THE STEADY RISE OF POLICE SACCO

Established by a  handful members fifty one years ago,  tier one Sacco is among the market leaders  in  a    fast growing   co-operative   sub-sector

By George Gichuki

It takes a lot of  blood, sweat and tears   to  start and  scale up a business successfully. Whereas some businesses are able to weather the storm ( especially at the start up stage)  and grow  into prominence, others struggle and collapse even before celebrating their fifth birthday.  There is a widely held  misconception that  entrepreneurs  need  a lot of capital to establish successful  businesses. That is not necessarily the case.  Globally  and  locally, we have many captivating stories of businesses whose roots were humble, but today, they have grown into giants in their respective  industries.  Kenya National Police DT Sacco (popularly known as  Police Sacco)  is a good  example.

Humble beginning

 Established in 1972 by only six hundred and ninety members, the tier one Sacco defied great odds in its nascent days.  By the end of 2023, its membership was 73,000. In February of the same year, it was pomp and ceremony as the President of the Republic of Kenya, Dr. William Ruto, joined the Sacco during its   fiftieth anniversary (golden jubilee) celebrations.  The President also launched   the Police Sacco stadium, that was  constructed by the society at a cost of Kshs. 89 million. Indeed, that was a major milestone.

Stellar performance

True to its  tradition,  Police  Sacco, recorded stellar performance in the 2023 financial year. The remarkable  financial results were released on 23^rd February   during its Annual Delegates Meeting (ADM) held at the Nairobi Serena Hotel.     Significantly, its asset base grew from Kshs.48.9 billion in 2022, to Kshs. 54.2 billion in 2023 – an equivalent of 10.8%.Additionally, the non-withdrawable deposits grew by 10% – from Kshs.25.9 billion in 2022 to Kshs.28.5 billion at the end of 2023.  By the same token, loans and advances grew by 11.7% to Kshs. 45.6 billion, up from Kshs. 40.8 billion in 2022.  Maintaining the same trend with the other parameters, the Sacco’s revenue  grew from Kshs.7.9 billion in 2022, to Kshs.8.7 billion in 2023; an equivalent of 10.1%. Finally, the core capital increased by 14% – from Kshs.15.7 billion in 2022, to Kshs.17.9 billion in 2023.

Against this background, the Sacco’s members were paid dividends on share capital at a rate of 17% which amounted to Kshs.599 million. Additionally, the interest on their deposits was paid at a rate of 11%, amounting to Kshs.3.0 billion. The gross total was  Ksh.3.6 billion;  compared to 2022’s Kshs.3.2 billion – an increase of 11%.

International standards

The Cabinet Secretary (CS), Ministry of Co-operatives, Micro, Small and Medium Enterprises, Simon Chelugui, graced the event as the chief guest. In his remarks, the CS observed that the core objective of savings and credit co-operative societies (Saccos) is to meet the needs that contribute to their members’ socio-economic welfare.

In that regard, he applauded the Kenya Police DT Sacco for developing innovative products and services that are tailored to its members’ needs, hence improving their socio-economic status. “Members owe the visionary leaders who founded this Sacco fifty one years ago a lot of gratitude,” said Hon. Chelugui. Some of the founder members of the Sacco and retired directors attended the ADM. They included Lawrence Mwadime (former board of directors Chairman) and Francis Muoka (a founder member).

 The CS further noted that the Sacco has endeavoured to set high standards since its establishment and in order to maintain that momentum, it should benchmark with the leading players internationally. “You need to look beyond Africa in your quest to grow to the next level,” he advised the Sacco’s leaders, management and delegates. United States’   Navy Federal Credit Union is ranked top in the world. It has an asset base of USD 168.4 billion (approximately Kshs.2458.6 trillion as of 27/02/2024), 24,300 employees and 13,300,000 million members.

Hon. Chelugui also acknowledged the leading Sacco’s   effort in addressing its members’ welfare hence making them productive at the workplace.  It has done so by for instance offering them affordable credit that   they have used to  put up decent  homes for their families,  pay  for  their  education  and  address emergency needs  like hospitalization.

Co-operative Bill

The CS added that the 2023 Co-operative Bill is aimed at enhancing the growth of the co-operative movement in Kenya (ranked the best in Africa and seventh globally). Among other goals, the Bill is also intended to strengthen the governance framework for co-operatives and to safeguard the members’ funds through enhanced regulation and supervision.

Another key development highlighted by the CS in his keynote speech will be the establishment of the Central Liquidity Facility through which Saccos will be admitted into the National Payment System. This is part of the government’s financial inclusion agenda.  According to the 2022 Sacco Supervision Report by the Sacco Societies Regulatory Authority ( SASRA), the total assets of  the regulated Saccos in Kenya   as at 31^st December 2022 was Kshs.620.45 billion, while the total deposits stood at Kshs.620.45 billion.

 Governance and accolades

Kenya Police DT Sacco was ranked the best managed Sacco countrywide during the 2023 National Ushirika Day celebrations. It also scooped the top award under the Sacco category in the 2023 FiRe (Financial Report) awards.  This superb performance according to Mr. David Mategwa the National Chairman, in his report during the ADM demonstrated the Sacco’s commitment to the tenets of good corporate governance. The theme of the 2023 FiRe Awards was: ‘Utlilizing technology and innovation to enhance sustainability, governance and financial information transparency.’

Mr. Mategwa further reported: “The Global Credit Rating maintained the society’s national scale long term issuer rating at A- (KE) in 2023 with a stable outlook and affirmed the short term issuer rating of A2 ( KE).  He added: “A surveillance audit was undertaken in October 2023 to ensure that the Sacco continues to comply with the requirements of the ISO 9001-2015 Quality Management Standard (QMS).”

The Chairman also reported that in 2023, the Sacco conducted the ‘ National Top savers’ conference that was followed by a countrywide member education drive in its endeavour  to build the capacity of its members, delegates, board and staff. “ In the year 2024, the society will organize for enhanced financial literacy and coaching for members besides undertaking top savers programme at the national, regional and international levels,” the Chairman said.  The top savers of the Sacco in 2023 got awards during the ADM.

During the 2022  National Ushirika Day celebrations, Police Sacco attained position one in:  best in credit management , deposit taking  Saccos- employer based Sacco. In the same vein, it attained position two in : best managed Sacco countrywide  and  best managed Sacco ( deposit taking employer based tier one Sacco categories.  Finally, it clinched position three in the best in risk management deposit taking Saccos in the employer based Saccos tier one category.

Focused

The Chairman further reported that the Sacco’s current five year strategic plan (2020-2024) which has contributed to its tremendous growth ends this year.  Its thematic areas were:  good governance, membership and service excellence and institutional capacity building. “To further build on this growth, the society will immediately begin the process of formulating the next strategic plan that will run from 2025 t0 2029,” the Chairman stated.

He also added that based on the members’ feedback, the Sacco shall be conducting a comprehensive review of its products and services this year. The objective of this exercise is to make these   products and services more   competitive, besides being responsive to the members’ needs.

Given the high potential of the diaspora market, the Sacco will also tap into it. “In the year 2023, the society conducted a webinar for the diaspora membership and in the year 2024, the society will escalate such interventions to empower the diaspora membership and those from within the country and further grow the membership,” reported the Chairman during the ADM.

As more members continue to embrace technology, the mobile banking platform of the Sacco has gained traction accounting for about 40% of its transactions.  The Sacco according to the Chairman is therefore   planning to upgrade its systems in 2024 in order to make them more robust and secure.

Doing business with a human face

 The Sacco’s flagship corporate social investment programme is sponsoring the education of   needy but bright students in secondary schools and universities.  By the end of 2023, this programme had 237 beneficiaries.   The Sacco also participates in the conservation of our environment by planting trees. In that regard, it planted   over 10,000 tree seedlings at the DCI headquarters along Kiambu Road in 2023.  “This will go a long way to mitigate the effects of climate change and enhance environmental conservation,” reported the Chairman.