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Management Success

SECRETS of Kenya’s Cooperative Movement Conversations with cooperative managers on their motivations, influences, management styles, goals and achievements

Emma Muli www.investmentnewskenya.com


Management Success


of Kenya‘s Cooperatives Movement

There is a growing realization all over the world that cooperatives offer important services and can play a major role in development and equitable distribution of resources. The challenge has been: How do you grow a successful cooperative that serves its purpose? This is what this book seeks to answer by looking at the experiences of those who have grown successful cooperatives



Published by Investment News (investmentnewskenya.com) P.O. Box 20257-00100 Nairobi, Kenya Copyright: Investment News Ltd 2010

ISBN: 996 67020 8



Management Success


of Kenya‘s Cooperative Movement



CONTENTS Foreword by the author Introduction by Moses Chebor, General Manager, Baringo Teachers Sacco Society CHAPTER 1 Elly Oyugi, Chairman, Kenya Bankers Sacco Society CHAPTER 2 Nicholas Kangogo, Chairman, Baringo Teachers Sacco Society CHAPTER 3 Shem Motuka, Chairman, Mwalimu Sacco Society CHAPTER 4 Zuhura Rajab Ali, chairperson, Universal Traders Sacco Society CHAPTER 5 Stanley Chemng‘orem, Chairman, Ukulima Sacco Society CHAPTER 6 Jeremiah Sirma, chairman, Kencom Sacco Society CHAPTER 7 Macloud Malonza, Chairman, Harambee Sacco Society CHAPTER 8 David Waruingi, chairman, 2NK Sacco Society CHAPTER 9 Lisalita Ambere, Chairperson, Jamii Sacco Society CHAPTER 10 Andrew Lang‘at, Chairman, Ndege Chai Sacco Society


page 7 page 8

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Page 32 page 38 page 44 page 50 page 54

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AUTHOR’S FOREWORD The purpose of this book is not to tell the story of the cooperative movement in Kenya. Its success and growth is well-known. In deed, Kenya is among the top nations in the world with a vibrant cooperative movement. The purpose here is however to bring together for the first time, the experiences and foresights of those who actually manage cooperatives. We have managers who started off cooperative societies literally from scratch and have steered them to top positions. We have managers who have taken over cooperatives that were fledgling under poor management and have turned them around. They all talk to us about the visions they hold for themselves and for their cooperatives and how they have been able to actualize them. Most of these stories were first published in Investment News—an online and print business publication (www.investmentnewskenya.com). In the magazine, the stories focused mainly on savings and credit cooperative societies generally known as saccos. And so, in this book too, we are focusing mainly on saccos. Saccos are a specialized type of cooperatives. They started off as workers cooperatives where employees from one organization would pool resources purely for the purpose of getting loans—thus the name savings and credit. Today, however, saccos are complex organizations offering a wide range of products and services. Some are as large as banks. Thus the management has become complex, demanding greater skill to motivate employees on the one hand, and to manage and motivate cooperators on the other. How do you achieve this? It is what this book hopes to demonstrate. I am certain you will find the book immensely useful. Emma Muli Editor, Investment News (www.investmentnewskenya.com) www.investmentnewskenya.com



I feel honored to have been requested to introduce this book. My view is that the cooperative movement in Kenya is the ideal vehicle to bring about faster development and to eradicate poverty. Every community has the potential to form a cooperative society and use it to improve their standards of living. Poverty is a manmade phenomenon created out of ignorance or intentionally to create dependency of some upon others for political manipulation. If the people could know what they can achieve on their own by putting their resources together and using economies of scale, the situation would definitely be different. I can testify to this from my own experience. I worked with Tugen Hills Farmers Cooperative Society Ltd in Baringo for four years, from 1982 to August 1985. Through their cooperative, the farmers were getting regular income from the sale of their milk, coffee, pyrethrum and cereals. Stores for farm inputs and implements were full from Tenges, Kabarnet, Kabartonjo to Bartolimo. Lorries, tractors and small vehicles were busy carrying goods up and down. All the societies were booming with business. Products of the Mogoswok Beekeepers and Honey Refinery, were stocked in every supermarket. The honey was, of course, the best. Fisheries in Lake Baringo was doing well. Cotton in Kerio Valley improved incomes and educated the children of the residents.



Then leadership wrangles started and the societies collapsed. Today the resources are still there, but the people of Baringo are among the poorest in the country. Nationally and internationally, calls are "Back to Basics". Communities are being urged to form groups in order to be assisted. The truth is they should first assist themselves by agreeing to come, reason and pool their resources together before the government or a donor comes to their aid. Those who have managed to stick together are better off economically than those who are still struggling to put their houses in order. The big challenge lies in finding and training managers for this vital movement. Books should be written on the best management practices. Best of all, we need to learn from those who have experience—those who have built cooperatives from zero to large enterprises. This, I believe, is the gap this book will fill.

Many of the people featured are managers who have been with the saccos since inception and painstakingly grown them to become key players in the Kenyan economy. Some like Harambee, Ukulima, and Kenya Bankers to mention only a few are helping develop cities and towns by putting up modern houses and generally becoming engines of development. How do the managers do it? Find the answer in this book. I am sure you will be encouraged to look at cooperatives with excitement. Cooperatives are truly the way out of poverty!

Moses Chebor General Manager, Baringo Teachers‘ Sacco Society




Elly Oyugi Chairman, Kenya Bankers Sacco Society Ltd

Kenya Bankers Sacco Society is best known for its innovative approach to product design and management. It has its parentage from the banking industry, and it has therefore adopted a banking structure



‘Most Innovative Products’ During the 2010 Cooperative Day celebrations popularly known as Ushirika Day, the Kenya Bankers Sacco Society emerged the winner in the category of the ―Most Innovative Products.‖ And it was well deserved. For the sacco has managed to build, in a record two years, 46 housing units for their members in Nairobi‘s up market South B estate at a cost of nearly a half of the going rate. It has not stopped there. The sacco has embarked on Phase 2 in which it will provide an equal number of members with houses, possibly at better terms. The sacco‘s chairman Mr. Elly Oyugi says, ―The success of Phase 1 of the housing project has encouraged even the employers to consider better facilities for their staff. This way the cost per unit will be much cheaper and the sacco members will benefit greatly.‖ How did the Kenya Bankers Sacco manage to do it? According to Mr. Oyugi, the sacco entered into a strategic partnership with a home developer and negotiated favorable funding terms from the Cooperative Bank of Kenya.. The strategic partner signed a fixed contract to ensure prices remained as agreed. ―The project was very demanding, but rewarding. The management had to monitor the work progress as well as deal with suppliers who were paid directly by the sacco.


12 In terms on management, the sacco has adopted structures and attitudes of the banking fraternity from which it draws its basic membership. Delegation is the key word. It is practiced right from the board to the regional representatives and then to the senior staff. In many ways, it runs more like a bank than a cooperative. ―We try to adapt what is practiced in the banking industry. For instance we have work stations in which staff may share telephone heads. The offices are open, much like in a bank. The structure also is tailored after that of the banks. ―The Finance Section is divided into two—accounts section which involves reconciliations and clearing section which deals with remittances. We also use software employed in many banks such as T-24.‖ The Credit Section is divided into retail and recovery sections. Retail section deals with loans only. ―In line with the new Act, we have planned a new subsection of credit called administration charged with the administration of bad debts.‖ Another section similarly tailored after banks is Customer Service. This deals with registration, closure and change of address as well as Fosas. And just like in the banks, they all report to an operations manager who reports to the general manager. Like in banks, general managers and operations managers are bankers by profession. ―It‘s easy for our senior staff to understand the demands of the sacco members since they all have similar backgrounds in banking. It makes work easier,‖ says Mr. Oyugi. And because of the banking background, the staff ensure that there is always double entry whenever there is a transaction. ―The moment your accounted is debited, there should be a double entry to ensure proper records are kept,‖ Mr. Oyugi emphasizes, noting that the


13 practice seals a banking weakness which is often exploited by fraudulent employees in saccos. Kenya Bankers Sacco has a committee of nine. It also has branch leaders and delegates. Its members, totaling some 15,500 are drawn from financial institutions around the country. Total member deposits total more than Shs 2.8 billion. ―We have been able to achieve al this through shared responsibilities. We encourage delegation of duties and responsibilities. When you let people do their work, you are telling them, you are responsible.‖ All approved loans are released through electronic fund transfer. Mr. Oyugi says this makes it easy to counter check differences because all the funds must go to an account before being withdrawn. Future plans include an account that will be run in partnership with the Cooperative Insurance Company, CIC. The sacco also plans to get into asset financing to be operated in conjunction with employers. Says Mr. Oyugi, ―I have a personal mission for the sacco: To establish a stable, enlightened membership who will be a source of new ideas to move the sacco.‖




NICHOLAS KANGOGO Chairman, Baringo Teachers Sacco

―We are today not only a big cooperative, but we are also ourselves landlords with large buildings in Eldama Ravine and Kabarnet,‖ Mr. Kangogo told me with a deserved feeling of pride.



People Skills that Work Wonders Mr. Nicholas Komen arap Kangogo simply calls his philosophy "people skills" but it has helped him to become and stay a darling of Baringo teachers, even when the cooperative movement is filled with turbulence. A chance diploma course in Britain on credit unions started arap Kangogo on a new, long and successful career in cooperatives. ‗I consider that I was very lucky because it was the course that introduced me to cooperatives".

Mr. Kangogo was then a treasurer with the Kenya National Union of Teachers (KNUT) in Baringo District. The course took nine months. That was in 1975. The year is significant because the following year, savings and credit societies swept the country like wild-fire. Teachers all over the country were among those in the lead in forming the societies that came to be popularly known as saccos - the equivalent of British credit unions. Teachers in Baringo were anxious too to set up saccos. But in the district, only Mr. Kangogo had any knowledge about saccos. It was for this reason that teachers made him the chairman of the sacco—the Baringo Teachers Sacco Society—when it was formed latter that year. It is a society he has literally steered and watched grow from a small group of teachers in a one room rented office to a financial power house in the three districts of Baringo, Koibatek and East Pokot. ―We are today not only a big cooperative, but we are also ourselves landwww.investmentnewskenya.com

16 lords with large buildings in Eldama Ravine and Kabarnet,‖ Mr. Kangogo told me with a deserved feeling of pride. All that time, Mr. Kangogo has been the society chairman—except only for one year when the District Cooperative Officer in the area barred him on a technicality. ―The teachers were anxious that I come back, and as soon as they could, they put me back.‖ Mr. Kangogo was awarded a commendation by the President for being the longest serving chairman of a cooperative in the country. So what is his secret of successfully running a cooperative? For an answer to that question, Mr. Kangogo looks far into his childhood where he sees the seeds for what he is today. His father died almost immediately he was born. "When he died, we were steeped into poverty. I felt it most because I was the youngest of the two children left behind—my brother and I. Growing up in such poverty taught me two lessons. One, 1 learned never to expect more than I am entitled to. I expect to get only what I earn—what is rightfully mine. "And two, I learned to respect other people and what is theirs. So when it comes to running a sacco, I put these two lessons together. Because I do not expect free things, I don't use my position in the sacco to take more than what 1 am entitled to. ―Then I apply the second lesson- I respect other people and what is theirs, so I give them what they are entitled to and no more."In a sacco, there are some members who will try to break the rules, but if you set the same rules for yourself, everyone will observe them". A father of nine children, Mr. Kangogo is a simple man with nothing more than what he needs. "I consider myself a happy man. I have a decent house and I have been able to educate my children. I live well. What more does a man need?" he tells me as he leaves to wait for public transport to take him home.



Mr. Kangogo retired from teaching five years ago but the teachers wouldn't let him quit his job as the chairman of their sacco. "They say they don't care how long I stay. They just want their sacco to continue running properly and improving". And that is what he has done for them for more than 31 years. Mr. Kangogo started his teaching career in 1967 at Kiptoin in Koibatek before moving to Kapkomoi. He became a religious education advisor for the Catholic Church in 1978. In 1983, he became an assistant primary school in-spector. He has worked as an executive office with Kenya National Union of Teachers (knut).





Baringo Teachers Sacco plaza at Eldama Ravine. Below: Receiving a prize for excellent work Facing Page: The award ceremony




Shem Motuka Chairman, Mwalimu Sacco

Mwalimu sacco, one of the largest and most successful worker cooperatives in Kenya, has 48,000 members a majority of whom are secondary school teachers. Others come from the TSC and related organizations. This diversity, according to Mr. Motuka, is what makes Mwalimu Sacco stand out. ―We have an enlightened membership who want things done well and who demand accountability.‖



Making a Difference When Shem Motuka joined Mwalimu Sacco Society as chairman in 2001, the sacco was just a regular sacco with three ordinary products – development, emergency and school fees loans. Armed with accountancy skills – he‘s a senior auditor with the Teachers Service Commission (TSC) – he set out to make Mwalimu a model sacco. ―As an accountant, I believed I‘d make a difference to the sacco – a difference that would enhance controls. An accountant knows how to manage and plan finances as well as investing.‖ He therefore set out to initiate reforms in management style. It was not a walk over though, and he needed the cooperation of all the players in the sacco. ―We organized for a retreat during which we discussed process analysis of our systems. We discovered weaknesses such as loan delays, rudeness of staff and insufficient funds among others.‖ They also went through input and output of every process and realized for example that emergency loans which used to take long could be released within three days. They then came up with a service charter which details rights and obligations. ―Members need to support us by knowing their obligations to achieving this.‖ Mwalimu sacco has 48,000 members a majority of whom are secondary school teachers. Others come from the TSC and related organizations. This diversity, according to Mr. Motuka, is what makes Mwalimu Sacco stand out. ―We have enlightened membership who want things done well and who demand accountability.‖ Another advantage of the quality of membership is that it brings in mixed www.investmentnewskenya.com

22 skills. ―There are accountants, economists, lawyers etc. This is especially beneficial for financial management.‖ Board members are also highly qualified. In fact they are certified by the Institute of Directors, making them qualified to hold office anywhere in the country. The sacco was the first to institutionalize strategic planning in 2001 as well as introduce a service charter. Best practices are so entrenched in the sacco that the sacco reviews its strategic plan regularly. In 2007, the sacco became the only cooperative to undergo performance contracting. The performance contract is maintained quarterly. ―We don‘t want to wait until the end of the year only to be told when it‘s too late that performance was below planned targets.‖ For instance if a target to be achieved involves mobilizing savings of a certain amount in the year, then a quarter worth of savings should be met during the first quarter. If not, then systems are reviewed and efforts enhanced to cover for the shortfall in the second quarter. Performance contracting at Mwalimu is at two levels. One is between the board and members who select representatives to sign on their behalf. The other is between the board and the chief executive officer who signs on behalf of the staff. Objectives, strategies and targets are drawn from the strategic plan. This is ascertained annually to see if there is a need for amendment to meet dynamic changes and to ensure that the plan remains relevant to realize its goals, mission and vision. Out of this, the sacco came up with a service charter which stipulates standards of service delivery. To achieve this effectively the sacco uses technology for quick delivery. For instance, loans forms are send through courier and acknowledged through telephone, short messages and email. Members‘ queries are answered through email and sms. Loan forms are


23 downloaded from the sacco‘s website. Members who require statements can access these on line using their pass words. Mwalimu sacco has an elaborate customer service centre with a service area for clarifications and advice. Members can complain to complaint section which analyses complaints and forwards them to relevant managers in charge for action and preventive measures. In an effort to encourage productivity, the sacco has a reward system for good performance which includes promotions and salary increments. Staff prepare departmental operational work plans up to individual level which is agreed between supervisor and employee and is appraised quarterly to see if the targets are met. If targets are not met, then there is need to analyze the mitigating factors. When the factors are linked to skills, training is facilitated. The service charter is reviewed annually. Two weeks before the Annual Delegates Meeting (ADM) the sacco sends out ADM documents such as budgets and annual reports. Included also are proposals to delegates for their approval. And again, one day before the ADM, delegates attend a seminar to go through the documents and raise questions. The documents must have proper notes so as to be easily understood. Unlike other Annual General Meetings (AGMs), therefore, Mwalimu Sacco‘s AGMs do not spend much time as they are merely for passing resolutions. Another unique feature of Mwalimu sacco is the board manual. This is oriented by the chairman for the new members of the board to know how to operate. It has a code of conduct.


24 Despite the successes of Mwalimu sacco, its management is not resting on its laurels. ―We are continually re-engineering our business processes. This is critical to remove bottlenecks and enhance delivery. There is no point in waiting for two years to identify processes which aren‘t value adding. Motuka tells me that they have benefitted greatly from their educational trips. Most of their best ideas are also practiced in the developed countries. He believes in implementing the best lessons learned. ―Our vision is to be a learning organization and a growing organization as well. We borrow the best practices for growth to be customer focused. Whatever we do must add value.‖ The sacco started a marketing department two years ago. This was in realization of the fact that some members don‘t patronize all the services of the sacco because of lack of information of what is available. ―Our aim is to be a one stop shop for financial services.‖ Mwalimu sacco has mainstreamed HIV Aids in the sacco as part of member education. This assists them to learn how to boost immunity through nutrients and positive living. They also do this through peer education in collaboration with donors in every province. The result has been a dramatic reduction in Aids related deaths. The sacco has a structured board which has agendas for central management committees. There are subcommittees which are specialized. The executive committee makes decisions on behalf of the board which are then ratified at the board level. Then there is the credit committee. This does not give loans but ensures that loan policy is followed. They do this through sampling. Their role is also to look at differed cases and make decisions. The human resources subcommittee looks at staff matters while the front office subcommittee handles activities at front office. The budget committee which is also the surveys board ensures that assets are safeguarded and decides whether to dispose of non-performing assets. www.investmentnewskenya.com

25 There is also a procurement committee, education committee, marketing committee as well as audit committee which handles internal and external audit reports as well as management reports. The role of the executive is to ensure that all programmes such as performance contracts are working through monitoring and evaluation. The ADMs make business plans and budgets. The reforms have made Mwalimu the number one sacco in Kenya and in the whole of Africa. To sum up the achievements was the ISO certificate in September 2009, again, earning the sacco another first in the cooperative sector. Motuka has also been recognized for excellence by being awarded a HSC in 2008 by the President. These facts best illustrate Mwalimu sacco achievements: It is the best capitalized cooperative at KShs 13 billion, best managed cooperative and sacco, lowest expenditure sacco among other firsts during the Ushirika Day celebrations. Products of Mwalimu are now many and varied. They include development loans with a repayment period of 48 months, super loan of 60 months, vision loan of 72 months, bridging loan or top up as well as discounting of commercial bank loans. The sacco has also brought in IR net coop Kenya, a money transfer company in partnership with Kenya Bankers Sacco Society and Woccu. This contributes to the funds of the sacco in terms of commissions earned. What is Motuka‘s legacy? ―Despite the reforms and achievements, I am not saying we have arrived. I would want to see a situation whereby all processes are automated including loaning becoming paperless. I would also wish to see an automated registry whereby a file can be shared by many officers at the same time.‖ His dream is to see Mwalimu become a bank - this he hopes can be realized through the microfinance section which was started in 2007.




ZUHURA RAJAB-ALI Chairperson, Universal Traders Sacco Society

Universal Traders Sacco Society Ltd controls the business rhythm of the fast growing Machakos town and the outlying areas from Kangundo to as far as Wote in Makueni District. It is one of the few societies that don't have backlogs of loan applicants because loans are given when applied for.



Battling Prejudice with Good Deeds

MRS. Zuhura Rajab –Ali, the chairperson of the Masaku (now Universal) Traders Sacco Society remembers with a mixture of pride and indignation, the day she walked into the Machakos branch of the Standard Bank to negotiate her first business loan. She had only recently received her first salary as a teacher with the Teachers Service Commission, bought several tons of construction stone, and within a few short weeks raised up the walls of some rental houses at a plot in Machakos town, which was given to her by her mother as a university graduation gift. She had run out of money just before roofing the houses and that is why she was visiting the bank. "I went to the Standard Bank and requested to see the manager. I had not anticipated any problem. But being a woman —and a young girl at that- was something the bank was not prepared for. I could feel the amusement when I told them I wanted a loan. I was flatly denied access to the manager. But I didn't budge. I persisted and insisted on seeing him.

"Luckily the manager, who was just then leaving his office, was attracted by the tense atmosphere and asked what 'the young girl' wanted. To my amazement and joy, when I told him that I wanted to see him, he just said 'Come in!' I walked out with a loan of Shs20,000,a lot of money those days.' But it was the confidence in her loan negotiation skills that Mrs. Rajab Ali was most happy about. The loan not only launched her into business, she has constantly needed those skills to negotiate frequent business loans with the same Standard Bank to expand her business. "Now I own a good number of rental houses. Business is in my family www.investmentnewskenya.com

28 blood", says Mrs. Rajab-Ali who, as the Chairperson of the Masaku Traders Sacco, is entrusted with running a small but influential financial outfit. The sacco which is said to control the business rhythm of the fast growing Machakos town and the outlying areas from Kangundo to as far as Wote in Makueni District has a membership drawn from all kinds of businesses. Since April 2006, the sacco has been housed in its own premises, a 3 storey building in the heart of Machakos town. The area had been her dream business location. "I had really wished to occupy these premises", Mrs. Rajab Ali remembers pointing at a building close by. "I hoped to shift my clothes business to these premises one day. This street has visibility. It is up market and has many people passing by". It was therefore not by chance that her first project as the chair person of the Masaku Traders Sacco was to shift it from rented premises to its building on the street. "It was an up-hill battle, with many intrigues. I came to realize that many other people had eyed the building as a strategic place for business". This was mixed with the ―usual prejudice.‖ "As the chairperson of the sacco, I always say I have two major challenges. The first is that of being a woman. Although many businesses in Machakos town are owned by women - and in deed, the women membership in the sacco is a half that of the men - not many women are interested in the politics of running the sacco. In fact, we have only three women in the management. "The result is that you are actually a woman in a man's world. And men, unfortunately always feel challenged. "Secondly, I am a Muslim woman in a Christian environment. You know they would say a 'Mswahili' woman cannot run a sacco because they think Swahili women only want happy and hustle-free lives.' "I have fought these two prejudices with my motto of doing with perfection whatever it is that I am doing. I always believe people will agree with me when they see the good results.



"I remember one day I went to visit a town where the sacco wanted to set up a branch. When I was introduced as the new chair person, the disapproval was loud. Some could be heard wondering aloud: Are there no more men left? ―We went ahead to successfully open the branch. And today, my staunchest supporters are from that branch.‖ Unlike employee saccos where members tend to know each other, this is a complex sacco where the high and mighty meet with the lowly and humble. There are all kinds of experts too. So every idea you put forward is weighed and critiqued and challenged by people with knowledge and skills. Even people with vested interests, after all they are members of the business community. "For example when we were renovating the sacco premises here, men who didn't know my background in the construction industry didn't at first take my suggestions seriously. But, I am always aware that I am talking to people who may have the expertise, vested interest or influence". To demonstrate the economic influence of the sacco, Mrs Rajab Ali quotes the example of the KenGen shares. The sacco had just shifted to its current prestigious location in the town centre. "There were always people filling our benches, waiting to buy shares. We sold the highest number of shares in Machakos,‖ she says. In fact, the sacco led with sales worth Shs 3.3 million followed by Kenya Commercial Bank with Sh 1.8 million. ''One of the benefits of our new location has been a tremendous increase in the confidence members have in the sacco,‖ says Mrs. Rajab-Ali. "I am proud that the improvements I have made have contributed in confidence building. I have ensured that the sacco has a five year strategic plan and policy guidelines covering investments, human resources, IT, loans and so on. These improvements have raised the morale of workers and the sacco is now attracting some of the best personnel."



Among the products the sacco has introduced this year are a children's account (unique in that both the child and the parent should sign for withdrawal) and a holiday account. The sacco has also introduced shares trading and a pay point service through which companies can pay their employees, a service that especially targets coffee societies. The sacco has four branches in Tala, Tawa, Masii and Wote towns of both Machakos and Makueni districts. Mrs Zuhura Rajab Ali, who is also the Deputy Head Teacher of the Machakos Girls High School, owns a variety of businesses in Machakos town most of which have sprung from her basic involvement with housing. For example, she supplies water in tankers to hotels and individual homes, a business she started after she drilled a borehole for her domestic water needs. And she is also into horticultural farming supplying her products to supermarkets. In deed, as she says, business is almost a natural part of her. When she was a university student, she invested much of her allowances. It was her business instinct that made her join the Mwalimu Sacco Society contributing Shs500 of her first salary as a teacher. And it was because of her business needs too that she joined the Masaku Traders Sacco Society. "I hesitated at first when I was asked by the promoters to join the sacco at its inception in 1990. Few people, I believe had faith that a sacco of traders would survive". But in 1998, she had an urgent need for finances to expand her business. While she was searching for funds, a friend suggested that she joins the sacco, which she did. "I joined the sacco at a time it was expanding rapidly. It had just received funding from Messp, a European micro-credit institution, and had moved to more spacious offices in order to launch its banking services."


31 She was elected into the sacco's supervisory committee in 2001. And in 2004, she and her team joined the management committee in ―a rather unusual way.‖ "We made a very impressive report to the sacco‘s Annual General Meeting and the meeting decided that the whole of my committee move to the management committee." Her rise in the sacco management continued when she become the Hon. Secretary. Then. finally, in a reshuffle, she was elected the chairperson of the sacco. Mrs. Rajab Ali who is a mother of four, believes in women leadership. "The world would be better off if more women were in leadership positions. Women have special God-given leadership qualities that men lack. For example in difficulties women are sober, more tolerant and have a human heart. "In many meetings, I watch with amazement as men squabble and abuse each other, often forgetting the main question at hand. But women wait patiently and speak from knowledge and understanding." Mrs. Rajab-Ali feels that Africans lack the seriousness to run businesses. In many cases, their businesses are overburdened with large overheads where a more cooperative approach would be beneficial. For example, similar businesses could share premises and cut down on rents and telephones. "In Dubai, I saw many businesses where this approach was used and they are quite successful." The legacy she wants to leave behind? Mrs. Rajab Ali goes back to her favorite investment line: "I spelt it out to the members in our last Special General Meeting: I want every member to own a house", she says.




STANLEY CHEMNG'OREM Chairman, Ukulima Sacco Society

"We see the sacco itself as an investment for its members. We are therefore urging them to reinvest their loans in income generating activities to improve their lives." And in deed, many members are heeding the advice, with some taking loans as high as Shs3 million for reinvestment



‗The Landmark of Excellence’ Perhaps, no one is better placed to talk about the art of growing a sacco than Stanley Chemng‘orem, the long serving Chairman of the Ukulima Sacco Society. Chemng'orem took over the leadership of the Nairobibased, countrywide sacco when it was a fledgling in 1976 and has nurtured it to a wealthy giant and a forward-looking key player in the cooperative world. How did he do it? His serious involvement with Ukulima Sacco Society came when he was elected unopposed as the national vice chairman in 1974. Two years later, he became the chairman of the sacco which by then had only one staff, no office and practically no records. Today the sacco is housed in its own ultra -modern, 11-storey, Ukulima House, right in the heart of Nairobi. The building which is owned 75% by the sacco members and 25 per cent by the sacco itself in keeping with cooperative investment regulations, has three basements which can accommodate 60 cars. It is fitted with high speed lifts and is, as Mr. Chem-ng'orem proudly puts it, "a land mark of the existence of the Ukulima Sacco Society and an important contribution to the economy of the country." The society's membership, although it has climbed down from its peak of 51,664, due to a combination of external factors such as deaths, retrenchment and government embargo on civil service employment, still remains one of the highest at 26,129 in the country. It comes from 85 employers, a record in itself, thanks to a change in the sacco bylaws that enabled the opening of the common bond. "This has enabled the society to recruit members from virtually all ministries, parastatals and reputable organizations from the private sector," says Mr. Chemng'orem. The core ministries are those of Agriculture, Livestock Development, Fisheries Development, Water and Irrigation and related parastatals. www.investmentnewskenya.com


"Our strategy is to grow the membership base by 10% every year," says Mr. Chemng'orem. "The society has a lot of potential for growth with the opening of the common bond. We have introduced new and varied products and services to attract and retain members," he adds.

Share capital has grown from a miserly Shs206, 330 in 1972 to an impressive Shs2.9 billion and is targeted to grow by 10% annually. To achieve this, Mr. Chemng'orem is relying on the confidence members have in the sacco and their propensity to save. "There are many high savers in the society whose share contribution exceeds one million shillings," he says. In deed, some of them have saved more than Shs2.4 million with the cooperative. By December 2008, the sacco's fixed assets stood at Sh361, 644,010. And they include Ukulima Cooperative House, 46 residential houses in Eldoret and Ukulima Towers plot in Nairobi. The sacco has other investments also such as Shsl3, 778,430 worth of shares in the Cooperative Bank of Kenya, Shsl,131, 500 worth of shares in Kuscco, Sh683, 502 in the CIC and Shs 50,000 in Codic. With this kind of growth rates and member support, Ukulima Sacco is in a good position to offer better, varied and efficient products and services to its members. In deed, it was this financial might that enabled the sacco to come to the rescue of its members then locked out by commercial banks through restrictive policies and unaffordable high minimum account balances in 1999. A front office activity was established to offer banking services to the members. Now the Fosa constitutes an important part of the big success story of the Ukulima Sacco. "We see the sacco itself as an investment for its members. We are therefore urging them to reinvest their loans in income generating activities to improve their lives." And many members are heeding the advice, with some taking loans as high as Shs3 million for reinvestment. The normal loan processing period has also been reduced to one month or www.investmentnewskenya.com

35 less. And the processing of emergency loans has been decentralized to the sacco branches countrywide to save members time and money travelling to the society's head-quarters. The essential outcome of this is excellent returns on investments for members. In 2008, dividends and interests were paid at the following high rates: main shares 8%, Ukulima Cooperative House shares 15% and Eldoret houses shares 5%. The total dividend paid for the year 2008 was Shs243, 247,306 which represented an increase of 10.9 per cent over the previous year. The experience of building Ukulima Sacco Society has made Mr. Chemng'orem come up with a 10-point sacco management principle of good sacco leadership. According to him a sacco leader must be: 1. A person of unquestionable integrity, selfless, honest, transparent, account-able, disciplined, efficient, dedicated and of good moral character. 2. A role model, leading from the front and ready to lead by example. 3. A person with the welfare of the society at heart, a desire to have it advance to greater heights and more prosperity. 4. Able to serve the society and members faithfully, without fear or favour. 5. Proactive, visionary and entrepreneurial oriented 6. Able to ensure safety and soundness of members' funds 7. A team player 8. Able to ensure that unity prevails in the society. A society full of squabbles cannot prosper. 9. Able to encourage openness and dialogue with and among members.


36 Members should feel free to discuss and criticize when necessary. 10. Able to recognize the role of a supervisory committee as positive and complementary. Supervisory committees play roles in building a strong society. Everyone should be regarded as a member of a team working towards the same goal— that of making the society a success.

It was because of this concern with improving management style that Mr. Chemng'orem and his team introduced the annual delegates system and scrapped the annual general meeting (AGM) system for the sacco. "It was felt that the delegates system could improve members' participation in the society's decision making," says Mr. Chemng'orem With AGMs, it was only members from around Nairobi who could attend and vote on issues. "Being a countrywide sacco, we felt this was unfair. The sacco was being run only on ideas of members who were around or in Nairobi. There was no input from the rest of the members around the country." Currently, the society has 95 branches spread throughout the country. Each branch elects three delegates who represent their members during the annual delegates meeting (ADM). The delegates elect 9 members to form the Central Management Committee and three members to form the Supervisory Committee. This is the group that's entrusted with the day to day running of the sacco. The management style requires an informed membership. And that is why Ukulima Sacco has put member education as one of the priorities of the sacco management. "Members need to be informed about their sacco's operations, their rights and obligations, "says Mr Chem-ng'orem. To fulfill this, the central management committee and managers regularly hold meetings with members to educate them on various issues of interest. Educational materials such as newsletters are also made available to the members." Members rights and obligations are further elaborated upon in a service charter developed and adopted by the management. "The charter is to imwww.investmentnewskenya.com

37 prove service delivery. It articulates the members' rights and obligations. It is firmly based on the sacco mission to provide quality savings, credit and front office facilities that enhance members economic and social empowerment," says Mr. Chem-ng'orem. Among the challenges Mr. Chem-ng'orem and his team have faced while building the Ukulima Sacco was dealing with the initial prejudice among potential members. "A large number of them at that time had the mistaken idea that saccos belong to junior staff who have little money," he says. The effect of this was that the saccos monthly share contribution was set very low—at Shs 20 for every member per month. And, it remained like that for long even when salaries had improved. "This meant there was little money that could not, without much diligence, satisfy the members' loan demand." Today minimum monthly contribution has been raised to Shs800 per member. Mr. Chemng'orem's achievements have been recognized far and wide. As early as in 1985, he was appointed as one of the commissioners to revive the Kenya Union of Savings and Credit Cooperatives, KUSCCO. He was later elected as director and vice chairman of the apex organization, positions he relinquished in 2004. He has served as the deputy managing trustee of the National Social Security Fund (NSSF) and was awarded the Order of the Grand warrior of Kenya (OGW) by the president in 2001. After graduating from Egerton College, Mr. Chemngorem joined the Ministry of Livestock Development in 1966 and worked in various districts before becoming the head of artificial insemination department at the Animal Health and Industry Training Institute, Ahiti, Kabete. He has travelled extensively and attended many courses and seminars in the country and abroad. He counts as his greatest achievement, the implementation of Strategic Plans at the Ukulima Sacco Society "A strategic plan is a tool for good governance, and a road map that helps the society define its own preferred future," he says. With a strategic plan, he adds, a society can quickly and effectively respond to the changing needs and expectations of its members. www.investmentnewskenya.com



Jeremiah Sirma Chairman, Kencom Sacco Society Ltd

Kencom Sacco is one of the few saccos determined to pursue very clear and well reasoned investment policies. The result has been not only a satisfied and increasing membership, but also the satisfaction of knowing the members are benefitting from their investments in the sacco. .



Staying On Higher Financial Altitude Fifteen years ago, Mr. Jeremiah Sirma and a few of' his colleagues decided to start a sacco for members of the Kenya Commercial Bank. Today, the sacco that came to be known as Kencom Savings and Credit Cooperative Society, is one of the most successful in Kenya. "Members needed loan facilities. We believed that such loans could only be provided efficiently and urgently by a sacco," Mr. Sirma, who is the Sacco's chairman, says, explaining the reasons behind the formation of Kencom Sacco in 1994. "We believed our own sacco would solve our pressing financial needs." The suitability of the idea is confirmed by the fact that Kencom Sacco has stayed on a financial high altitude since its formation. Statistics illustrate the story better. Its membership has increased to 3,000 despite heavy staff retrenchments in the banking sector in recent years. Its share capital has increased to Shs 300 million while revenue has increased to Shs 30.9 million in 2008, rising from Shs 21.3 million the previous year. Loans given to members have increased to Shs 78, 023,059, bringing the total loan portfolio to Shs 231,327,446 as at the end of 2008. At the same time share capital grew to Shs 121.2 million while total assets of the sacco stood at Shs248,240,257 by the end of 2008, an increase of 36 per cent. As an investment, the Kencom Sacco has also continued to increase its profitability to members as reflected in the high dividends and interest rates on member deposits and shares. According to Mr. Sirma, a key reason for sacco's success is that it tailors its products to suit the needs of its members.


40 "For instance, there are members who don't need school fees because their children are still young. They need different kinds of products. We therefore encourage such members to take loans to start and support businesses such as real estate. 窶標e have members who have purchased tractors for farming businesses and others who have started schools and colleges. " In this way, says Mr. Sirma, Kencom Sacco is helping members and contributing to the development of the country. In deed, he believes that saccos have contributed immensely to the development of Kenya. "If you look around, you will not miss to see a development which is owned by a sacco or which has been set up using sacco funds. The matatus on our roads are owned by sacco members. The tall, modern buildings in our cities and towns are owned by saccos and their members. And the beautiful homes all over the countryside have been put up using sacco funds." In deed, it is estimated that one in three of all working Kenyans are members of an investment group, mostly saccos (saccos control more than Sh150 billion orUS$1.7 billion while informal groups similarly patterned control another Sh 35 billion, or US$469 million in savings). And unlike the commercial financial institutions and businesses, Mr. Sirma is convinced that saccos have the best governance structure, enabling them to overcome many obstacles. He uses the case of the collapse of US banks in 2008 to illustrate the point. "Banks in the US had to be bailed out by the government. But saccos, which are known as credit unions in the US, weathered the economic crisis without government intervention. It is because the sacco governance structure is transparent. "Companies, including banks, are out to make a profit for their shareholders and to ensure they pay out huge salaries to their employees. When


41 they have a problem, rather than lose customers, they look for ways to paint a good picture of their financial status. On the other hand, saccos don't have high running costs and their transactions are open to members." That is why Mr. Sirma, who has steered the sacco as chairman since its inception, believes that saccos are an excellent vehicle for development. The government can help seal the small holes that encourage the temptation by managers to lend out money recklessly; it can ensure saccos have a strong savings base - most often interfered with by employer reluctance to remit funds and it can encourage mergers for societies that are too small for efficient service delivery. "That way saccos can be able to compete effectively with other financial intuitions like banks that keep targeting sacco members," says Mr. Sirma, adding that because of Kencom Sacco's strong financial base, effective marketing strategies, and diversified , products, the sacco was not affected by commercial banks' entry into the micro finance market. "We don't see banks as our competitors. They have their niche and we have ours. We offer products they cannot offer. For example, we have products such as masaa loan which you can get in a few hours. Banks cannot improve on that."And his dream is to expand the sacco to serve members of the KCB based in branches in the Eastern Africa region and to see the sacco play a greater role in assisting the government in its efforts to alleviate poverty and to achieve its vision 2030. Kencom Sacco has now developed an investment policy that emphasizes real estate investments instead of stocks and shares. The policy is based on ROI (returns on investment), ease of management and fewer risks. "Real estate is easy to manage and it has good returns," Mr. Sirma explains. In addition, he continues, "Real estate doesn't depreciate." Two years ago, the sacco bought 16 hectares of land in Kitengela and subdivided it into 118 plots of half acres and quarter acres. The sacco then sold the plots to members and made a profit of Shs7 million. "This encouraged us to pursue this investment policy. The strategy is for www.investmentnewskenya.com

42 the sacco to source external funds, purchase a piece of land, subdivide it into plots which are sold to members at a fair price. In this way members benefit and the sacco benefits as well." In the strategy, development of the plots is essentially left to individual owners but the sacco ensures uniformity in the pattern of structures to maintain a standard." In pursuit of this investment policy, the sacco plans to buy land in most of the major towns where their members are to be found. "After completing the sale of Kitengela plots, we moved to Kisumu in 2009 where we now have 50 plots. Our next stop will be Eldoret before moving to the Coast, Eastern and Central provinces. "In this way, we will ensure sacco members who are outside Nairobi have a chance to purchase property in urban areas that are accessible to them. At the same time, the sacco will also be contributing to national efforts to alleviate shortage of housing in outlying towns. "The demand for land is always going up. And so are the prices. A plot you bought for Shs 150,000 a few years ago, will be now nearly a half a million shillings. And there isn't a moment it will ever come down." Regarding risks, the sacco chairman recounts the story of Safaricom IPO (initial public offer). "Many saccos rushed to buy shares in Safaricom, some even using borrowed funds. But it was a big mistake. And many of these saccos have been plunged into difficult liquidity problems. We regard ourselves as having been fortunate not to have bought the Safaricom shares. "As you are aware, saccos do not have funds for speculative investments such as shares and stocks. We need sure and steady investments. Real estate is one of these.


Kencom Sacco delegates meeting held at a hotl in Nakuru





Macloud Malonza Chairman of Harambee Sacco Society Ltd

"We have delivered a balanced scorecard of growth and performance," says Mr. Malonza, outlining the performance of the giant society last year.



Exceeding Expectations

At the Harambee Savings and Credit Cooperative Society, National Chairman, Macloud Malonza is leading his enthusiastic team of managers and staff in a renewed interpretation and implementation of the cooperative principles. Service to the members has been placed on top, a clear proof of the old statement that saccos are "not for charity but for service." Says Mr. Malonza, "We sought opportunities for growth by putting our stake holders and members at the heart of the business and offering appropriate services that delighted our members and exceeded their expectations." The outcome has been increased profit— year after year— much to the benefit of all concerned. "We have delivered a balanced scorecard of growth and performance," says Mr. Malonza, outlining the performance of the society last year. Speaking particularly of last year, he says, "In the year 2007, there were many strategic decisions that we got right." Those he notes include introduction of the new integrated computer system and the connection of the Mombasa branch on line to head office through Kenya Data Network. "This is a demonstration that the committee is committed to improving customer service and bringing services closer to the members." In this regard, the committee is planning to open Fosa offices in Nakuru, Kisumu and Eldoret. "Tenders for the renovation work have already been awarded and contractors are on site." In deed the Fosas are expected to be operational by September this year.


46 Other areas are also earmarked for the expansion of the Fosa services. "The expansion of the Fosas will make our services affordable and accessible to all members." The society's gross profit after tax was up by 42 per cent—from Shs 425 million to Shs 604 million. And that was despite a payment of a whooping Shs 113 million to staff declared redundant in a cost cutting exercise that put the society back on the profit-making path. The startling growth, Mr. Malonza says, reflects "well managed expenses and significantly improved operating profits." The society reached "billion shillings bench mark‘ at 1.2 billion during the last year. "I am delighted... .It is my pride to be part of the Harambee society team that delivered record financial results in the society's history. With this achievement, we have demonstrated our ability to deliver on our promises. Performance has always been the top priority of the committee. This year's results are evidence that, as we have always promised, the performance culture has taken root in the society...." Change - positive change in an all inclusive and steady forward match of the management, staff and members - has been the guiding principle ever since Mr. Malonza took over the then loss-making, wobbly giant society. He underpinned the key role of cooperatives - service to members - and sought to increase and improve the number and quality of services throughout the 148 branches of the society strewn all over the country. "Customer service has remained a critical component in our performance evaluation criteria. It has always been the aim of the committee to serve customers with flexibility and convenience." To this end, the Front Office Services Activity, FOSA, opening hours were extended in Nairobi to start at 9 am and end at 4 pm. The society also launched "Top Up" loans "to meet our members' expectations and in line with the changing business environment and competitive forces. In addition members were allowed to access the society's three loaning products at once. www.investmentnewskenya.com


The result was an increase in both membership and use of the society services. Over 44,086 loans worth Shs 3.4 billion were given out in the back office while the Fosa gave out 3087 loans worth Shs 1.124 billion. Thus loans given out increased from Shs 6 billion to Shs 6.8 billion. During the period, members' deposits increased from Shs 6.1 billion to Shs 6.9 billion. Other financial highlights include: • The society gross income increased by Shs 349 million from Shs. 861 million in the year 2006 to Shs. 1.209 billion 2007. The society's income accrues mainly from interest in member loans which has remained at a minimum rate of 1 per cent per month on a reducing balance. • The income accruing from the Fosa rose to Shs 526 million in the year 2007 up from Shs 170 million in the year 2006. This can be attributed to the overwhelming demand for Fosa personal loan products. • The society balance sheet capitalization grew from Shs8.7 billion in the year 2006 to Shs 9.8 billion last year. This reflected the tremendous progress the society has made on its journey of transformation. On this, Mr. Malonza says, "We have built momentum and we have real confidence in our strategic focus." A great deal has to do with the strengthening of member loyalty to ward off competitors, particularly from the commercial banks. The society initi -ated an aggressive campaign to market its products, so that when the commercial banks decided to buy off sacco loans, Harambee Sacco members did not find the need to jump into the fray. Member loyalty depends on the society's continued look out for member interests and ability to provide a level of service that is generally not available at the other financial institutions.


48 Whether it is providing a loan to help a member pay for unexpected medical bills, giving a loan for an urgent school fees or for a funeral, committed saccos make a difference for their members. These are the things that Mr. Malonza realized early as the Chairman of the largest sacco in Kenya - in deed the largest in Africa and the eighth in the world. It has repaid his efforts many fold. And that is why this year, the committee has recommended dividends of 6 per cent, up from 4 per cent last year. He says, "All these improved performance indicators could not have been possible without the confidence and trust that our members have in the operation of the society. The high dividend rate is to thank them for this support.‘ This was despite a 6% dividend payable that translates to Shs 413 million.


2NK Sacco launches its Western Kenya route. A brand new bus is inaugurated with fanfare at Nyeri Town.





David Waruingi Chairman, 2NK Sacco

Its dream is to become the leading transport sacco in the country. And with a new Business Plan as the road map, Nyeri-based 2NK Sacco has embarked on a journey to improve the livelihood and incomes of its members



Turning Dreams Into Money-making Business Its dream is to become the leading transport sacco in the country. And with a new Business Plan as the road map, Nyeri-based 2NK Sacco has embarked on a journey to improve the livelihood and incomes of its members It is over a decade since the founder of 2NK Sacco, Patrick Wanarua, mobilized a group of matatu operators to form the sacco. His core objective was to enable members to save money and borrow loans to improve their businesses. Today, that dream has been achieved ten fold. The 2NK Sacco, which now has a strong financial and asset base, has impact throughout the country. In 1994 the sacco kicked off its operations, with matatu owners on the Karatina-Nairobi route. Soon they were joined by those operating on Nyeri-Nairobi route. The membership has also grown from 60 at inception to 600. The first challenge of the sacco was to create order at the Tea Room matatu terminus where unruly manambas had taken charge of the Nairobi stage. Maintenance of law and order, ethical conduct of business and professionalism has earned 2NK Sacco respect since inception. 2NK Sacco operates several income generating projects. The sacco projects were born out of emerging reforms and liberalization in the public transport sector. Liberalization of the market in 1998 posed a danger to the matatu industry, the sacco's lifeline. The projects have however, not diverted the sacco from its core objective of mobilizing savings and giving loans to members.

The sacco projects include parcel delivery service, two petrol stations, an


52 insurance agency, Nissan Matatus, 2NK Special Buses, FOSA and a petrol tanker. The sacco has already acquired a plot near Ruringu shopping center in the outskirts of Nyeri town for the construction of another petrol station and an office complex. Members own the projects through shares and earn dividends at the end of the year. The Sacco members own about 600 Nissan Matatus which operate along major routes in Kenya and have a major Matatu terminus in Nairobi. A new office is already in operation at Tea-room in Nairobi to enhance services. Other 2NK Sacco stations are Nyeri, Nakuru, Eldoret, Karatina, Nyahururu and Thika. With the commissioning of 2NK Luxury Buses last year, the Sacco opened an office in Mombasa with a manager and support staff. The sacco's way forward is not to start new projects but to maximize profitability of the on-going projects. The Sacco projects have not only boosted the financial base of 2NK Sacco but have also enhanced its image. The projects are also major job creators. As they evolve over time, the projects have created additional jobs in the market. The bus project, for example, created new opportunities for supervisors, clerks, drivers, loaders and many others. 2NK Sacco has developed a five year strategic plan focused on goals and objectives to improve services and boost income for members. The strategic plan was formulated by the sacco's management team, senior staff and senior co-operative officers at a workshop facilitated by Co-operative Consultancy Services—an arm of the Cooperative Bank of Kenya. The strategic plan analyses the sacco operations, evaluates its strengths and weaknesses and sets goals with time frame under which they are to be achieved. Implementation of the strategic plan will take the sacco to the future with confidence in the light of changes taking place in the public transport sector. It will enable the giant transport sacco to achieve its vision of becoming www.investmentnewskenya.com

53 the leading transport sacco in the country and go along way to improve the livelihood of it's members by providing excellent services as stated in the sacco mission. Monitoring and evaluation of the strategic plan will be done continuously to access the degree to which the set objectives are being achieved. The strategic plan, which runs up to year 2012, is a blue print of 2NK Sacco's programmes designed on an achievable time table. The strategic plan will enable the sacco attain quality governance standards to cope with emerging demands of the industry. With adherence to co-operate governance values, the sacco endeavors to maintain its leading role with confidence despite challenges, both internal and external. The need for enhanced customer care and adopting of IT standards is taken care of in the strategic plan in addition to the need for a motivated staff. The chairman Mr. David Waruingi noted that 2NK Sacco has set the standards for others. "We intend to retain our leading position and even do better despite the challenges that have faced us over the years. The hallmark of 2NK Sacco has been sanity and orderliness in all their bays, a trademark that has differentiated them from other transport groups. ‗No amount of pressure can make us break the rules. Instead 2NK will continue to enhance the rules and remain a disciplined public transport. I appreciate that commuters have remained faithful to 2NK Sacco despite the unfair competition that has emerged in some of the matatu stages."




Lisalitsa Ambwere Chairperson, Jamii Sacco Society Ltd

Concern for the unbanked - women and youth groups is what gives the Jamii Sacco Society its distinction. Its basic membership is derived from the ministry of culture and social services.



Burning Ambition to Help Youth and Women As the chairperson of the Jamii Sacco Society, Anne Lisalitsa Ambwere has one burning ambition—to help youth and women groups currently being exploited by microfinance institutions. "Microfinance institutions give these hard working people small loans at exorbitant rates. They are impoverished instead of being helped". Her concern with groups of women and youth — often referred to as the unbanked— is long term. She has worked with them ever since she started work with the Department of Social Services in 1975. "We know these people very well. My pride would be to see the success of a project to incorporate them into our sacco where they can get cheaper loans". Unlike other micro-financial institutions, Jamii Sacco draws its membership from people who are familiar with the groups. "As a ministry, we register and supervise these groups. So we know their weaknesses and strengths". Ms Ambwere is herself the Commissioner of gender and social services, the government department with the responsibility to help the disadvantaged. "We have been studying other saccos such as the Kipsigis Teachers and Maua Methodist where schemes to help women and youth groups have been successfully started. We are convinced that the idea is feasible", she says. That however is not the only challenge for Ms Ambwere. She would like to see more women included in the management of cooperatives. "Generally, women make better managers", she says. "At Jamii Sacco, we have recognized this and there are three women members in our management". www.investmentnewskenya.com


She insists however that women must be educated to become even better managers. "Education must be emphasized whether a person is a woman or a man," she says. "At the final analysis, performance depends on how enlightened you are. You may not be corrupt, but if you as a leader are illiterate, others will take advantage of your ignorance and the result will be mismanagement". Ms Ambwere joined the management of the Jamii Sacco in 2000 and was elected a member of the education subcommittee before being elected the Chair person. "We have a generally well managed sacco. What I have tried to do since I took over was to cut costs. We have, for instance, reduced our regular management committee meetings. We meet only when it is absolutely necessary. Thus we have cut down on allowances. Procurement procedures have also been streamlined to ensure that funds are not lost through unnecessary purchases. "I also set out to put up the IT systems because I felt it was of major concern. We have an IT manager to ensure proper operations of the systems. "We also needed to improve our product range". Like other saccos in the public sector, Jamii Sacco has suffered because of the government employment freeze coupled with retirements and retrenchments. "We are in fact worried. Sacco membership is not growing, it is declining. Unless something is done, this may become a real threat to the existence of saccos in five or so years. "We are also concerned about the low incomes of our members. Many of our members earn very low salaries that cannot service big loans. Because of this , our members become more dependent on loans and more loans. And most of the loans go to unproductive expenses that put our members into a vicious cycle." For her work, Ms Ambwere was awarded an MBS by the President. www.investmentnewskenya.com


Ukulima Sacco Society House at the centre of Nairobi City: Sacco owned buildings such as this are many in Nairobi and other towns. www.investmentnewskenya.com



Andrew Lang’at Chairman, Ndege Chai Sacco Society

Mr. Andrew Lang‘at is setting the pace as the new breed of educated, vision-led cooperative managers. He and his dedicated team of managers have led the Kericho-based Ndege Chai Sacco Society to become one of the most profitable coop-eratives in Kenya. And in recognition of this, President Mwai Kibaki honored him with a presidential commendation, the first ever for a cooperative manager.



Putting the Sacco Movement on the Map Mr. Andrew Lang'at, the Chairman of the Kericho-based Ndege Chai Sacco Society tells of his agony when he wanted to join the sacco as a member. "I was hesitant because of the management. I didn't feel confident with it". Little did he know that he was actually destined to become the chairman, and therefore the top manager of the society he had learned to view with a mixture of dread and admiration. And neither did he imagine he would so radically change the management techniques of the society such that Ndege Chai Sacco would not only be the top cooperative society in the country but also bring him personally, countrywide fame. For his work has now won him a rare presidential commendation—in fact, the first in the cooperative sector- from President Mwai Kibaki. "All I wanted when I joined the cooperative management was to try to improve things from within. I didn't take it as a great deal". The award was hailed by the cooperative sector as a positive sign that the movement's role in the economy was finally being recognized. "We see this as a big step forward. It will encourage competence, hard work and improvements in cooperative society management. And it will also lessen corruption", says the General Manager of Kilifi Teachers Sacco Society . When he took over the management of Ndege Chai sacco in 1999, the society had only 4,700 active members. Now the society is counted among the giants with over 14,389 active members. "We mounted aggressive education and recruitment campaigns throughout the estates and factories. Our current target is to reach 24,000 members by the year 2008," says a confident Mr. Lang'at.



He relies on effective, open management to create confidence among old and new members. And to him, good management is a hands-off style. "We empower our people to do their work", Mr Lang'at told me. "We have opened up the democratic space within our society. Members say whatever they want to say without censorship or fear. "We have sub-committees with specific roles and they plan individually. The plans are then brought for discussion at the management level. If there is consensus, the plans are implemented", he says. Everything is however, done within a strategic plan, the new goal oriented management style. "In fact we go a step further — we carry out a quarterly assessment to ensure that we are within our strategic plan". On becoming the chairman of Ndege Chai Sacco Soci-ety, Mr. Lang'at initiated procurement and credit policies to control expenditure and potential mismanagement. He however, focused on one goal as the determinant of his management success — the control of liquidity of the sacco. In saccos, this is the area of most discontent. "When I joined the sacco, you waited for months to get a loan after application. I was determined to improve on this. Now you can get your loan even in two days". And loans are given out strictly on first come, first served basis. "This has created confidence and trust among the members", he says. Mr. Lang'at puts education and training in the forefront when it comes to improving the management of coopera-tives. "At Ndege Chai Sacco, everything is in black and white — written down — because every member should read. Misunderstandings are therefore eliminated". And in this regard, Mr. Lang'at leads by example. He has attended numerous training courses both locally and abroad. He and his management team have also traveled far and wide in order to learn from others. "We, at Ndege Chai sacco, ensure that those of us who travel share with other members the knowledge gained. We also implement what we can implement". During a visit to the United States, Mr. Lang'at and his team realized that saccos there improved their profitability and liquidity by not giving out their entire surplus as dividends. They borrowed the idea. "As a result


61 dividends went down from 14 per cent last year to 10 per cent this year, but liquidity improved. "We also realized that saccos in the US — known there as credit unions — are light years ahead of us. Loans are applied for and approved on line. The saccos even have their own clearing house. And because of powerful and effective lobbying, they have elaborate and strong government support", he told me. The US saccos —or credit unions— Mr. Lang'at told me, are, unlike saccos in Kenya, governed by an effective body of rules. For example there are rules that govern mergers under which small, unprofitable credit unions are encouraged to merge to attain efficiency and profitability" These are some of the ideas that Mr. Lang'at hopes to share in the proposed monthly luncheons with co-operative leaders in Kericho district. Next to illiteracy, Mr. Lang'at counts nepotism as another of the principle impediments to progress and development of cooperatives in Kenya. "Because of nepotism, people who should never have been leaders are put in leadership positions. Even illiterates are given positions where ability to read is basic!" he says. . Mr. Lang'at's view is that cooperatives offer the best vehicle for increased wealth distribution and poverty eradication. "Cooperatives have the infrastructure for wealth creation and distribution in place. What is missing is the government will and support", he says.

Cooperatives can also be the best vehicles for dispersion of community funds as most Kenyans are connected to cooperatives in one way or another. "The funds for HIV/Aids and youth could have certainly been better entrusted to cooperatives than to MPs. But the government would have to improve cooperative manager's accountability, management skills and educational standards".


62 Mr. Lang'at horned his management skills in the 4K clubs in primary school days where he was the chairman. Club members used to rear and sell chicken and divide the profits at the end of the year. Later, as a secondary school student at Maseno High School, Mr. Lang'at was the chairman of the Economics Club. But it is to his upbringing as a first born and a Christian that Mr. Lang'at attributes much of his leadership skills. "As the first born in a large family of eight, I needed much skill to account for my position". He was born in Bureti District in 1953.He studied at Kabianga High School, Maseno High School and the University of Nairobi where he graduated with a Bachelor of Education degree. But rather than go to the classroom, Mr. Lang'at chose to join James Finlay, the well-known tea farming estates , as an assistant manager at its Cheptabes Estate. In that capacity, he worked in various estates of the company before being promoted to a full manager in 1993. Currently, he is the manager of the company's Kitumbe Factory. His life with James Finlay has been an enthusiastic story of innovations and staff motivation which have "improved the quality of factory products, cut down on costs, minimized industrial accidents, improved conservation of the environment and overall profitability". Mr. Lang'at joined the Ndege Chai Sacco Cooperative in 1986 and was elected to the team of managers in 1994.


About the Author Emma Muli has extensive experience as a writer, editor and researcher on women related issues and business. She has written influential columns and features for the Standard and Nation newspapers in Kenya. Her pioneering book, Kenya: Investing in he Great Rift Valley, has been widely used by the government and parastatals to promote investing and business in Kenya. Her particular interest has been to promote the cooperative movement as a viable vehicle for wealth distribution and to encourage investing and entrepreneurship in Kenya by providing information on investment opportunities in the country. She received a BA degree in Economics and Philosophy from the Nairobi University and an MA degree in Media Studies from the same university.

She is currently an associate editor of Investment News (www.investmentnewskenya.com), an online business magazine that promotes investing in Kenya

Profile for Investment News

Book on Cooperative Management Success  

Conversations with cooperative managers on their motivations, influences, management styles, goals and achievements

Book on Cooperative Management Success  

Conversations with cooperative managers on their motivations, influences, management styles, goals and achievements


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