Subscribe | Advertise | Contact Us
Investment News Kenya
News, Analyses and Information on Investing, Living and Traveling in Kenya
Kencom Sacco
Kencom Sacco Chairman, Mr. Jeremiah Sirma:
'How we keep our sacco growing'
Kencom Sacco is one of the few saccos determined to pursue very clear and well reasoned investment policies. The result has been not only a satisfied and increasing membership, but also the satisfaction of knowing the members are benefitting from their investments in the sacco. Investment News discusses with its long-serving chairman, Mr. Jeremiah Sirma, (pictured) the philosophy behind the sacco's success and its future plans.
kencom sacco chairman Mr.Jeremiah Sirma
By Emma Muli
Fifteen years ago, Mr. Jeremiah Sirma and a few of his colleagues decided to start a sacco for members of the Kenya Commercial Bank. Today, the sacco that came to be known as Kencom Savings and Credit Cooperative Society, is one of the most successful in Kenya.
"Members needed loan facilities. We believed that such loans could only be provided efficiently and urgently by a sacco," Mr. Sirma, who is the Sacco's chairman, says, explaining the reasons behind the formation of Kencom Sacco in 1994. "We believed our own sacco would solve our pressing financial needs." The suitability of the idea is confirmed by the fact that Kencom Sacco has stayed on a financial high altitude since its formation.
Statistics illustrate the story better. Its membership has increased to 3,000 despite heavy staff retrenchments in the backing sector in recent years. Its share capital has increased to Shs 300 million while revenue has increased to Shs 30.9 million in 2008, rising from Shs 21.3 million the previous year.
Members Get Increased Loans
Loans given to members have increased to Shs 78, 023,059, bringing the total loan portfolio to Shs 231,327,446 as at the end of 2008. At the same time share capital grew to Shs 121.2 million while total assets of the sacco stood at Shs248,240,257 by the end of 2008, an increase of 36 per cent.
Reason for Success
According to Mr. Sirma, a key reason for sacco's success is that it tailors its products to suit the needs of its members. "For instance, there are members who don't need school fees because their children are still young. They need different kinds of products. We therefore encourage such members to take loans to start and support businesses such as real estate. We have members who have purchased tractors for farming businesses and others who have started schools and colleges. "
In this way, says Mr. Sirma, Kencom Sacco is helping members and contributing to the development of the country. In deed, he believes that saccos have contributed immensely to the development of Kenya.
"If you look around, you will not miss to see a development which is owned by a sacco or which has been set up using sacco funds.The matatus on our roads are owned by sacco members. The tall, modern buildings in our cities and towns are owned by saccos and their members. And the beautiful homes all over the countryside have been put up using sacco funds".
In deed, it is estimated that one in three of all working Kenyans are members of an investment group, mostly saccos (saccos control more than Sh130 billion orUS$1.7 billion while informal groups similarly patterned control another Sh 35 billion, or US$469 million in savings). And unlike the commercial financial institutions and businesses, Mr. Sirma is convinced that saccos have the best governance structure, enabling them to overcome many obstacles. He uses the case of the collapse of US banks in 2008 to illustrate the point.
"Banks in the US had to be bailed out by the government. But saccos, which are known as credit unions in the US weathered the economic crisis without government intervention. It is because the sacco governance structure is transparent.
"Companies, including banks, are out to make a profit for their shareholders and to ensure they pay out huge salaries to their employees. When they have a problem, rather than lose customers, they look for ways to paint a good picture of their financial status. On the other hand, saccos don't have high running costs and their transactions are open to members."
Management Skills
That is why Mr. Sirma, who has steered his sacco as chairman since its inception, believes that saccos are an excellent vehicle for development. The government can help seal the small holes that encourage the temptation by managers to lend out money recklessly; it can ensure saccos have a strong savings base - most often interfered with by employer reluctance to remit funds - and it can encourage mergers for societies that are too small for efficient service delivery.
"That way saccos can be able to complete effectively with other financial intuitions like banks that keep targeting sacco members," says Mr. Sirma, adding that because of Kencom Sacco's strong financial base, effective marketing strategies, and diversified products, the sacco was not affected by commercial banks' entry into the micro finance market. "We don't see banks as our competitors. They have their niche and we have ours. We offer products they cannot offer. For example, we have products such as masaa loan which you can get in a few hours. Banks cannot improve on that."And his dream is to expand the sacco to serve members of the KCB based in branches in the Eastern Africa region and to see the sacco play a greater role in assisting the government in its efforts to alleviate poverty and to achieve its vision 2030.
Sirma's leadership skills may be attributable to his great grandfather who was a traditional chief and who led his Lembus people in rebellion against British colonial rule in 1890.
INEWS: Liked this story?
Related stories...
Investment News Magazine
Investment News is Kenya's authoritative guide to investing and travel in Kenya.
Current Issue
Current Issue
.jpg)
Inside...
Which internet business opportunities are there in Kenya?
Who owns Coop Bank?
Equity Bank
Succeeding in business in Machakos
There are no comments yet