The Metropolitan National Sacco —one of Kenya’s largest savings and credit co-operatives (saccos) —has withheld dividends for members and put controls on exits as part of turnaround reform measures instituted last year.
Chairman Christopher Karanja said in a notice to members the decision is in line with its transformation plan to conserve capital as a buffer.
The sacco that draws membership from teachers around the country (formerly Kiambu Teachers Sacco), last year contracted the consultancy arm of Co-operative Bank of Kenya to restructure operations.
Metropolitan declared a dividend of 6.25 percent but chopped it by half arguing the funds will be used to boost members’ savings. “We hereby inform you that the interest on member deposits (interest rebates) for financial year 2019 have been successfully processed…the board further advises that 50 per cent of this pay-out has been availed (sic!)…and the remaining 50 per cent is already reflecting in your back office withdrawable deposits in line with our transformation strategy as presented in our 2019 annual general meeting,” said Mr Karanja in the notice to members. Following the dividend freeze, shareholders have voiced anger at the decision they term unilateral.
A cross section of the investors said they rely on stable dividend for regular income and maintained they were opposed to taking stock in lieu of cash.
“They ought to have consulted in regards to capitalising shares with my dividend,” said a member who sought anonymity for fear of victimisation.
The shareholders argued that they were not consulted and normally such resolutions must be approved by members through an AGM.
The sacco has not convened a general meeting with members after AGMs were banned due to the Covid-19 pandemic. However, boards have been allowed to pay dividends.
Metropolitan CEO Benson Mwangi did not respond to our queries by the time we went to press.