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Saccos take fight for clients to doorsteps of commercial banks

By James Anyanzwa | July 30th 2013

By James Anyanzwa

Savings and Credit Cooperative Societies (Saccos) want the banking law amended to allow them access the national payments and clearing system.

They say exclusion from the national payments system and clearing house has slowed their growth momeentum. The move could put an end to an emerging trend of close relationships involving Saccos and commercial banks.

The societies, whose combined asset base stood at Sh293 billion last year are facing serious competition from banks. Though potential competitors, Saccos are now brokering deals to rollout certain financial services jointly since the Banking Act blocks Saccos from the national payment system. This has left them struggling to reach out to their banking competitors for collaborations.

Saccos view their cooperation with banks as a platform to offer additional financial services. This enables them  boost liquidity as well as counteract stiff competition from the lenders.

The Kenya Union of Savings and Credit Cooperatives (KUSCCO) said Saccos should access the national payments and clearing system to enhance their financial positions. “We are pushing for reforms in the banking sector to allow for inclusion of the Saccos into the National Payments and Clearing system,” said KUSCCO Managing Director George Ototo.

“Some of our members are now collaborating with commercial banks to access the national payments system and retain liquidity in the Saccos, which has been a challenge to us.”

So far, Stima Sacco has partnered with Family Bank while ABC Bank has lodged collaboration with Unaitas Sacco Society Ltd. These relationships are meant to fast-track issuance and clearance of cheques for Saccos members. Under these arrangements Sacco members will be issued with cheque books and receive cheque processing services from their respective banks.

Other services offered by the banks to the Saccos and their customers include trade finance services, treasury management services, apex financing and co-financing. Others are agency banking and the offering of local and international remittance services.

The move is expected to help these Saccos boost their front office services and grow their revenue reserves. “ABC Bank views Saccos and Microfinance institutions (MFIs) not as competition, but as partners, hence the reason for this partnership in which the bank seeks to provide Unaitas with a platform that allows it to optimise its input in the economy,” said Shamaz Savani the Group Managing Director of ABC Bank. “Our rebrand into Unaitas was a promise to champion access to more financial power. This is just yet another step in that direction,” said Unaitas Chief Executive Tony Mwangi.

 “By ensuring our members can access cheque books, faster cheque processing and clearing services, we have once more proven that we are indeed bold and pioneering.” There are 1,689 active Saccos in the county and 215 Deposit taking Saccos in Kenya.


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