Dividends boom as Saccos make turnaround amid Covid-19 adversities

By Sammy Chivanga

Savings and Credit Co-operative Societies (Saccos) are declaring increased dividends on continued recovery from the Covid-19 economic headwinds that had slowed business activities and increased the need for cash preservation.

Many Saccos have made increased cash distributions in what offers timely boost to members ahead of the start of crucial activities such as long rains for planting and reopening of schools for a fresh academic year.

The payouts are expected to offer the much needed cash flow boost to the Sacco members as the economy continues to recover from Covid-19 disruptions that set in around March 2020.

This goes head to head with banks where performance has recovered and many of them are increasing payouts unlike last year where there were cuts and freezes in order to preserve cash to raise capital buffers.

Many Saccos have posted increased surplus pegged on improved uptake and repayment of loans among members in line with improving economic conditions.

Sacco leaders who spoke to the Sacco Review also say that the prospects of economic recovery are looking stronger, giving them the confidence that there is going to be a growth in income levels during the year.

Kenya Police Sacco for instance declared dividends on share capital at a rate of 17 percent amounting to Sh51.6 million.

Interest on deposits was at a rate of 10.8 percent or Sh2.4 billion, making a gross total of Sh2.9 billion.

The Police Sacco’s payout represents a 11.5 percent jump from the previous year when dividend on members’ deposits was 10.5 percent while payout on members’ shares was 17 percent.

“We are seeing a strong recovery and we saw it best to raise the dividends for our members,” said David Mategwa.  

“Despite Covid-19, the year was better compared to 2020. We have seen more activities on the reopening of the economy and see it getting better.”

The board also paid honoraria to directors and supervisory committee, staff bonus and annual delegates allowance of Sh175 million, an increase from Sh141 million in 2020.

Members of Stima DT Sacco saw a boost on their liquidity after the Sacco announced dividends and rebates at the rate of 14 percent and 10.75 percent respectively for the 2021 financial year.

The payout, which matched that of the previous year, came on the back of Sacco turnover growing by 16 percent to Sh6.86 billion in 2021 from Sh5.89 billion in 2020.

Harambee Sacco, which recorded a 187 percent rise in net surplus to Sh350 million, saw it raise dividend to eight percent from six percent in the previous year. Payout on members’ shares was 7 percent.

This came as Harambee Sacco recorded a 187 percent rise in net surplus to Sh350 million on increased interest from members’ deposits in the year ended December 2021.

Hazina Sacco Society paid interest on dividends at 10.6 percent and dividends at 18 percent during the review period.

Saccos with most of its members in the public sector such as teachers, policemen, electricity firms and other civil servants continued to dominate other Saccos.

Bandari Sacco paid the dividend on share capital at 18 percent and interest on members’ deposits at the rate of 11.5 percent for the year ended December 2021.

Trans Nation Sacco, which draws membership from teachers, declared dividends on share capital at 17 percent and interest on deposits at 12.5 percent, the same as that of the previous year.

The Sacco had last year raised payouts from those of 2019 where dividends on share capital was at 15 percent while interest on deposits was at 12.1 percent.

Ukulima Co-operative Savings and Credit Society, which has over 45,806 members declared dividends on shares at the rate of 10% (Shs 88.4 million for both share capital and Ukulima Headquarters investment shares).  The society also paid interest on deposits at a rate of 9 percent representing a total payout of Sh748.4 million compared to Sh700.7 million in the previous year.

Nation Sacco raised interest on deposits from eight percent to nine percent and retained dividend on shares at 15 percent.

The increased payout came on the back of Nation Sacco’s surplus rising from Sh79.65 million to Sh90 million.

Cosmopolitan DT Sacco paid dividends on shares at a rate of 15 percent, same as 2020 even as it set interest on members’ non-withdrawable deposits at a rate of 12 percent, higher than the 11.8 percent paid out the previous year.

Safaricom Sacco CEO Joseph Njoroge says Sacco paid eight percent as rebates and 13 percent as dividends on the back of improved performance.

The payout represents a rise from the previous year when Safaricom Sacco paid rebates at 7.5 percent and dividends at 12 percent.

Saccos had seen a spike in loan defaults in line with economic headwinds that had faced households but this has started clearing.

Non-performing loans (NPLs) ratio hit 9.12 percent in June 2020—the highest since 2012 when it was at 9.6 percent.

NPL ratio tracks the portion of loans that have remained unpaid for at least three months and therefore a higher figure points to more customers struggling to keep up with repayments.    

Alarmed by a rise in loan defaults, Saccos had reacted by slamming brakes on the pace of lending to avoid elevation of loan losses, leading to reduced surplus which ate into the level of dividends and rebates.

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