Harambee Sacco is set for major changes as its new boss seeks to clean up the mess at the country’s third largest deposit-taking co-operative society.
George Ochiri, a former chief executive of Safaricom Sacco, took over the reins just over three months ago in management changes that also affected other key positions including finance.
He says the Sacco’s books have been far from impressive due to years of mismanagement and outright graft.
Dr Ochiri told Weekend Standard that he has set out on a turnaround plan that will involve staff rationalisation and see about 20 employees sent home by July.
Already, the new CEO has brought on board a team of 16 new employees who include departmental heads in a move he said is meant to instill professionalism in the running of the Sacco that holds over Sh16 billion in deposits.
“There was absence of leadership. There was no CEO, there was no head of finance, no head of credit and branches had no heads. I’m bringing in new departmental managers,” Ochiri said.
He said they had also introduced performance contracting for staff as a way of measuring output.
Harambee Sacco’s membership stood at about 92,000 at the end of 2017, most of whom are current and former civil servants.
Ochiri said the Sacco had accumulated a large portfolio of non-performing loans, forcing it to make huge provisioning.
Between 2007 and last year, for instance, the Sacco lost in excess of Sh1 billion due to what the CEO said were loopholes created by lack of substantive managers in respective departments, and staff collusion.
He said since taking over, he had embarked on a clean-up of the loan book by attaching guarantors to the non-performing loans which had gone uncollected for long.
“As a result, there is a reduction of provisioning by Sh75 million. Collection has also improved by 30 per cent,” the CEO said.
The Sacco Societies Regulatory Authority has in the past had run-ins with the Harambee Sacco, with a 2012 audit finding it having run afoul of nearly all prudential parameters.
At the time, the Sacco had negative core capital. It also had material variances between the outstanding loan portfolio reports and provisions for loan losses.
Ochiri said he hopes to mend fences with the regulator by ensuring compliance with all statutory requirements, but also called for change in regulations with regard to the appointment of board members.
“We have a situation where people are elected on the basis of popularity. This impacts governance,” he said.
The CEO said the Sacco expects turnover to rise to Sh4.3 billion this year, up from Sh3 billion previously.
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