Troubled Harambee Sacco has started selling a huge chunk of its multi-billion shilling real estate property to boost its cash flow as it continues in its turnaround plan, newly appointed chief executive officer George Onchiri has said.
The country’s third largest sacco whose 76,000 strong membership is largely drawn from civil servants, including the police, the military, and provincial administration personnel has reinstated dividend payouts after bouncing back to profit position in 2018 following a loss the previous year.
The giant Sacco posted a net surplus for the year of Sh141.94 million last year, an improved performance compared to a net loss for the year of Sh174 million posted in 2017.
The sacco has paid Sh994 million for member earnings in dividends (5.5 per cent) and rebates (4.5 per cent) compared to Sh745million in rebates (4.5 per cent) last year. It did not pay a dividend in 2017.
Dr Onchiri, who was poached from Safaricom Sacco last November to turn around the sacco’s fortunes, said this affected its performance.
He said the sacco is eyeing to retire its multibillion loan from Cooperative Bank and grow its membership to 80,000 by end of this year.
“The year 2018 was characterised by our own challenges related to the low dividend of 2017. Quite a number of members withdrew from the society at the same time they took away their deposits,” said Mr Onchiri.
“We were also servicing a bank loan (in 2018) which was starting at Sh1.9 billion. So the interest expenditure was quite high which is not going to be the case in 2019. Efficiency of loan recovery was quite low but we have seen an improvement.”
The sacco’s interest income went up 13.83 per cent to Sh2.1 billion with its loan book growing by 5.48 per cent to Sh15.4 billion. Its total assets in the period rose 2.33 per cent or by Sh600 million to Sh26.3 billion in the period.
The real-estate portfolio quoted for sale is spread across the country in major cities and towns including Kisumu, and Mombasa.
“We have got a lot of land around the country, we want to convert that into cash. We are eyeing nearly a billion shillings this year,” said Dr Onchiri.
In Kisumu, the sacco is targeting 11 acres for sale to fetch Sh200 million while in Mombasa it is targeting to sell 16 maissonettes at Sh25 million each to raise about Sh400 million.
“We are also going to participate in the sacco mortgage services financed by the Kenya Mortgage Refinancing Company and that should help us offload another 10 acres in Siaya,” said Dr Onchiri.
He said the sacco with a staff count of 133, is targeting to beef up its workforce by 16 but to retire about 20 staff through a voluntary early retirement plan.
“We are bringing in new staff who can catch up much faster,” said Dr Onchiri.