The savings and credit cooperative societies (saccos) movement has over the years gained popularity and attracted Kenyans keen on saving for the future.
It also provides a banking partner where loans are relatively cheaper than in the convectional financiers.
But growth of the movement has come with an increasingly chilling fear over the safety of members’ deposits.
Perhaps, the best example is the Ekeza sacco where the leadership under the watch of controversial preacher David Kariuki Ngari aka Gakuyo swindled over Sh2 billion of member deposits.
But while State agencies led by the industry regulator Sacco Societies Regulatory Authority (Sasra) and the Director of Criminal Investigations acted swiftly, leading to the refunding of the members last year, another sacco has taken a radical path keen to ensure its members do not suffer similar fate.
Kenya Police Sacco has taken measures it says will strengthen its already sound financial standing and leadership besides increasing its asset base.
On February 25, the sacco made changes to its leadership structure that its soft-spoken board chairman David Mategwa says is akin to killing two birds with a single stone.
Delegates voted to change the minimum deposits for a member wishing to vie for election as a delegate from Sh400,000 to Sh700,000.
They also doubled the minimum deposits for a delegate wishing to stand for election to the board to Sh2 million from Sh1 million.
Despite fears that the changes will lock out those seeking to rise up the leadership ladder, Mr Mategwa sees it as a silver bullet to grow deposits and enhance its already vibrant leadership.
“The increment is a form of financial discipline. Remember that if a sacco collapses, then the government first attaches the deposits of the top officials. Just like in the village, you must have cows in order to be entrusted with the cattle dip, there must be sacrifices at the leadership of our saccos,” Mr Mategwa says.
To him, leadership is a form of trustee and he adds that it is critical to guarantee the safety of members’ deposits, some from police officers who work in extremely tough conditions.
Mr Mategwa reckons that by increasing the minimum deposits for those seeking seats as delegates and board members, it weeds out those who see leadership as an avenue to swindle funds.
The increment in the minimum deposits for those seeking leadership comes at a time the sacco has set an ambitious target of a Sh50 billion asset base ahead of its Jubilee celebrations next year.
“Besides being a form of discipline, the decision to increase the requirements is also boosting our journey to grow the asset base,” he adds.
The sacco’s asset base stood Sh39.1 billion and a loan portfolio of Sh32.6 billion in the year to December, pointing to just why Mr Mategwa says that the move to increase minimum deposits for those seeking leadership is a silver bullet.
Started in June 1973, the sacco has grown its membership from a paltry 690 to the current 63,009. Mr Mategwa adds that ahead of next year’s Jubilee celebrations for the sacco, they target to hit 70,000 members.
The State has previously said the biggest challenge facing saccos are weak governance structures, that have left loopholes for unscrupulous leaders to swindle funds and force members down a financial and psychological turmoil.
“Most challenges we talk about are governance, weak structure and people taking advantage of that to misappropriate money from members, things that are inimical to the interests of the members,” then Trade and Industrialisation Secretary Munya warned. He is the now in charge of the Agriculture docket.
Sasra says many Kenyans have lost their money to pyramid scheme-like entities operating virtually and purporting to be saccos by hoodwinking the public to save with them with promises of good returns, only to disappear.
The dust of the Ekeza sandstorm is yet to settle but Mr Mategwa says the changes to the minimum requirements for one to lead Kenya Police Sacco is a timely move to instill confidence from within.
Early this year, South African rating agency Global Credit Ratings (GCR) upgraded the rating of the sacco citing good asset quality, healthy funding and liquidity.
