LEADING SACCO NOT RESTING ON ITS LAURELS

Stima Sacco has made many major strides since it was established, but it is continuously revamping its product offering and fine tuning its service delivery in its endeavour to conquer more market share

By George Gichuki

Over the years, savings and credit co-operative societies (Saccos) have played a pivotal role in the socio-economic development of our country. Indeed, their ability to provide credit at very competitive interest rates and friendly payment terms has enabled them to win many customers.  Consequently, Saccos have immensely contributed to the deepening of Kenya’s financial sector.  One of their unique features is that at the end of every financial year, Saccos share profits in form of dividends among their  members based on the shareholding of the latter. Through their membership of Saccos, many individuals have established successful businesses, educated their families and  put up  modern houses , besides acquiring assets like motor vehicles and land, among other benefits.  Saccos are mainly formed by individuals in the same profession, under the same employer or pursuing the same line of business.

Going down memory lane
Stima Sacco is one of the leading Saccos in the country.  With an asset base of Kshs. 25 billion and a membership of 103,000, the giant organization was formed by employees of the then East African Power and Lighting Company (EAPL) in 1974.  Nevertheless, after   the collapse of the   East African Community in 1977, the operations of EAPL were confined to Kenya and subsequently, the company was renamed Kenya Power and Lighting Company (KPLC) in 1983. Come 1997, Kenya Power was separated from KPLC and renamed Kengen – the latter was charged with the responsibility of generating power. In the 2000s, Kenya Electricity Transmission Company (KETRACO) and the Rural Electricity Authority (REA) were also split from KPLC.  In the same breath, in 2008, the Geothermal Development Corporation (GDC) was established to accelerate the development of geothermal resources locally. The membership of Stima Sacco cuts across all these organizations.
In 2008, when the Sacco Act was enacted by Parliament, the organization embarked on a transformation agenda. Consequently in 2011, it changed its bylaws to include other members outside the energy and allied sector.  Currently, the Sacco serves civil servants and employees of the Teacher Service Commission (TSC).  It has also opened doors to the business community and people from various walks of life. The membership is both individual and corporate.  Stima Sacco offers front office service activity (FOSA) launched in April 2003. This facility allows its members to save and withdraw money on demand.

Governance
Stima Sacco has a nine member board. These members are elected from delegates.  “ Members from  various electoral  zones  elect  the  delegates ,  who in turn elect the board during  the annual  general  meeting ( AGM),” says Mr. Chris Useki, the chief executive officer ( CEO).  The delegates also elect  three members of the supervisory committee  while the CEO is appointed by the board.  Finally, the top management team is appointed by the board and the CEO.

Unique
Stima Sacco stands out from the competition because of offering unique products.  A good example of such a product is the makeover loan through which the Sacco finances its members to purchase goods (like solar panels) directly from various suppliers. This ensures that the loan facility is not diverted to other uses like consumption of luxurious goods.  “Most importantly though, our uniqueness is defined by our ability to offer members exemplary customer service which unlike products, cannot be replicated by other players in the market,”   avers Mr. Useki. “We strive to meet all the financial needs of our customers under one roof including payment of school fees, hospital bills and other emergencies so that they are empowered for life,” he adds.
The giant Sacco has also invested heavily on technology in a bid to enhance its service delivery. “It is in our interest that our members should not queue for long in our banking halls when in need of loans and other financial services and that is why we have embraced technology as a driver of our products and service delivery,” the CEO further says. “Our ultimate goal is to leverage on technology in order to minimize our cost of doing business and boost our revenue base,” he adds. In that respect, the Sacco has developed a mobile phone platform (known as MPawa) through which its members can access  various loan products, transfer funds and pay utility bills ( like power and water) because it is connected with various financial systems.  By embracing technology, Stima Sacco is expecting to grow its membership from the current number ( 103,000) to more than one million by 2020.

Delivery channels
Besides technology, Stima Sacco reaches its members through  its  branches  in Nairobi ( Headquarters and Kimathi street), Nakuru, Kisumu, Mombasa, Olkaria, Embu  and  Eldoret.  It is also in the process of opening a  branch in Kawi Centre – in Nairobi’s South C.   Moreover, it is looking  forward to boosting its  countrywide outreach through agency banking.  In that regard, it is developing partnerships with institutions with a countrywide presence like Kenya Power, Posta Kenya and leading commercial banks.

Market trends
Effective first of January, 2018, all lenders in the country shall be expected to adopt the International Financial Reporting Standard – 9 (IFRS-9).  In that vein, one percent of a performing loan will be provided for in a lender’s books of accounts as non-performing as soon as it has been advanced. The strict accounting standard is meant to ensure that lenders are more prudent in their practices and losses accruing from non-performing loans are minimized.  Currently, provisioning for loans is based on their performance. They are deemed non-performing if they have not been serviced for more than two months.
“ Arising from this development, lenders will be very cautious and financing customers who are deemed risky will be curtailed,”  cautions Mr. Useki.  Nevertheless, according to him, this might be an opportunity for Saccos to attract more customers since their lending rates are competitive.
Stima Sacco is beefing up its risk management department so as to adequately address various risks arising in the market.  These are mainly credit risk and cyber crime.  “ With the ever growing online product offering, cyber crime is gaining currency forcing lenders to be hawk eyed in curbing the vice,”  he further says.

Mwananchi Sacco
As a FOSA, Stima Sacco has attracted very many micro, small and medium enterprises.  “We are encouraging them to save and borrow from us by offering them attractive products and services so that they can grow their businesses,” says Mr. Useki.  The lender is also arming   owners of small businesses with critical skills like taxation so that they can succeed in their endeavours. In addition, the Sacco is supporting the growth of agribusiness in the country, and currently, it is undertaking a pilot study on dairy farming as it prepares to develop a product that will facilitate them to buy farm inputs on credit.
Having been recently confirmed as the CEO, Mr. Useki’s vision is to guide his team steadily so that Stima Sacco can become the market leader in the country. “We are encouraging Kenyans from all walks of life to join us in their quest to be financially empowered,” he concludes.