Sheria Sacco to fund Sh3 billion tower with savings product

Patrick Kiage

Sheria Sacco chair Justice Patrick Kiage. FILE PHOTO | NMG

Sheria Sacco is offering members up to 10 percent annual returns to lock savings over 10 years as a strategy to raise funds for the construction of a Sh3.3 billion office complex in Nairobi’s Upper Hill.

The sacco launched the Mavuno account for members willing to lock savings between five to 10 years.

The account offers a return of 8.5 percent per annum on investment redeemable in five years and a return of 10 percent if redeemable in 10 years.

The sacco bought land in Upper Hill in 2004 for Sh20 million and wants to build a twin-tower complex hosting business offices and residential apartments on the site. The land currently has an estimated market value of Sh400 million.

“Mavuno Account has been designed to assist members to finance the construction of Sheria Sacco Twin Tower. As the name suggests the account affords members an opportunity to earn a good return on their investment,” said Sheria Sacco chair, Justice Patrick Kiage.

The sacco had 15,689 members as of December 2021 and is betting on uptake of the special investment accounts to raise the funds. Saccos are evolving by involving their members more before making investments while raising cash without putting member contributions at risk.

In July 2021, the Sheria Sacco Board notified the regulator of the resolution to construct the building and followed up by engaging members.

Sheria Sacco had explored options of either using the institution’s own finances, doing a rights issue, pre-selling the units, taking a loan from a bank or even getting a strategic partner.

It finally settled on two options, developing a new product (the special deposit accounts) and preselling units to avoid touching members’ ordinary savings.

“The board received concurrence from eight out of nine regions regarding ways of raising the funds. It is gratifying to report that members present in all the nine meetings adopted the proposal in an overwhelming fashion,” said Justice Kiage.

The sacco believes it will take about one year to raise the minimum funds required to kick off construction.

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