Sacco driven to its knees as members fail to repay Sh7m

Members of Kiambu-based Kumisa Savings and Credit Co-operative Sacco fear they could lose their savings after details emerged it had run into cash problems.

The once-vibrant Sacco is now a shadow of its former self, going by the details given during the Annual General Meeting (AGM) last Saturday.

During the stormy AGM held at Kirigiti Stadium, Sacco officials told members that the company was on the brink of collapse due to liquidity problems.

The Sacco’s secretary, John Gakure, said board members had defaulted on loans amounting to more than Sh3 million, while members had failed to repay more than Sh4 million.

Buy land

Mr Gakure also revealed that the Sacco has a loan of Sh7.5 million taken in 2016 to buy land in Mai Mahiu, but the money was instead loaned out to members.

“The plan never materialised after we realised that the land had issues. The money that was meant to buy the land was given to members in the form of loans, but they have refused to pay back,” he said.

The chairman of the supervisory committee, Martin Kinyanjui, added that out of more than 2,000 members who currently had loans, only about 100 were servicing them, throwing the Sacco into liquidity problems.

“All we are telling the officials and members with loans is to pay so that the Sacco can get back on its feet,” said Mr Kinyanjui.

Jonah Njoroge, the Sacco’s chairman, who is also in charge of credit, added that non-payment of loans was their greatest challenge.

Mr Njoroge, who took a loan of Sh800,000, exonerated officials from blame, saying Sacco rules and procedures were followed in qualifying them to borrow.

“The officials are also members and qualified for loans as long as they met all the stipulated guidelines. The problem is not that they were given loans, but that they refused to pay,” he said.

Sacco officials were taken to task to explain how they have been using the money that was collected from loan repayments. It emerged that between January and July this year, Sh1.5 million had been collected via mobile money transfers, and Sh300,000 in cash.

It also emerged that the officials had sold 43 pigs belonging to the Sacco at Sh365,000.

Despite the money collected, officials said, the Sacco has rent arrears of Sh233,000 and has been unable to pay off its loan as required. Instead of repaying Sh200,000 a month, it was paying Sh100,000.

Sacco employees, it was further revealed, have gone several months without pay.

Gakure and Njoroge, however, denied claims of funds embezzlement, saying the money that was being collected from loan repayments and from the sale of pigs was used to advance credit to members who had applied.

They also said the money was being used to pay members who had applied to leave the Sacco.

However, multiple interviews with members revealed that the Sacco was neither refunding member savings nor advancing loans due to financial difficulties.

Several people who spoke to The Standard narrated how their bid to withdraw their savings has been futile.

Turned away

Caroline Waithera, who had saved Sh65,000 with Kumisa, said she was turned away in June when she went to apply for a Sh90,000 loan.

“The officials told me the Sacco had no money. When I then decided to get a refund of my savings, I was given a cheque, which then bounced,” she claimed.

Samuel Njathi, who has saved Sh46,000, faced similar hurdles. He has been trying to get his money back for the last two years, he said.

“My bid to have my money refunded has not been successful. Two years down the line, Sacco officials have been taking me round in circles. The Government should intervene and ensure members get justice,” he said.

Francis Mwangi who had saved Sh30,000 with the Sacco also claimed to have been issued with a bad cheque after he went to the Sacco and took a Sh52,000 loan.

“I was shocked after I took the cheque to the bank and it bounced. I then decided to withdraw my savings but my bid has been unsuccessful as the Sacco has no money,” he said.

During the AGM, members elected a new board, which they tasked with collecting all unpaid loan and getting the Sacco back on track.

Kiambu Co-operative Officer Peter Mwangi, who attended the meeting, recommended that the Commissioner of Co-operatives carry out an inquiry into the Sacco’s activities.

He further directed that loan repayments be remitted only through bank or mobile money transfers, and that the Sacco appoint a new debt collector to pursue defaulters.

“The Sacco further needs to look into cost-cutting measures due the ongoing liquidity challenges. Members who want to withdraw should be given their refunds,” Mr Mwangi said.