Mwalimu Sacco bid to buy Equatorial faces headwinds

Kenya: Mwalimu Sacco’s bid to acquire a 51 per cent controlling stake in Equatorial Commercial Bank (ECB) has sunk into further controversy, throwing the proposed investment into doubts.

This is after the Co-operative Alliance of Kenya (CAK), the umbrella body of more than 10 million-member cooperative movement wrote to the Ministry of Industrialisation and Enterprise Development seeking to have the transaction suspended over credibility issues. Mwalimu Sacco draws its membership mostly from teachers and their spouses as well as education sector employees such as the Teachers Service Commission staff. The society has close to 60,000 members.

In a letter in our possession to Principal Secretary Dr Wilson Songa dated January 21, 2015, and copied to Central Bank of Kenya Governor Prof Njuguna Ndung’u, Sacco Societies Regulatory Authority Chairman John Nthuku, CAK Chief Executive and Managing Director Daniel Marube said due process has been overlooked in every stage of the proposed investment.

According to the letter, no specific annual delegates meeting approvals have been granted to authorise the multi-billion-shilling investment and they want a feasibility study done first. There is also little disclosure, promising unsubstantiated returns to members presented for delegates meeting to approve the resolution. “The resolution lacked clarity both in terms of the investment, the sums involved, the potential risk, the projected returns and how it is to be financed,” said Marube.