Safaricom Investment Co-operative (SIC) is set to diversify its revenue streams to strengthen its balance sheet in the wake of reducing returns from the real estate sector last year.
SIC is planning to venture into property agency business, manufacturing, ballast mining, healthcare and financial services sectors starting March. The co-operative targets to raise 40 percent of its 2020 revenue from the new businesses.
SIC’s revenue declined to Sh55.9 million for the year ended December compared to Sh525 million a year earlier, partly due to compliance with the IFRS 15 accounting standard which resulted in deferment of Sh217 million worth of income that will now be booked in the current fiscal year. Under IFRS 15, the society recognises revenue only when land has been sold and transferred to the customer as opposed to the previous practice of booking sales after clients pay a deposit.
“Co-operatives have had to shift from the old and unsustainable business models. At SIC we are diversifying from the real estate sector through joint ventures and sole investments,” said Safaricom Investment Co-operative CEO Humphrey Njeru.