In the picturesque green hills of Homa Bay County, washed by the cool breeze of Lake Victoria, the country last month converged for the 13th edition of the devolution conference.
Governors, especially from counties that are rich in agriculture, hailed devolution as a game-changer in powering the agricultural sector and creating employment most prominently in rural counties.
The elephant in the room during the discussions that the Sacco Review followed carefully was lack of financing for farmers and other agribusiness entrepreneurs
Murang’a Governor Irungu Kang’ata decried the ‘risk’ status that commercial banks place most farming enterprises in which he said as pushed out investors in agriculture.
“Commercial lenders don’t think farmers are a safe option for loans. They place them in the high risk category. That is why the government should step in and create a credit guarantee scheme, like the one we see for the Medium Small and Medium Enterprises (MSMEs) in the trade sector. That way perhaps banks can begin lending to farmers,” Dr Kanga’ta said.
He was referring to the State-backed credit guarantee scheme mooted by the Central Bank of Kenya (CBK) which pledges to repay banks 50% of the outstanding principal amount in case of a default on qualifying credit facilities advanced to MSMEs. This provides an incentive for the banks to offer better credit terms for the qualifying MSMEs.
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However, finance experts have pointed out that Savings and Credit Cooperative Societies (Saccos) can play a huge part in offering financing especially for farmers at the county level and bridging the huge gap left by commercial lenders.
Mpuria Kinyua, an accountant and a former member of Centenary Sacco in Meru averred in an interview that many Saccos are now concentrated on winning county government staff into the cooperative movement and staying on the traditional business of deposit mobilization and lending instead of creating credit facilities targeting specific groups such as farmers.
“Opportunities in sectors such as farming, housing and water as well as partnerships with county governments are yet to strongly catch the eyes of Saccos,” said CPA Kinyua.
The lack of properly structured internal policies for making targeting investments has been cited as one of tailwinds slowing Saccos’ pace of integrating with counties. While county governments are increasingly seeking financial partners on key projects such as farming, housing and water, Saccos have failed to turn up strongly.”
Saccos are falling over each other in recruiting county staffs into membership given that many county government staff yet to come up with their own Saccos.
While this is a diversification from the past where teachers have been the core members for many Saccos, the big opportunities that have come with devolved units.
Many Saccos are only making baby steps in trying to understand the needs of county governments and how they can immerse themselves into the grassroots activities.
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On the flipside, Country Sacco Society, formerly trading as Rukuriri Tea Growers Sacco is for instance betting on counties for growth.
Rukuriri Tea Growers Sacco started in February 1991 to serve tea farmers whose tea proceeds were being marketed by Rukuriri Tea factory and other factories such as Mungania and Kathangariri tea Factory.
The Mount Kenya-based Sacco rebranded to County Sacco Society in 2011 a year after devolved governments came into place.
“The Society rebranded to County Sacco which literally means an ambitious Sacco with a strategic focus in all counties in Kenya,” said the Sacco.
But seizing the real opportunities across the counties has not been as fast as the name change.
For some Saccos, the coming up of counties has meant mapping their customers in terms of Counties and making them ambassadors in winning business in devolved units .
For instance, Trans Nation Sacco in 2020 opened what it called the first satellite Sacco branch in Moyale, coming a few months after launching in Marsabit.
Lengo Savings and Cooperative Society has also partnered with Kilifi County government to sign up the county’s staff as its members.
The Saccos have been wooing the Kilifi County staff with affordable products that they can manage during retirement.
The board was proposing to register a housing Sacco that will facilitate the building of some offices where the Sacco would rent out.
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But Saccos are now being urged to join hands with counties in mega projects such as acquiring land and setting up houses for use by count staff as well as the emerging town centres by the workforce serving counties.
Unison Sacco, with the help of the County government of Laikipia, late 2020 rolled out affordable housing projects in Nanyuki.
The Sacco has partitioned its 542-acre land in Nanyuki into plots of 50 by 100 and 100 by 100 to customers for construction of a well-planned residential estate, named Taji Gardens.
The World Bank in 2017 put Kenya’s deficit for houses at two million and asked the government to explore the role of Saccos in bridging the gap in the housing finance market.
But counties have not come out strongly in developing houses and selling or renting to county governments despite the glaring shortage of housing.
Eyes are now on Bingwa, Harambee, Imarika, Kenya Police, Imarisha, Mwalimu National, Stima, Tower, Ukulima, Safaricom and Unaitas Saccos which are part of Kenya Mortgage Refinancing Company (KMRC) which seeks to accelerate housing.
Data from the Sacco Societies Regulatory Authority (Sasra) shows that cooperative societies have rebounded. There are now 1,806 cooperatives with an annual turnover of Sh56 billion. Up from 1396 in 2016.
Nationally the total number of registered cooperatives has grown from 20, 175 to 21,016 in the past one year.
By Erick Munyua
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