MENTOR SACCO REGISTERS GROWTH AS IT OUTLINES PLANS TO UPGRADE ITS CORE BANKING SYSTEM DURING THE 47TH AGM

Buoyed by its huge growth in numbers and membership, tier one Sacco’s next frontier of growth will be largely driven by digitization

By George Gichuki

Mentor Sacco, a leading tier one deposit taking Sacco Annual General Meeting (AGM)  was held at Mumbi Grounds, Murang’a town in the third Saturday of January. It was a hybrid event – both virtual and physical – in line with the Sacco’s bylaws. This year’s AGM had a record breaking physical   attendance of over three thousand members.  They started arriving at the venue from as early as six in the morning.

Presenting his report during the colourful AGM, the Chairman, Mr. Anthony Kamau noted that Mentor Sacco registered impressive results in the 2023 financial year, the challenging economic times in the country not withstanding. “ I am happy to report that our Sacco’s   2023  impressive results were driven by our passionate focus on members’ needs as we executed a business plan within an economy facing high inflation,” he said.

Standing out, the asset base of Mentor Sacco grew by 14.5% – from Kshs.11.8 billion in 2022 to Kshs.13.5 billion in 2023. Additionally, its total revenue increased from Kshs. 1.5 billion in 2022 to Kshs. 1.8 billion in 2023. Members were therefore paid interest on non-withdrawable deposits at a rate of 12.4% and dividend on share capital at 15%.  This was equivalent to Kshs.1.2 billion –16.5 %    more than what they were paid in 2022.

Growth

Mentor Sacco continued to register growth in various parameters. Embarking on an aggressive marketing campaign targeting new market territories, the Sacco’s membership grew from 32,599 in 2022 to 39,912.  “Notable in the year, the Sacco recruited over 3,000 new members in Kiambu and more are still coming on board courtesy of our good corporate reputation,” Mr. Kamau emphasized. “To sustain this growth, I urge all the members to passionately market the Sacco in the forums they are privileged to attend through positive word of mouth,” he added.

The core capital of Mentor Sacco grew by Kshs. 254,599,891 in the 2023 financial year, compared to Kshs. 207,775,552 in 2022. The institutional capital on the other hand grew by Kshs. 125,874,185 in comparison to Kshs.113,696,488 in 2022. Against this background, the Sacco sufficiently made retentions from its surpluses, hence building its capital base.  “These key capital adequacy parameters show that that the Sacco is stable and operates within the prescribed minimum capital adequacy requirements,” noted Mr. Kamau.

The Sacco’s cash and cash equivalents increased by Kshs. 443,525,158 million in 2023 from Kshs. 2,033,555,086 billion in 2022.  Effectively then, in 2023, its liquid assets ratio increased from 131% in 2022 to 145.3%.  The minimum prescribed by the Sacco Societies Regulatory Authority (SASRA) is 15%.

Cementing this trend, the share capital of Mentor Sacco increased from Kshs.739,534,288 million in 2022 to Kshs. 868,219,994 in 2023 which was equivalent to 17.4%.  Further, the total members’ deposits increased from Kshs.8,908,466,620 billion in 2022 to Kshs. 10,201,536,745 billion in 2023. “This increase in deposits has been realized through contribution by members in schemes like ordinary deposits, front office savings account (FOSA) deposits and Mazao deposits,” said Mr. Kamau.

Securing the future

Mr. Kamau also informed the members that Mentor Sacco has developed a product – dubbed golden account – which serves as a pension scheme. It is aimed at providing financial security to members. “For the pensionable members, the product is aimed at bridging the gap between when one stops earning a salary and when the monthly pension is received,” noted  Mr. Kamau.  He added that the contribution to the golden account can be through : check off, standing orders, mobile banking, direct cash deposits or bank transfers. Members can access this account upon celebrating their sixtieth birthday.

Loans and advances

The loan book of Mentor Sacco in 2023 grew by Kshs. 1,038,577,169 billion (an equivalent of 12%) compared to Kshs. 1,174,469,195 in 2022.  In that regard, the total loan book as at 31st December 2023 was Kshs.9,858,945,126 billion  up from Kshs. 8,683,011,938 billion in 2022.

Accolades

Over the years, Mentor Sacco’s strong performance has been recognized and celebrated nationally and at the county level. 2023 was not an exception. During the 2023 national Ushirika Day celebrations, the Sacco attained position one countrywide in risk management. It also emerged the best in risk management among the deposit taking Saccos – employer based Saccos tier one. In the same vein, it attained position three countrywide as the most improved employer based Sacco in the tier one category.

In Murang’a county, Mentor Sacco emerged the best overall co-operative society during the 2023 Ushirika Day celebrations. Additionally, it scooped the highest savings per member, best exhibitor and the highest interest (FOSA) awards. That was no mean achievement.

Pertinent issues

Mrs. Joyce Ndegwa, the Chief Executive Officer (CEO) of Mentor Sacco responded to the pertinent issues raised by the members during the AGM. In this regard, she clarified that should a member with a loan be financially constrained at some point, then the Sacco is willing and able to engage him or her on how to restructure the facility. 

She also emphasized that a percentage of the Sacco’s total revenue is retained every year in order to build on its stability. It is referred to as institutional capital.  “One of our major objectives is to make our Sacco stable and hence we retain a percentage of our total revenue annually as opposed to paying the same to the members as dividend and interest,” said Mrs. Ndegwa adding that this is also a regulatory requirement by SASRA. In that regard, she urged members to continue patronizing the products and services of the Sacco so that it can register more growth. “We would like the future generations (members) to inherit a solid organization and it is therefore our duty to manage its resources prudently,” she added.

In the last five years, Mentor Sacco has registered phenomenal growth.  The membership for instance is currently heading to 40,000. In this era of digitization, most of these members are transacting online as opposed to visiting branches. Consequently, Mrs. Ndegwa informed the members during the AGM that the Sacco is planning to migrate from its current core banking system to a new one that is more robust. This will enable it to serve the members more efficiently and effectively. 

Mrs. Ndegwa also encouraged members to channel their other sources of income – including proceeds from tea, milk and real estate – to the Sacco. “You can deposit that income directly to your account via our M-Pesa paybill number – 540800- without incurring any charges,” she advised the members.The CEO also reassured members who are not in active employment that they enjoy the same products and services as their active colleagues.

Road ahead

According to Mr. Kamau, Mentor Sacco’s three year strategic plan (2024-2028) aims at fortifying financial stability, fostering community progress and ensuring the prosperity of members.  In particular, the new strategic plan is aiming at increasing the membership from 39912 in 2023 to over 80,000 in 2028, enhancing efficiency in service delivery by acquiring a new core banking system, investing in a robust cyber security infrastructure,  enhancing digitization, growing the revenue from Kshs. 1.8 billion in 2023 to Kshs. 3 billion by 2028  and growing the loan  book from Kshs. 9.8 billion in 2023 to Kshs. 14 billion by 2028.  By the same token, the strategic plan aims at growing the members’ deposits from Kshs. 10.2 billion in 2023 to kshs.16.4 billion by 2028, growing the share capital from Kshs. 868.2 million in 2023 to Kshs. 1.5 billion by 2028 and finally, enhancing the Sacco’s risk management to 100% in 2024 and beyond.

By and large, the goals outlined by the 2024-2028 strategic plan of Mentor Sacco are quite ambitious. That not withstanding, with a rich brand heritage of forty seven years, the fast growing tier one Sacco looks set to achieving them. Its future is certainly promising.