Harambee Sacco borrowed Sh1.18 billion from the Co-operative Bank of Kenya in the year ended December amid a jump in the loans disbursed to members of the thrift institution.
The sacco’s latest annual report shows that the loan taken from the bank increased to Sh3.32 billion in the review period, up from Sh2.14 billion the year before.
The jump in borrowing coincided with increased lending to members and a jump in operating costs for the Sacco which draws the majority of its membership from the civil service.
“There are no borrowings exceeding the core capital nor are there any borrowings exceeding 25 percent of the total assets,” the sacco says in the report.
The Co-op Bank loan is equivalent to nine percent of the sacco’s total assets of Sh37 billion as of December 2022.
The Deposit Taking Sacco regulations of 2010 cap external borrowing for Saccos at 25 percent of their asset base.
Saccos borrow for various reasons including to manage their liquidity and cash flows.
The sacco used its Harambee Plaza in Nairobi’s central business district and member deposits at Co-op Bank to secure the Sh3.32 billion loan.
Harambee Sacco’s lending to members grew 11.7 percent to Sh27.23 billion in the period under review. Operating costs including administrative expenses rose 16 percent to Sh2.5 billion.
Harambee recorded a 22.5 percent jump in surplus to Sh444.6 million, a move that saw it raise the return on member deposits to eight percent from seven percent in 2021.
With 79,641 members, the Sacco is one of the biggest in the country and targets 86,502 members in the next two years in what will also boost its finances in the form of deposits and increased lending.
Member deposits grew five percent to Sh23.7 billion in the review period on the back of increased recruitment of civil servants while its asset base grew seven percent to Sh37.01 billion.
Harambee Sacco has unsuccessfully tried to sell part of its vast real estate portfolio across the country in a bid to boost its cash flows, four years since it first disclosed the sale plans.
The institution tapped Dansal and Associates Limited in September 2019 to value the properties ahead of the anticipated sales.
The sacco had hoped to raise an estimated Sh400 million by selling 16 maisonettes in Mombasa’s Nyali estate and a further Sh200 million from the disposal of 11 acres in Kisumu.
But it suspended the sale plans a year later in the wake of falling property prices that threatened to scuttle hopes of raising an aggregate of Sh1.7 billion from the land and developed properties.
The sacco is mulling fresh valuation of the properties in line with its policy to revalue its assets every three years and a renewed push to sell them off.
