A majority of saccos have made higher cash distributions for the year ending December amid improved profitability and brighter economic prospects, according to analysis by the Business Daily.
The saccos have raised their dividends buoyed by higher earnings, increased loan repayments, and reduced economic uncertainty following the removal of coronavirus-related restrictions.
Kenya Police Sacco declared dividends on share capital at a rate of 17 percent amounting to Sh51.6 million, and interest on deposits at a rate of 10.8 percent or Sh2.4 billion, making a gross total of Sh2.9 billion.
Savings and Credit Co-operative Societies (Saccos) have resumed paying higher dividends after a difficult two years when the Covid-19 pandemic led to calls to conserve cash.
A majority of saccos have made higher cash distributions for the year ending December amid improved profitability and brighter economic prospects, according to analysis by the Business Daily.
The saccos have raised their dividends buoyed by higher earnings, increased loan repayments, and reduced economic uncertainty following the removal of coronavirus-related restrictions.
Kenya Police Sacco declared dividends on share capital at a rate of 17 percent amounting to Sh51.6 million, and interest on deposits at a rate of 10.8 percent or Sh2.4 billion, making a gross total of Sh2.9 billion.
This represents a 11.5 percent jump from the previous year.
Police Sacco the previous year had set the dividend rate paid out on members’ deposits at 10.5 percent; with payout on members’ shares at 17 percent.
The sacco, which currently has over 63,000 members largely drawn from the security agencies and other government employees, saw its asset base grow from Sh39.1 billion to Sh44 billion in the year ended December.
It targets to hit 70,000 members this year.
Ukulima Co-operative Savings and Credit Society, which has over 45,806 members paid interest on deposits at a rate of 9 percent representing a total payout of Sh748.4 million compared to Sh700.7 million in the previous year.
Nakuru-based Cosmopolitan DT Sacco paid dividends on shares at a rate of 15 percent, same as 2020 even as it set interest on members’ non-withdrawable deposits at a rate of 12 percent, higher than the 11.8 percent paid out the previous year.
Total payout
This represented a total payout of Sh600 million which was an improvement from the Sh520 million paid out the previous year.
This came as the sacco saw its membership, drawn from salaries employees both in the public and private sector and ordinary merry-go-round groups, grow to 25,044 and its asset base increase to Sh8 billion.
When the Covid-19 pandemic struck in March 2020, it negatively affected the performance of many saccos.
Some resorted to suspend cash distributions forecasting defaults.
The pre-emptive move was meant to ensure they had ample liquidity should the pandemic persist.
Stima Sacco paid dividends and interest rebates on share capital at the rate of 14 percent and 10.75 respectively for the financial year 2021.
The sacco with an asset base of Sh46.48 billion and a loan book of Sh36.35 billion draws its membership of over 154,308 from the energy utilities as well as other sectors.
Separately, Harambee Sacco set dividend rate to be paid out on members’ deposits at 8 percent up with payout on members’ shares 7 percent.
This came as Harambee Sacco recorded a 187 percent rise in net surplus to Sh350 million on increased interest from members’ deposits in the year ended December 2021.
The sacco’s interest from members' deposits rose from Sh1.1 billion to Sh1.44 billion. During the review period, deposits and savings grew by five percent to Sh22.54 billion.
Invest and Grow (IG) Sacco set its dividend payout rate at 12 percent for non-withdrawable deposits and 17 percent on share capital.
Share capital
Bandari Sacco paid the dividend on share capital at 18 percent and interest on members’ deposits at the rate of 11.5 percent for the year ended December 2021.
Speaking while making the announcement, the Sacco’s Chairman Ken Sungu said during its Annual Delegates Meeting in Mombasa that the firm’s asset base also grew to Sh1.33 billion despite the ravaging impact of the Coronavirus pandemic.
The higher dividend payments following two difficult years will be a relief to shareholders and will be crucial in helping them cope after suffering from the dip in the economy that teetered to near recession.
The pandemic has also resulted either in redundancies and salary reductions which hurts people’s savings.
Nation Sacco set the dividend rate to be paid out on members’ deposits at nine percent up from 8 percent the previous year; with payout on members’ shares flat at 15 percent.
After-tax profit
The mid-sized sacco reported an after-tax profit of Sh80 million in the period to December 2021 compared to Sh72.3 million the previous year.
Kenya’s coronavirus cases have been dropping steadily amid a rise in the number of people who have been vaccinated.
The positivity rate is now at 0.6 percent as the country's daily coronavirus case count continues to decline amid increased mass vaccinations.
The Sacco regulator had in 2020 urged Saccos to strike a delicate balance between high level of capital buffers before distribution of cash.
Saccos in 2020 faced resistance to their dividend payout plans from their regulator, dampening shareholders’ hopes of tidy returns.
“In order to alleviate the members’ financial challenges occasioned by Covid-19 pandemic and also in line with the circular dated 26th March, 2020 issued by Commissioner of Co-operatives Development, the Authority advises deposit-taking saccos are at liberty to pay the 2019 dividends on member share capital. However, this only applies to saccos who declared surplus and demonstrated capacity to pay the declared dividend in their approved audited accounts of 2019 without relying on external borrowings,” the Sacco Societies Regulatory Authority (Sasra) warned.
“It is also imperative that decisions to pay dividends are made with utmost diligence considering the potential impact of the Covid-19 pandemic on liquidity and earnings of the saccos. To this extent, the Authority strongly recommends that the sacco boards reconsider and document the decisions on dividend payment to adequately factor the current and expected impact of the pandemic in the foreseeable future.”
Most sacco managers appear to believe that the worst of the pandemic, woes which had made many members default on loans, is behind them. This has seen a majority of saccos report surplus earnings and record a higher deposit base.
“We are already reaping the fruits of our members’ hard work despite the challenges brought by the pandemic, which in all honesty had a minimal impact on our business, based on the fact that 99 percent of our members are police officers whose contributions were not affected. We are predicting a good outcome this year,” David Mategwa, the chairman of the Kenya National Police DT Sacco, was earlier quoted as saying.
