Kencom Sacco Investments :
Policy Is Based on the Needs of Both Members and the Sacco

Kencom Sacco has now developed an investment policy that emphasizes real estate investments instead of stocks and shares. The policy is based on ROI (returns on investment), ease of management and fewer risks.

"Real estate is easy to manage and it has good returns," Mr. Andrew Okumu (pictured), the Sacco's Chairman of the Investment committee explains. In addition, he continues, "Real estate doesn't depreciate."

Counting the Gains

Two years ago, the sacco bought 16 hectares of land in Kitengela and subdivided it into 118 plots of half hectare and quarter acres The sacco then sold the plots to members and made a profit of Shs 7 million.

"This encouraged us to pursue this investment policy. The strategy is for the sacco to source external funds, purchase a piece of land, subdivide it into plots which are sold to members at a fair price. The members benefit and the sacco benefits as well."

Development of the plots is essentially left to individual owners but the sacco ensures uniformity in the pattern of structures to maintain a standard."In pursuit of this investment policy, the sacco plans to buy land in most of the major towns where their members are to be found.

"After completing the sale of Kitengela plots, we moved to Kisumu in 2009 where we now have 50 plots. Our next stop will be Eldoret before moving to the Coast, Eastern and Central provinces.

"In this way, we will ensure sacco members who are outside Nairobi have a chance to purchase property in urban areas that are accessible to them.

Rising Demand for Land

"At the same time, the sacco will also be contributing to national efforts to alleviate shortage of housing in outlying towns.

"The demand for land is always going up. And so are the prices. A plot you bought for Shs150, 000 a few years ago, will be now nearly a half a million shillings. And there isn't a moment it will ever come down."

Fewer Risks

Regarding risks, Mr. Okumu recounts the story of Safaricom IPO (initial public offer). "Many saccos rushed to buy shares in Safaricom, some using even borrowed funds. But it was a big mistake. And many of these saccos have been plunged into difficult liquidity problems. We regard ourselves as having been fortunate not to have bought the Safaricom shares.

"As you are aware, saccos do not have funds for speculative investments such as shares and stocks. We need sure and steady investments. Real estate is one of these."

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