Kenya: Teachers Woes as 'Risky' Lending Rocks Once Vibrant Sacco

Forty three years ago, primary school teachers in Kiambu united and formed a savings and credit facility to help them grow, considering that their meagre salaries could not enable them finance meaningful developments.

On February 10, 1977, like-minded teachers registered Kiambu Teachers Sacco, whose headquarters was in Kiambu town and instructed their employer to channel their salaries through it.

LEADERSHIP

The entity was later rebranded to Metropolitan Teachers Sacco and later to Metropolitan National Sacco which is now staring at liquidity that could easily make it sink. It had restricted its membership to teachers from Kiambu only.

After years of toiling, the sacco opened up more branches in Kiambu, Thika and Limuru town as the management sought to widen its catchment area and grow its membership.

Then, the sacco was rated as among the best managed, but today, it is a pale shadow of its former self, with members accusing its leadership of mismanagement that has seen the entity grapple with bad debts and liquidity to an extent that there is no money to serve the members.

The misfortune has been attributed to bad leadership and the management's ambitious expansion plan of accommodating more members outside the teaching profession which led to a sharp increase on members they can no longer handle.

For the last two years, unhappy members have been withdrawing from the institution fearing that it could collapse with their money.

In 2012, the management's insatiable appetite for huge number of members and deposits opened its brackets to accommodate non-teaching members.

This was in a bid to increase its share capital. It also changed its name to Metropolitan Teachers Sacco, ostensibly to make it marketable outside Kiambu.

EXPANSION

The rebranding, according to Mr Francis N'gan'ga, the then Sacco's chief executive officer was "to make the institution national," since they had already started opening branches outside Kiambu."

By then the sacco's membership had grown to 14,634 up from 5,557 in 2008 and its share capital rose to about Sh1.4 billion.

At the time, the sacco which was licensed by Sacco Societies Regulatory Authority (Sasra) had branches in Kiambu, Thika, Limuru, Nairobi and Kisumu regions.

But the management was still yearning to increase, and so they lobbied for the amendment of their bylaws to open the common bond allowing staff from other government institutions, the private sector, traders and Kenyans in the diaspora people to join.

"At first, it was meant for teachers from the great Kiambu district but today we have members from other government units, private sectors and local authorities. And to cater for the diversity, we rebranded to Metropolitan Teachers Sacco Limited," Mr N'gan'ga told an annual general meeting in 2012.

The opening for the common bond saw it rebrand once again to Metropolitan National Sacco to give it a national face in an ambitious expansion that has destabilised it.

In 2012, it had 14,634 members, currently the membership is 101,057. But notably, the number of dormant members rose from 2,806 to 28,868 in the last one year while only 51,810 are still remitting their monthly contributions; a reflection of how members are losing hope in the sacco. Between 2012 and 2016, the membership was growing by at least 25 per cent annually but in the last financial year, the membership grew by just 109 members.

CONCERN

This has been attributed to massive withdrawals as members' fear the sacco could sink with their savings.

The Sacco is now grappling with external debts after dishing out "risky" loans worth billions of shillings which led to massive borrowing, which has made it impossible to serve its members who have been complaining that even withdrawing their money is a problem.

Kiambu West Kenya National Union of Teacher executive secretary, Mr Michael Muna said from its current status, the sacco is no longer serving its initial purpose. He said the sacco is subjecting teachers to great suffering since sometimes they are unable to access their salaries when they need money.

"Mr greatest concern is that with the current hardships, teachers are not even getting their salaries from the Sacco but being restricted on how much they can withdraw. There is no way one can work for 30 days and when you go to get your pay, the Sacco is not able to give you your money. This has to addressed urgently," Mr Muna said.

COMPLAINTS

The Sacco's Annual General Meeting held at Kiambu High School on Saturday was marred by shouting and heckling, forcing some guests to cut short their speeches as members displayed their dissatisfaction on how the Sacco was being managed. The members also expressed concern that unless things are corrected, the sacco could soon go down.

Last year, following massive complaints from members that they were not able to access their salaries or loans when channelled through the banking wing, investigators from Sasra raided the institution.

The outcome of the probe has not been released and members have been reading mischief even as they push for it to be made public.

Mr Peter Njuguna, the head of supervision at Sasra confirmed that their team raided the institution but described it as a routine inspection.

Pressed to explain when the report would be out or if there is any report on concerns raised by the members, Mr Njuguna said he was not authorised to speak to the media, but promised that Sasra would give an explanation through their communication department which never happened.

Mr Muna said the mess in the Sacco should be addressed urgently, saying "teachers have laboured to build the Sacco and it has been their lifeline," adding that the concerned people must do all it takes to ensure the sacco gets back to its feet.

DIVIDENTS

Teachers, he said invested a lot of money in the sacco, saying some have invested their pensions and therefore should the institution go down it will drastically affect lives of thousands of members and their families.

That the sacco is doing badly was evident during the AGM on March 30 when the management announced that dividends had been reduced by five per cent-from 11 per cent in previous year to six per cent last year in what has been attributed to liquidity problem.

In 2017, the sacco gave dividends worth Sh582 million but for last year which the members got last week, the Sacco awarded Sh334 million.

Last week, the sacco had a hard time as members streamed to their respective branches to withdraw their dividends.

Mr Joash Okeyo, a teacher from Kisumu, and who is a member of the Kisumu branch said, "Last year I received Sh15,000. This year I got only Sh7,000. I don't understand what is happening."

The Sacco's supervisory committee, in its report signed by chairman Joseph Gachunja, and an audit report by Finitech Frontiers, pointed to bad operation practices by the board which have been blamed for plunging the sacco into liquidity.

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