Bank eyes sacco members with debit cards

• UBA Kenya chief executive Tunji Adeniyi, said the bank had already engaged various Saccos on the introduction of prepaid cards.
• KUSCCO managing director George Ototo said that Saccos still relied heavily on banks to bridge financing gaps and at the height of the liquidity crunch last year, the cost of credit was not affordable.

UBA Kenya Bank, a subsidiary of Nigeria-based United Bank of Africa, will introduce prepaid cards for members of various savings and credit co-operatives (Saccos) as it eyes large financing opportunities with institutions in the sector.

Speaking to Business Daily on the sidelines of the Summit for African Saccos and Cooperatives, UBA Kenya chief executive Tunji Adeniyi, said the bank had already engaged various Saccos on the introduction of prepaid cards.

The cards would allow members to, among other things, withdraw cash or shop once they are loaded with money.

“One of the products that is ready is prepaid cards with various functionalities and we are already in discussions with officials on how we can introduce members of the co-operative sector into the financial system,” said Mr Adeniyi.

The summit was organised to offer alternative financing sources for the Sacco sector which brings a large number of Kenyans, mainly in areas which are underserved or not served by banks, into the financial system.

The sector last year experienced a funding gap after a liquidity crunch caused by a tight monetary policy stance hit the financial markets.
Interest rates rose sharply and the demand for cheap credit increased significantly, triggering Saccos to seek alternative and affordable loans.

Mr Adeniyi said that in addition to the pre-paid cards, he was in talks with a representative from African Development Bank and the Kenya Union of Savings and Credit Co-operatives (KUSCCO) seeking to develop financial products for Saccos.

“Because there are no products specifically designed for the sector, there is a need for us to develop one. Once one bank does it and it succeeds others will copy and this is good for the society,” he said.

KUSCCO managing director George Ototo said that Saccos still relied heavily on banks to bridge financing gaps and at the height of the liquidity crunch last year, the cost of credit was not affordable.

“We end up paying interest rates which rise to even 32 per cent. Lack of liquidity has been a challenge. Our intent is to get affordable funding,” said Mr Ototo in his speech at the summit adding that a lending facility at KUSCCO was not sufficient.

In August, Sacco Societies Regulatory Authority chief executive Carilus Ademba revealed that as at the end of last year Saccos could not satisfy a demand for loans of between Sh30 billion and Sh40 billion because of inadequate funds.

“I hope that as a result (of this summit) we’ll know how to raise capital, mobilise savings and consolidate small Saccos into large ones,” said Co-operatives minister Joseph Nyagah.