MENTOR SACCO @ 40: MENTORING MEMBERS TO SUCCESS

Solid Sacco maps out a solid strategy as it sets its goal on growing to the next level

By George Gichuki

The history of the co-operative movement in Kenya dates back to 1908. That is the year when the first co-operative society was established by the colonial government. It was in dairy farming.  Nevertheless, it was not until 1946 that Africans got involved in the establishment of co-operative societies after the colonialists realized that there was a need for them to participate in the socio- economic development of the country.  The critical movement started growing fast in 1955 after the Africans were allowed to grow cash crops (mainly coffee) through the historic Swynnerton Plan.  When the country attained independence in 1963, this growth was accelerated by the formulation of policies that were friendly to the co-operative movement by the new government.
According to the 2017 Economic Survey, deposit taking savings and credit co-operatives (Saccos) which are regulated by the Sacco Society Regulatory Authority (SASRA) had assets valued at Kshs.342.8 billion in 2016. In addition, their deposits stood at Kshs.272.2 billion. This a very good example of the extent to which the co-operative movement in Kenya has grown over the years and the pivotal role it plays in fostering our economic prosperity.

Murang’a County
Being a predominantly agricultural region, Murang’a County has a rich history of nurturing highly successful co-operative societies which dates back to the colonial days. Both Weithaga and Kandara Farmers Co-operative Societies were established way back in 1953. In the same breath, in its hey days, Murang’a Farmers District Co-operative Union was an economic powerhouse that transformed the lives of many coffee farmers. From their earnings, farmers   were able to educate their families, besides putting up modern houses and meeting other needs.
Since the coming into place of devolved governments, Saccos have grown exponentially in Murang’a County. Currently, the county has two hundred and fifty Saccos in key areas of the economy including: finance, dairy farming, coffee, tea, horticulture, trade, transport and housing.  The county government has also supported the establishment of Saccos for women who are engaged in business and farming among other economic activities, local musicians and people with special needs. According to Josephine Mwangi, Murang’a County’s commissioner for co-operatives, the members of these Saccos are about 300,000. Some of the outstanding Saccos which have their roots in Murang’a but have now spread their wings in other parts of the country are Mentor Sacco ( formerly known as Murang’a Teachers Sacco), Amica ( formerly known Murata Sacco and mainly  serving coffee farmers in Murang’a) as well as Unaitas ( formerly  known as Muramati Sacco and  mainly  serving tea farmers in  Murang’a).
During the 2017 Ushirika Day (World Co-operative Day) Celebrations in Murang’a County  that were held  at the historic Ihura Stadium at the beginning of this month,  Mentor Sacco outshone its  peers and other exhibitors by clinching the  best overall  Sacco, the best exhibitor as well as the best theme interpreter  trophies.

Going down memory lane
As a popular adage goes, every journey starts with a single step. It has taken many years of  hard work   and dedication   by   members,  the board  and  management   of  Mentor Sacco to  grow and  expand  the leading  financial institution to its current status. “ The Sacco was formed by  about  three hundred  teachers  from  the then  Murang’a  district  in 1977 –  it  was    known as Murang’a Teachers  Savings and Credit  Co-operative at that time,” says Mrs. Joyce Ndegwa, the  chief executive officer ( CEO).  “In 2000, through a common vote by the members, we opened our membership to civil servants,” she adds.
But possibly, the most important development in the meteoric   rise of Mentor from a small savings and credit co-operative to its current status took place in 2011.  “During that year, we found it prudent to accommodate members from other professions as well as the business community in so far as they were   legal citizens of Kenya,” shares Mrs. Ndegwa.   In that vein, Murang’a Teachers Savings and Credit Co-operative rebranded into Mentor Sacco. “The rebranding exercise was informed by the fact that we wanted to bring on board members who were non-teachers, besides expanding our territory beyond the borders of Murang’a,” she further says.

Product offering
Mentor Sacco offers ‘front office services activity’ ( fosa) and therefore its members are able to open and operate accounts, on top  of  accessing various loan products.   To that end, it is regulated by SASRA.  Its loan products include: emergency, development and ‘ fosa’ ( for those who channel their savings through the ‘fosa’ model).
In addition, through a mobile banking platform that is branded ‘Mentor Quick Cash’,   the Sacco is able to offer value addition products that are accessible to its customers wherever they are located.   “Through this platform, members are able to deposit and withdraw cash, pay various utility bills and transfer funds using their mobile phones,” observes Mrs. Ndegwa. These transactions are real time. “Currently, making deposits through this platform is free of charge to our members and it is therefore a big incentive for them,” she further says.
Mentor Sacco also has an interactive website through which members can access important information about the organization, share feedback about the products and services being offered as well as downloading   loan application forms which they can in turn fill and upload without visiting the branches.   The Sacco is also in the process of developing a portal through which members can access their statements via the website.
Moreover, having opened its doors to the small and medium enterprises (SMEs) market segment, Mentor has developed a special loan product for them.  Nevertheless, since its main objective is mobilizing savings that it in turn lends to its members, SMEs have to save with the Sacco first, and then afterwards, based on their character and transactions in their accounts, they can access credit.

To become a member of the fast growing Sacco, one is supposed to have a minimum share capital of Kshs. 30,000 which is payable in instalments. Nevertheless, this amount must be fully paid before one can access a loan. “Members earn dividends from their shares and the minimum amount cannot be withdrawn,” advises Mrs. Ndegwa.  “All the same, they can withdraw their monthly deposits if they do not have any obligations with us,” she adds.
According to the Sacco’s By Laws, a member is supposed to save for at least six months before accessing credit.  But, this period can be made shorter depending on the member’s needs and character. The innovative organization has been able to attract very many new members because of offering competitive interest rates on its loans, giving it a competitive edge over the competition. “For those with salaries, the interest rate on loans is 1% per month on a reducing balance which effectively translates to 6.5% per annum,” the CEO observes.  “On the other hand, we offer business loans at a rate of 1.5% per month, translating to 9.75% per annum,” she adds.
According to Mrs. Ndegwa, members of the business community that her team has interacted with have given very encouraging feedback about Mentor Sacco’s products and services. In particular, they have been happy because of the short turnaround time when they apply for loans and the high dividends the Sacco pays them. “Mentor Sacco has maintained high dividends payment rates over the years because it is owned by members and it therefore has an obligation of giving them a good share of the profits it generates every year,” observes the CEO.

Growth and expansion plans
Currently, Mentor Sacco has five full-fledged branches that are located in   Murang’a town, Parkroad – Nairobi, Kenol town and Thika.  It also has small outlets (referred to as satellites) in Kiriaini , Kandara and   Kangari towns   as well as  Ithanga, which is at the far end of  Murang’a  county neighbouring the Eastern region of Kenya.
The Sacco is also planning to launch agency banking in various shopping centres located in areas it serves. “Expanding through agency banking is more cost effective than doing so through brick and mortar,” says Mrs.  Ndegwa.  “It will enable us to serve the members residing in areas which are far away from the main towns more effectively,” she adds.

Standing out
The hallmark of Mentor Sacco’s road to success has been exemplary delivery of service to its members.  “We take time to interact with our customers so that we can understand their needs,” avers Mrs. Ndegwa. “By so doing, we are able to develop tailor made products and services that address their needs and aspirations,” she adds.
In addition, the Sacco ploughs back a significant percentage   of the profits it generates every year to its members.  The practice has endeared it a lot to the members and it has enabled the ambitious organization to conquer more market share.

Visionary leadership
The vision of Mrs. Ndegwa, who recently succeeded Mr. Alex Irungu as the CEO (the latter retired after serving Mentor Sacco since its inception) is to take the financial institution to the next level.  “We have developed a five year strategic plan running up to 2018 and once we implement it, our Sacco will be stronger and very efficient,” she avers. Currently, Mentor Sacco has a loan portfolio of Kshs. 4.2 billion and a membership of 18,000. Nevertheless ,  despite  its  steady   growth  over  the years,  unlike some of its peers,  the Sacco  has no plans of being converted into a  commercial bank.
Nurturing the growth of organizations to greatness is not a walk in the park. It requires a lot investment in respect to time and resources as well as a great deal of patience.  That is the audacious journey that Mentor Sacco has embarked on for over forty years. Its major challenge currently is to learn from that experience as it endeavours to grow to the next level.  Going by its current momentum, there is no doubt that the once small organization is firmly on the road to greatness.  This is a story that clearly demonstrates the importance and value of pooling resources (through the co-operative model) in order to transform people’s socio-economic status.