Teachers employed with Teachers Service Commission (TSC) can now take a loan with repayment period of up to one hundred and twenty months, equivalent to twelve years in some Saccos.
Teachers are entitled to a personal loan which most times with a repayment period of up to eighty four months. However recently some banks and Saccos (Saving and Credit Cooperative Societies) extended the period to ninety six and some one hundred and twenty months.
Winas Sacco is the latest Sacco to allow teachers to take loan with a 120 month repayment period.
Saccos in Kenya are regulated by Sacco Society Registration Authority (Sasra). A recent survey shows a majority of these saccos are for farmers (42 percent), teachers (23 percent), communities (18 percent), governments (18 percent), and the private sector (5 percent).
There are over 22,000 registered cooperatives in Kenya. Of these, 13,000 are saccos (Savings and Credit Cooperative Societies), whose crucial role in facilitating investment cannot be underestimated.
About 175 of these are deposit saccos, regulated by the Sacco Societies Regulatory Authority (SASRA) regulated.
By December 2020, about 175 Saccos that accept deposits held Sh627.68 billion worth of assets and deposit n of Sh431.46 billion. They had disbursed loans totaling Sh474.77 billion.
But that number of Saccos excludes hundreds of no-cash Saccos that had not been brought under Sasra oversight by the end of the year.
The 175 regulated Saccos have 4.097 million active members and 1.372 million dormant members.
Deposit Saccos allow members to deposit and save their money, which they can withdraw at any time, as well as banks.
Teachers Saccos for a long time have performed better compared to other Saccos.
However recently some Saccos belonging to teachers have sank into deeper financial trouble that has left members worried.
Mwalimu National and Metropolitan are good examples of banks that are sailing in troubled waters.
Teachers have been complaining of not able to leave the Saccos easily once they have become members. In addition teachers are lamenting of many charges that are eating into their deposits.
Some Saccos have already issued annual dividends to members with others lined up to do this month and the coming months.
Nyeri based New Fortis Sacco (formerly Nyeri Teachers Sacco) has announced Sh740 million dividend payouts to members, defying the Covid-19 economic downturn.
Sacco Chairman Anthony Mathinji told members at the 46th Annual General Meeting (AGM) that the payments were 12.9 per cent interest on deposits and savings by members.
This is an increase from the Sh662 million paid to members in 2020.
“We are happy that our membership of 17,720 in 2021 had grown from 15,758 in 2020 and 14,890 in 2019,” Mr Mathinji said.
The Sacco bosses also informed members of the increase in the society’s share capital from Sh117 million in 2020 to Sh129 million in 2021. The Sacco rebranded as New Fortis to attract more members.
Mathinji said the total loans granted hit Sh37 billion, and in 2021, at least Sh6 billion was loaned out to members.
“Despite the hardships of the pandemic, members continued having confidence in Saccos and paid-up their loans which contributed to the overall health of the organisation,” he said.
The sacco said 340 members had built homes in land acquired in Mweiga, Kieni Constituency under the affordable housing programme.
Mathinji said the sacco had maintained the interest rate in light of the challenges of the Covid-19 pandemic and the fact the country was headed into an election year.
Nyeri Governor Mutahi Kahiga commended the sacco for growing its asset base and making payout dividends despite the ravages of Covid-19.
He said the county will provide a conducive environment for the cooperative movement to thrive.
“Businesses can only flourish where the government plays a facilitation role and the private sector takes advantage of the opportunities provided,” Mr Kahiga said.
A recent survey however, has revealed huge weaknesses in the sacco IT systems, which represent more than a trillion shillings in members’ assets and savings.
Around 111 saccos were surveyed, including 40 in the coastal region, 30 in Nairobi, 10 each in the Rift Valley, Central and Eastern, five in Western and Nyanza and one in the Northeast.
In October last year Saccos was reported to have lost the equivalent of Sh6.23 million per have month or 208,000 Sh daily by software vendors contracted by saccos.
Although there has been a steady increase in cybersecurity budgets over the past three years, due in part to increasing attacks, sacco- Boards still prioritize solving the problem.
Some saccos choose to outsource the work of protecting their systems to poorly audited consulting firms, jeopardizing their customers’ savings and personal information
The latest Serianu sacco Cybersecurity Report (2020) shows that even after engaging such firms to offer IT services, a majority of the saccos does not regularly audit their suppliers, and some those who do are often urged to act only when a problem arises.
“(Approximately) 42 percent of saccos have no monitoring and alerting activities 16 percent track their vendors’ activities on their networks only when there is a problem,” the report notes.
Government efforts to contain the spread of Covid-19 are favoring online transactions. The financial sector is undergoing a digital transformation, with banks such as Equity reporting that 98% of their transactions are now taking place outside of their branches, while over 90% of KCB transactions are digital.
Around 38 million Kenyans also rely on M-Pesa for their day-to-day transactions, leading saccos to keep up with the digital financial revolution.
“(A) majority is doing this by developing a website for communication purposes and conducting basic transactions through an associated one App offers M-Pesa and to a partner bank for ATM transactions,” noted Dr. David Cracknell, the director of First Principles Consulting.
He notes that with the exception of some of the largest Saccos, which have invested heavily in new systems, such as the Kenyan Police, Harambee and Unaitas, it is for the still difficult for most saccos to meet the challenge of digital transformation head-on.
For example, he says: “Few saccos have started to offer easy access to small loans via mobile phones.”
Martin Mwangi, a senior cybersecurity consultant at Serianu, notes in the report that the lack of proper cybersecurity controls has allowed cybercriminals to continue to compromise corporate networks and systems.
“Successful cybersecurity programs are built on understanding an organization’s risks, vulnerabilities, and threats,” he notes.
The survey advises every sacco to be on the lookout for rogue devices and software on their networks with malicious intent, and invest in antivirus software, firewalls, and email security gateways to detect and prevent malware attacks
Other attacks can take the form of unauthorized user account ications, social engineering attacks, and unauthorized database modifications.
Cynthia Wandia, CEO and co-founder of Kwara, calls on local saccos to take advantage of the digital revolution, evolving from manual organizations to fully automated entities Sacco market.
“Saccos and other cooperatives will benefit the most from the adoption of cloud computing technology, which only offers a more cost-effective solution for digitization, but also more secure platforms for managing data and transactions,” she says.