Tier one Sacco registers good results in 2019 with its financial position becoming stronger and more members coming on board
By George Gichuki
Mentor Sacco successfully held its 43rd Annual General Meeting (AGM) on Saturday at Murang’a Sports Club. The members turned up for the important event in large numbers. Going by the financial results that were presented during the AGM, 2019 was a very good year for the tier one sacco. It registered remarkable growth in all the key performance parameters: total assets, total deposits, loans, share capital, core capital and reserves. In addition, three thousand and thirteen members joined the sacco in 2019, demonstrating their confidence in the brand.
“In 2019, Mentor Sacco remained financially stable as evidenced by its compliance with the minimum prudential requirements in capital, liquidity, asset quality and reserves,” said Mr. Anthony Kamau, the board of directors chairman, during his address to the members.
Due to this remarkable performance, the members were paid a handsome dividend of 15% on share capital, while they earned an interest of 13% and 11.5% on Mazao and other deposits respectively. The total amount of dividends paid was over Kshs. 638 million.
The co-operative model
The co-operative model enables individuals to pool their resources in order to attain various socio-economic goals. Unlike other lenders then, saccos are not driven by the need to generate huge profits. Since they are owned by the members, saccos price their products competitively. “Co-operatives have a dual purpose – to give their members good economic returns, while taking care of their social needs,” emphasized Professor Esther Gicheru, the deputy vice chancellor finance planning and administration, the Co-operative University of Kenya. She was the chief guest during the AGM.
It is against this background according to Professor Gicheru that unlike commercial lenders which focus a lot on generating huge profits in order to give their shareholders an equally huge return on their investment (hence charging high interest rates on their loans among other products), saccos charge competitively for their products. Whereas it is possible for saccos to charge high interest rates on their loans for instance, hence leading to more profits and huge dividends payments to their members, Professor Gicheru advised that such a model would overburden members with unnecessary debts. Ultimately, this would impoverish the members as opposed to improving their socio-economic status as envisaged in the co-operative model. “Cases of saccos disposing their members’ assets through public auctions because of failure to service loans are very rare because they charge very competitive interest rates and they are mindful of their members’ welfare,” she said.
Professor Gicheru also observed that saccos should strive to maintain steady growth and profitability while embracing sound risk management, trustworthiness (loyalty) at the market place and effective corporate governance. “Being the supreme decision making organ of saccos in particular and co-operatives in general, the AGM’s key mandate is to give policy direction,” she added.
A call to borrow
Mentor Sacco’s chief executive officer, Mrs. Joyce Ndegwa emphasized to the members that being investors, they are expected to mobilize enough deposits for onward lending. By the same token, she said that since they own Mentor Sacco, they should ensure that its business is running smoothly. She also called upon the members to patronize all the products being offered by the sacco in order to enhance its profitability and sustainability.
In the same regard, Mrs. Josephine Mwangi, the county director of co-operatives, Murang’a County, advised the members to apply regularly for loans and use the same to improve their livelihoods. “The primary goal of joining a sacco is to save and then access credit in order to grow economically,” Mrs. Mwangi observed.
Due to its exemplary performance in a market that is characterized by cut-throat competition, Mentor Sacco has over the years been accorded many awards. In the 2019 Ushirika Day celebrations for instance, it emerged the best overall co-operative society countrywide in operating policies, information security and insurance coverage.