Kimisitu Sacco eyes FOSA services, embarks on capital shore-up drive

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Mar 10, 2017
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By Jackson Okoth

Kimisitu Sacco, which draws its membership from Non-Governmental Organizations (NGOs), embassies and international missions, plans to launch a Front Of­fice Service Activity (FOSA) wing. This will enable it to offer quasi-bank­ing facilities to its members.

“We have to first have the right capital ratios as well as satisfy several regulatory requirements before we can be allowed to offer FOSA. The capi­tal raising process has already begun with each member contributing Sh 5,000 each year up to the year 2020,” said Peter Kariuki Waithaka, Kimisitu Sacco CEO.

Members are expected to contrib­ute Sh30,000 each at the end of five years although a few individuals have shown willingness to clear this amount at once.

“Our aim of introducing FOSA is to satisfy the need for banking services by our members. We aim to bring these services to lower costs that members incur when they transact business with conventional commercial banks-which charge highly for their services,” said Waithaka.

Available figures indicate Kimisitu Sacco’s core capital stands at around 8.6 per cent, below the required 10 per cent of total assets while institutional capital reserves are at six per cent, be­low the statutory 8 per cent for anyone seeking to operate FOSA.

According to the Sacco Act (Sec­tion 24) and Regulations (Section 4) Saccos seeking to provide FOSA must provide a minimum core capital of Sh10 million as shown in their finan­cials or bank statements. This is in ad­dition to complying with all the three capital adequacy ratios as stipulated in the Regulations.

A core capital of not less than 10 per cent of total assets owned by a Sac­co; a core capital of not less than eight per cent of its total deposit liabilities and an institutional capital of not less than eight per cent of a Sacco’s total assets, are the ratios that must be met.

The Sacco’s board of directors and senior management or departmental heads must also be subjected to a “Fit and Proper” test, vetting their moral and professional suitability to be on the board and to manage the Sacco Society, respectively.

The Regulator will also require a detailed four-year business plan and feasibility study, including projected financial statements as required, be­fore issuing a FOSA licence to the Sacco.

“A Sacco applying for a licence to operate FOSA must first have its premises and infrastructure assessed by SASRA after it issues a letter of intent. After all the ratios have been met, an interim licence to operate FOSA will be issued, to last for a pe­riod of at least six months before a final licence is issued by the Author­ity,” said Isedorius Agola, Chairman of Coast Association of Front Office Service Activity(CAFOSA).

All these requirements only ap­ply to Saccos conducting deposit tak­ing business or intending to start a FOSA.

“We have also begun the process of ensuring that the Sacco is ISO 9001 Certified. This process is expected to be complete by the end of 2017. The Society has already conducted aware­ness training sessions for members and staff and is carrying out a docu­mentation process, to ensure that all systems meet international standards,” said Waithaka.

He said that ISO 9001 Certification is a commitment by Kimisitu to all its partners and stakeholders that the Soci­ety is compliant and offers quality ser­vices and products.ISO 9001 is a certi­fied quality management system (QMS) for organisations who want to prove their ability to consistently provide products and services that meet the needs of their customers and other relevant stakehold­ers.

Kimisitu Sacco is also planning to put up a Sh200 million modern office block as its headquarters, at the exclusive Kili­mani suburbs, in upmarket Nairobi.

“We expect to begin construction of the office block beginning of next year after all the modalities have been fi­nalised and necessary approvals ob­tained from members,” said Mr Wait­haka.

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