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SME financing by SACCOs; a story of innovation and resilience



By Linda Karimi

“Success is not final; failure is not fatal: it is the courage to continue that counts.” – Winston Churchill.

For many entrepreneurs, these words ring true due to the dynamic and sometimes volatile business environment. Adaptability, innovation and customer satisfaction are key tenets in any business. The dilemma regarding capital and expansion can easily be resolved when one is a member of a SACCO. The SACCO Star team spoke to a business proprietor and member of Dimkes SACCO who shed more light on her journey and learning points in business.

Meet Pauline Njoki Nguri a budding entrepreneur at the heart of the bustling Kiambu town. Pauline first ventured into business with her husband who at the time was selling car spare parts. She took on the management of the shop for a few months and even introduced agency businesses like Mpesa and Equity Bank to bring in customers, but sales were low on most of the spare parts in the shop.

Back to the drawing board

She and her husband then re-strategized on starting another business since the car spare parts business continued to dip in sales. After carrying out a market survey and research, she realized that Kiambu town was populated with Auto rickshaws or ‘Tuk Tuks’ as they are popularly known. These compact vehicles are used both for public and private transport because they are relatively affordable to own and operate. She also learnt that despite the numerous ‘Tuk Tuks’, there was no shop selling spare parts, and most people had to go to Nairobi to buy them.

It is at this point that the idea of ‘Kijo Auto Spares’ was born, a shop selling ‘Tuk Tuk’ spare parts. She continued researching and got assistance from ‘Tuk Tuk’ drivers and owners on how she could start this business. She also got support from a mechanic who guided her on some of the critical spare parts that she could start with. She started the business in 2017, after winding up the car spare parts business.

Joining Dimkes SACCO

Through a friend’s referral, Pauline joined Dimkes SACCO in 2018 where she started saving in order to access affordable credit. The SACCO, which has a branch in Kiambu town, offers loans for Small and Medium Enterprises (SMEs). The loans are disbursed under the lending methodology; Technology and Innovation for Financial Inclusion in partnership with KUSCCO and the World Council of Credit Unions (WOCCU) to benefit SME owners. While Pauline’s friend saved money and took a loan to buy a car, Pauline opted to save KES.500 to KES. 1,000 monthly so that she could take up a loan to buy new stock for the ‘Tuk Tuk’ business. Her first loan was Sh160,000 which she re-payed in about three years.

In 2022, she took another loan of KES.1.5 million to repay in four years. The loaning process from Dimkes SACCO was smooth and she secured the loan using a   title deed for collateral instead of guarantors. She was delighted that the turnaround time for the loan processing took about three weeks considering conveyancing takes longer.

During the appraisal stage, a team from Dimkes SACCO undertook a physical visit to her shop and checked her books of accounts. They were impressed that she has a record-keeping system (Point of Sale) that provided a full view of her financial affairs at a touch of a button. The system maintains up-to-date stock levels as well as tracks daily sales which helps her manage her business better as she is able to track day-to-day performance. The Dimkes team also undertook due diligence on the ‘shamba’ or parcel of land proposed as the collateral for the loan.

When joining a SACCO, Pauline’s advice to other entrepreneurs is that they should believe in themselves. “Jiamini” she quipped. “Many people are scared of loans for fear of repossession or litigation in case of default. However, in my experience, the loans from Dimkes SACCO have assisted me grow my business and even helped me open a second  shop selling ‘Tuk Tuk’ spare parts in Ikinu town, within Kiambu County.” She also stated that loans help people work harder so that one can repay the loan faithfully.  Her advice to the youth is, “Save and borrow responsibly to invest the money and not to use the loan on consumables or unnecessary items.”

A Tuk Tuk outside the spare-parts shop


As is expected, Pauline faced a few ‘teething challenges’ bearing in mind the ‘Tuk Tuk’ spare parts business was the first of its kind in Kiambu town.

In terms of customer satisfaction, Pauline did not accurately know what customers wanted since this business was new to her too. “I didn’t know the items that would meet customer needs and because of this, some items were not sold for almost 2 years,” she said.  Setting the price was also a challenge for Pauline, since the products were new and there was no other shop at the time to compare with.

Pauline also noted that a few people insist on getting items on credit, although as a business owner, she minimizes such cases. “We are happy when our customers buy and pay in cash,” she added with a smile.

Pauline is also in partnership with Newlife SACCO which has 200 members, where some of the members buy spare parts from her shop. Additionally, Pauline also assembles and repairs spoilt ‘Tuk Tuks’ by working with local mechanics.

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In the news

SACCO Strategic Plans under Threat, Expert Says



By Ngumbo Njoroge

Savings and Credit Cooperative Organizations (SACCOs) have been advised to stay vigilant against the volatility of the business environment and align their long-term strategic plans to adapt to the changing landscape.

The recent years have presented SACCOs with an unprecedented challenge as business volatility disrupts their carefully crafted strategies, compelling them to reassess their operations and embrace flexibility.

According to Mr Joshua Wambua, a leadership expert, the Coronavirus pandemic and rapid technological changes are major factors contributing to business volatility. He emphasized the need for SACCOs to regularly review their strategic plans at short intervals and assign an officer to monitor the business environment for potential threats.

“Constantly reviewing SACCO strategic plans and monitoring the business environment is crucial. This provides boards and management with up-to-date information on any changes that may impact their strategies,” Mr Wambua stated during the annual Chairpersons and Vice-Chairpersons Forum.

Mr Wambua highlighted the importance of this monitoring process, explaining that without it, SACCOs may continue to invest member resources into strategies that fail to yield desired results. By constantly reevaluating and aligning their plans, SACCOs can re-engineer themselves to adapt to the evolving business landscape, ensuring the best use of resources and ultimately benefiting their members.

During the forum, Mr Wambua urged SACCOs to devote resources to exploring new digital frontiers and building partnerships. He emphasized that embracing technological advancements and fostering collaborations are crucial steps in overcoming business volatility and securing a prosperous future.

“You must have the courage to be future makers, willing to explore new digital frontiers to reimagine today’s world for a better tomorrow,” he encouraged SACCOs.

The SACCOs’ response to the challenges posed by business volatility will determine their long-term sustainability and ability to support their members effectively. By staying vigilant, regularly reviewing their strategic plans, and leveraging technological advancements, SACCOs can navigate the unpredictable business environment and seize opportunities for growth and success.

As SACCOs continue to face uncertainties in the economic landscape, the expert advice provided by Mr Wambua serves as a guiding light, urging them to adapt, innovate, and collaborate to safeguard the interests of their members and ensure their resilience in the face of ever-changing business dynamics.

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Deputy Chief Justice Champions Women’s Empowerment at Cooperatives Forum



By Ngumbo Njoroge

Deputy Chief Justice Hon Philomena Mwilu commended women involved in cooperatives for defying negative societal expectations regarding women’s leadership.

 Speaking at the 5th Women in Cooperatives Forum, Hon Mwilu highlighted the disproportionate impact of poverty, discrimination, and exploitation on women, emphasizing their underrepresentation in senior leadership positions. She called for a transformative shift to address the scarcity of women leaders in cooperatives, emphasizing the significant role that Savings and Credit Cooperative Organizations (SACCOs) can play in fostering change.

During her keynote address, Hon Mwilu recognized the critical contributions of women to society and the challenges they face due to prevailing stereotypes. Women continue to bear the brunt of poverty, discrimination, and exploitation, struggling to secure senior leadership positions.

 To rectify this imbalance, Hon Mwilu emphasized the importance of financial inclusion as a catalyst for women’s full participation in the economy. She acknowledged that gender dynamics often hinder women’s access to financial and economic opportunities, stressing the urgent need for change. By equipping women with the necessary tools and support, financial inclusion can dismantle barriers and establish a more equitable and inclusive society.

Mercy Njeru, Advocacy Manager at the Kenya Union of Savings and Credit Cooperatives (KUSCCO), underscored the significance of leadership training programs in empowering women to assume leadership positions at national and international levels. Njeru emphasized the scarcity of women leaders not only in Kenya but globally, urging women to acquire the qualifications necessary to pursue leadership roles.

Florence Kerubo Omundi, Deputy Commissioner General of Prisons, echoed the sentiment that women must assert themselves and vigorously contend for leadership positions. Omundi emphasized the need for women to challenge societal norms that perpetuate gender disparities and carve out their space in leadership.

The 5th Women in Cooperatives Forum revolved around the theme, “Aggressive or Assertive? Addressing Gender Stereotyping,” reflecting the pressing need to confront and overcome deeply ingrained gender stereotypes that hinder women’s progress. The forum provided a platform for engaging in discussions and the formulation of strategies to empower women and foster a more inclusive cooperative sector.

The event served as a reminder of the ongoing efforts to promote gender equality and create an environment that recognizes and supports women’s leadership potential. Through dialogue, advocacy, and collaborative initiatives, the cooperative movement seeks to dismantle barriers and cultivate an environment where women can thrive and make meaningful contributions to sustainable development.

The 5th Women in Cooperatives Forum showcased a collective commitment to dismantling gender stereotypes and promoting women’s leadership. By addressing the challenges associated with stereotyping and negative gender roles, the forum strives to create opportunities for women to excel and make significant contributions in the cooperative sector and beyond.

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Climate Change




By Robert Kanyua

The Climate Crisis is deepening and bringing along adverse and significant impacts across all sectors. The all too familiar threats occasioned by climate change include flooding, drought, unpredictable seasons and weather patterns that have turned hitherto fertile lands into deserts. Accordingly, the loss and damage associated with climate change impacts keep on growing. Yet, even as the consensus around climate risk reporting becomes stronger, not all financial services firms have embraced the practice. How should financial services firms approach climate risk reporting, and specifically, why must Savings and Credit Cooperatives (SACCOs) embrace Climate Risk Reporting?

The Impact of the Climate Crises

The impacts of the climate crises extend beyond the environment to impact business. Even where slower-moving weather events like droughts and coastal erosion are not so apparent, their impacts contribute to economic erosion. That is why the climate change risk mitigation agenda should concern companies greatly just as it concerns nations across the world.

Climate-Related Risks & Their Connectivity to Business

The nexus of Climate Risk and Business Sustainability is becoming clearer. It is now evident that Climate change presents economic risks as it impacts the long-term growth of the organization and in certain instances business continuity.

As each year passes by climate risks are becoming greater and the potential for loss is becoming higher. Climate change impacts such as flooding along the water bodies have led to loss of businesses in Kenya amounting to millions of shillings.

In the financial services space, climate-related risks include and are not limited to, loss of markets and debt defaults. When climate risks actualize, they heap pressure on the balance sheet and profitability of a business.

Climate risk reporting will enable SACCOs to identify climate-related risks, prepare for shocks and recover quickly whenever they occur. It helps financial services firms unearth links invisible or not-so-apparent risks to the physical world.

The Importance of Climate Risk Reporting for Financial Services Firms

Financial services firms have a responsibility to safeguard the assets and value of their shareholders.

Even though climate-related risks are not limited to SACCOs, they are particularly vulnerable as a majority of their members are directly or indirectly dependent on agriculture for income or well-being. Indeed, in the recent past, SACCOs have been particularly impacted by the dwindling incomes of their members who rely on this sector.

Additionally, the role of cooperatives in SME development is set to expand as Small and Medium-sized Enterprises become significant economic players in the country. We anticipate the level of economic threat posed by climate-related risks to also rise as more SMEs onboard as SACCO members.

SACCOs must seek to understand the impacts of climate-related risks within the multiple sectors where their members operate. A potential challenge is that SMEs operate in multiple sectors that are impacted differently by climate change. Without proper climate risk reporting, SACCOs run the risk of failure if SMEs in certain sectors or regions face an uncertain future and begin to be a drag on their liquidity and members’ savings mobilization.

Given that climate-related risks can lead to a drastic reduction in members’ income and loan defaults, climate risk reporting will help SACCOs prepare to make the shift from the safe terrain of employer ‘check-off’ loan system to serving their business members.

Climate Risk Reporting, A Proactive Strategy

Most publicly owned firms produce and disseminate various reports including the regularly published annual report to shareholders. However, more often than not, these reports do not disclose climate-related risks or at best mention them in passing.

Globally, there is a push to leverage climate risk reporting to mitigate climate change risks. Regulators in the financial services sector have responded to the climate change threat by enacting guidelines to help build a better, solid and more sustainable future for financial services firms.

In Kenya, The Central Bank of Kenya introduced Guidance on Climate-related Risk Management for licensed institutions under its purview. Now climate risk reporting will feature more prominently to ultimately inform credit and investment decisions.

Whereas reporting itself does not eradicate climate-related challenges it goes a long way towards enhancing preparedness, monitoring and enabling prompt intervention where necessary.

It is my view that Climate Risk Reporting should be mainstreamed and go beyond best practices.

Priority Actions – How SACCOs Can Deal with the Widening Risk Landscape

An organization that assesses and reports on climate-related risks is less likely to be caught flat-footed by the occurrence. Below are two priority actions that SACCOs can adopt to address these risks.

First, assess your SACCOs risks and evaluate their impacts. This will enable you to have a deeper understanding of the risks to enable you to make decisions that reduce your risk profile.

The second is to report on all material risks – both current and emerging. This has the benefit of making you thoughtful and deliberate in decision-making about where and when to allocate your capital. Decision-making may entail revising your lending policies based on the disclosure results.

Assessing and reporting and monitoring climate-related risks helps you in strategic planning. As you continuously monitor current and emerging risks, you get an opportunity to devise mitigating measures and course-correct if the risk situation deviates from its target level. This minimizes the likelihood of impact and the severity of climate change shocks on the organization.

More importantly, appropriate climate risk information can help SACCOs identify new opportunities for growth and develop new products. Also, climate risk reporting will enable SACCOs to make informed investment and credit decisions.

Going forward, it is clear that climate-related risks will increase and hence the need to be proactive. Now is the time to embrace climate risk reporting even in the absence of any legislation. The payoff is in preparedness, better allocation of capital and in informing strategy. Hopefully, these benefits add impetus to the push for climate risk reporting.

The writer is a Consultant and Sustainability Expert with Pro Excellence Management Consultants.

You can reach him at /     

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