter next year. We are raising some money ourselves and also looking for funding from our joint venture partners because its a huge endeavour. For the two markets we should be having a minimum of Sh1.2 billion, said Nelson Kuria, the CEO of CIC group in an interview.

Mr Kuria said the group is willing to cede shareholding to a financier who comes on board with cash and professional experience of the new markets. He did not disclose details of the targeted partners, but hinted that international lenders that also offer technical assistance would fit the bill. We are going to structure it that way (shareholding agreement) and you know they dont take it for perpetuity. We need them to help establish because we also need capacity building, said Mr Kuria.

CIC Insurance listed on the Nairobi Securities Exchange (NSE) last year and is currently trading at Sh4.70 per unit. Mr Kuria ruled out the possibility of floating a rights issue to raise capital, arguing that a cash call to shareholders would be pre-mature as the stock is only 11 months old at the bourse and is yet to establish a performance track record to motivate investors to buy more shares. Ceding of shareholding to financiers could dilute the current shareholders, but analysts said that given the amount needed for injection into the business the companys market value could rise from the transaction. Helios bought into Equity at a higher price even though it diluted shareholders, the overall effect was that it propelled growth of the bank so it depends on the amount injected. Taking debt has its own challenges, said Eric Musau, an analyst at Standard Investment Bank. Costs associated with taking debt include unpredictability in movement of interest rates and currency volatility where the loan is not shilling denominated. CIC Group will own 69 per cent of the joint venture in South Sudan with the other stake being taken up by the Juba government following a resolution by its shareholders in its recent annual general meeting. CIC Insurance covers mainly with sacco associations. Its entry strategy into South Sudan is similar to Co-operative Banks, which has also been seeking partnerships with Sacco movements in neighbouring countries. CIC is also eyeing expansion into Tanzania and Malawi. The insurance group has three subsidiaries and an associate company namely CIC Life, CIC General Insurance, CIC Asset Management and Takaful Insurance of Africa respectively. The company has a capital base of Sh2.1 billion and recorded a profit after tax of Sh1.4 billion last year, up from Sh584 million in 2011. Regional expansion by Kenyan insurers has appeared an un-attractive proposal given the low penetration in the country and the opportunities being provided by oil discoveries and entry of new corporates into the country. The low hanging fruits have been taken; even though we have low penetration it may require a lot of effort to benefit and there is also the aspect of following Kenyan companies in those markets, said Mr Musau. 5

CIC Insurance will be joining Britam and UAP in South Sudan and Jubilee, Britam and UAP in Uganda. Apart from geographical expansion CIC is also diversifying into real estate investment and has already acquired 512 acres of land in Kajiado County on which it plans to develop residential houses by 2015. CIC also has 200 acres of land in Kiambu County, Kamiti Road and is close to completing a twin tower 12-floor office block. gngigi@ke.nationmedia.com

Discipline pays dividend for Nakuru youth Sacco Hope and Vision Sacco
Right behind the Barclays Bank building in Nakuru town is a group of young traders selling clothes, shoes and fruit salad, among other wares. They open shop as early as 8 oclock in the morning. As they go about their business on the side street, the young men among them engage in small talk about the English Premier League, challenging one another on their favourite club. One can walk through this kichochoro or alley without fear of mugging or of some hungry trader accosting them in the hope of making a quick sale. When a potential buyer stops by any of the stands, he is given ample time to look around. A shopper is under no pressure to buy. Neither will customers encounter drunk or disorderly traders. Members are not even allowed to smoke at work. Such is the discipline in the group that last year, Hope and Vision Youth Sacco won a top prize for the best youth-run society in the country. For a group that started out as a welfare society or chama, the members, mostly aged between 20 and 35 years are well on their way to starting a front office micro-savings bank or FOSA, as the outgoing chairlady, Irene Wangui, told Business Daily. When we started, we did not think we would do much more than being a merry-go-round where each member would regularly get a share of the savings. But our vision is indeed bigger, and we hope to even open a bank one day! Ms Wangui says as the group turned into a micro-savings scheme, more people asked to join paving the way for new members. So long as the applicants understand and abides by the laws, they are welcome to be part of us. You do not have to be based in Nakuru town. We are giving opportunity to those with incomegenerating activities from other parts of the county, she says. Members contribute Sh1,500 every month, with the option of contributing daily or weekly to reach the target. They do not discriminate on the type of business, and members comprise tea vendors, barbers, curio dealers, shoe shiners, water sellers and book sellers among other venturesexcept contraband goods.

We cannot accept a member who sells illegal products from poaching or drug peddlers. Potential members must provide all their personal and business details. The registration fee is Sh2,600 for new members. The groups aim is to inculcate a savings culture as well offer loans at affordable rates. We realised that our businesses could not grow unless we came together to help one another. Other financial institutions demand sureties and other documents that as micro-business people we do not have, says credit officer James Kimani. There are 10 different types of loan products that the Sacco offers its members, says Mr Kimani. Some are soft loans such as money for buying food and home improvement.

Each product comes with its own repayment interest, with the highest being the Mbuzi loan that one can pay at 15 per cent interest for up to four months. The money is to help members during festivities such as Christmas holidays and is repayable within four months. There are also business developments products from which members can borrow up to two times their savings. Mr Kimani adds that discipline in the payment of monthly contributions, and repayment of loans has kept them strong. He adds that the bond they have built over the years has also been cemented by their businesses and social lives. Grow business In 2007, the group undertook a three-day training where they were taught how to grow their businesses, and how to make the group become much more than a merry-go-round. It is from there that they moved a step higher to form a Sacco. They have now opened an office at the Salman Centre in Nakuru Town which handles their administrative work. Ms Wangui says without a formal office, even the government and other international groups would not have shown interest in working with them. They have been working closely with an international non-profit organisation from Britain. The group, Balloon Kenya, brings in volunteers to work with young entrepreneurs as they exchange and refine business ideas into workable enterprises. The organisation then offers grants for kick starting the best business ideas, along with constant advice and follow-up. Balloon Kenya plans to use the Nakuru small businesses model to teach successful business start-up in other parts of the world. And so far, things are looking good. Comprising 102 members so far, Hope and Vision Youth Sacco has bagged several trophies and awards. It was named the best-managed Sacco in Nakuru for three years from 2010, 2011 and 2012.

In 2011 they were the highest dividend paying Sacco in Nakuru and also the Sacco with the highest number of women members in the committee. Last year, the youthful businessmen and women walked away with the top prize for the best managed sacco nationally. The future for Hope and Vision Sacco is bright. They are focusing on opening a bank for small-scale traders. For a group whose ground values, basic friendships and mutual understanding are still their strongest principles, nothing is too hard to achieve. mgakii@ke.nationmedia.com

Kiambu Sacco to open Nairobi branch

Tuesday, April 16, 2013 - 00:00 -- BY STANLEY NJENGA A Kiambu based microfinance K Unity will open up its services in Gikomba Market in Nairobi and other parts of the country as a strategic plan of becoming a bank. Speaking yesterday in the offices in Kiambu town during a signing of documents with Kenya union of commercial food and Allied workers in enhancing good working condition of staff working in the microfinance Chairman Joshua Njoroge said that the expansion of the microfinance will help in gaining more clientele and also moving closer to thwe main members who are small businessmen and farmers who take their produce to Nairobi. "We want to get closer to our members and also target small business owners who have no access to banks as we realized that most of our members are farmers and take their produces and wares to sell in Nairobi and we did not have a branch there so it would be easier for thenm to transact business with us closely,"said Njoroge. Njoroge said that the micro finance which is a saving and credit cooperative society had to change its name from Kiambu Unity Finance to K Unity since their membership declined from 130,000 to 80,000 since the teachers who were their members formed their own Sacco hence making it impossible for the micro finance reaching the threshold of becoming a bank. He added that they have a strategic plan which will take five years to meet all the regulations required to become a bank with at the moment having a share capital of Sh 130 million. "The micro finance has embarked on a strategic plan which we hope to take 5 years to becoming a fully-fledged bank and at the moment we have opened up selling shares of the micro finance which the people has responded well and by opening branches all over Kenya and by making alliances with institutions which will help the sacco grow," He added. The institution has a share capital of Sh130 million.

Biashara Sacco Society to open new branch in Embu

Tuesday, April 16, 2013 - 00:00 -- BY WAMBUGU KANYI THE Biahara Sacco Society Joseph Njamuku said the society will open a branch in Embu this year at a cost of Sh 2.6 million. Speaking during this years Annual General Meeting at YMCA hall, Nyeri town, the Sacco chairman Joseph Njamuku said the branch will be useful to the local farmers and business community since the county is an agricultural area. The society is also planning to open other branches in Meru, Nakuru, Nyahururu towns and Nairobi city. Currentlyit has branches in Othaya, Nyeri town, Karatina, Gakindu, Gatarakwa and Nanyuki. Najamuku said the society will establish a network and partnership with the county governments and take advantage of governmen sponsored programmes of wealth and job creation. Let us forge ahead in the new devolved government guided by our robust policies to achieve Vision 2030 and Millennium Development Goals, he said. In the last financial year, the society's share capital rose from Sh 106.4 million to Sh 121.5 million representing 14 per cent growth.

Kitui Sacco launches irrigation scheme

Thursday, April 4, 2013 - 00:00 -- BY MUSEMBI NZENGU The 300 farmers who have been allocated plots at Wikithuki Irrigation Scheme in Tseikuru district, Kitui, will be dispossessed of the same if they do not utilise the land appropriately. A tough talking Wikithuki Cooperative Society Chairman William Nzomo Kakuru said the project dubbed Operations Mwolyo (Relief Food) Out (OMO) had no room for joyriders. He said the project was not for the faint hearted but result oriented committed farmers. Many people have made haste in acquiring plots but to plant and harvest a good crop one must be thoroughly committed. If one is not able to operate on his peace of land efficiently, then it will be taken away and given to someone else, said Kakuru. Kakuru was speaking at the site of the project on Tuesday after presided on the balloting to allocate 200 members of the cooperative society an acre on land each. Earlier another batch of 100 farmers had been allocated their plots. Every member is entitled to an acre of land in the scheme. I want to stress that we must take this irrigation project serious. It had been code named Operation Mwolyo (Relief Food) Out, because we need to end dependence on relief food in this area. The government has interest and has put a lot on money into this project and cannot allow its money to go down the drain, said Kakuru. 10

He said although work at the scheme was labour intensive and a bit expensive for ordinary members all must do their best to meet the set goals. He said the 300 farmers were not only expected to produce enough food for their families but surplus for sale.

Narok Teachers Sacco records growth in assets

Wednesday, April 24, 2013 - 00:00 -- BY KIPLANG'AT KIRUI NAROK Teachers Sacco Society has recorded a growth in assets and membership in the 2011-12 financial year. Speaking during the AGM yesterday at Africa Hope Hall in Narok town, the Sacco's chairman James Munene attributed the growth to the investors' commitment. The loans to members increased by 8.2 per cent to Sh409 million up from Sh378 million in 2011. And turnover reduced to Sh41 million in 2012 from Sh43 million in 2011, said Munene. Munene said increased interest rates by banks from 13 per cent to 23 per cent affected the financial position of the society that led to a decrease in members interest. The chairman urged the members to save regularly so as to build a strong financial base. To enhance productivity and bring services closer to members, the society adapted new products such as ATM services, mobile banking and SMS banking, said Munene. He said the Sacco intends to expand operations by introducing new and innovative products and services to broaden its revenue base and improve service delivery. The total assets increased from Sh459,278,630 to Sh484,890,667, while the membership grew from 2059 to 2326. The Sacco's bookshop profit however decreased from Sh1,257,007 to Sh584,803. The chairman attributed this to increased purchase cost, high cost of transportation and decrease in discount from book sellers.

Bingwa Sacco boss fined for fight at AGM

Monday, April 8, 2013 - 00:00 -- BY JANE MUGAMBI

A former Director with the Bingwa Sacco in Kirinyaga, has been jailed for three months by a Kerugoya court after he was convicted for creating disturbance at an annual general meeting. Kerugoya acting Principal Magistrate Kennedy Chariot who convicted William Njiraini Nguru of the offence however gave him an option of Sh10,000 fine. Nguru had been charged that on April 27 last year within the Kerugoya Catholic church grounds he stormed into an annual general meeting for the Sacco and created disturbance by engaging its official in a physical fight. Nguru who had denied the criminal charges through his lawyer Kimani Njuguna pleaded with the court for leniency upon being convicted. 11

He mitigated that he was a father of six children and that he is the sole breadwinner for his family and as such the court should consider the factors. The prosecution through prosecuting Officer Sammy Mbarani told the court to treat him as a first offender though the nature of the offence he has committed was serious. The Sacco has been established that it has expelled Nguru and revoked his membership to the society. He was expelled at a specially convened general meeting held at the Kerugoya stadium two days after creating disturbance and was seen not to be fit to be a member of the Sacco. Society chairman Kabira Njine confirmed that Nguru was no longer a member after he caused the disturbance saying that he went against the Saccos by-laws.

Harambee Sacco posts 21% income rise

Monday, April 29, 2013 - 00:00 -BY STAR REPORTER

The giant Harambee Sacco interest income grew by Sh120 million between the year 2011 and 2012.According to audited financial results, the society's interest income rose by 21 per cent to Sh1.1 billion up from Sh980 million that was recorded in the previous year. This growth was realised despite uncertainties which were witnessed within the financial market sector.The sacco which holds its Annual General Meeting tomorrow, however, acknowledges a sharp decline in income from the Front Office Banking Services which was occasioned by suspension of all income generating products in the department due to poor loan recovery. "Apart from the challenges we had, the society recorded a 10 percent growth in member deposits from Sh10.3 billion to Sh11.4 billion. The loans to members also grew from Sh13 billion to Sh14.3 billion," reads part of the statement by the chairman to be read at tomorrow's meeting. The cooperative movements are some of the institutions earmarked for great reforms following the promulgation of a new constitution.

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For in stance, Harambee Sacco is planning to establish county offices as a move to streamline its operations alongside the devolved system of government. During the AGM, members are expected to go through the financial statements, approve the budget and hold the rotational elections of new directors for the next one year.The AGM will be held at the Kenya School of Monetary Studies. Harambee Sacco has in the last six months recovered 83 per cent of the Sh4.1 billion funds tied to defaulted loans given out to members, the Sacco Societies Regulatory Authority (Sasra) CEO Carilus Ademba has disclosed. Speaking at the Saccos annual general meeting, Mr Ademba said Harambee Sacco had cut last year's non-performing loans by Sh3.4 billion down to Sh700 million this year, having fast tracked defaulters and made them to pay. The Sacco has made an impressive comeback since last year having been faced with fraud cases involving some officials, Mr Ademba said. Sasra though, he said, is still monitoring the Saccos operations to ensure it does not revert on gains made. He added that investigations into graft charges involving the three suspended Sacco officials were still on-going. The Saccos regulator last year suspended the chief executive of Harambee Sacco and two other managers who it described as masterminds in defrauding the society through mobile money and ATM transfers. Sacco Board chairman Macloud Malonza said the soft lender last year posted a Sh780 million profit despite management issues at the top. The frauds involving ATM and mobile money transactions didnt eat much into our total loan portfolio thus our positive results, Mr Malonza told the Business Daily on the sidelines. Meanwhile, Harambee Sacco seeks to expand its cash reserve as it adopts new strategies towards increasing its lending capacity. Last fiscal year, the Sacco said, a sum of Sh358 million went towards servicing loans it had taken from commercial banks to plug deficits. In this regard, the Sacco has proposed an expansionary policy to boost its liquidity position. In the recommendations, a member would pay a minimum deposit of Sh3,000 up from the current Sh1,000. Members would also be required to have shares worth over Sh20,000 up from Sh3,000. Additionally, dividends would be ploughed back as additional shares instead of giving out cash to members. The society further proposed an eight per cent deduction of its members basic salary in order to raise the revised Sh3000 monthly contribution. The audited financial statements at the Sacco show that the combined balance of share capital and member deposits stand at Sh11.7 billion while loans given out are Sh14.3 billion.

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This fact has prompted us to come up with these new strategies to correct financial imbalances, said Mr Malonza. This comes in the backdrop of a Sasra inspection carried out last year which found out that the Sacco was in an acute liquidity crisis with its standing on all prudential parameters being dismal. The regulator said that the Sacco had negative core capital and had material variances in between various outstanding loan portfolio reports and the provision for loan losses. The inspection found that employees, directors and Sacco members had been given credit without adequate collateral and that there was a backlog of Sh1 billion in loan applications dating back four years.

Harambee Sacco recovers Sh3.4bn from bad loans

Posted Tuesday, April 30 2013 at 15:47 Harambee Sacco has in the last six months recovered 83 per cent of the Sh4.1 billion funds tied to defaulted loans given out to members, the Sacco Societies Regulatory Authority (Sasra) CEO Carilus Ademba has disclosed. Speaking at the Saccos annual general meeting, Mr Ademba said Harambee Sacco had cut last year's non-performing loans by Sh3.4 billion down to Sh700 million this year, having fast tracked defaulters and made them to pay. The Sacco has made an impressive comeback since last year having been faced with fraud cases involving some officials, Mr Ademba said. Sasra though, he said, is still monitoring the Saccos operations to ensure it does not revert on gains made. He added that investigations into graft charges involving the three suspended Sacco officials were still on-going. The saccos regulator last year suspended the chief executive of Harambee Sacco and two other managers who it described as masterminds in defrauding the society through mobile money and ATM transfers. Sacco Board chairman Macloud Malonzo said the soft lender last year posted a Sh780 million profit despite management issues at the top. The frauds involving ATM and mobile money transactions didnt eat much into our total loan portfolio thus our positive results, Mr Malonzo told the Business Daily on the sidelines. Meanwhile, Harambee Sacco seeks to expand its cash reserve as it adopts new strategies towards increasing its lending capacity. Last fiscal year, the Sacco said, a sum of Sh358 million went towards servicing loans it had taken from commercial banks to plug deficits. In this regard, the Sacco has proposed an expansionary policy to boost its liquidity position.

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In the recommendations, a member would pay a minimum deposit of Sh3,000 up from the current Sh1,000. Members would also be required to have shares worth over Sh20,000 up from Sh3,000. Additionally, dividends would be ploughed back as additional shares instead of giving out cash to members. The society further proposed an eight per cent deduction of its members basic salary in order to raise the revised Sh3000 monthly contribution. The audited financial statements at the Sacco show that the combined balance of share capital and member deposits stand at Sh11.7 billion while loans given out are Sh14.3 billion. This fact has prompted us to come up with these new strategies to correct financial imbalances, said Mr Malonzo. This comes in the backdrop of a Sasra inspection carried out last year which found out that the Sacco was in an acute liquidity crisis with its standing on all prudential parameters being dismal. The regulator said that the Sacco had negative core capital and had material variances in between various outstanding loan portfolio reports and the provision for loan losses. The inspection found that employees, directors and Sacco members had been given credit without adequate collateral and that there was a backlog of Sh1 billion in loan applications dating back four years.

Societies woo Kenyan investors in diaspora

By IMMACULATE WAIRIMU immawairimu@yahoo.com Posted Wednesday, May 8 2013 at 04:42 In Summary

The Safaricom Cooperative released its common bond two years ago and invited non-staff members to invest. In 2005, members enjoyed a dividend of five per cent. This rose to 42 per cent in 2010. Kenyans in the diaspora are keen to invest at home, but they are most vulnerable to fraudsters because they are not present to fully engage in their projects... Some get land prices quoted higher than the real value of the parcel, says Ms Macharia.

Jackson, who prefers to use one name, is a Kenyan living in Texas, USA. He was introduced to an investment cooperative in Kenya by a friend, who is a member. The performance of the cooperative, based on its reports, encouraged him. He now earns annual income of $160,000, an equivalent of Sh12.8 million. Getting reliable and honest partners who can represent our interests on the ground can be a challenge, he says. According to Jackson, many Kenyans living abroad have been disappointed by agents, relatives, and friends they have entrusted with investment money.

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So far, Jackson says he is happy with the services of Safaricom Investment Cooperative (SIC), except that he would prefer that the organisation specifically sets up a diaspora department to deal with their unique issues. Cooperatives are becoming the vehicle of choice for real estate investors, especially those living in the diaspora. According to SIC marketing manager, Ms Joyce Nyambura Macharia, last years remittances from Kenyans living abroad increased significantly. She believes cooperatives held the key in attracting the money. Data from the Central Bank show that diaspora remittances were about Sh50 billion in the first six months of 2012, up from Sh34 billion in 2011. This marked a 47 per cent rise in the first six months of 2012. According to a Stanbic Investment Management Services report, diaspora remittances have contributed more than Sh251 billion to the Kenyan economy in the past five years. Cooperatives offer good returns that remain unmatched by banks. The fixed rate of return is 13 per cent, a figure that is within the market ranges of between 12 per cent and 14 per cent, which when reinvested would give a higher principle, says Ms Macharia. The Safaricom Cooperative released its common bond two years ago and invited non-staff members to invest. In 2005, members enjoyed a dividend of five per cent. This rose to 42 per cent in 2010. The highest dividend paid out was 45 per cent in 2011. It drastically dropped to 28 per cent in 2012, a situation attributed to the election season. Though investors were not keen on buying land, there was much more stock than in the previous year. With a membership of 1,600 to 1,700 persons, five per cent of the members are from the diaspora while 80 per cent consist of Safaricom staff. The share value growth in 2009 was at Sh100. This has grown to Sh230 in 2013. The total assets in 2012 rose to a value of Sh503,783,598, up from Sh19,805,056 in 2009. Kenyans in the diaspora are keen to invest at home, but they are most vulnerable to fraudsters because they are not present to fully engage in their projects... Some get land prices quoted higher than the real value of the parcel, says Ms Macharia. Most of these investors are from the US, South Africa, UK, and the United Arab Emirates. Prudence is key in any investment acquisition, but more so in buying land. Buying property through a cooperative means that the organisation handles all the due diligence, including the payment of fees to lawyers, architects, and contractors.

Saccos to lend among themselves

Wednesday, May 8, 2013 - 00:00 -- BY STAR REPORTER SAVINGS and credit cooperative societies plan to start lending among themselves to help meet loan demands as members avoid higher interest rates charged by banks.

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Makadara District cooperative officer, Joseph Maiko has said demand for loans from Sacco members has become so high forcing some of the societies to decrease repayment periods for disbursed funds. "Lets put our house in order, own our societies members should be asked to add more money in savings instead of having a back log or even decrease the loan repayment period. Lets make solutions that should be binding," Maiko said. Maiko was speaking at the annual general meeting of Sauti Sacco whose members comprise of employees under the Ministry of Information and Communication. The 37th Sauti Sacco AGM approved a payout of dividends at 10 per cent for the shares and payout of interest on members deposits at five per cent. The Sacco which divested from Cooperative bank of Kenya last year said the deal boosted its core capital grew from Sh5.9 million to Sh26.6 million and the institutional capital increased from Sh4.4 million to Sh25 million. Sauti Sacco chair Elly Ndwiga said during year 2012, the organisation recorded a loan backlog which stands at Sh14.1 million with a waiting period of four months.

Transport Sacco adopts IT system to enhance the control of vehicles

2NK Sacco driver Samuel Njoroge, in uniform, ushers in travellers at Nyeri bus stage. The new system which is being fitted by Frotcom East Africa Ltd and Airtel Kenya will allow the management to track all vehicles within the country. JOSEPH KANYI By NGONDI MBURU Posted Thursday, December 27 2012 at 11:44 Kenyas leading transport Sacco, 2NK is set to adopt a new Fleet Management System in a bid to gain more control of its 550 vehicles. The Sacco which pioneered parcel delivery by matatu vehicles is set to launch the new system in January 2013.

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We want to reduce accidents on our roads and to manage our vehicles professionally, said the Saccos Chairman James Kahiro. Estimates show that the Saccos members will save nearly Sh40 million annually by sealing loopholes through which money is lost. The new system which is being fitted by Frotcom East Africa Ltd and Airtel Kenya will allow the management to track all vehicles within the country. The system will involve insertion of a gadget that will allow geo-tracking of the more than 550 vehicles in the saccos fleet. It will provide details of the vehicle including the number, the driver and the route the vehicle is plying. According to the chairman, one of its main advantages is the ability to notify the sacco management in case of over-speeding. It will enable us to see the way the vehicle is moving and in case of over-speeding we will be able to contact the driver. This will help us to manage over-speeding which is the biggest cause of carnage on our roads, said Mr Kahiro. The system will also help the sacco management to track petrol consumption in their vehicles, minimising possibility of theft by drivers. It will also give alerts when a vehicle diverts from its intended route. This is expected to assist in cases of carjacking or vehicle theft. The system will also keep performance records of each vehicle for a long duration which can later be retrieved for assessment. Through the system, the management will know at what time the driver started working and what time he spent on the road. According to the chairman, the sacco is embracing the new system to help it enforce the new traffic regulations. ICT is the way to go in business today and we want to do this to enforce compliance to traffic rules rather than evasion, said Mr Kahiro. The 2NK chairman has urged other transport saccos in the country to follow suit and acquire similar management systems. 2NK sacco was formed in 1993 as one of the first transport saccos in the country by a few matatu owners plying the Nyeri-Nairobi route. The society enabled members to pool resources and implement market-oriented strategies at a time when the sector was famed for anarchy and lack of courtesy. Today the sacco has a membership of 400 matatu owners and has advanced loans to the tune of more than quarter a billion shillings to members. Some of the saccos investments include two petrol stations, a petroleum tanker, and an insurance agency that serves members and the public. But the saccos most notable initiative that transformed the industry was setting up of parcel delivery services.

Safaricom Investment Society

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Safaricom Investment Cooperative (SIC) is set to provide decent accommodation facilities to university students as it seeks to diversify its investment options. The cooperative has reserved Sh50 million seed capital to construct hostels on a 10-acre land targeting KCA University students in Kitengela. Speaking Thursday during the unveiling of the societys first housing project Blue Bells Garden the board chairperson Mackrine Abukah said the society sought to tap into increased number of students seeking accommodation around universities. We are exploring two options public-private arrangements and going alone, Ms Abukah told the Business Daily on the sidelines, adding that the board is currently in talks with a number of universities. The society, comprising of 1,400 members, will buy land around certain universities and put up accommodation structures. Under public-private partnership, the society will adopt a build-operate-transfer (BOT) model where the investor constructs the hostel and collects rent for a given time depending on project capitalisation before handing the building back to the university. This comes amid rapid expansion of public universities currently standing at 22 which has piled pressure on the existing accommodation units. In total, there are 48 universities in Kenya 22 public (government funded), 14 chartered private universities and 12 with Letter of Interim Authority. University administrators say rising student enrolment has made it more attractive for private investors to set up hostels from which they stand to reap handsome returns. Meanwhile, Cooperative Development Secretary Nelson Githinji urged other saccos to emulate Safaricom and initiate housing projects directed at tackling accommodation problems, especially at county level. It is envisaged that the cooperative sector will provide a quarter of the national target of 150,000 housing units per year according to 2030 Blueprint, he said. Safaricom Investment Cooperative also plans to undertake value addition for agricultural produce and facilitate Kenyans in the diaspora to invest in the countrys real estate sector.

Safaricom Sacco unveils Sh1 billion housing project in Mlolongo

Updated Thursday, May 9th 2013 a 22:08 GMT +3 By Fred Obura Safaricom Investment Co-operative has unveiled Sh1 billion housing project on a five acre parcel of land in Mlolongo.

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The 300 housing units dubbed, Blue Bells Garden will be constructed in two phases. They will be completed in 2015. The project will be financed through a partnership with Co-operative Bank Speaking during the ground breaking, Safaricom Chief Executive Officer Bob Collymore said the first phase will be ready in September 2014, while the second phase will be ready at the end of 2015. SIC has planned to invest more than Sh1billion in the entire project with the first phase having 160 units and the second phase having 140 units, said Collymore yesterday. These houses will be a mix of two and three bedroom units and will contribute towards reducing the 150,000 housing deficit that the country experience annually. The project will also accommodate a commercial centre to serve its residents. The development, which is targets middle and upper income earners working in Nairobi and Machakos counties is meant to address the rising demand for gated community housing around the country. This project is meant to bridge the annual housing deficit in Nairobi, while meeting the rising demand for gated communities, said Mackrine Abukah, SIC Chairperson. Abukah said that the pricing of the houses will range from Sh6.6 million for three bedroom and Sh5.6 million for two bedroom units respectively. SIC will be rolling out similar projects targeting Kenyans in the Diaspora to enable them to effectively participate in the real estate space in Kenya. As SIC we intend to raise Sh1 billion capital by the end of 2015 and already have various programs in place to achieve this. she said. The other planned areas of investment include development of affordable housing, value addition in agricultural produce and student accommodation projects.

Sacco reverses decision to triple tax on dividends

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The Ukulima Sacco Mombasa Fosa branch. FILE By George Posted Sunday, April 28 2013 at 17:19 One of Kenyas largest Sacco, the Ukulima Co-operative and Savings Society, has reversed a controversial decision to triple withholding tax on dividends, averting a showdown with members at its AGM on Monday. The settlement of the issue sends a signal to societies that tax on dividend is restricted to five per cent. Sacco general manager Henry Nakaya said last years directive, which raised withholding tax on dividends from five to 15 per cent, was based on misinterpretation of the Income Tax Act. We have held several discussions with members and come to an agreement that extra money withheld from them last year will be released together with this years dividends, Mr Nakaya said. Tension has been brewing between the more than 30,000 members of the agricultural sector sacco and its officials, especially after the members claimed that the extra money deducted was never remitted to the taxman. Some of the members speaking on condition of anonymity said the sacco withheld Sh46 million when it raised the tax rate. On Thursday, the sacco released its financials indicating that Sh409 million will paid on members deposit this year, 19 per cent higher than the Sh345 million earned last year. The management also proposes a dividend of Sh29.5 million on members savings. We have never received any official communication despite several letters addressed to the management. This silence has led us to raise this issue again because we dont know which rate they are planning to apply this time round, said one of the members. Omondi

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The sacco officials had through a letter dated May 24, 2012, cited section 35 of the Income Tax Act which requires entities to deduct 15 per cent on interests paid to resident persons when it decided to increase the rate of withholding tax on dividends. But a letter written by KRA on June 6, 2012 refers the warring parties to section 3(a) (b) which specifies the withholding tax rate on dividends as five per cent. If your members feel they have been overtaxed, they should follow the law by submitting the Self Assessment Return for the respective year and claim refund, reads KRAs letter to the sacco. omondi@ke.nationmedia.com

SOT Tea Growers Sacco plans to build Sh146m tea factory

Updated Sunday, April 21st 2013 a 22:41 GMT +3 BY EDWIN MAKICHE Bomet, Kenya: Set up in 1992, it has 15,000 members with a share capital of Sh146 million A farmers cooperative society in Bomet County is set to construct a multi-million tea factory and at least three satellite withering centres in the next one year. Sot Tea Growers Savings and Credit Cooperative Society said it had already acquired a six-acre plot at Merigi shopping centre where the factory would be set up. Speaking during the launch of the Saccos share drive, the cooperatives Chief Executive officer Leonard Sang said members proposed the initiative following congestion in the Kenya Tea Development Authority (KTDA)-run factories that have left farmers experiencing huge losses. The Sacco, which was set up in 1992, has 15,000 members with a share capital of Sh146 million. It plans to invest Sh330 million in the project. Shareholders will contribute Sh120 million while the rest would be financed through loan capital. Sang said already three commercial banks have expressed interest in financing the project but the Sacco has not settled on any. He added that alongside constructing the factory, the Sacco also planned to construct three satellite withering centres to enable farmers pluck their tea throughout the day. Saccos chairman Zakayo Sang said the factory would help reduce congestion in existing KTDA factories and help guard farmers from losses. Mr Sang hit out at the KTDA run factories for failing to allow farmers to open accounts with the Sacco. We are concerned that KTDA factories are now viewing us as competitors and have been urging farmers not to open accounts with us. We appeal to the Government to intervene on this issue to enhance positive competition, he said. He added: We took the initiative at the best interest of farmers who have been incurring huge losses when the KTDA factories fail to collect their produce. 22

Sang added that the withering centres was a step forward in protecting farmers from such losses. Government support He said through the initiative, tea farmers would pluck their tea throughout the week as opposed to the current practice in which KTDA-run factories dictate specific days that farmers can pluck tea. Speaking during the function, Bomet Governor Isaac Ruto lauded the move pledging his administration would contribute another Sh40 million towards the project. He said the county government would further construct another six satellite withering centers in addition to the three. Mr Ruto decried KTDAs failure saying his government would advocate for the liberalisation of the tea sector. I will hold discussions with colleagues in other tea growing zones as we re-evaluate the role of

Saccos to lend among themselves

Wednesday, May 8, 2013 - 00:00 -- BY STAR REPORTER SAVINGS and credit cooperative societies plan to start lending among themselves to help meet loan demands as members avoid higher interest rates charged by banks. Makadara District cooperative officer, Joseph Maiko has said demand for loans from Sacco members has become so high forcing some of the societies to decrease repayment periods for disbursed funds. "Lets put our house in order, own our societies members should be asked to add more money in savings instead of having a back log or even decrease the loan repayment period. Lets make solutions that should be binding," Maiko said. Maiko was speaking at the annual general meeting of Sauti Sacco whose members comprise of employees under the Ministry of Information and Communication. The 37th Sauti Sacco AGM approved a payout of dividends at 10 per cent for the shares and payout of interest on members deposits at five per cent. The Sacco which divested from Cooperative bank of Kenya last year said the deal boosted its core capital grew from Sh5.9 million to Sh26.6 million and the institutional capital increased from Sh4.4 million to Sh25 million. Sauti Sacco chair Elly Ndwiga said during year 2012, the organisation recorded a loan backlog which stands at Sh14.1 million with a waiting period of four months.

Central Bank retains base lending rate at 9.5 per cent

Updated Tuesday, March 12th 2013 a 22:00 GMT +3 23

By Jackson Okoth Consumers of credit will have to wait for a long time before they can return to the banking halls. This is because banks have a reason to maintain their high lending rates after the Central Bank of Kenya ( CBK) decided to retain its lending rate at 9. 5 per cent. The Monetary Policy Committee (MPC) an organ of the CBK responsible for formulating monetary policy retained the Central Bank Rate (CBR) at 9.50 per cent. This is the same level the committee set when it met in January 10, and decided to lower the CBR by 150 basis points from 11 per cent to 9.50 per cent. Biggest losers On the list of big losers following on this decision are small business and individual households, who will have to wait a little longer before they can access affordable bank credit. Commercial banks are charging upwards of 17 per cent to 21 per cent on most of their loan facilities, a level that has forced most people in the private sector to seek alternative sources of funds. In recent months, the market has been consistently surprised by the pace of CBK easing, with the magnitude of each rate cut typically a little more than the market consensus for each of those meetings, said Razia Khan, Regional Head of Research, Africa at the Standard Chartered Bank. He added that having eased aggressively prior to the March meeting, the CBK can afford to remain on hold for a while, should current market conditions require it. The impact of the earlier easing is still feeding through to the real economy after all, said Khan. Markets up The March 4 polls went on smoothly without the violence similar to that which occurred in 2007. Given the relatively smooth passage of elections and the rally in Kenyan markets subsequent to this, there had been some risk of easing, so the question now is what we may see over the course of the cycle, said Khan. Growth is seen to be recovering nicely, given firmer credit growth and recent developments. Inflation is also well within the desired range. But the additional month on month inflationary pressure observed in January and February could explain CBK pause at this stage of the cycle, to give the MPC more time to assess the impact of earlier easing. 24

Remain stable Should most variables remain stable, and inflation remain range bound in lower single digits, which is our core scenario given the post-election environment, then we believe there is still a good chance of further easing, perhaps of another 100 bps in total, said Khan.

Loan guarantees a double-edged sword for Sacco Societies

Before you become a loan guarantor, understand the financial liabilities you will incur in case of default. FOTOSEARCH By ISAIAH Posted Sunday, May 5 2013 at 15:07 In Summary

OPIYO

Saving societies adopting alternative ways of guarding against risks as defaults hit membership and earnings.

I had planned to cover something else other than sacco societies this week until I saw a letter from a reader, Arnet, narrating how she had lost her entire savings in repaying a loan for a colleague. Arnet had been saving with her company sacco for the last three years hoping to qualify for a loan when a colleague requested her to stand as her guarantor for a loan of Sh300,000 from the society. Arnet, whose saving in the sacco had hit Sh320,000 obliged, but she did not consider the consequences. Several months later, Arnets colleague changed employers and left without fully repaying the dues. After several attempts to follow her up failed, the sacco decided to pass on the burden to Arnet. 25

Its the guarantors obligation to pay if the debtor defaults or dies but this penalty has demoralised and set back Arnet who has stopped her contributions to the sacco. Such cases have become common among credit societies. Although they still insist on guarantors as a requirement for credit, the cushion is proving to be an arrow rather than a shield for the saccos development. Defaults have continued to impact saccos and their membership in the following ways. Low morale among members and diminishing appetite for savings The issue of guarantorship affects saccos and their members alike. Sometimes members pull out when they fail to secure guarantors. When this happens, the impact will be felt through reduced savings and falling sacco membership. Many saccos face collapse for lack of members. Reduced capital base for saccos to lend out Saccos rely on members contributions. Reduced or depressed deposit resulting from withdrawal would translate to low capital base. Sometimes members applying for loans have to wait for several weeks to give the sacco sufficient time to mobilise savings or cash from loan repayments. People who have no patience to wait withdraw from the saccos to seek credit elsewhere. Lack of capital to lend out also means the society will lose the opportunity to earn from interest on loans something which would impact on the profitability of the society and eventually dividend to members at the end of every trading year. Low dividend is the surest way to kill morale. Loss of savings to the sacco in case of default Since saccos insists on guarantorship as a risk management measure, defaults would force the sacco to seize the savings of the guarantors until the loan is fully recovered. Members like Arnet can neither borrow against their deposits nor access their savings should they opt to terminate their membership until the money is fully recovered. A guarantor is not only bound to pay the loan amount if the debtor defaults, but the transaction could impact his credit score and loan eligibility. Whereas guarantorship in this situation would cushion the sacco from bad debts resulting from defaults, the same would impact negatively on the members who volunteered as guarantors. Fear of guarantorship A reduced or depressed loan book will further affect the profitability of the sacco and eventually investments. It is also important to note that besides the motivation to access affordable loan facilities, most income earners save through the saccos to earn lucrative dividends. This explains why the issue of guarantorship has continued to subdue the growth of saccos instead of serving as an impetus. Many saccos are already adopting alternative ways of risk measures such as asking for collateral for those unable to get guarantors.

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If your best friend decides to take a sacco loan and asks you to stand surety, first consider the consequences. Ensure you have the financial muscle to shoulder the additional liability that will come in case he or she defaults. Mr Opiyo is Training Manager & Coach with Tolerance Employee Financial Advisors Limited

Banks must take MPC cue and offer cheaper credit

Posted Wednesday, May 8 2013 at 18:10 For a long time, Kenyas economic fortunes have been chiefly tied to the countrys weather patterns, but not in recent months. The fed agriculture, which is touted as the machine that drives Kenyas economy, has become the focus of policy makers. But official data on the economys performance has seen the rate of bank credit take a front rank in the guidance of the countrys wealth. The Central Bank of Kenya has been alive to this fact and has been working at policies geared at boosting credit flow through cheaper bank loans, but lenders are now working in tandem. Borrowing costs remain expensive and drastic changes in Central Bank Rate (CBR), the cost at which the regulator lends to banks, have not had a similar effect on private sector credit growth. As a result, key sectors of the economy like manufacturing, retail and construction are not getting enough credit to boost to boost Kenyans purchasing power and prop up the private sector through increased demand for goods and services. The slackened consumer demand for goods and services has dimmed the capacity of many Kenyan firms to boost production that will offer some room for fresh hiring and stop executives mulling over cutting jobs to preserve cash and profits. This outlook has since last year prompted the CBKs Monetary Policy Committee (MPC) to act and review policies that were geared at inflation and lending rates. At the time, the benchmark lending had been increased to 18 per cent to shield the shilling against renewed pressure from foreign currencies, prompting commercial banks to raise their average lending rate to 25 per cent from about 18 per cent. The monetary policy honchos lowered the rate to 9.5 per cent in December and 8.5 per cent on Tuesday, representing a drop of 9.5 percentage points. Commercial banks have not matched the CBK in their rate cut despite slashing deposit rates given that the low cost of savings has emerged as the main profit driver of lenders that have so far announced their quarter one results. Therefore commercial banks are emerging as the missing link in the drive to step the recovery of the Kenyan economy at a moment when are preparing to unveil super profits. What Kenya needs now is cheaper credit to spur private sector lending. 27

CBK cuts key lending rate to 8.5pc

The Monetary Policy Committee (MPC) has reduced the indicative Central Bank Rate for the first time this year signalling a cut on cost of loans. The committee reduced the rate at which it lends to commercial banks to 8.5 per cent from 9.5 per cent which has prevailed since January. In making the decision the policy maker is banking on the peaceful election and transition of power for enhanced economic activity which needs to be supported by easy access to finance. The Committee concluded that the monetary policy measures continue to deliver the desired results, providing policy space to encourage the private sector to fulfil its growth augmentation role, said the MPC The Central Bank has cut its indicative interest rate for the first time this year, sending a signal to commercial banks to lower the cost of loans as focus shifts to spurring economic growth. The Monetary Policy Committee (MPC) said after its bi-monthly meeting on Tuesday that it had cut the Central Bank Rate (CBR) by one percentage point to 8.5 per cent. The CBR is the cost at which the regulator lends to commercial banks through the emergency borrowing window. In making the decision the regulator is banking on the recent peaceful outcome of the election and transition of power for enhanced economic activity, which needs to be supported by easy access to finance. The committee concluded that the monetary policy measures continue to deliver the desired results, providing policy space to encourage the private sector to fulfil its growth augmentation role, said the MPC. The reduction was in line with market expectations following a stable macro-economic environment that allowed for easing of the monetary policy. The CBK is resuming its easing cycle following the elections. Despite risks emanating from the euro area and Kenyas still-substantial current account deficit, the broad outlook is still for relative stability a view with which we agree, said Razia Khan Head of research on Africa at Standard Chartered PLC. A survey conducted by CBK to guide the policy makers showed increased optimism for a strong growth recovery in 2013 mainly on account of the prevailing macroeconomic stability marked by stable inflation rates and a strong shilling. Analyst however noted that the shilling, which lost ground against the dollar Tuesday to close at 83.90 units from Mondays rate of 83.71 may come under some short lived pressure from sections of the market which had anticipated a smaller cut to the CBR. Beyond the knee-jerk market reaction, our expectation is that the Kenyan shilling will continue to rally, as Kenyan asset markets benefit from increased offshore inflows, said Ms Khan. The Nairobi Securities Exchange 20 share index rose from 4,518.6 in February 2013 to 4,765.2 in April 2013 points driven by increased participation by foreign investors.

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CBK noted that the rates charged on commercial loan were dropping at a slow rate and the credit growth for the first quarter reached the traditional sectors of the economy which are agriculture and manufacturing. Data from the CBK website shows that the average lending rate for March when the CBR was 9.5 per cent was 17.8 per cent compared to 20.3 per cent in June last year when the indicative rate was 18 per cent. Commercial banks have been under pressure to lower their lending rates in line with the CBR reduction from highs of 18 per cent mid last year. The lenders have attributed their slow transmission of the cut to costly fixed deposits which were locked in by savvy investors during the high interest rate environment. The policy rate is a signal to the market; a lot depends on whether the market responds and in this case the market is those who provide deposits to the banks. If their cost goes down then the banks transmit the same to the borrowers said Mr Habil Olaka, the chief executive of Kenya Bankers Association. Economist also noted the increased borrowing from the domestic market at higher rates by the government could however crowd out the private sector from accessing credit from the banks which have to consider the opportunity lost in their pricing. In the last auction 91-day treasury bills returned an interest rate of 10.10 per cent - the highest on record. The President and his deputy were also urged to hasten the setting up of the cabinet in order to start the laying down of policies which will advise investors on where to put their money. We need a cabinet to reduce uncertainties and clear policies on the direction the government will take. This will unlock the money individuals and corporations are keeping in wait and see, which will lead to more economic activities and more tax revenues, said Dr X. N Iraki. gngigi@ke.nationmedia.com

Teachers clash with Sacco officials over low dividends

By EVERLINE Posted Sunday, May 26 2013 at 14:21 A showdown is looming at a Kacco in Kisumu after members threatened to withdraw over claims of funds mismanagement. The members of Kisumu Teachers Sacco have contested a divided pay of 1.3 per cent and say they will decamp from the 5000-member revolving fund. OKEWO

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Imagine getting 1.3 per cent of your shares yet you have saved a total of Sh236,300 in one year. I only got Sh2,600 as dividends, said Mark Onyango, a member. He said the board has been holding secret meetings without involving members, raising so many questions. The teachers are accusing the board of directors of mismanagement whom they have issued a notice to vacate their positions for fresh elections. We have observed that normal loans are not being issued out; instead members of the sacco are subjected to Fosa loans, which are very expensive, Erick Omulo said. The board is also accused of favouritism. This years financial statement indicate the rate of default stands at Sh39 million. However, the chief executive of the sacco Joseph Oganga dismissed the claims, claiming those threatening to withdraw from the membership are loan defaulters who are busy mobilising others to leave the sacco.

Afya Sacco seeks CBK licence for conversion to micro-lender

Afya Sacco is raising capital from its members to hit CBKs minimum requirement of Sh60 million for a nationwide deposit-taking micro financier. FILE By GEORGE NGIGI Posted Thursday, May 30 2013 at 19:47 Afya Sacco has applied for a Central Bank (CBK) licence to operate as a deposit-taking microfinance institution, setting on a transformational path for the co-operative society. The Sacco is currently raising capital from its members to hit CBKs minimum requirement of Sh60 million for a nationwide deposit-taking micro financier (DTM). 30

Afya (Sacco) has already applied for a license to begin its trading activities. Once trading commences the company will provide all Microfinance services, says the Sacco on its website. If approved it will be the first DTM to be operated by a Sacco and it will open the door for a transformation of the financial industry landscape, with more Saccos likely to follow path. DTMs are regulated by the CBK as they are allowed to collect deposits from the public, which they can use to grow their loan book. Saccos on the other hand are regulated by the Sacco Societies Regulatory Authority (Sasra) and are only allowed to collect funds from their members. CBK has licensed six DTMs since 2010 when regulations creating the micro-lenders were passed. Most micro financiers are credit only (those allowed to give loans only without getting deposits from the public). DTMs lend to the public depending on their ability to repay, while Sacco loans are backed by customers savings and guarantors. Saccos are popular with members because of their more friendly cost of credit. Many Saccos are however limited by liquidity problems, delaying some of the members loan applications. Afya Sacco is calling its members and other interested parties to buy shares of at least Sh5000 and a maximum of Sh60 million in the new institution. It has a membership of 39,016 and as at end of 2011 it had deposits of Sh6.4 billion and a loan book of Sh6 billion. Saccos have also started partnering with banks to issue cheque books to their account holders allowing them to serve the business community. This has been accompanied by wider product range which includes long term facilities such as mortgages and development loans. Stima Sacco has partnered with Family Bank while Unaitas has turned to ABC Bank. DTMs are also able to participate in the clearing house through a representative bank. Under the regulatory environment of Sasra, the Sacco community is picking itself up from years of misconduct which had seen it lose public confidence as some of them collapsed with hard earned savings. There are over 110 licensed Saccos with an asset base of over Sh200 billion.

Church Sacco bets on property market

By Neville Otuki Posted Monday, June 3 2013 at 20:23 Christ is the Answer Ministries (Citam) is seeking to tap into the property market to raise revenue for supporting its social programmes. 31

Through LaNyavu Sacco, the churchs savings and credit cooperative society, the church plans to spend Sh7 billion in constructing residential houses on a 72 acre parcel of land in the prime Karen area of Nairobi. Speaking during the launch on Friday, retired bishop Bonifes Adoyo urged the government to create an enabling environment for the countrys real estate sector. I urge Kenyans and the Government to uphold the sanctity of title deeds or any other land ownership document for that matter, he said. The gated housing community project is set to start in August and be completed in early 2015. The houses in Karen will comprise 130 units of four and five-bedroom houses. LaNyavu said its initial focus would be on its 2,000 members before starting projects where non-members would befit. Citam also owns four schools in various parts of Nairobi with a population of 4,000 students. The church said it seeks to empower members through business ventures in property development. Church organisations are increasingly turning to property to expand their services to members beyond the spiritual through investment companies engaged in buying and selling of land, building hotels and hostels as well as transport services.

Co-op overtakes BBK, StanChart in earnings race

Co-operative Bank of Kenya has overtaken Barclays and Standard Chartered banks on the profit ranking deepening the dominance of indigenous banks against the multinationals. Results for the first quarter show that Co-op Bank posted a net profit of Sh2.6 billion, beating Stanchart (Sh1.8 billion) and Barclays (Sh1.6 billion). This made Co-op Bank the third most profitable bank in the country behind its home-grown peers KCB and Equity, whose net profits stood at Sh3 billion and Sh3.2 billion respectively. 32

The stronger performance by the indigenous banks was helped by major cutbacks in interest expenses compared to the multinationals that reduced their deposit costs marginally. The local banks have also benefited from aggressive lending, especially on the retail and SME sectors, compared to the multinational rivals who have adopted a cautious approach. Margins in retail and SME lending are significantly higher compared to corporate banking and this is driving the performance of Co-op, Equity, and KCB, said Vimal Parmar, an analyst at Burbidge Capital. The three local lenders were the only top tier banks to grow their profits by double digits, with the earnings of Barclays and Stanchart shrinking by double digits in the first quarter. Mr Parmar added that Barclays and Stanchart have traditionally focused on corporate banking, which has lower margins and is growing at a slower rate compared to retail and SME banking. The larger retail presence among the home-grown banks has helped boost their loan books, interest earnings and transaction-based income from their millions of customers. Equity has the largest customer base having seven million deposit accounts as of December, followed by Co-op (2.3 million) and KCB (1.2 million). Barclays had 1.1 million and Stanchart 171,377 accounts in the period. But deposit expenses were the game change in the first quarter. Co-op Bank reduced its interest expenses by Sh1 billion in the three months to March, a move that compensated for its flat loan book of Sh119 billion. KCB also cut also cut its interest expenses by Sh730 million and Equity by Sh511 million. Stanchart saved Sh72 million on the cost of deposits while Barclays reduced its interest expenses by Sh174 million. Barclays dominated the local banking industry for decades but its reign ended in 2011 when its Sh8 billion net profit was overtaken by KCBs Sh10.9 billion. Investors have taken note of the shift in fortunes among the big banks, with the stocks of the indigenous lenders recording the highest demand and bigger gains, according to stock brokers. Equitys share price has recorded the highest gain, rising 55.4 per cent over the past six months to trade at Sh36, followed by KCBs stock that is trading at Sh41 after gaining 49 per cent in the period. Co-op Banks share price has risen 37 per cent to Sh16.7, Stancharts has gained 25.8 per cent to trade at Sh300 and that of Barclays has gained 23.1 per cent to trade at Sh17.9. The homegrown banks with the exception of Co-op Bank have also benefitted from their expansion in the region in a move that has diversified their earnings away from the Kenyan market. On this front, the local banks have a distinct advantage over the multinationals operating in Kenya who have limitations of broadening their reach beyond the country because their parent companies have operations in neighbouring countries like Uganda and Tanzania. Co-op Bank is venturing into South Sudan in its first regional shop and has ambitions to open more foreign subsidiaries, which is expected to boost its earnings in the coming years. 33

vjuma@ke.nationmedia.com

Coop Bank profit up by 17pc

Co-operative Bank House along Nairobis Haile Selassie Avenue in Nairobi. FILE By MWANIKI WAHOME jwahome@ke.nationmedia.com Posted Wednesday, August 7 2013 at 19:57 In Summary

The banks growth was aided by the partnership with CIC-insurance to offer bancassurance - selling of insurance through the bank - in its branches, while 425 Sacco Fosa outlets continued to grow with 593,000 new Sacco-link cards issued in the period.

Co-operative Bank has posted a 17 per cent growth in after-tax profit. The bank earned Sh4.7 billion in its half-year results compared to Sh4 billion in the same period last year. The Banks managing director Mr Gideon Muriuki said the bank defied low demand for loans and advances due to sustained growth in commissions and transaction-based incomes to record growth in the period under review. The growth was achieved despite the low demand for loans and advances due to sustained growth in commissions and transaction based incomes, Mr Muruiki said in a signed statement about the banks financial performance. The banks growth was aided by the partnership with CIC-insurance to offer bancassurance selling of insurance through the bank - in its branches, while 425 Sacco Fosa outlets continued to grow with 593,000 new Sacco-link cards issued in the period. Total customer deposits increased by Sh27.1 billion to Sh172.8 billion compared to Sh145.7 billion in June 2012. The number of customers accounts crossed the 3.5 million mark. We now have 3.5 million account holders realised through continued concerted effort by all staff to bring funded accounts in the bank. With cross selling initiatives, we are increasing our wallet size by offering other products and services to our customers, the MD said. Loans increased by 11 per cent to Sh124.9 billion from Sh112.6 billion in the same period last year.

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The banks assets reached Sh225.3 billion from Sh177.7 billion in the same period last year, placing it in third position in the country in terms of assets. The net interest income increased by 19 per cent to Sh8.86 billion compared to Sh7.44 billion in the same period last year. The non-funded income increased by 11 per cent to Sh4.5 billion in the period under review compared to Sh4.04 billion earned last year. The rise is attributed to due to fees and commissions. The total operating costs increased by 15.5 per cent as it opened new branches across the country, while redeploying their staff to maximise on their personnel.

President Uhuru speech Madaraka day

Exempt We are committed to sparking an industrial revolution that will ensure we are able to manufacture the necessary tools and equipment for economic activities as well as to carry out value addition of our raw materials and primary commodities. It is for this reason that I formed the Ministry of Industrialisation and Enterprise Development. This Ministry will be the heartbeat of our industrial revolution and export diversification agenda. It will ensure the full implementation of the Sessional Paper No. 9 of 2012 on the National Industrialisation Policy Framework for Kenya (2012-2030) which is aimed at transforming Kenya into a globally competitive regional industrial hub in line with Kenya Vision 2030. The key projects that will drive this process include the development of integrated steel mills, development of SME parks; promotion of the One Village, One Product programme; and productivity improvement for SMEs. It is our conviction that these initiatives will play a critical role in attaining our objective of creating one million jobs per year for the nextfive years. To further increase investments and generate employment opportunities, we will continue to strengthen cooperatives to better enable them play the crucial roles of mobilising savings, marketing products and value addition to our products. The mobilization of savings is particularly key to the realisation of Vision 2030 in respect to increasing national savings from the current 17 percent to 30 percent of national income. I am encouraged that currently, members deposits in SACCOs amount to approximately Kshs.378 billion. We must strengthen and harness the potential of this sector in order to increase the pool of investible resources. With respect to value addition, we want to see more cooperatives venture not only into value addition, but also packaging, branding and marketing of high quality products. I call upon cooperatives to emulate the success stories of co-operatives such as New KCC which through value addition now produces finished products including powdered milk. This is one of the best ways in which we shall be able to generate employment and create wealth.

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Co-op Bank targets counties with Sh500m growth plan

Co-operative Bank customers queue to withdraw money at an ATM in Kisumu in December. The bank plans to open branches in 47 counties. File By GEORGE NGIGI Posted Monday, February 11 2013 at 20:18

In Summary

Co-op Bank is drawing funds from its retained earnings to take advantage of the new county government structure. The bank also intends to open its first branch in Juba, South Sudan, in April before opening four more by end of the year. Apart from branches, the bank also intends to set up shopping malls while increasing its agents network to above 3,500.

Co-operative Bank has opened nine new branches in the past one month as part of a Sh500 million expansion plan to give the lender a presence in all the 47 counties. The bank is drawing funds from its retained earnings to take advantage of the new county government structure which comes into effect after the March 4 General Election. Going forward, the county structure is going to be a strong focus for development and the banks expansion plan ensures a strong presence in the counties, said Samuel Birech, the Co-op Bank director of retail banking. Some of the new branches opened so far include, Yala, Malaba, Oyugis, Ruiru, Embakasi Junction, Kawangware 46, Othaya and Molo. Co-op Bank also intends to open its first branch in Juba, South Sudan, in April before opening four more by end of the year. 36

Apart from branches, the bank also intends to set up shopping malls while increasing its agents network to above 3,500. The lenders geographical presence is smaller than its main competitors in the retail segment, Equity Bank and KCB. Research analysts at Standard Investment Bank, however, say Co-op Bank should improve on its efficiency even as it seeks to grow its presence. Despite increase in customer deposit accounts, rise in debit cards issued to sacco members, increased use of mobile banking platform and rollout of over 3,000 banking agents, performance in fee per commission income was disappointing, said Standard Investment Bank in a survey on Kenya banks. By last September the lender had 3.2 million deposit accounts up from 2.3 million a year earlier. Standard Bank analysts, however, hold that the lenders diversification to long-term loans using financing from international financiers was likely to grow the loan book at a faster rate. The Central Bank introduced the agency banking model two years ago to encourage banks to operate in regions that are not financially viable to set up branches. The bank said that it was setting up in areas where it felt that it needed more representation than that can be afforded by agents, especially in loan applications. Co-operative Bank also operates in partnership with saccos who hold a majority stake in the bank. Our network of saccos and agencies benefits immensely when we provide them with a branch in close proximity, said Mr Birech. Our branches, therefore, do not compete with the saccos and agents, they complement one another.

Nandi Teachers Sacco loses 200-acre farm

Friday, May 3, 2013 - 00:00 -- BY BARRY SALIL

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A teachers' Sacco has lost a 200-acre farm in Uasin Gishu. Nandi Teachers Sacco bought the land from the East African Tanning Extract Company, a subsidiary of Lonrho Africa group in UasinGishu. The management told members at a meeting yesterday that they cannot trace the property. They expressed fear that the land might have been secretly sold by the previous management According to the Lands ministry, the property is registered under the name of the Sacco. Sacco chairman Alfred Ngetuny told a stormy annual delegates meeting in Kapsabet that a local, wellconnected tycoon is claiming ownership of the farm registered as 'Nandi Teachers Sacco, Pioneer Ngeria Block'. The Sacco bought the farm in 1999. The plan was to either sub divide to interested members or resell it at a higher price. The management said the land has been sold using fake documents by a land agency in Eldoret. Tempers flared as the chairman further informed the members that the society does not have shares at the Nandi Tea Company. He said the 37 per cent stake held by the Nandi Teachers Sacco belongs to individuals and not the society. Ng'etuny is a director of the highly profitable tea company. At this point members stormed out of the meeting in protest. Ng'etuny's efforts to explain the situation was ignored as members said they always receive dividends. He explained that his team registered another Sacco to manage the tea company shares which stand at 47 per cent on behalf of individual teachers. We nominated a consultant, Titus Kipyab, to the board of the tea firm on our behalf because we realised that the shares are quite substantial, Ng'etuny said. The members accused the management of failing to recover property stolen and misappropriated by the previous team. If teachers cannot get their loans on time for no apparent reason, what will make us happy with the management, they shouted. However, the 3,000 member Sacco registered for the first time in eight years a Sh10 million profit which will be paid as dividends to members at 1.5 per cent per share.

Sacco officials face prosecution over Sh70m scandal

By TOM MATOKE Posted Tuesday, June 18 2013 at 19:05 38

Teachers are calling for the prosecution of Sacco officials implicated in the loss of more than Sh70 million and their properties attached to recover the money. Over 7,000 teachers in Nandi County lost their savings and an inquiry by the Co-operatives ministry implicated the officials in the scandal. The teachers said their children had dropped out of school for lack of fees as most relied on loans from the sacco to educate them. Children who had applied to go for further studies cannot access funds because former officials crippled the teachers co-operative, one teacher said. The Sacco officials were also accused of grabbing 200 acres of land belonging to the Nandi Teachers Cooperative purchased in 2003. The teachers want the land surrendered. The management of the sacco went to the Lands ministry and got shocked when they discovered land documents missing and alerted KNUT leaders and they agreed to call for urgent teachers meeting to discuss the issue, said Nandi teachers sacco chairman Alfred Ngetuny. Tempers flared on Tuesday at a meeting in Kapsabet stadium when Kenya National Union of Teachers (Knut) leaders and Nandi teachers sacco management disowned a task force appointed last year to investigate the 200 acres of land belonging to the teachers. The task force composed 40 officials who were supposed to investigate shady land deals conspired with prominent personalities and registered the land under the families and relatives and instead turned against teachers should not be allowed to go free since it would encourage land grabbing while poor teachers continues to suffer, said Mr Misoi, the KNUT for Nandi south. The 7,000 teachers led by Knut officials; national trustee, Boniface Tenai, Josephat Serem, secretary for Nandi north, Stephen Misoi, secretary for Nandi south and Sylvester Talam, secretary for Nandi central branch, demanded that action be taken against the officials accused of stealing teachers properties. Mr Serem said the former Cooperative minister Joseph Nyagah had directed that properties of top officials of the Nandi Teachers Sacco be attached and that Ethics and Anti-Corruption Commission invited to investigate the scandal, but to date nothing has taken place. Mr Tenai asked some of the officials who are still in office and are implicated in the loss of teachers funds and land to quit to pave way for investigations, adding that the era of impunity ended under new constitution. Teachers resolved that the anti-corruption agency be invited to carry out independent investigation into the land scandal.

Banks lose out to Saccos on lucrative youth, women loans

By GEORGE NGIGI Posted Wednesday, June 12 2013 at 18:39 39

In Summary

Parliaments Budget and Appropriation Committee said bureaucracy in commercial banks had slowed down lending to deserving women and youth, defeating the States target of job creation and spurring economic growth. The parliamentary committee also recommended that the youth fund be restructured in order to ensure that the youths were trained on the use of the cash and accounting for resources as well as the type of projects that they should be involved in.

Commercial banks could be big losers following a recommendation by Parliament locking them from distributing the multi-billion shilling government enterprise funds to women and the youth. Parliaments Budget and Appropriation Committee said bureaucracy in commercial banks had slowed down lending to deserving women and youth, defeating the States target of job creation and spurring economic growth. Banks have also been accused of using the revolving women and youth enterprise funds, which are in excess of Sh2 billion, to boost their deposits instead of giving cheap loans to deserving borrowers. The funds are currently channelled through 39 financial intermediaries. The bulk of the cash is passed through banks; which include Equity Bank, Family Bank and First Community Bank while small volumes are loaned through saccos. It was recommended for government to consider using other intermediaries such as the saccos and not commercial banks to channel the funds, reads the report by Parliaments Budget and Appropriation Committee, which is chaired by Mutava Musyimi. Commercial banks were noted to create stringent conditions which discouraged youth from accessing the government loans. The funds are set to receive a boost following President Uhuru Kenyattas declaration that the Sh6 billion allocated for election runoff would be redirected to creation of revolving funds for the youths and women. The money is loaned to groups at an interest below market rates. Borrowers are charged an interest rate of eight per cent compared to the average market rate of 18 per cent for unsecured loans. The borrowers are also not required to have security, unlike in normal lending where collateral or proof of regular income such as permanent employment is mandatory. Commercial banks are making money from the youth fund when the youths have no money, said the majority leader in Parliament Aden Duale. This is a serious recommendation on the access of the funds. The funds management agreed that saccos were popular at the grassroots because of their close interaction with the community. It was however quick to point out that the banks offered a wider variety of products than other financial intermediaries, making it necessary to give the youths an option based on their financial needs.

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A youth can easily get a guarantor to take a loan in a community-based sacco, said Youth Fund public relation officer Benson Muthendi. (In a bank) the youth choose what is best for them depending on their geographical location, level of their business, amount they require and other services provided by the institution, and which may not be related to the fund. The absorption rate of the funds has been low, with Parliament saying that commercial banks were to blame for introducing stringent and bureaucratic processes in accessing the funds. The parliamentary committee also recommended that the youth fund be restructured in order to ensure that the youths were trained on the use of the cash and accounting for resources as well as the type of projects that they should be involved in. Mr Muthendi said that the fund was exploring ways of directly relating with the youths such as transforming into a micro-finance institution. The funds were created in order to help tackle the problem of unemployment. Youths and women were to use the funds to start their own businesses to break the dependency syndrome and secure financial independence. gngigi@ke.nationmedia.com

Stima Sacco to issue cheque books to members

Saturday, March 23, 2013 - 00:00 -- BY MOSES KHISA Stima Sacco has launched a cheque book for its members to aid their transactions across the country. The initiative is a partnership with Family Bank and is part of the Saccos continued effort to boost its front office services and deepen Kenyas financial markets. The cheque book will be available to prime account holders before being rolled out to other members. Speaking during the launch, Stima Sacco chief executive officer Paul Wambua said the venture was also aimed at placing the Sacco on equal footing with other financial market players. We have seen growing interests from the micro finance segment as well as small and medium entrepreneurs and the cheque book in addition to other services we have been offering will make us equally attractive in the fast growing market,"said Wambua.

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Stima Sacco cheque book holders will benefit from ease in paying third parties, tracking their financial transactions as well as providing them with a secure payment method. The launch of the cheque book coincided with the Saccos annual general meeting at which the board of directors recommended a first and final dividend payment of 12 per cent per share on fully paid up shares. During the year under review, the Sacco recorded satisfactory performance, posting a surplus before tax of Sh237.8 million, which was an increase of 27 per cent compared to Sh187.2 million in 2011. Wambua said membership increased by 21 per cent from 12,831 in 2011 to 15,511 in 2012.

Stima Sacco hires 14 to boost services and grow revenue base

Updated Monday, June 3rd 2013 at 11:48 GMT +3 By Nicholas Waitathu NAIROBI, KENYA: Stima Savings and Credit Cooperative Society Limited (Stima Sacco) have embarked on an expansion plan. Chief executive, Paul Wambua said the financial services provider is keen to grow its business by opening new branches in parts of the country. In this way, he observed that business would grow by more than 300 per cent in the next three years (2016) through innovative products, services and branch expansion. To enable it pursue this goal, the union is seeking to recruit 14 new personnel. Those to be engaged include a branch manager, operations officer, branch credit officer, branch accountant, and procurement assistant. Others are two customer relations assistants, administrative assistant, four marketing representatives and two accounts assistants. Stima derives membership mainly from the power sector. Deposit taking business in the country has intensified with majority of financial institutions employing strategies to reach the unbanked. Wambua said the idea is to expand the branch network to tap on emerging business opportunities In our strategic plan we plan to open new branches in Nakuru, Nairobi, Mombasa, and Kisumu thus offering job opportunities to Kenyans, he said. Wambua said the new employees would be deployed in its branch in Nakuru as from next month. The other branches will be opened soon. The credit union, licensed by the Sacco Societies Regulatory Authority (SASRA) to carry out deposit taking business is diversifying its membership in order to register more businesses. As at end of April it had 17,000 members and intention is to expand the membership further.

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Mwalimu Sacco ups financial deepening with opening of Eldoret branch

Updated Monday, June 10th 2013 at 20:43 GMT +3 By TITUS TOO Mwalimu National Savings and Credit Cooperative Society has opened its fifth Sacco banking branch in Eldoret town. The branch which offers financial services to secondary and tertiary institution teachers in North Rift, becomes the latest financial institution in area to cater for an increasing number of tertiary institutions. We want to take banking services closer to our members countrywide. It will ease access to loans and advances among other financial needs of teachers, said Shem Motuka, Saccos national chairman. Motuka said the Sacco is embracing performance-contracting systems for effective service delivery. The new performance systems will ensure that members are served within the shortest time and also enable the Sacco achieve its financial targets, he said. He added that members of the Sacco are now receiving their salaries through the bank and can also process loans and other allowances with ease. Rose Sereti, a commissioner with Teachers Service Commission (TSC) said the institution will promote savings among teachers. With the new banking branch, secondary and tertiary institution teachers will save in their Sacco, educate their children as well as investing in property, she said. The commissioner also said TSC is decentralising its services to counties and that it will support growth of Sacco movements. Benjamin Teigong, the chairman of the Saccos supervisory committee urged members to utilise the financial services offered by the Sacco to better their living standards. Teigong said the institution is offering business loans that can financially assist members who are preparing for their retirements. Uasin Gishu County Governor Jackson Mandago said his county government would support Sacco movement in all sectors of the economy. Mandago said savings societies have clearly defined terms and minimal interest rates on loans and appealed to residents to join societies and boost their living standards.

Mwalimu Sacco opens loan-book lead over rivals

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A teacher at the Mwalimu Sacco offices in Nairobi. The sacco is the largest in the country. Photo/Isaac Wale By GEORGE NGIGI Posted Wednesday, 24 2013 at 19:34 July

Mwalimu Sacco, the largest savings and credit co-operative in the country, grew its loans book by Sh2.7 billion last year, solidifying its position as the top lender boosted mainly by growth in membership. Data from the Sacco Societies Regulatory Authority (Sasra) shows that Mwalimu Saccos assets (mainly comprising of loans to members) increased to Sh22 billion, while second-placed Harambee Sacco grew its balance sheet by Sh1 billion to Sh16.9 billion. Mwalimu Sacco, whose membership is mainly constituted of teachers, increased its membership to 52,664 from 49,040 a year earlier. The sacco has also opened its doors to spouses of its members. Mwalimus growth is because of the large catchment areas that they have all secondary school teachers, most of whom have stable incomes, said Sasra chief executive Carilus Ademba. As per the saccos website, the average savings per individual is Sh316,354. Other top lenders as per the Sasra data include Afya, Stima and the Kenya Police Sacco. The total number of licensed saccos rose to 130 and from 110 in 2012. Total loans issued by the institutions grew by 27.2 per cent to Sh159 billion, riding on the shift of borrowers away from banks, whose interest rates had risen to average at about 24 per cent for most of last year. Saccos have also been diversifying their loans to accommodate the needs of their members, offering construction and development loans, which are more long-term. The unions were also able to reduce their exposure to non-performing loans, which dropped by Sh600 million to Sh11.6 billion. The defaults constitute 7.3 per cent of the total loan book down from 9.6 per cent an year earlier. The shrinking bad debts book is different from that of the banking sector, which has been growing owing to high interest rates and slowdown in business activity in the lead up to the March General Election. Among saccos, non-performing loans are those that have not been serviced for more than one month, while for banks they constitute debt that has not been serviced for three months. Saccos are required to make provisions for the bad loans, which reduces their profits. 44

The total deposits held by the unions grew by 23.2 per cent to Sh148 billion. The saccos been aggressive in enrolling new members with some, such as Winas Sacco in Embu, carrying out media campaigns. Saccos are anchored in numbers; the bigger the numbers the better as they mobilise more savings, said Mr Ademba. He said the saccos involved in mobilisation programmes were licensed by the regulator and had to report to it every two weeks to ensure they dont bite more than they can chew. Paul Wambua, chief executive of Stima Sacco that is also expanding by opening branches outside of Nairobi, attributed its aggressiveness to changes in regulatory environment and need for additional capital. Saccos have a regulatory opportunity to expand our mobilisation of funds beyond our traditional base. We also need to grow and one source of capital is new membership, said Mr Wambua. The sacco has also partnered with Family Bank to allow its customers to issue cheques, similar to Unaitas Sacco which has partnered with ABC Bank. gngigi@ke.nationmedia.com

This is what youve lost by ignoring the Sacco AGMs

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Wananchi Sacco members at an AGM in Othaya town in 2012. The AGM is one of the best opportunities to raise questions. Photo/Joseph Kanyi By ISAIAH Posted Sunday, April 21 2013 at 15:02 In Summary

OPIYO

From this year, change tack, start attending these meetings and count the gains.

Perhaps you are one of those co-operators who dismiss Sacco annual general meeting invites. This way, you are telling yourself the event does not fit the bill. But, unfortunately, you are a member. Perhaps you need to drop this membership. This week, we are focusing on why attending the sacco AGM should, from this year, be one of the most important meetings to attend. I want to tie this argument to the Mahatma Gandhi thought of being the change that you wish to see in the world. Here we go: 1. Review resolutions The first agenda of any sacco AGM is often to run through the minutes of the previous meeting to remind members where the organisation is coming from and what it intends to do. It benefits those who attended and did not in equal measure because then one can take the managers or the board to task on some steps. Members should take keen interest in the minutes to confirm whether the resolutions reached during the past meeting were captured accurately. 2. To ascertain financial position and performance Before the date of the meeting, the directors prepare and circulate a copy of audited accounts for approval and adoption. The financial statement gives the membership a clear picture of performance and whether it is prudent to continue being a member, keeping the regular contributions constant, reducing the figure or raising it based on the returns. Therefore, before the AGM, go through the financial statements by comparing with the previous years to gather the trend of performance. If there is a decline, demand to know the underlying factors and propose ways and means of improving performance. 46

Lastly, you monitor revenue growth. Since dividends are paid on net profits, a member can propose how related expenses should be treated to improve future returns. 3. To get the outlook At the AGM, one gets the chance to gather how the directors are planning for future growth. Based on performance, the directors will propose either a dividend pay-out or retaining earnings. You should attend to raise issues on the earned profits for the past year. Importantly, members should read the recommendations of the auditors opinion on the financial statements as the true representation. 4. To network with future loan guarantors One of the key requirements in accessing a sacco loan is to have members with significant deposits or shares guarantee the proposed amount. This requirement is a challenge to many sacco members who want to borrow but have no one to guarantee. This may delay ones projects. At the AGM, one gets a chance to meet other members who are potential guarantors and promise you would return the favour. A wide network of sacco friends increases chances of getting easy access to loans, which, most times, are cheaper than other sources like the commercial banks. 5. Appraising directors The directors as the managers of the organisation must be appraised and members decide how to compensate them and decide their fate on the board. Like employees, the directors need to be remunerated as an incentive or reward for managing the sacco on your behalf. This depends on the performance score card. 6. To read your wish-list Members get the rare opportunity to raise issues outside the agenda of the day. The Any Other Business (AOB) session is where the real matters touching on your return on deposits would be discussed. It is the time to propose ways of enhancing sacco performance. This, probably, is why you should attend the forthcoming AGM. Mr Opiyo is a training manager and coach. isaiah.opiyo@toleranceadvisors.com

Bungoma Sacco rebrands

Tuesday, July 16, 2013 - 00:00 -- BY JOHN NALIANYA 47

Bungoma Teachers Savings and Credit Cooperative Society has changed its name to Ngarisha Savings and Credit Society withan aim of recruiting more teachers and non-teachersas well. The cooperatives CEO Chrispinus Barasa said the Sacco will compete with other micro-finance institutions in the region. We dont want to be seen as a Sacco that looks out for interes ts of the teachers only. We want to improve everyones living standards, Barasa said. He said the core activities of Ngarisha Sacco will be to give out loans and encourage their members to save. Speaking from his office, Barasa appealed to local residents to start saving with the Sacco saying that the more they save the more they will be entitled to bigger loans. He was accompanied by the Sacco chairman Gabriel Wasike and said they will offer loans at an interest rate of 7 per cent claiming its the lowest compared to other banks operating in the area. Barasa said the Sacco has already loaned Sh200 million to its members. Bungoma Teachers Sacco loaned out Sh640 million last year from Sh530 in 2011, according to the chairman Gabriel Wasike. He said the Sacco which re-brands today to 'Ngarisha Sacco Society Ltd' to widen its membership base currently has a financial base of Sh800 million in form of deposits and share capital and a membership of 4,795. The re-branding of the society will obviously give it a national face to enable it venture into micro credit market segment which the Sacco is striving to start, said Wasike. The Sacco has introduced a new concept known as spot cash that allows members to withdraw or bank their cash using their phones. The society owns the prestigious Sacco plaza in Bungoma town.

Asili Sacco assistant accountant charged with Sh22m theft

Tuesday, June 4, 2013 - 00:00 -- BY ALPHONCE MUNGAHU An assistant accountant at Asili Sacco was yesterday charged in a Nairobi court with stealing over Sh22 million from the society. Milicent Kananu Kaaria denied the charge before senior principal magistrate Lucy Mbugua who ordered her to be remanded until Thursday to enable police complete investigation before granting her bond pending the hearing of the case. The prosecution led by chief inspector Daniel Musangi told the court that detective needs more time to wind up investigation into the alleged theft by servant offence. The prosecution request was granted by the court. The charge against the accused person states that June 29, 2012, at Asili Sacco in Nairobi county, jointly with others not before court, being servant to the Sacco as accountant assistant stole Sh22,046,176 which came into her possession by virtue of her employmen 48

Kakamega Teachers Sacco to pay Sh1.4m for unlawful sack

Updated Friday, June 7th 2013 at 00:17 GMT +3 By MAUREEN ODIWUOR A Teachers Savings and Credit Society in Kakamega is to pay Sh1.4 million for terminating three employees illegally. The three were dismissed from employment after Sh1.1 million disappeared from Kakamega Teachers Savings and Credit Cooperative Society Ltd. The Kenya Union of Commercial Food and Allied Workers filed the suit on behalf of Adelaide Lichira, Ann Masiva and Sammy Malova, citing unlawful termination of employment in January 5, 2011. In her judgment, Kisumu Industrial Court Judge Helen Wasilwa ordered that each claimant be paid a years salary as compensation of the unlawful termination. The first claimant Lichina, whose monthly salary was Sh21, 045 will get Sh252, 540 while Masiva who used to earn Sh24,790 will be given Sh297, 480. Mr Malova is to receive Sh278, 400. The Judge also ordered that each of the claimants be given a pay equivalent to half a months salary for each year they worked; the first claimant who worked for 18 years will receive Sh189, 405. Masiva who served for 23 years will get Sh285, 085 while the third respondent who only worked for one year will get Sh11, 600. In total the three will receive Sh1, 383,545. The court ordered that each of the claimants be issued with a certificate of service and their former employer pays for the cost they incurred on the case. The fraud is suspected to have been committed between February and April 2008.

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Mwalimu National Teachers Sacco rolls out housing project

Updated Monday, June 17th 2013 at 21:36 GMT +3 By Augustine Oduor Nairobi, Kenya: Teachers are set to benefit from a multi-billion housing project that will see each of them own a house of up to Sh4.5 million. The Mwalimu National Savings and Credit Society announced that it is working on an elaborate housing scheme for all its 53,000 members. In addition to this, the Sacco has acquired a piece of land in Nairobis Upper Hill area to construct a Sh1.5 billion complex to host its headquarters. This means that the current teachers Sacco offices situated along Tom Mboya street will be relocated to the new 15-storey building to be completed in two years. The Chief Executive Officer of the Sacco, Joshua Ojall, said these are some of the major projects lined up to make teachers comfortable. He said all member teachers will soon be able to choose one to three bedroom houses in the first phase of the project to be piloted in Nairobi. Ojall said Juja and Kitengela areas in Nairobi have been identified for the pilot project. The nearer the house is to the city the more costly it will be because land is more expensive as you move closer to Nairobi. But the houses to be constructed in an eighth of an acre plots will range from Sh2.8 million to Sh4.5 million, he said. Nationwide strike Teachers through their unions are still pushing for a 50 per cent of their basic pay as housing allowance from the Government. This is one of the issues in the 1997 Legal Notice that Kenya National Union of Teachers (Knut) has registered as a concern in the coming nationwide strike. Ojall however said teachers will have an opportunity to chose the design of their house. They will tell us their taste so that the homes are customised as per their wish, he said, adding the project will be rolled out to other counties immediately the Nairobi project is complete.

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Benefits of using Sacco savings scheme to plan retirement

Last month, while I was watching the IAAF Diamond athletics competition, I noticed some unfortunate event occurred on the track. In one of the marathon competition, a leading athlete in got exhausted and dropped off the race on the last lap to the finish line. It appeared ridiculous that an athlete who had put many years and a lot of effort into preparation for this marathon competition would drop off the race. Similarly, this is what happens to many income earners who spend many years doing personal financial planning in order to enjoy their desired lifestyle only to get exhausted at the finishing line - by not having a retirement plan in place to cater for their livelihood during the sunset years. Just like any marathon athlete would not wish to start on a high pace only to lose energy on the last lap to the finish line, any income earner would not want to work forever and savings is therefore critical to retirement planning. Many a times in our daily endeavours, we are confronted with two major fears that largely influence the nature and choice of our personal financial plans. This revolves around the fear of premature or untimely death and the fear of prolonged life. The former is associated with the financial loss and the inability that comes when death occurs prematurely before one accomplishes his financial ambitions.

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The fear of prolonged life on the other hand is usually mute and only emerges at a later time in life when one is retired, weary and old to fend for his financial needs. This is what creates the need for retirement plans such as pension schemes and annuities as a means of financial livelihood for the retired. Lack of such plans makes life at old age unbearable and many retirees at this stage loose the focus in any financial ambitions and mostly rue the essence of long life spans. With the heightened economic conditions, many income earners are looking for retirement plans that would not only provide them with a regular source of income to afford a decent lifestyle at their sunset years but one with a cash value that they can use to as collateral for any lending or for their mortgage in their lifetime. This double benefit is what lacks in many convectional retirement plans. Many of these convectional retirement plans are tailored only to cater for the benefit of providing the retiree with a regular source of income and sometimes limited to be used as collateral only for mortgage plans. This limitation affects many potential income earners who would wish to use their retirement plans to secure lending for their other personal financial plans. With all these challenges, many income earners are now shifting from convectional retirement plans to saving for their retirement through sacco savings schemes. Unlike initially when sacco schemes were only used as avenue to access affordable loan facilities, today they are doubling up as alternative schemes for retirement plans. Lets take the case of Jack, a 32-year-old employee who wants to retire from active employment by 2040 with a regular monthly retirement income of Ksh.50,000. Assuming that Jack opts to plan for his retirement through his sacco scheme, he will be required to make monthly contribution to the sacco. Assuming that his sacco would give a conservative dividend of 10 per cent per annum for the next 28 years, if Jack opts to cash on his yearly dividend income without reinvesting the same, he would be required to have accumulated Sh6 million by 2040. With an accumulated deposit of Sh6 million and at a conservative dividend of 10 per cent, Jack will earn Sh600,000 per annum which translates to a monthly retirement income of Sh50,000 each year. Conversely, to accumulate a deposit of Sh6 million over 28 years, Jack will have to make a saving contribution of Sh214,286 per annum; a figure which will translate to a monthly saving of Sh17,857. It is also important to note that at a conservative dividend of 10 per cent per annum, Jack will earn a dividend of Sh21,427 at the end of first year, Sh214,286 on the tenth year and Sh428,572 on the twentieth year. This is if he decides to withdraw his dividend payments every year. This annual payment may increase if Jack opts to reinvest his dividends payment he receives every year into the sacco. By planning for his retirement through the sacco saving scheme, Jack can opt to borrow from the sacco against his deposit to achieve his other financial plans such as building his residential home without interfering with his ongoing savings plans for retirement. Opiyo is a Training & Coach with Tolerance Employee Financial Advisors Limited. 52

Saccos weighing up youth schemes

Updated Sunday, July 14th 2013 at 23:19 GMT +3 By James Anyanzwa Nairobi,Kenya:Savings and Credit Co-operative Societies ( Saccos) are re-thinking their business models in a bid to survive growing competition for deposits from commercial banks. The Saccos latest change in strategy involves an escalation of its target market by bringing under its armpit a more vibrant, dynamic and ambitious youthful population, which constitutes more than 50 per cent of the population. Saccos reckon that part of the goodies lined up for youth include an interest rate of up to eight per cent on loans compared to the standard 12 per cent. The Kenya Union of Savings and Credit Co-operatives (KUSCCO) has also underscored the need to plug the generational and succession leadership in co-operatives in order to attract the youth through the use of technology, sports and employment creation. We are encouraging our members to issue SME loans to our youth on easier terms if possible up to a maximum of eight per cent to enable them participate in businesses, said KUSCCO Managing director, George Ototo. The move is part of the Saccos growth and expansion strategy aimed at consolidating their deposit base and bolstering their revenue reserves through diversification and extension of their niche markets. Saccos contend that they are facing financial constraints due to their model of lending Sh3 to every Sh1 saved to their members, a situation that has prompted them to consider new way of raising additional revenue including issuing an infrastructure bond. excise tax The matter has further been worsened by the National Treasury s introduction of a 10 per cent excise tax on money transfers by Saccos, microfinance institutions (MFIs) and Kenya Post Office Savings Bank. The societies whose combined asset base stood at Sh293 billion last year are facing serious competition from banks, a scenario partly blamed on their exclusion from the national payments system and clearing house. Banks such as Kenya Commercial Bank and Equity have also come up with products targeting the youth.

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Saccos eye bonds market to raise capital amid lean times

Updated Friday, July 12th 2013 at 22:55 GMT +3 By James Anyanzwa Savings and Credit Cooperative Societies ( Saccos) are considering new avenues of raising cash to shore up their cash-flow positions, which they say are currently under pressure. The Kenya Union of Savings and Credit Cooperatives (KUSCCO) said its members should consider tapping into the debt market by issuing infrastructure bonds to remain afloat. The body said its members are currently facing liquidity constraints due to their model of providing Sh3 to every Sh1 saved to members inform of loans. KUSCCO Managing Director George Ototo said Saccos should also consider introducing new products and participate in real estate investments through the Real Estate Investments Trusts (REITs). The issue of liquidity has been a challenge to us and hence Saccos need to consider floating infrastructure bonds, said Ototo. Saturated market Mr Ototo was speaking during a Finance Services Conference and Exhibition in Nairobi on Thursday. Going by recent subscription trends to both Treasury and Corporate bonds offers in Kenya, it is evident that Kenya has a huge potential. In 2009 for instance, the Government was able to raise a significant amount of funds to finance infrastructure development through the first 12-year Sh18.5 billion infrastructure bond which was oversubscribed by 45 per cent attracting a total of Sh.27 billion against a target of Sh18.5 billion. Similarly, the CFC Stanbic bond, the KenGen Infrastructure bond, the Safaricom bond and the government of Kenyas second infrastructure bond were equally over-subscribed. Mr Ototo said Saccos are already operating in a saturated market due to competition from commercial banks. Accountability He said Saccos should rebrand and open branches in areas where they do not exist. 54

 Saccos have remained a little bit traditional compared to banks, said Ototo, adding that 35 Saccos have so far rebranded in order to have a national appeal, increase membership and recruit more members countrywide. The Government through the ministry of Cooperative last year reckoned that governance has been a challenge to the co-operative sector for a long time. It is argued that though a few boards have institutionalised the tenets of governance in their management systems, they have not committed themselves to the principles of accountability and transparency. The success of any Sacco is benchmarked on good leadership, which requires societies to embrace prudential standards to guide their operations. Sacco leaders are expected to be innovative to produce financial products that are demand driven and attractive to their members. However with the new Sacco law, the Sacco Societies Regulatory Authority (SASRA) has moved to increase supervision and surveillance of Saccos.

Machakos Sacco cautions against rogue land sellers

Wednesday, July 24, 2013 - 00:00 -- BY WAMBUA KAVILA Katelembo,Muputi and Athiani co-oerative society in Machakos has warned land buyers to be wary of con men purporting to sell land on behalf of the society. Society secretary Daniel Kasinga said tricksters were taking advantage since the society undertook an exercise to allocate members 2,000 half acre plots in Kyumbi at the Machakos turn-off area. He said it is unfortunate that some members had lost their parcels after conmen sold them to unsuspecting buyers. "Those who want to purchase land from the society must get transfers from our office," Kasinga said. Katelembo, Muputi and Athiani Co-operative Society in Machakos will issue 2,000 title deeds to its members in the coming month. This was disclosed yesterday by society secretary Daniel Kasinga who said the titles are for half acre plots that it recently allocated to the members. He said majority had paid for the titles and processing of the document is at an advanced stage with the lands ministry. "With the titles, the members will now be empowered economically as they can secure bank loans to develop their land and engage in economic activities," Kasinga said. He said it is unfortunate that some members had lost their parcels after fraudsters sold them unsuspecting buyers. "Those who want to buy land from the society's parcel have to get transfers from our office and nowhere else," Kasinga said. He said only 72 interested buyers had approached the society for transfers in recent months to sell off their parcels. Others have claimed that they bought the land from us after they were tricked. Meanwhile, Kasinga lashed out at a Machakos tycoon who had illegally acquired society land and sold it off and was now inciting members against the management to cover his evil deeds.

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Kasinga said the management is streamlining operations of the society which has been affected over the years by bad management and haphazard disposal of society's assets. Katelembo society owns the most lucrative land in Machakos town which stretches from the town to Mombasa road at the Makutano area better known as Kyumbi. Half an acre which used to cost Sh100,000 two years ago,now fetches between Sh800,000 to a million. as scores of potential land buyers and speculators have invaded the area.

Insurance, Sacco fees to attract 10% tax

Monday, July 22, 2013 - 00:00 -- BY WINFRED KAGWE

Insurance companies, Saccos and postal money services will have to remit 10 per cent of excise duty on all transaction fees introduced this year, alongside banks and mobile money transfers. This follows a clarification made by the Kenya Revenue Authorirty on the Finance Bill 2013. KRA said in a public notice that the term 'financial institutions' has now been defined to include persons licensed under the Banking act, Insurance act, Central Bank Act, Sacco Societies act and Kenya Post Office Bank. The excise duty shall be charged at 10 per cent of the excisable value and shall become due when the service is purchased by the customer. The service providers are expected to remit the collected taxes by the 20th day of the succeeding month KRA also clarified that the interest charged on consumers will not attract the excise duty. "Other fees is defined to include any fee, charge or commission charged the by financial institution but excludes interest," said the commissioner of domestic taxes in a public notice. The 10 per cent duty introduced by the Finance Act 2012 to help the government close part of a Sh40billion budget deficit. Treasury expected to raise upto Sh4.5 billion annually form this. The duty came into effect on January 9 this year. But its implementation among financial institutions was delayed after the Kenya Bankers Association got a court injunction against KRA arguing that excise duty should be levied on goods and not services. However the court eventually ruled against the bankers. 56

Commercial banks have now asked KRA to give them more time to change their systems and be able to capture the new tax in their charges. The excise duty for June was expected to be paid by July 20. The hurdles in collecting the excise duty (combined with non-passage of the VAT Bill 2012) saw KRA adjust its revenue target for 2012/2013 downward by Sh99 billion according to KRA Commisioner General John Njiraini. On the other hand, Safaricom which operates the biggest mobile money transfer service, immediately passed on tax to its M-pesa consumers in February. Essar Telecom, which operates yuCash, also added the tax to its transaction fees.

Sony Sacco to open front office services this year

Tuesday, July 23, 2013 - 00:00 -- BY MANUEL ODENY SONY Sugar Sacco which recruits Sony Sugar Company permanent employees will open front office services by the end the year. Sonygar chairman Andrew Omugah, during the 34th Annual General Meeting at the weekend said the move will follow expansion. He said they will target non-permanent workers and other staff to join the Sacco. Omugah said they will increase member monthly contribution from Sh813 by to Sh2,000 in the financial year. We have boosted members confidence after an audit showed more than Sh5 million was misappropriated by the previous officials which will be recovered, Omugah said. It is the biggest Sacco in Awendo District with membership contribution of Sh5.3 million. Sonygar is set to be selling off a 8 hectares plot of land in Kisumu which has already been subdivided into 64 plots and will fetch about Sh8 million, Omugah told shareholders when reading audited reports. The Saccos 15 per cent of Sh21.2 million loan acquired in the last financial year is yet to be repaid.

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Murang'a boda boda men launch Sacco

Thursday, July 18, 2013 - 00:00 -- By JESSE MWANGI Muranga governor Mwangi Wairia yesterday launched a boda boda Sacco for motorcycle operators. Wairia also pledged Sh5 million for the union which he said will empower the youth who are the majority in the sector. Wairia said funds from his government will be saved through savings and cooperative societies whose members are the 5,000 operators. The governor asked the operators to avoid spending earnings on alcohol and instead save the money for future use. The Sacco was launched at the Maragua Catholic Church hall. Wairia said the motorcycle operators earn an average of Sh500 per day which translates into Sh2.5 million daily. There is a lot of money in the sector but it all ends ups with liquour brewers as majority of our youth are drunkards, he said. He said there is a huge amount of cash circulating in the county especially in the transport sector and called for its optimum utilisation. Wairia said the Sacco will be formed according to the law and he will monitor its daily operations. We also want them to own their own motorbikes for those who are employed in the industry, Wairia said.

KUSCCO named best Sacco with highest growth rate

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Updated Thursday, July 25th 2013 at 22:33 GMT +3 KUSCCO Ltd, the umbrella body for Saccos, has been awarded the 2013 Winner of World Council of Credit Unions (WOCCU) outstanding membership growth award. The award recognises that Saccos in Kenya have the highest growth rate globally. It was given in the just concluded 2013 WOCCU conference, held in Ottawa, Canada. Kenya and the US achieved remarkable growth in membership, while Brazils Credit Unions reported an increase in assets last year. KUSCCO Ltd reached 25 per cent membership growth among 5,000 Credit Unions, increasing from 4.2 million members to 4.7 million. The US Credit Union National Association added 2.1 million members. George Ototo, Managing Director, KUSCCO Ltd said countries introducing Sacco regulations should avoid the cut and paste tendency and the one coat fits all syndrome, as regulation in one country might not fit in another.

Teacher dies at Sacco office

Thursday, July 25, 2013 - 00:00 -- BY GILBERT KIMUTAI A primary school teacher in Konoin district collapsed and died on Monday at a Sacco where he had gone to request for a salary advance following the delay in payment by the government due to the teachers' strike. The Kobor Primary School teacher collapsed and died at Kapkatet Imarisha teachers Sacco after he was told he could not get an advance payment. "The teacher looked healthy and when he was told it was not possible for him to get the money he look depressed and collapsed. Several minutes before he was rushed to hospital he died," said an official at the sacco. Teachers in Bomet have blamed the government for the demise of their colleagues saying the decision to deny teachers salaries during the strike exposed them to "social suffering". Knut Bomet branch chairman Francis Tonui said the government condemned teachers to death by witholding their pay. "The government should know that it has condemned one of our own to death ," Tonui said. Knut Bomet executive secretary Malel Langat said the Salaries and Remuneration Commission chair Sarah Serem should not have told TSC not to pay teachers' their July Salary. "In the back-to-work formula we signed no teacher will be victimised but the SRC wants to deny them their salary," Langat said. 59

How Sacco Societies can retain senior citizens as lifetime members

During the recent Ushirika Day celebrations hosted in Nairobi, I encountered Gaudencia, a 75year-old retiree, who had joined her Sacco members to celebrate the International Co-operative Day. Since she retired from public service almost a decade ago, Gaudencia has continued to retain her membership in the Sacco despite loss of her monthly payslip. But she intimated that some of her peers rushed to terminate their sacco membership on retirement to access their deposits. She revealed that her borrowing appetite had declined as she has no regular source of income to commit for loan repayment. This, she said, is one of the numerous reasons why many retirees opt to walk out of their saccos. Retaining retirees as lifetime members is a challenge for many saccos, yet retirees control substantial amount of deposits and assets in saccos. Any mass withdrawal would lead to erosion of deposits and share capital base. Below are ways saccos can nurture lifetime membership among retirees: Create a unique membership category for retirees Retirees have unique needs that may not be fully met by the conventional sacco products and services. This is because they have low borrowing appetite and sometimes they may be devoid of a regular source of income to commit to regular savings contribution. Saccos can create a unique membership category to cater for such. This category of senior citizen would have unique features such as low minimum monthly saving contribution or no monthly savings contribution but with a compromised dividend payment rate. Provide dividend management plan and advisory Paying dividend income earned from the sacco in lumpsum may disorganise retirees financially, especially those who have no regular income and have to meet their monthly saving contribution set by the sacco. The sacco can provide a dividend management plan that would involve making some cash deduction from the dividend income earned to cater for the required monthly savings contributions while the balance is distributed into a monthly income. Develop unique savings product A significant income earned by retirees goes towards medical expenses for recurrent illnesses associated with old age. Since majority of retirees would be tempted to withdraw their deposits from the sacco to cater for such expenses, developing a saving product that has a medical cover component to augment medical expenses would go a long way. Nominate retirees as mentors or ambassadors of the Sacco 60

Retirees can be given opportunity or roles as mentors to shares with younger members why they need to enhance their savings contribution and retain their membership in the sacco for their whole lifetime. Establish an estate planning scheme Since the retirees could also be worried about future security and use of their deposits should they pass on abruptly, you can establish an estate planning scheme where they would be encouraged to nominate any of their preferred beneficiaries or next of kin to join the sacco as a member whilst they are still alive. The beneficiaries would enjoy the borrowing platform on their behalf and should they pass on, the beneficiaries will inherit the retirees deposits but with a caveat of not withdrawing the deposits of the deceased but enjoying the monthly incomes. Mr Opiyo is a training manager and coach with Tolerance Employee Financial Advisors Ltd.

MP Gideon Mwiti Irea denies role in Sh780m pyramid scheme

Imenti Central MP Gideon Mwiti Irea. In the case the prosecution says Mr Mwiti cheated and induced 12 complainants to deposit their money under the guise that they would earn a monthly interest rate of 16 per cent. By VINCENT AGOYA vagoya@ke.nationmedia.com Posted Monday, July 29 2013 at 18:40

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A Member of Parliament who investigators have linked to a pyramid scheme which collapsed with over Sh780 million in members contributions on Monday disowned the company he allegedly used to receive the money. Imenti Central MP Gideon Mwiti Irea told a trial court in Milimani, Nairobi, that he was not behind the Kenya Business Community Sacco which the government shut down for engagement in illegal banking business. The MP was defending himself before a magistrates court in a case of cheating where 12 complainants claim he swindled them of millions of shillings while acting as the Sacco general manager. My role was purely consultancy I was a businessman in Nairobi in 2004 running a company called Kenya Akiba Micro Finance Limited, I was only consulted on regulatory by-laws being a lobbyist for a law seeking to regulate micro-finance institutions and this climaxed with the enactment of the Micro-Finance Act 2006, Mwiti said. In the case, the prosecution says that Mr Mwiti cheated and induced 12 complainants to deposit their money under the guise that they would earn a monthly interest at the rate of 16 per cent. The court was told that the offences were committed between January 12 and July 26, 2007. He denied participating in the registration of the Sacco, whose members took him to court, and dismissed the case as malicious. A government task force formed to investigate the scam in 2007 linked the MP to Kenya Business Community Sacco , Kenya Multi-Purpose and Kenya Akiba Micro Finance which was recently awarded Sh2 billion for wrongful closure after the MP went to court seeking damages. The prosecution said the MP was feigning ignorance about the operations of the Kenya Business Community Sacco but he objected saying the only contact he had with it was when he was consulted during its formative days. It is a registered entity and its officials are known, he said. Prosecutor Robert Kyaa suggested to Mwiti that he knew the people accusing him well as they invested in the scheme and entered into contract with the organisation officials, but he denied ever making contact with the complaints. I did not see them... I was not party to the day to day running of the business and I did not sign any of the investment contracts, the MP said. He said the people named in the case were total strangers to him while he only came to meet others in court after his arrest in 2007.

Judge declines to reverse orders on ex-Sacco staff

Updated Wednesday, July 31st 2013 at 23:42 GMT +3 62

By Maureen Odiwuor Kisumu, Kenya: Efforts by a teachers savings society former employees to have a court order sacking them reversed, have been thwarted. George Nyatama, Joel Makaburi and Huruni Birundu had returned to the Industrial Court to have Justice Helen Wasilwas judgement touching on their term at Gusii Mwalimu Savings and Corporative Society reversed. Justice Wasilwa had ordered against the Sacco reinstating employment of the claimants after three years of retirement, adding it was imprudent according to section 12(3) part six of the Employment Act 2007. An order of reinstatement of any employee after three years of dismissal is considered subject to three years cupping and so it will not be prudent to order reinstatement, she said. Tuesday, the judge declined to review her orders on grounds the three had retired and paid all their dues. She upheld her decision in which she found the claim that they were retired prematurely, unlawful. The judge maintained that they each be paid a years salary as per the last pay compensation for unlawful retirement. In the review, the three said they wanted to be reinstated because they had not been out of employment for three years, saying they were on leave and were paid salary up to September 2011 hence their year started in October. The Sacco however opposed the judicial review stating the application does not meet threshold for review. The three claimed they had been retired prematurely and filed their statement on July 26 2011. They gave evidence before court claiming that they were retired before reaching 55 years of age which was then mandatory age of Public Service.

Order on teachers pay saves lenders from defaults

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President Uhuru Kenyatta meets Kenya National Union of Teachers officials when they called on him at State House in Nairobi on Monday. Photo/PSCU By DAVID HERBLING Posted Monday, August 5 2013 at 20:37 In Summary

President Uhuru Kenyatta on Monday met Kenya National Union of Teachers officials and promised them tutors would be paid their salaries in full. The TSC had released the tutors pay on Saturday, in which a section of primary school teachers were only paid for the 10 days they worked in July.

Banks and saccos are counting on Mondays presidential directive for teachers to be paid their full salaries to save them from massive loan defaults. The Teachers Service Commission (TSC) released the tutors pay on Saturday, in whic h a section of primary school teachers were only paid for the 10 days they worked in July. This saw the lowest paid public primary school teacher get about Sh6,500 which would have been deducted to settle loans and advances. If the balance of the cash is not paid immediately and has to wait for the next payslip, saccos are staring at short-term liquidity problems and depressed interest income from the check-off loan schemes. Metropolitan Teachers Sacco confirmed that it had only recovered 60 per cent of total monthly loan repayments after processing July salaries for its members on Monday. Our cashflow will be greatly affected and this will have an adverse effect on our operations, Benson Nganga, finance manager at Metropolitan Sacco told the Business Daily. We will make internal arrangements to reschedule the loans, but the delayed interest income will have revenue implications for us. 64

The magnitude of the salary deductions is highlighted by the fact that primary school teachers make up roughly two thirds of Kenyas public teachers workforce totalling 278,000 tutors. Furthermore, teachers saccos had advanced loans worth more than Sh100 billion as at the end of last year, data from the Sacco Societies Regulatory Authority shows. Metropolitan Saccos loan book stood at Sh3.8 billion as at June lent out to its 40,000-strong membership made up mostly of public school teachers. Mr Nganga said that the Sacco was only able to recover Sh60.6 million out of the expected Sh100 million. The Teachers Service Commission ignored the one-third rule in making the payments, allowing financial institutions to raid teachers payslips, leaving some with a take-home of as low as Sh60. The Employment Act provides that total deductions from a workers salary and wages must not exceed two-thirds of ones total pay. This means that the teachers are entitled to receive at least a third of their salary regardless of whether they had taken up loans, advances, medical schemes and private pension plans. The teachers pay was dispatched as President Uhuru Kenyatta met Kenya National Union of Teachers officials and promised them tutors would be paid their salaries in full. Secondary school teachers and those in public colleges were spared of the deductions because the Kenya Union of Post Primary Education Teachers (Kuppet) called off its strike and engaged TSC in negotiations. The Kenya Bankers Association said that lenders are yet to evaluate the possible effects of the salary deductions on loans and advances. We have not compiled data on teachers loans. This is a matter that is a decision of individual banks, said chief executive Habil Olaka. The giant Mwalimu Sacco with a membership base of 52,664 and a loan book of Sh18.9 billion is set to be hardest hit. The loans will be rescheduled and well recover them over a longer period, said Mwalimu Sacco chief executive Joshua Ojall. Giving out more loans will be a challenge as our cash flow will be affected, he said before the president ordered the release of the cash. Public servants such as teachers have been a prized target for banks and saccos wooing them with cheaper loans, salary advances and top-ups due to the security of tenure they enjoy. Special packages Most banks have developed special packages for teachers in the form of unsecured loans. For example, Family Bank offers unsecured loans of up to Sh3 million repayable in 72 months to civil servants through the check-off system.

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Saccos allow members to borrow as much as three times their deposits and offer interest rates as low as one per cent per month. Our members who suffered the effects of the high commercial bank interest rates in 2011 returned to the sacco to sell off the bank loans, said Mr Ojall. The unprecedented move by the TSC to deduct teachers pay raises serious questions on the security of giving loans to civil servants. Metropolitan said the defaults would have forced saccos to make higher provisions for loan losses this year, eating into their surplus earnings. hdavid@ke.nationmedia.com

MP accused of promoting ponzi scheme

By VINCENT AGOYA Posted Tuesday, August 13 2013 at 18:53 In Summary

Mr Mwiti is charged with inducing by deceit and trickery 12 investors to put money in the Kenya Business Community Sacco that went down with Sh780 million in 2008 following a government purge on illegal banking institutions.

South Imenti MP Gideon Mwiti will know on October 4 whether he will be jailed for three years in a case where he is accused of promoting a pyramid scheme. Mr Mwiti is charged with inducing by deceit and trickery 12 investors to put money in the Kenya Business Community Sacco that went down with Sh780 million in 2008 following a government purge on illegal banking institutions. He is accused of obtaining Sh13 million from the investors in the guise that their contributions would grow at a 16 per cent monthly interest rate. The offence is defined as a misdemeanour in section 315 of the Penal Code. Mr Mwiti, however, contends he was not a beneficiary of the lost funds and blamed the complainants for not getting the money from the government, which shut down the business. He said he was an external consultant to the Kenya Business Community Sacco during its formative stages and that he was not a shareholder or manager. Mr Mwiti has another criminal case on the matter set for hearing on September 26.

Kililfi Teachers Sacco Rebrands

Monday, August 12, 2013 - 00:00 -- BY ELIAS YAA

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KILIFI teachers Sacco has rebranded in its bid to go national and international. The Sacco changed its name to Imarika Sacco and is expected to open branches outside Kilifi County, where it has been operating, and the Coast region. The Sacco is the biggest in the Coast region. Speaking during the rebranding luncheon in a Kilifi hotel on Friday, the Sacco CEO Daniel Masha said the rebranding will enable the Sacco to reposition itself as a financial institution that can be accepted nationally. This Sacco has grown with its members and the community of Kilifi county," he said.

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