For many years Saccos have been seen to belong to certain strategic groups of people in Kenya like the civil servants and the unions.
However, this has now changed and majority of Kenyans are now embracing the uptake of Sacco services and products.
This has been supported by the development and growth of a vibrant sacco industry in the country.
Mwalimu Sacco one of the fastest growing Saccos in Kenya is now on the path to set the market trend for the industry in Kenya.
With a membership of 103,000 Kenyans, Mwalimu sacco was first formed by Staff of TSC Secretariat then latter joined by high school and tertiary schoolteachers as members and staff of the Sacco. Currently the Sacco accommodates teachers from private schools and former teachers and staff from its subsidiary companies.
According to the latest financials from Mwalimu National Sacco it ranks as the biggest sacco in Kenya and Africa by asset base.
As of September 2020 Mwalimu National Saccos’ asset base closed at 56billion.
What it takes to lead such a big Sacco
Alphonse M. Kaio the Chief Executive Officer of Mwalimu National Sacco says that technology, innovation, and unique product offering has been on the fore front in driving their growth agenda.
“How we are driving our agenda is that we have a five-year strategic plan with the current plan running from 2019-2023 which we review annually to see if we’ve achieved the yearly targets.”
Kaio rather than seeing the effects of the pandemic as challenges he says that the current economic situation has opened up spaces for the future technological advancements in the financial sector.
“If 2020 has shown us anything, it is that in the event of an unpredictable event like the Covid-19 pandemic, digitisation is the key to maintaining service delivery in a safe and efficient manner.”
He maintains that investment in robust technology enabled the Mwalimu National Sacco members to continue receiving services even during the work-from-home period disbursing and processing loans and accessing account transactions to a tune of Ksh.300, 000 per day via mobile with services such as Salary advance also given through mobile phones.
“Through this technology we are ensuring businesses are not affected since they can easily access their accounts, this ensured that businesses were not affected during the pandemic.”
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Mwalimu National Sacco has not only survived the turbulent times since most of its target customer base the teachers have continued to earn their salaries, but also a robust monitoring on how the loans are put to use.
He adds that SACCOs need to invest in proper internal infrastructure and systems like banking systems that will guarantee flexibility and configurability
Fintech and the SACCO industry
The changes in fintech services in the country have not only brought in competition but also brought in a challenge and only those organisations that adapt well manage to keep tabs.
Mwalimu National Sacco However downplays whether these changes in technology in the sector will affect their businesses and maintains that Fintech is not a threat rather an opportunity for their business to diversify and offer more services conveniently.
“We are looking to work with them as partners that we can do business with them. We have developed a secure system and invested on our cyber security”
Through technology the Sacco has been able to monitor performance of their loans something that Kaio says has helped to reduce non payments of the loans.
“This monitoring has been helping us know how our customers are performing and whether our goals are aligned with those of the government in providing services to Kenyans”
Through the monitoring Mwalimu National SACCO has been able toestimate the impact of their business in the economy
In the period from April to September they managed to trace 1.3 billion of their loans went to the agricultural sector, (with almost 1 billion accounting for Animals poultry dairy and other agricultural activities involving domestic animals.)On the same agricultural supporting services accounted for 300 million, Agri-business 700 million, trade-wholesale and retail took 2 billion, transport both PSV and boda bodas’ 800m.
Service industry Jua Kali, Kinyozi, repairs 200m, technology development and softwares 30m, Education 3.8 billion, Health (e.g. medical bills) 1.7 billion, land and buildings 1.8 billion, social issues 300m, about 400m to clear other debts and 90 million in hospitality.
Housing took the greatest chunk of the SACCO loans with members borrowing Ksh.4.7 billion for construction of either residential or commercial housing projects.
With the Sacco now eyeing a balance sheet of 82 billion by 2023 the double the size in 2018 Kaio says that their unique product- offering(Golden product) targeting the retirees and those about to retire will enable them to achieve the milestone.
“This offering offers senior savers product that if you’re saving up to 1.5 m you can access up to 15m. In 2018 we were at 40 Billion now were at 56 Billion (16 Billion growth in the last 2 years)
If in 2018 we were 40 Billion and now we are 56B it means within the last 2 years balance sheet grew by 16B and we will be closing at between 58 Billion and 60 Billion by the end of this year.
At 56 Billion if we Mwalimu National Sacco was to be ranked with banks it can fall under a tier 2 bank category in the Country Kenya.
Business Environment and the Pandemic
With the financial sector in the country reeling from measures that sought to cushion Kenyans from Covid-19 effects, businesses have had to re asses their performances.
Kaio acknowledges that Covid-19 impacted their operations and having to restructure over 200 million in loans owed by its members have impacted their business though by a mild margin. We had also granted moratorium to some members mostly employed by private schools.
“Definitely this impacted our business, and we missed our targets slightly, but we are okay. We did restructure some of the loans we had given our members, we have 3 lending units. The main lending Sacco unit (BOSA) the FOSA and Business loans. It is in the business loan lending unit were we did some restructuring of loans because all businesses were affected by the pandemic,” he says.
Sacco’s and Regulation
Though theuptake of Sacco products and services is still low especially among the young generation, the CEO points out that the level playground offered by the regulator Sacco Societies Regulatory Authority (SASRA) should be a stimulant for the youths to embrace SACCO services due to their low interest rates.
“Kenyans need more sensitization education, awareness and lobbying. The regulator has now moved in to oversee all the Saccos’ we are talking about 174 Saccos operating in the country.”
Kaio continues that the Potential is there for the sector in Kenya to grow. Since some Saccos are too small in terms of operation efficiency and this could be a challenge to set up proper secure systems for their operations. The big Sacco should hold their hands and help them to grow too.
Several Saccos have come up and stagnated because they don’t have the resources to maintain their business.
Though he acknowledges that the sector is still evolving in the areas of governance after several cases of money fleecing hit the headlines, he says the move by Government through SASRA develop regulatory guidelines shows how vital the industry has become.
Despite these changes in the sector, a new threat has emerged, Cybercrime, several Saccos have lost money from these attacks especially those that can’t invest in strong systems.
Sacco is the way to go to empower Kenyans and eradicate poverty and to empower Kenyans economically because they are able to access financial services at a fairly price of charges as compared to other financial providers.
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