By Ken Langat.
A world class Sacco, Ndege Chai Ltd posted significant growth last year despite battling to adjust to various challenges, such as the new credit regulations barriers, unfavourable weather dictates including market parameters that seemed to have dogged most of its members.
Sacco members had no options but to swallow bitter pills when the Board of directors announced a whooping Sh49,854,018 would be slashed from their net surpluses and transferred as provisions to enable the Sacco meet the new regulations.
The according to the Sacco Chairman, Mr Daniel Sang, the move shot down last year’s dividends to 8 percent from 10 percent while interest rates also dropped to 8 percent from 11.35 percent in 2015.
The amount, according to Mr. Sang was transferred to cover provisions for bad loans of 2015 amounting to Sh19,068,453 up from Sh5,410, 757. General reserves rose from Sh1,400,000 in 2015 to Sh19, 000,000 last year and write off totaling Sh11,785,565 which remained constant.
“Had it not been for the above provisions, the amount could have been Sh151, 718,081 which could have yielded dividend of Shs.11.8 percent up from Sh10 per cent of 2015,” Mr.Sang said.
The Government through an Act of Parliament constituted a regulatory body Sacco Societies Regulation Authority, (SASRA) to provide guidelines to ensure sustainability of Saccos in the country; also issue license, provide oversight and enforce regulation on micro-finances institutions in the country.
Failure to comply with the new law has consequences which included prohibition from declaring or paying dividends, prohibition from expanding existing activities or engaging in other activities including lending, investment and credit operations among others, the Chairman noted.
The well-attended meeting which was held at Chebulu Club inside Multi-national tea company Finlays Kenya Ltd educated members on new policies –cum- Sacco operations and enthralled the more than 500 members who remained calm and attentive.
The meeting was graced by the company General Manager, Mr. Kipchumba Bullut, Sacco Chief Executive officer, Geoffrey Bett and Cooperative movement officials and stakeholders.
During the year under review, Mr.Sang further revealed that the Sacco strove to comply with all SASRA regulatory ratios and status compliance to remain a float.
“Since we received our initial license to operate Front Office Service Account (FOSA) our Sacco has strived to comply with all the required regulatory ratios and we report monthly to the Authority on our status of compliance,” he said.
The Sacco whose 99 per cent of its members are lower cadre employees of the company, Mr. Sang said, rely on the tea which sometimes is affected by the harsh weather condition and prices at the world market which in turn impact negatively on the Sacco.
He said despite registering an increase of membership to 34,360 equivalence to 6.8 percent, the number of dormant members some with unserviced loans was at the rise.
He revealed that loan portfolio to members grew by 12 percent from Sh1.783 billion by end 2015 to Sh1.999 billion by end of last year .
To cushion the same, Mr.Sang revealed that the Board has made far reaching decisions to bridge the gap either through donation, making monthly contribution by members into non-refundable shares or by setting a side part of the profits into reserve accounts.
“While the value of loan portfolio has risen, my Board is putting every effort to ensure that the level of delinquency is kept at the lowest possible rate,” he asserts.
The share capital and deposit the chairman said showed growth from Sh134,628,933 to Sh 168,125,346 at end 2016 an equivalent of 25 percent while deposits increased by 14 per cent an equivalence Sh1,431,543,420 to Sh1,630,890,035.
The Sacco Supervisory Committee Chairman, Peter Mutai gave the management a clean bill of health on their operations during the year under review.
“The loans were continuously reviewed and recorded in the Sacco book and were documented in accordance with credit policy,” he said.
Mr. Mutai added that loans are appraised and approved based on the credit policy checking on the level of deposits, multipliers of loans and considering the ability to repay.
On his part, the General Manager of James Finlay Ltd, Mr. Kipchumba Bullut, in his overview also gave the Sacco management a clean bill of health for last year’s operations and urged them stick to their core mandate and uphold SASRA regulations to the letter.
“The company will continue to support you both materially and financially to improve service delivery to members,” he assured.
He revealed that 99 percent of over 15,000 company employees get their salaries through the Sacco which amounts to about Sh200 million monthly.