MENTOR SACCO: A LIGHTHOUSE OF VALUE

By George Gichuki and Joseph Macharia

Mentor Sacco Society Limited (commonly referred to as Mentor Sacco) traces its early origins back in 1977. That is when a group of close to three hundred focused and audacious teachers from the then Murang’a district joined hands to form a savings and credit c-operative (Sacco) to cater for their financial needs. At a time when the financial sector in the country as a whole had not yet been transformed and liberalized as it is today, the main objective of the pioneer members was to pool their resources as they strived to achieve financial success.

During its early days, it was known as Murang’a Teachers Savings and Credit Co-operative Society since its members were teachers hailing from Murang’a district which today forms part of the great Murang’a County. That time, membership was confined to teachers employed by the Teachers Service Commission (TSC) only. For over four decades, Mentor Sacco has grown in quantum leaps to meet the threshold of being bestowed a tier one Sacco status. The Sacco and Societies Regulatory Authority (SASRA) classifies a Sacco exceeding Kshs. 5 billion in assets as tier one.

The Journey

Tired of being locked out of the formal financial institutions of the day, majorly the big commercial banks, the three hundred teachers came together to start what would eventually morph into a giant tier one Sacco with an asset base of over Kshs. 11.7 billion as at the end of the 2022 financial year. Indeed, the pioneer members laid a robust foundation upon which the then tiny Sacco would flourish in the years to come.

The now giant Sacco began its operation in a table-banking style, with its headquarters in Murang’a town. Members made monthly contributions which were in turn loaned to their colleagues on fairly favourable interest rates of around 6.5% per annum. The members who took the loans paid back with an interest which would annually be shared in form of dividends. This vicious cycle fostered loyalty among members and cultivated a strong savings culture which

are two supreme qualities for growth of any Sacco. Membership also increased steadily as more teachers were enlisted along the way. The number of members has grown one hundred and fifteen times from the initial three hundred to over thirty five thousand.

As the Sacco’s membership continued to grow, it launched a second branch at Kenol town in 2010. One of its most significant milestones was in 2011 when it opened its common bond. Consequently, members from other professions, civil servants and business people started coming on board. By the same token, it transitioned from back office services activities (BOSA) to front Office Services Activity (FOSA). This created a window for the Sacco to provide deposits, credit and cash transfer among other services to its members. Currently, Mentor Sacco has five full-fledged branches : Murang’a, Kenol, Thika, Nairobi and Ithanga. Additionally, it has satellite branches in Kandara, Kangari, Kangema and Kiriaini.

Most importantly, Mentor Sacco has embraced mobile banking in line with the market trends. To that end, it has developed a product dubbed Mentor Quickcash through which members are able to deposit and transfer money, apply for loans and pay for utilities among other functions.

Loyal members

One of the major factors that has played a huge role in the massive growth of Mentor Sacco is the loyalty of members. They are its devoted brand ambassadors. Mr. Antony Kamau, Chairman, board of directors, acknowledges this point. “Our members are very loyal and they have significantly contributed to our growth by patronizing our products and services, besides referring their friends and colleagues to us ( word of mouth advertising),” he says.

Speaking at this year’s members’ information day (MID) held in Kandara sub-county, Mrs. Joyce Ndegwa, the chief executive officer (CEO) also noted with satisfaction the unwavering loyalty of the members. “I would want to thank our members in a special way because of their patronage,” she said. “They have been very loyal to their Sacco and as its brand ambassadors, they have played a major role in the growth of its membership,” she added.

Goodies for the Members

Being a member of a Sacco comes loaded not only with economic advantages, but also a sense of financial freedom. According to Milfred Wairimu the co-operative officer in charge of Kigumo sub-county in Murang’a , there are many benefits of joining a Sacco. “One is that when you join a Sacco, you become its shareholder, hence you contribute in making important decisions,” she says. In accordance with the Co-operative Act of Kenya Cap 490, the highest decision making organ of Saccos is the Annual General Meeting (AGM), where members are the key participants. “Another advantage is that you can access loans at low interest rates compared to other financial institutions,” she continues. Mentor Sacco offers its members a wide array of financial solutions at very friendly terms.

“Another advantage is that Saccos are not focused on profit maximization but on running their business sustainably and sharing their earnings annually through dividends on share capital and interests on deposits,” she adds.

Members’ information days

Mento Sacco conducts members’ information days (dubbed MIDs) annually in line with one of the co-operative principles: education, training and information. “ Over the years, it has been our tradition to organize MIDs in order to keep our members informed and educated, save for the Covid-19 period when protocols and restrictions to curb the spread of the pandemic were put in place by the Ministry of Health,” said Mr. Anthony Kamau, Chairman, Mentor Sacco during this year’s MID at Ikumbi primary school – Kigumo sub county.

The CEO, Mrs. Ndegwa expounded further on this issue: “One of the principles of co-operatives is education, training and information and we have not been left behind in that respect.” She added :“We always make sure that we set aside some time so that we can inform and educate our members on various issues regarding their Sacco in particular and the co-operative movement in general.”

Saccos also promote savings culture among members through the mandatory monthly deposits. To that end, Mentor Sacco has developed innovative savings products based on the needs of its members like Mazao shares and ordinary deposits.

The blueprint

As a tier one Sacco, Mentor has endeavoured to increase its footprint in order to serve its members more efficiently and effectively. Currently, the Sacco is making major inroads in Kiambu, Nairobi, Machakos and Kajiado counties with a target of growing its membership from thirty five to fifty thousand by 2024. “ Our members have to a very large extent supported our marketing campaigns through referrals,” said Mr. Kamau during an interview with us.

Bottom Line

In 2022, Mentor Sacco recruited 5,633 new members as compared to 4,517 in 2021 which saw a 15.1% growth in total membership from 28,032 to 32,599. Additionally, its asset base increased from Kshs. 10.3 billion in 2021 to Kshs.11.76 billion in 2022. This represented a growth rate of 14.1% – 3.3% higher than in 2021.

In the same breath, Mentor Sacco’s share capital rose from Kshs. 625.8 million in 2021 to Kshs.739.5 million in 2022, an increase of 18.2% – in comparison to 2021’s 13.7%. Members’ deposits also increased from Kshs. 7.84 billion in 2021 to Kshs 8.908 billion in 2022.

In 2022, over 10,811 members received loans amounting to Kshs. 7.4 billion, as compared to Kshs. 7.12 billion granted the previous year.

By the same token, the total income jumped from Kshs. 1.315 billion in 2021 to Kshs.1.541 billion in 2022 which resulted in members pocketing dividends amounting to Kshs. 1.018 billion – an equivalent of 66% of the total income. This dividend payout was 18.7 % more than the 2021 one.

Always a winner

Mentor Sacco’s exemplary performance has won it accolades both nationally and at the county level. The Sacco scooped the Urban Sacco of the year award for three consecutive years from 2011 to 2013, at the county level. In 2011, it was named the Best Managed Teacher’s Sacco and second Best Managed Co-operative country-wide. At the county level, Mentor Sacco emerged the best overall co-operative society in Murang’a County during the 2023 ushirika Day celebrations. It also scooped the highest savings per member, best exhibitor and the highest interest (FOSA) awards.

At the national Ushirika Day celebrations this year, Mentor Sacco attained position one countrywide in risk management. Additionally, it emerged the best in risk management among the deposit taking Saccos – employer based Saccos tier one. Moreover, it attained position three countrywide as the most improved employer based Sacco in the tier one category.