Saccos help to fuel investments

Dr Catherine Ngahu [File]

Dr Catherine Ngahu is a major believer in savings and credit societies. “This is because I was educated through the old cooperative movement, a precursor of modern-day saccos,” she says

During her school-going days, Ngahu recalls that coffee was the major crop, and revenue would come in handy through co-operatives. “When they (our parents) did not have money to pay fees from their incomes and salaries, they would go to the coffee co-operatives and get a letter confirming that your fees will be paid when the coffee proceeds are received,” said Ngahu, chair of SBO Research Group Ltd, a company with footprints in 26 African countries.

Speaking at the launch of a cyber-security report on saccos, Ngahu said once the school received the letter, admission was assured. “Those days, there were hardly any easy loan systems, unlike today,” she said.

“So when I grew up and got employed, I joined a sacco from day one. And when my son started school and I faced challenges challenges in income balancing, I would go to my sacco which offers school fee loans in a matter of hours.”

Just how quick one can access credit is one of the reasons saccos are popular financial institutions for many Kenyans of all walks of life.

For instance, if Robert Mogoi knew of the benefits that one gets from a sacco, he would have joined much earlier. In just five years since he joined Chai Sacco by default as the IT Manager, he has made a turn-around on management of his money.

“It is until I came to the sacco that I was able to consolidate all my many loans into one that has made debt management very easy for me. I will advise any person to find a way to get to the nearest sacco,” he said.

Kitemoto Housing Co-operative Society did not start out as a housing sacco. The idea behind it was to counter police harassment meted out on Boda boda operators in Kitengela, Kajiado County.

Aloise Mwai, the sacco chair, said the entity’s main business when it was formed back in 2009 was to contribute funds to bail out colleagues who fell afoul of the law enforcers.

Whenever a member was arrested, the rest contributed Sh100 in order to raise Sh5,000 bail ahead of court appearance.

Then the police got tired of always being asked to justify their arrest in court, so the harassing stopped.

“So we thought instead of stopping the contribution, why don’t we create a sacco where one can borrow and repay,” said Mwai. “Even then, our idea was not to put up houses.”

The first order of the day, he said, was to buy each member a motorbike since majority of them were employed. Each of the 200 members was to contribute sh100 to raise sh20, 000 daily which in two months it was over a million.

After three months, they bought 10 motorbikes, which were distributed among 10 members. “So the Sh500 which they used to give to the owners of motorbikes they were using became the daily installments for their new bikes. They were basically employed now by the sacco,” he said.

Mwai said as the sacco progressed, it was realised that majority of the members were borrowing Sh5,000 or Sh6,000 to pay rent. “We then had a meeting and it was agreed that the basic thing to do is to purchase a piece of land and build informal houses made of iron sheet,” he said.

It was then that they met a non-governmental organisation that works in housing and provision of basic services in informal settlements. The NGO funded them through the National Cooporative Housing Union (Nachu). They bought a five-acre piece of land and started putting up houses for members. That is how Ngasemo Estate, made up of 100 bedsitters for the members and 24 others for commercial use, were born.

Apart from Boda boda riders, the co-operative also has as its members tuk tuk and taxi drivers, jua kali artisans, hawkers and other small scale traders.

Saccos have always had a bad review among Kenyans, yet many have also benefited from them and sister entities.

Franklin Odhiambo put up a two-bedroom house through the sacco of the company he works for. He would contribute Sh5,000 a month, which he raised to Sh7,000 on realising his living expenses were not that much.

“In the third year, I had substantial savings which I topped up and took a loan to construct a two-bedroom house,” he said.

His preference for a sacco loan over bank finance was informed by the low interest rate.

“I also get to increase my shares with time and earn dividends each year, which is more than I would have earned by saving with the bank,” he said.