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KUSCCO marks Golden Jubilee with Celebrations of Milestones



By Ngumbo Njoroge
The history of SACCOs in Kenya is a fascinating story that begins in the early 20th century and involves the efforts of visionary leaders, grassroots organizing, and a commitment to economic self-reliance.

KUSCCO, Kenya’s umbrella body for SACCOs, has been an integral part of that journey. Registered in 1973 and began operations in 1974, the Union has been at the forefront of efforts to form and develop strong and viable SACCOs.

The Union was born out of the need to amplify the voice of SACCOs that had been entrenched into the country’s financial landscape by the second decade of independence. 

Defying challenges in the first decade, the Union rose to defy odds and cement its position in the Co-operative movement.  At the time, KUSCCO did not have the means to run its resource generation at the national level and was largely dependent on donations.  Following government intervention through a taskforce formed by the then Minister of Co-operatives Hon Maina Wanjigi, the Union’s control reverted to members through elected Directors in 1988.

Following these interventions, the Union introduced three flagship products; the Central Finance Fund (1989), the Risk Management Programme (1993) and the KUSCCO Housing Fund (1998), and revitalized other services such as Education and Training. 

The Central Finance Fund was conceived as a facility that allows Societies to lend among themselves using the Union as a handling intermediary.    CFF began with savings from 2 SACCOs and membership increased to 85 SACCOs which later grew to 209 SACCOs in 1990. By the end of 1991, the programme had 349 members with savings of Sh135.8 million and loans of Sh 235 million. 

In 1998, the Union launched the KUSCCO Housing Fund (KHF) from which members of SACCOs could obtain long-term finance. The product was started to finance low-medium cost housing. By 2019, the Fund had over 14,000 mortgage accounts, when it transformed into a Housing Co-operative. KUSCCO Housing Co-operative has over 16,000 members, serving individual and corporate members.  The Co-operative offers end to end integrated property solution to our members; this includes identification, acquisition and development processes.

The Risk Management Programme was started to internalise the risk that member SACCOs societies had, and in return for paying a premium, they could be covered by KUSCCO.

In the years since, the Union has been instrumental in providing technical support and training to SACCOs, helping them to improve their operations, governance, and financial performance. In addition, KUSCCO has played a critical role in influencing policy and regulatory changes that have benefited the SACCO sector.

One of the major milestones was the introduction of the Front Office Service Activity (FOSA) in 2010. This was a significant achievement for KUSCCO as it allowed SACCOs to offer banking services, such as deposits and withdrawals, to members at their branches.

As at December 2010, there were 227 SACCOs operating a FOSA, providing greater convenience and accessibility to SACCO members. FOSA has also helped to improve the financial performance of SACCOs by generating additional income streams and reducing dependence on loan interest as the primary source of revenue.

The Union currently offers Education and Training to SACCO leaders, Research and Consultancy Services, the Central Finance Fund products, advocacy services as well as publishes the quarterly SACCO Star magazine.

Further, KUSCCO has an insurance subsidiary, KUSCCO Mutual Assurance, licensed by the Insurance Regulatory Authority (IRA) to operate as a life insurer in Kenya. KUSCCO Housing Cooperative was registered in December 2019, growing from being a mortgage financing institution to providing integrated property solution in Kenya.

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In the news

Stima SACCO Expands Network with Three New Branches 

The objective revolves around enlarging the business through extended distribution channels and robust resource mobilization.



Eric Mwai

Stima SACCO, a market leader, has added three branches to its network driving services to members.

The move aligns with the SACCO’s strategic growth plan aimed at amplifying operational efficiency, influence, and financial inclusiveness throughout the nation.
As an integral part of its 2019-2024 Strategic Plan, the branch expansion strategy signifies the Society’s commitment to transforming its business model. The objective revolves around enlarging the business through extended distribution channels and robust resource mobilization.

Stima SACCO CEO Dr. Gamaliel Hassan, speaking during the launch of the Electricity House branch, emphasized the Society’s intent to implement a decentralization policy. This policy aims to draw the organization closer to its membership base.
“The establishment of this branch reflects our unwavering commitment to meeting the evolving needs of our members and the modern demands of the digital age, especially in Nairobi, the economic hub of Kenya. This city thrives on innovation, entrepreneurship, and a dynamic financial sector,” Dr. Hassan said.

The three new branches located in Kisii, Meru, and Nairobi’s CBD within the Electricity House building raise the total branch count to twelve, with three situated in the city and nine dispersed across the country.
Dr Hassan underscored that the current expansion rests on three core principles: accessibility, convenience, and member satisfaction. With an extensive array of tailored financial solutions for its members, Stima SACCO aims to bridge gaps, and facilitate savings, investments, and affordably accessible credit facilities for Kenyans, catering to their specific needs.

“We recognize the importance of meeting the evolving needs of our members in a fast-paced world that demands efficiency and flexibility. The branch opening represents our dedication to making banking more convenient, hassle-free, and tailored to the diverse lifestyles of our members,” expressed Dr Hassan.
This development coincides with the government’s drive to make cooperatives a fundamental component of national financial inclusion efforts. Cooperatives hold a unique advantage due to their broader reach, particularly among those in the lower economic strata.
Leveraging technology to extend their reach, cooperatives like Stima SACCO have embraced innovations such as mobile banking. This allows them to offer services to a wider spectrum of customers, including those in remote areas. Technology has streamlined access to innovative products, unparalleled customer services, and the establishment of lasting relationships, forming a robust financial foundation for both current and prospective clients.

Additionally, Stima SACCO, as a customer-centric enterprise, has collaborated with Fintech companies to provide accessible and affordable digital financial services to its members. Examples include quick and convenient M-Pawa mobile-based loans of up to Sh120,000, access to low-premium insurance products, and secure alternative channels like M-Pawa mobile banking.
The Society has also intensified financial education programs, empowering members with enhanced financial literacy and management skills, enabling them to make well-informed decisions about their finances. Consequently, financial inclusion has risen as members are better equipped to access financial services and products.

Stima SACCO eyes growth in membership by over 30,000, surpassing the current count of 177,260 members by the end of December 2022. According to Chairman Eng. Albert Mugo, membership growth is anticipated to positively impact the society’s asset base, which stood at Sh54 Billion as of the close of the 2022 fiscal year.
The new branches are projected to generate employment opportunities for numerous Kenyans, supplementing the existing twelve permanent employees at each of the nine branches.

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SACCOs Recover Sh800 million in Non-Remitted Funds



By Ngumbo Njoroge

SACCOs recovered Sh800 million in non-remittances last year, driven by initiatives by the regulator and key SACCO players, new data by SASRA shows.

Non-remittances to SACCOs dropped to Sh2.6 billion in 2022 from Sh3.4 billion the previous year. The regulator notes that SACCO non-remittances recorded a significant drop from a high of Sh5.04 billion in 2020.
“The total amount of non-remitted funds owed to the Regulated SACCOs as of September 2022 stood at Sh2.696 billion, directly attributed to a total of 66,452 members drawn from 80-Regulated SACCOs made up of 57-DT-SACCOs and 23-NWDT-SACCOs,” SASRA said in the 2022 SACCO Supervision Report.
The data shows that loan repayment constituted 75 percent of total non-remitted funds, amounting to Sh2.02 billion.

“The direct impact of these non-remittances is that the total loans’ portfolio among the Regulated SACCOs was defaulted in an almost equivalent amount, besides occasioning liquidity crunch and pressures on the SACCOs to meet their financial obligations,” the regulator added, noting that this impacted the SACCOs’ interest income.
Loan repayments to DT-SACCOs stood at Sh1.75 billion, with 57 SACCOs being the most affected.
The regulator urged SACCOs to implement recommendations of a 2019 notice requiring channeling of members’ income through FOSA savings account.
County Governments and Assemblies were the largest debtors to SACCOs, owing Sh1.35 billion, which accounted for 50 percent of the total non-remittances.

This affected 43,139 members, primarily employees of County Governments and Assemblies. The funds owed were mainly related to loan repayments, indicating the poor quality of loan portfolios in SACCOs with members from these entities.
Public Universities and Tertiary Colleges owed the second-highest amount, totaling Sh620.52 million, or 23 percent of all non-remitted deductions. Private Sector Companies and State Corporations (parastatals) owed Sh428.95 million (16 percent) and Sh143.09 million (5 percent), respectively.

Public-owned companies owed Sh64.18 million (2 percent) to SACCOs.
The regulator notes that SACCOs, which rely heavily on remittances from employer firms and organizations, have been grappling with a persistent problem of funds not being remitted as required by law.
“These remittances are largely premised on the provisions of Section 35(1) of the Cooperative Societies Act which allows employees to instruct their employers to periodically deduct from the employees’ emoluments such sums as the employee may determine, and to remit such deductions to the employees’ designated SACCO or Cooperative Society.”
SASRA noted that two main forms of remittances exist. The first is non-withdrawable deposits (BOSA) deductions, which serve as collateral for loans but are refundable to employees upon exit. The second involves remittances for loan repayments and credit facilities issued to employees by the SACCOs.

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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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