Mentor Sacco’s total assets grew by 24.33 percent, from Ksh 3.93 billion to Ksh 4.88 billion in the year 2016.
Sacco deposits increased from Ksh. 3.007 billion to Ksh 3.588 billion, a 19.33 percent increase, from the previous financial year while the share capital recorded 181.33 percent rise from Ksh 57.9 million to Ksh 163.05 million.
The Sacco’s outgoing chairman, Mr Simon Mukunu, attributed the growth in share capital to share drive that commenced in October 2016.
Speaking during the Sacco’s 40th Annual General Meeting (AGM) held at the Murang’a Sports Club, the chairman announced that the membership increased from 12,386 to 13,471 representing an 8.8 percent growth.
“Loans granted to members rose by a record 29.16 percent from Ksh 3.15 billion to Ksh 4.07 billion, while total revenue increased by 23.97 percent from Ksh 557.4 million to Ksh 691.08 million in 2016,” stated the chairman.
He suggested that if all members would save regularly and pay their loans promptly, the society would have strong financial muscle enabling it to pay better rates on dividends and interest on deposits.
Mr Mukunu, therefore, called on members to increase their share capital and deposits as well as regularise on loan repayment to avoid any deductible arrears in their accounts.
He went on to say that the main source of revenue for the Sacco is interest earned from loans disbursed, adding that increased loan defaulting translates to decreased revenues.
“In the year ended 31st December 2016, defaulted loans increased from Ksh 7.85 million in 2015 to 11.1 million. Defaulted loans affect negatively the amount available for dividends due to increased loan loss provision,” he observed.
He said KSh 12 million was provided as loan loss last year. To recover the loans, the Sacco will engage the services of debt collectors and has already engaged Metropol Credit Reference Bureau and listed 31 defaulters in a move to complement guarantors as a default risk management tool.
He called on members to pay their loans promptly and save regularly so as to maintain the financial institution’s revenue growth.
Though the share drive has created an investment opportunity for members that guarantees them annual returns, the chairman lamented that only a few had subscribed.
“By the end of January 2017, only 3127members had subscribed the shares, 937 members by cash, 95 Fosa or Mazao shares transfer, 1736 through share loan and 359 members through Standing orders,” he articulated.
Going by the numbers, 10300 members out of 13471 have not joined the team and he urged those members to join the others and subscribe to the shares to enable the Sacco continue its loaning business.
In the year under review, the number of members eager to learn more about how to contribute to the growth of the institution also recorded a rise.
The members Information Days (MID) attendance increased by 25.6 percent from 3686 in 2015 to 4703. AGM attendance also improved by 22.61 percent from 1017 in 2015 to 1247.
On Information Communication Technology (ICT), Mr Mukunu said the Sacco has made notable progress
in the use of technology to enhance efficiency in service delivery.
“The Sacco has successfully introduced Mobile Banking Platform which has enabled members to access their funds through their mobile phones. Currently, members can apply and receive Quick fix Loans via their mobile phones,’ he observed.
The Sacco also uses Short Message Services (SMS) to update members on Sacco developments and sensitising them on access to products and services. The financial institution also intends to market its products and services through its website: www. mentorsacco.co.ke, by posting news and updates on the society’s events.
“The enhanced website will soon have a loan calculator that members can access from anywhere, that shows them how much they qualify for and a payment schedule. We also plan to introduce web banking where members can log in and view their accounts statements, next of kin details, personal information and loan application status among others,” noted the chairman.
To supplement ATMs, QFS and Coop bank POS (Points of Sale), the Sacco is rolling out Sacco agency banking. Through Mentor Sacco own POS, members will be able to access their accounts.
The board proposed a dividend rate on members share capital of 15 per cent, the interest rate on Mazao deposits of 13.8 percent, the interest rate on members Fosa deposits at 11,09 and interest rate on members deposits at 11.8 percent.
The chairman said the Sacco with four full-fledged branches and four satellite branches has already opened a branch next to KRA offices Thika and called on members in the area to patronise and market it.
Mr Mukunu said though the Central Bank of Kenya capped interest rates at 14 percent, the same did not affect the Sacco as it was already giving loans at less than the new rate. However, he was quick to note that the capping would impact on the performance of the sub-sector.
The supervisory chairman Peterson Maina echoed the chairman’s sentiments adding that the Sacco was not affected as most of the products were charged at below 14 percent interest rate.
The supervisory chair said that as, at December 2016, there was a total of 8875 out of the total membership who had borrowed loans worth Ksh 4.0 billion.
“Out of these, 4200 were female and 4675 were male. This means a total of 4596 members have not borrowed with the Sacco. The exclusive non-borrowers include 2055 men who save but they never borrow and 2541 women,” said Mr Maina.
He said this means 19 percent of women and 15 percent of male members do not generate regular income for the Sacco which is 34 percent of the total membership. The non-borrowers have savings totalling to Ksh. 611 million.
He asked members with other sources of income apart from their salaries to start channelling the incomes through the Sacco to give them better bargaining power in terms of borrowing.
Other than saving and offering loans, the Sacco also receives wills and title deeds among other documents from customers for safe keeping.