MENTOR SACCO: A STRONG FOUNDATION BUILT ON PRUDENCE

Tier one Sacco launches a new branch as it seeks to have a stronger presence in the market

By George Gichuki

Mentor Sacco has a very rich history. The tier one savings and credit co-operative society was started by a visionary team of about three hundred teachers from the then Murang’a district (now Murang’a County) way back in 1977. Back then, it was known as Murang’a Teachers Savings and Credit Co-operative. It rendered its services to teachers employed by the Teachers Service Commission (TSC) who would save and access credit in order to meet their day to day financial needs like educating their children and putting up modern houses. In 2000, through a common vote by the members, it opened its membership to civil servants.

Come 2011, in line with the market trends, the Sacco opened its common bond hence accommodating members from other professions as well as the business community, provided they were legal citizens of Kenya. Consequently, it rebranded into Mentor Sacco and started expanding beyond its traditional Murang’a market.

Product offering

Mentor Sacco offers ‘front office services activity’ (fosa). Its members are therefore able to open and operate savings accounts, on top of accessing various loan products. To that end, it is regulated by the Sacco Societies Regulatory Authority (SASRA). Its loan products include: emergency, development and ‘fosa’ (for those who channel their savings through the ‘fosa’ model).

Its flagship product is branded ‘Mentor Quick Cash’ and it is offered through the mobile phone. “This innovative product enables our members to deposit and withdraw cash, pay various utility bills, confirm balances , apply for loans and transfer funds using their mobile phones on a real time basis,” says Mrs. Joyce Ndegwa, the Chief Executive Officer. “It is very cost effective and convenient and we are therefore encouraging all our members to use it,” she adds. Moreover, in partnership with the Co-operative Bank of Kenya, Mentor Sacco offers Visa branded automated teller machine (ATM) cards to its members as well as cheque books to those operating current accounts.

The vibrant Sacco has an interactive website through which members can access important information, share feedback about the products and services being offered, besides 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 Mentor 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. “They can only 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. All the same, this period can be made shorter depending on the member’s needs and character. Mentor Sacco 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. 

Network

Currently, Mentor Sacco has six full-fledged branches that are located in Murang’a town (the head office), Parkroad – Nairobi, Kenol town, Thika and Ithanga. It also has small outlets (referred to as satellites) in Kiriaini, Kandara and Kangari urban centres. The Ithanga branch was recently upgraded from a satellite to a full-fledged branch in order to meet the demand for banking services among the local residents. “We launched the Ithanga in fulfilment to a promise we had previously made to our loyal members and now they do not have to travel all the way to Thika town in order to bank with us,” says Mr. Anthony Kamau, Chairman, Mentor Sacco.  The Sacco is also planning to launch agency banking in various shopping centres located in the 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

Mentor Sacco stands out because of offering exemplary service to its members as well as innovative products. “We take time to interact with our members so that we can understand their needs,” says Mrs. Ndegwa. “In response, we develop products that address their needs and aspirations,” she adds.

Most importantly, the Sacco ploughs back a significant percentage of the profits it generates every year to its members through dividends. The practice has endeared it a lot to the members and it has enabled the ambitious organization to conquer more market share.

The sacco owns the tallest building in Murang’a town (Mentor Complex) which houses its headquarters and a number of leading businesses and organizations.