Even with the influx of digital financial services, Saccos seem to be weathering the economic storm just fine.
Analysis of audited results for more than 100 companies — listed and non-listed — by Financial Standard showed that deposit-taking Saccos were doing well, unlike microfinance banks (MFBs), which made losses.
Only two Saccos slid into losses. This was a far cry from ten that saw their profits increase. The profit-makers in the year to December 2018 included Kimisitu, Kenya Police Sacco Society, Mudete Factory Growers, Mwalimu National and Stima.
Other Saccos in the list that returned a profit in 2018 were Boresha Sacco Society, Gusii Mwalimu Sacco, Metropolitan National Sacco and Imarisha Sacco Society. The loss-makers included Afya Sacco and Kenversity Sacco Ltd.Saccos are struggling with a vote of confidence after the Ekeza Sacco scandal that has seen members lose their hard earned cash — while Mwalimu and Stima Saccos have been latched with doubtful investments with industry players saying the malaise seeps deep in the sector.But Metropolitan Sacco Chief Executive Francis Ng’ang’a says there is nothing to worry about.
He says there are many Saccos facing challenges, including dealing with a membership that comes from outside the traditional pool. Metropolitan Sacco, for example, was supposed to be a co-operative society for teachers, particularly from Kiambu. It opened its membership to the public, which he reckons brought some positivity in terms of financial strength, but also exposed it to external factors.
Moreover, Saccos have been hit with a tough economic environment including for Metropolitan Sacco, the near collapse of Nakumatt and Uchumi Supermarkets, which employed lots of their members. “The fact that most of our members are in the teaching fraternity, any slight change in our finances has serious repercussions to our members who are not teachers,” Mr Ngángá noted. He reckons that it was such wide linkages to the rest of the economy that normally to some extent tend to have a bearing on their performance.“We have cushioned ourselves from these economic upheavals and hired a consultant to help stabilise our financial aspect,” said Ng’ang’a.
Saccos Societies Regulatory Authority (Sasra) Chair Sammy Ruto in the supervisory report published last year, also warned that the sector is facing unprecedented competition from mobile lending applications taking away their business.
“The Sacco sector must brace itself for stiff competition from other financial service providers; particularly, with the growth in popularity of the digital credit services that principally specialises in unsecured micro-credit loans, a forte hitherto associated with Saccos,” Mr Ruto said.