Small Enterprise

How former church self-help group grew into thriving sacco

Times U Sacco Limited in Githongo, Meru County,
Times U Sacco Limited in Githongo, Meru County, and the sacco's founder and chairman Geoffrey Kathurima Kinoti on November 12, 2015. PHOTOS | PHOEBE OKALL |  NATION MEDIA GROUP

The name Times U Sacco Limited may not ring a bell, but the firm is a success story in Meru, having risen from a church self-help group to a microfinance institution with a turnover of nearly Sh1 billion.

In the early 1990s, 12 youths living in Uruku location, South Imenti sub-county came together and founded a church-based self-help group aimed at improving the livelihood of the locals. Uruku Rural Sacco Society, as the micro-financier was then referred to, had 200 members.

Today, that number has grown to about 22,000 members who last year registered a turnover of Sh849 million up from Sh653 million posted the previous year, according to the sacco.

“We started as a common bond sacco targeting cash-strapped, unemployed members of population who could not afford high interest rate loans advanced by shylocks and banks,” said Geoffrey Kinoti, Times U Sacco founder and chairman.

“Our immediate core responsibility was to pool resources together and provide credit at an affordable rate to ensure that the living standards of the members, who were well known, and those of their children were improved.”

The 52-year-old says he felt it was necessary to start a common-bond sacco because many of the other existing institutions at the time required members to be either employed, such as teachers, or engaged in large-scale dairy or coffee farming.

The businessman from Nkubu, Meru, said this requirement — and a lack of assets to act as security — meant that unemployed members of his community could not access financing.

Mr Kinoti, who at the time was the youth leader at his local church, sold the idea to his neighbours and members of his congregation and made the decision to start a sacco solely targeting the poor and those with menial jobs.

The law at the time required the names of 12 persons in order to register a sacco and Mr Kinoti got his dozen people, marking the birth of Uruku Rural Sacco Limited.

They divided the location into three units — the upper, central and lower — and sent well-known representatives to conduct a door-to-door campaign to recruit new members.

To become a member, one was required to part with Sh10 in order to get an application form and an extra Sh300 as registration fee.

“We did not have a monthly contribution amount. Remember our members were poor people and placing a minimum payment and deadlines would have resulted in mass defaults,” said Mr Kinoti.

Instead, members were urged to “increase their borrowing power” by saving as much as they could.

One ordinary share in the sacco was valued at Sh1,000 and members were allowed to borrow three times their personal savings payable at favourable interest rates.

Mr Kinoti, who at the time was also dabbling in the matatu business in Meru, used to save members’ contributions in his personal account until the decision was made to open a separate account.

“Everybody in knew one another. They trusted me with their money. In the event of a loan default, we all knew where to get the person and how to request them to honour their payment,” he says. “I used to be the main person in the sacco, holding multiple titles including that of the treasurer. However, when we started offering loans, we hired our first employee to track disbursements and repayments.”

The loans business and a sustained recruitment drive grew the sacco and in 2004, it began offering front office services. This marked its transformation from a table banking entity to a formal microfinance.

In 2009, Uruku Rural Sacco Society was rebranded to Times U Sacco Society Limited to broaden its scope beyond Uruku location where it was founded.

Times U Sacco, which is registered by the Sacco Societies Regulatory Authority, has four branches spread across Meru — Nkubu, Mitunguu, Githongo and Kariene.

It is set to open the fifth one in Meru’s central business district this month.

“Our members are from Meru, Tharaka-Nithi and Isiolo counties. They include farmers, businesspeople and salaried employees,” said Catherine Karambu, Times U Sacco chief executive.

“Since inception, we have loaned out about Sh1 billion to these members.”

There are currently 184 registered saccos in the country. These institutions are crucial in deepening access to credit in an economy where banks still heavily rely on collateral to lend.

Current high interest rates charged by banks have endeared borrowers to relatively cheaper saccos, whose rates are also stable given that changes have to be approved by members during annual general meetings.

Saccos have also been widening their product offering to accommodate the needs of their members and ensure they do not lose them to banks.