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Finance and Investment

DIMKES SACCO wins community through SME loans



One Sunday afternoon in 1999, a few ladies from Mother’s Union met and decided to do table banking. The group was called Mother’s Union SACCO and it started by saving Sh200 which later grew to Sh500. Now, 23 years later, it has grown to the current over 31,000 members. Dioceses of Mt. Kenya South SACCO (DIMKES) has its headquarters at the heart of the bustling Kiambu town, which is not only agricultural but also a business hub. With a vision; ‘To be a world-class deposit-taking SACCO anchored on Christian values,’ the SACCO has branches in Ngong, Kiserian, Kangemi, Wangige, Banana, Kikuyu, Nairobi and Limuru, Kimende, Ruaka, Kiambu and Githunguri,

Dimkes SACCO was licensed by the SACCO Societies Regulatory Authority (SASRA) as a deposit-taking SACCO in 2010. Despite challenges faced during the Covid-19 pandemic including loan delinquency, closure of members’ businesses, low loan demand, tough working environment, and reduced volume of transactions by members, the SACCO emerged victorious in this year’s Ushirika Day winning three accolades; Kiambu County, 1st place,Most Improved SACCO, Nationally, 2nd place, Most Improved Community-based SACCO and Nationally, 3rd, Best in savings, deposit-taking community-based SACCO. Further, the SACCO’s total loan portfolio has grown to Sh1.8 billion at the close of 2021, with 90 per cent of it allocated to SME lending.


The SACCO Star team met with the SACCO’s energetic and passionate managers who shared more insights on lending to Small and Medium Enterprises (SMEs).  

Benson Maina, Chief Executive Officer, Dimkes SACCO

What is the name and what are the features of the SME products?

We have FOSA loans tailored for SMEs including:

Development loans to assist members construct both residential and commercial houses.

Landlord loans are issued at a maximum of Sh2 million, secured with a deed of rental assignment and loan repayment of 36 months. Landlords can also access a rental advance which is a short-term loan payable within 3 months up to a maximum of Sh500,000.

Asset Finance loans facilitate members to buy assets including motor vehicles.

What does TIFI mean and how have you applied it in the SACCO?

TIFI is an acronym meaning Technology and Innovation for Financial Inclusion which has developed an SME lending toolkit to reduce credit risk for SACCOs lending to SMEs, as well as streamline and simplify SME lending processes, thereby cutting the associated costs. We embarked on pilot testing of the SME loan underwriting tool based on the 5Cs of credit scoring for new SME loan applications.

What are the technological innovations you have put in place for a smoother and more convenient lending process for SMEs?

We are in the process of integrating the new credit scoring process into the core-banking system to reduce the turnaround time for SME credit applications.

We capture data obtained from our members through loan cards/forms which are uploaded into the system. This ensures we have all the information required to enable us to score loans using the SME loan underwriting tool.

The SACCO has a ‘Paybill’ number and ‘Lipa na M-Pesa’ option to ensure that members can transact with the SACCO more conveniently. It also has a Mobile App called ‘M-chipuka’ accessed through dialling the USSD code *645#, which members use to access loans, make deposits and withdraw money.

What risks do you face when lending to SMEs and how does the TIFI model de-risk lending to this sector?

One of the challenges we face is asymmetric information where the borrower does not disclose adequate information about his or her financial affairs. In addition, some SMEs do not keep proper books of accounts or records for their business transactions making the appraisal process a bit cumbersome. We continue to offer more capacity building to our members to see the need for bookkeeping and daily transaction recording since it enables the SACCO to undertake better credit assessments based on reliable financial statements. On the other hand, the loan officers undertake site visits to the borrowers’ premises to ascertain that the borrower has given correct information about their business. TIFI loan underwriting tool also enables the loan officer to collect adequate information that supports objective credit decision-making.

Secondly, from our experience, SMEs are net borrowers who seldom keep funds in their accounts and thus the SACCO strives to provide products and services which appeal to and offers incentives to promote a savings culture.

Lastly, lending to SMEs is riskier compared to lending through check-off. It’s a bit hard to correctly price these loans commensurate to the risk since the market rates appear to be capped. The risk-based lending approach already started by the banks will pave way for better pricing of SME loans thereby incentivizing financial institutions including SACCOs to lend more to SMEs.

How have you applied the 5Cs of lending?

The diagnostic tool already has the 5Cs of lending in-built namely, Character, Capacity, Conditions, Collateral And Capital. The tool also provides the income and expenditure information, as well as the balance sheet to enable one to make sound decisions on whether the SME has the capacity to repay the loan. It also has options to fill in information about unsecured collateral or guarantors.

So far, the SACCO has used the tool for six months disbursing 12 loans with zero PAR.

In numbers

  • Approximately KES.500-600 million of the loan book is used for SME lending
  • Minimum loan issued-KES.500,000
  • Maximum loan issued-KES.1.5 million
  • Number of loans issued-12
  • Portfolio at Risk (PAR)- 0%
  • Loan repayment period: 36 months
  • Turn-around time- Before using the credit scoring tool- 15-30 days
  • After using the scoring tool- 5-7 days

3.    From left: (standing) Alfred Orora, Country Co-ordinator, WOCCU, Dimkes SACCO staff; Dominic Mwangi, Credit Manager, Patrick Kiruki, Internal Audit Manager, John Kimani, Finance Manager.
From left: (sited) Linda Karimi, Corporate Affairs Executive, KUSCCO, Dimkes SACCO staff; May Mbugua, Human Resources Manager and Salome Muthike, Business Development and Marketing Manager 

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Finance and Investment

Yetu SACCO Explores New Frontiers with NEW BRANCHES

Hon. Patrick Munene, Chuka Igamba Ngombe Constituency officially opened the Yetu SACCO Chuka town branch this year



By Linda Karimi

Yetu SACCO, formerly South Imenti Tea Growers SACCO Ltd, opened its seventh branch in Chuka town to attract new members and increase market share.

The 32-year-old SACCO has its head office in Nkubu, Meru County and has a wide branch network in Meru, Nairobi, Kitengela, Kionyo and Kinoro. Since its inception, Yetu SACCO has gradually been on an upward trajectory and as of 31st December 2022, it has 57,000 members and an asset base of Sh5.7 billion.

The new branch opening was officiated by Hon. Patrick Munene, M.P. Chuka Igamba Ngombe Constituency and was well attended by various dignitaries including Hon. Shadrack Mwiti, M.P. South Imenti Constituency and Members of the County Assembly (MCAs), which demonstrated confidence in the SACCO’s products and services.
Hon. Munene expressed joy at the impressive growth of Chuka town and confirmed that as a politician, he wanted the people of Tharaka Nithi County to grow. He noted that young people ought to start small business and access loans from SACCOs instead of engaging in vices like drinking from illicit brews.

He congratulated the SACCO for their good services in savings and investments adding that competition in the financial sector would improve services for members.

Hon. Patrick Munene unveils the plaque to officially open the Nkubu Branch

“Let me encourage all of us to inculcate a culture of saving at individual levels in order to grow wealth and grow the SACCO,” he said.

Mark Gitonga, Chairman, Yetu SACCO added that the SACCO was stable and has been paying dividends at favourable rates for the last 20 years.
“I encourage new members to join the SACCO and enjoy affordable loans of 12 per cent per annum. Take this as your financial institution where you are an owner through your shares,” he said. Mr Gitonga also added that many people including those working in the Government, as well as private sector benefited from SACCOs and therefore more people should join and improve their financial wellbeing.

Yetu SACCO Directors and invited guests pose for a photo during the opening of the Nkubu Branch

Also present at the event was Denis Kirimi, Chief Executive Officer, Yetu SACCO who reported that the SACCO has grown to the present staff team of 85 people on permanent basis, with 120 staff employed on contractual basis.
He also reported that the SACCO had the capacity of giving loans up to Sh90 million noting that the highest depositor in the SACCO held Sh71million, showing the stability of the SACCO.

Mr Kirimi urged the locals to join the SACCO in order to grow and better themselves financially adding that monthly contributions were affordable for all. “Let me encourage business people, farmers, boda boda riders among others to join us and save as little as Sh100 and benefit from our affordable loans,” Kirimi emphasized.
He also encouraged members to take up loans in the SACCO, which would be issued based on a member’s repayment ability. “We offer mortgages at affordable interest rates for any member willing to build a house or construct a school, among other investments. The security of the loan is the title deed and we also accept car log books. Your deposits in the SACCO are also part of the security,” he said.

He informed the members that to make accessing financial services easier and more convenient, the SACCO had a Mobile Application (App) where a member can access their funds anytime and from any location. “You can save, send money, withdraw and check your balances, among other services through the App,” said Mr. Kirimi. He also reported that the SACCO had a vibrant diaspora membership of 37 people in various countries including USA, England and Australia, who access financial services without visiting any physical branch.

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Finance and Investment

How does a Cooperative arrive at an ideal board of directors’ composition?



By Mary W Kiema

As a group sets out to form an enterprise, their main concern is to meet their common needs through a business model that is suitable for most of them. Their requirements for the association will be formulated depending on the anticipated nature of the business. The form of business will inform the appropriate rules and subsequent regulations required. The interim governing body at this stage will be composed of some of the founder members who will be responsible for setting up the ground rules.

 In Cooperatives, the objects and membership requirements are contained in the bylaws. These by-laws are specific to an individual Cooperative society. A financial Cooperative for example will provide bylaws that attract members who have the capacity to save, borrow and repay promptly.

 A marketing Cooperative will reach out to the producers or developers of the desired products. At this point the most important assignment is to get numbers regardless of their gender or age provided that they can meet the membership conditions. As the Cooperative takes shape and begins to generate the desired results, the focus is directed to other areas of concern a simple scan through the composition of the membership of a number of Cooperative Societies, shows the dominance of the male gender. This is further evident at the board of directors level and in apex bodies. Attention has been drawn to this state of affairs and certain interventions are being explored to address this.

 As a requirement, a Cooperative Society observes the principle of open and voluntary membership. This means a Cooperative can attract members from diverse walks of life. These members have a right to democratically control their enterprise. The implementation of this democratic member control principle sometimes yields results that go against the tenets of inclusion.  The outcome may sometimes generate discussions that are geared towards attaining the desired status. This will only happen for an enterprise that is deliberately aiming at achieving an ideal position in governance. For most, the disparity goes without being attended to until it is pointed out from within or without.

 Since the promulgation of the Constitution of Kenya 2010, the matter of gender balance has continued to elicit a lot of discussion. The constitution being supreme, all other laws including the Cooperative laws are expected to align.

Enterprises that are private and opt for democratic member control grapple with the challenge of balancing between democracy, appropriate representation and inclusivity.  The desire is to not only have all stakeholders sufficiently represented in the decision-making but also to have an effective organ at the top. The growth and complexity of the Cooperative societies have also further complicated the equation. The qualification requirements for board members go beyond one being a member. To qualify for a board position, some Cooperatives require one to have a certain number of shares and amounts in deposits and to have attained a certain level of education or specific professionalism. This may be interpreted as an avenue for eliminating a particular category from leadership.  With all these hurdles, how does a Cooperative arrive at an ideal board of directors’ composition?

This governance challenge is not an easy one to resolve but it may be the missing link towards addressing issues that have remained in the background for a long time.  As the ground is being levelled to bring all players into the fold, some interventions will be required. The absence of youthful members in the movement may be attributed to their inability to ascend to the decision-making table.   The board of directors are drawn from members, therefore, for youth and women to be on the board they must first be found in the membership. With enough numbers, the electoral zones may be created in a manner that will give all eligible members a chance to serve at the top.

Among the interventions evident include the formation of women and youth networks. Some of these networks have developed elaborate programs to equip the participants with an array of leadership skills that are geared at enhancing inclusivity in institutions. The emphasis is on youth and women because they have been seen to have been left behind although these skills are required across the board. The situation is slowly changing with more women taking up jobs at all levels and being able to participate with others in the management of the organization they belong to. The youths are also encouraged to form workers’ Cooperatives where they can contribute their skills as they grow their unique enterprises.

 Apart from achieving the right composition in terms of demographics, the main concerns have lately turned to the effectiveness of the board. Some skills are wanted among the board. It is for this reason that the issue of accommodating independent directors who have specific skills keeps coming up. One step at a time with the right intentions, an ideal situation will be achieved.

 The writer is a consultant on Co-operative Business Model, a member of the Kenya Society of Professional Cooperators and founder of the SACCOprenuers group on Facebook

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SUCCESS STORY: Kenyan SACCOs help Women Turn Entrepreneurial Dreams into Reality



By Linda Karimi

Nancy Kariuki was a licensed pharmacist who wanted something more: she dreamed of becoming an entrepreneur. Eight years into a career in sales for drug companies, at age 40, she finally took the plunge.

 Keenly aware of the challenges women-owned businesses face, Nancy had been saving money over the years, and by 2020 had amassed Sh1 million (approximately $7,300) in start-up capital.

She opened her business, Essos Pharmacy, in the central business district of Kerugoya, a town of 15,000 in central Kenya.

Nancy was successful for two years in establishing and growing the business. But, in 2022, Essos was struggling to meet increased demand caused by the COVID-19 pandemic.  She needed capital and turned to  Fortune  SACCO.  SACCOs, savings and credit cooperatives, are a popular financial services option in Kenya.

Members of SACCOs invest in them or make deposits and can use that value as collateral when borrowing from the institution. They often can borrow more from a SACCO than from a bank and at a lower interest rate.

Fortune SACCO is one of ten SACCOs participating in a USAID-funded World Council of Credit Unions project under the Cooperative Development Program (CDP) called Technology and Innovation for Financial Inclusion (TIFI). The project seeks to enhance the capacity of SACCOs to lend to micro-, small- and medium-sized enterprises through improving credit risk management, streamlining and simplifying the lending process, and increasing the number of quality financial products available to these businesses.

Fortune granted Nancy a loan sufficient to do what she most wanted – create new jobs. She hired a staff of four, after previously relying only on her husband for extra help. She also enrolled her employees in the National Housing Insurance Fund and the National Social Security Fund, which provide them with healthcare, a pension and social protection.

Nancy also used the money she borrowed to upgrade her point-of-sale and inventory system. She now has more visibility over the operations and financial position of the business. The data also enhances her ability to borrow money in the future, and at a lower cost, because she can now provide reliable financial statements to lenders.

Within a year, the business tripled its revenue and now competes with larger pharmaceutical businesses as a key player in the market. Nancy’s success not only contributes to the economic growth of the community but also provides a source of inspiration for other women entrepreneurs in the area.

The USAID/CDP-TIFI project is transformative because it unlocks the potential of SACCOs such as Fortune, improving how they lend to micro-, small- and medium-sized enterprises. SACCOS in turn helps unlock the potential of those businesses, such as Essos Pharmacy, and people like Nancy, who turned her dreams into reality and improved her community in the process. She is a shining example of what can be achieved with the right resources, determination, and support.

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