Stima Sacco has dropped long held plans to raise Sh5 billion through a corporate bond to finance its mortgage business.
The sacco’s acting chief executive, Gamaliel Hassan, said they came to the decision after partnering with the Kenya Mortgage Refinance Company (KMRC) to finance its homes plan.
Stima Sacco has dropped long held plans to raise Sh5 billion through a corporate bond to finance its mortgage business.
The sacco’s acting chief executive, Gamaliel Hassan, said they came to the decision after partnering with the Kenya Mortgage Refinance Company (KMRC) to finance its homes plan.
“At this time, we do not need to go for a corporate bond. We have partnered with KMRC where Stima Sacco currently holds a directorship seat. The idea behind that is to ensure long-term funding is available to Stima Sacco,” said Mr Hassan.
KMRC was set up by the National Treasury to ease liquidity challenges for commercial banks and saccos that disburse affordable home loans.
Stima Sacco first announced the bond plan in 2016, but did not give timelines for the issue after indicating it was seeking regulatory approvals.
It planned to use the funds to offer long-term loans of between 10 and 15 years at competitive rates, hoping to fend off growing commercial banks’ foray into its turf at a time when the now repealed rate cap law had made life difficult for smaller lenders in the market.
It then identified mortgage financing and insurance as prime areas to venture into. Stima has been developing residential properties for its members.
Mr Hassan said the affiliation with the KMRC will now allow the sacco to tap liquidity from institutions such as the World Bank and the Treasury at subsidised rates.
The sacco, he said, will under KMRC get single-digit interest loans on a reducing balance between a period of 20-25 years.
“We now expect KMRC to fund those long-term loans that ideally a corporate bond would have done,” said Mr Hassan.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
