Unaitas joins saccos seeking bigger membership

One of the hallmarks of 2012 was an increase in the number of savings and cooperative societies (Saccos), which were rebranding to adopt a national outlook and others that were carrying out share promotion drives to grow their capital.

Deposit-taking Saccos have been seeking to grow their capital to meet minimum requirements set by the Sacco Societies Regulatory Authority (Sasra), while the need for growth has seen many change their names to appeal to a wider membership.

Muramati Sacco, which initially started as Murang’a Tea Growers, a savings and co-operative society that mainly served tea farmers in Central Kenya, was one of those that changed names in the quest to grow countrywide. It is now known as Unaitas Sacco Society.

READ: Saccos rebrand in bid to grow membership

According to its management, the Sacco is looking to increase its footprint in the country through an ambitious expansion plan which it has already started implementing.

According to the Sacco’s annual report for the period ended 2011, last year it paid out Sh20.97 million in dividends on a share capital of Sh233.08 million, or at a nine per cent rate compared to eight per cent in 2010.

It also paid out interest on deposits at six per cent compared to eight per cent the previous year.

The financial institution had total assets of Sh2.8 billion compared to Sh2.09 billion in 2010, made profit after tax of Sh79.86 million in 2011 compared to Sh13.21 million the previous year, while total income stood at Sh487 million compared to Sh350 million the previous year.

The Business Daily interviewed sacco chairman Joseph Ngaai and chief executive officer Tony Mwangi who discussed Unaitas’ performance in 2012, plans and outlook for 2013.

How was last year’s performance?

The year’s performance was impressive going by the numbers for the first nine months. Dividends will not be less than what we paid for 2011.

However, what we are emphasising to shareholders is having an organisation that is stable than giving out everything and later borrowing to fund some of our projects.

Last year we paid dividends at nine per cent and it will not go down. The decision of whether it will go up depends on the board. We do not want sudden upsurges but rather consistent payouts.

What is most important to us is to be satisfied that we are conducting our services efficiently.

What growth do you expect after the audit in terms of membership and assets?

Membership of those who held investment shares stood at about 47,000 in 2011. In 2012 we expect about 100,000. In terms of assets we expect a 40 per cent increase from the previous year, which shows that we are growing the business.

The last three months of last year were even better than the first nine because of payments from the Kenya Tea Development Authority.

The agriculture sector was good and that is good for our business. By the end of the year we were expecting turnover of Sh0.8 billion which we expect to grow that to Sh1.2 billion this year.

If we increase turnover and cut costs, our efficiency ratios will improve and members will get good returns.

We expect to grow our asset base by 100 per cent this year. We will depend on our brand, staff, and technology. Unaitas has been growing fast.

Are there plans to convert into a bank and list on the stock exchange?

In the banking sector, you are under the Central Bank of Kenya (CBK) and the capital requirement is Sh1 billion, but in the Sacco sector it is Sh10 million so the first impediment is share capital.

Secondly, Saccos are started and run as member organisations. The perception from members is that if you convert into a bank they will not get cheap loans.
CBK governs the Central Bank Rate and you will somehow be governed by this rate as a bank.

The problem is that people believe that when you want to deposit money, you go to a bank and when you want a loan you go to a Sacco because rates are affordable.

However, the most important thing is providing accessible services to our members within the current laws. If the laws are not progressive we will have every reason to convert into a bank, but if they are conducive we will have no business changing.

We have been consulting and I am sure we will make the right decision.

Unaitas raised money from the public after the process was regularised to meet Capital Markets Authority requirements. Was the share promotion successful?

We were looking for Sh200 million in 2010 and Sh100 million was supposed to come from the share promotion where we got about Sh60 million, this was very good.

Last year we did very well, we will be closing at about Sh400 million.

During the regularisation process the value of the shares that we sold for Sh10 was discovered to be worth Sh37. This shows that members are seeing increased value.

Do you see a place for credit information sharing in the Sacco sector?

Last year we participated in a pilot for credit sharing and maybe this year we should start sharing information. In developed countries, sharing of both positive and negative information is a requirement.

Positive information is more beneficial and this helps to bring down default rates.

It helps to know the character of clients. When you link up with utility companies you have credible information and when you want to get a loan we do not have to do appraisals, which helps cut down costs.

If information about you is positive, we can give you a loan at a lower rate.

What were your other achievements last year? Do you have new projects this year?

The flagship project last year was the Chama Conference. We would like to see chamas get viable investment opportunities and transform from merry-go-round activities to investment companies.

The full impact of the conference will be seen this year, but the number of investment groups that we have has already grown two fold.

We have also been funding projects in places such as Konza where we have groups which we finance.

Members of a Presbyterian group have applied for loans from us to buy property. We have been spreading our footprints all over the country. We opened branches in Ongata Rongai and Nakuru.

We have established service centres in places like Gikomba and Kawangware. We would like to see these grow to fully fledged branches.

All our branches are linked in real time because we put a lot of effort into infrastructure.

We participated in three competitions and won the FIRE award for the third time in a row, and the ICT award organised by the Computer Society of Kenya for the second time.

We were runners up for the chief executive officer and chairman award in the corporate governance sectors. The competition was organised by the Institute of Public Secretaries of Kenya.

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