Tuesday, May 08, 2007

of saccos and like minded socities

some friends of mine have been trying to lay siege around me after attending what they described as a very highly energized seminar by a leading financial adviser called manyara kirago. the siege they want to lay is my because of my softness towards saccos and other cooperative societies. and it was rather easy for the said adviser to convince these guys. all he asked them was this:

"why borrow your own money and pay interest on it"

to which am told there were blank stares and a resolve to withdraw from such saving schemes. the guy further advised that for day to day expenses all you needed was a credit card. and instead of savings society , you could put your money in unit trusts especially zimele!

ok i find it tiring to even think of responding to those claims. however anybody who has lived in kenya in the last 50 years knows that this country has moved forward because of saccos and like minded societies. manyara should be old enough to remember that to get any loans one needed to have a title deed. and that title deeds were and still are issued only by the president to loyal party followers. so if you had siasa mbaya , then of course the prezo never came to your rural area to issue title deeds and consequently you did not qualify for loans.

secondly the interests rates were as high as the stars and those who dared take loans invariably burnt their fingers. it was the saccos which saved the common mwananchi

third, on the case of borrowing from yourself, i would respond with a question: if you were to award a tender, who would be the best suited to do business with? is it not yourself. the best person to borrow from is yourself! since the interest you pay comes back to you in terms of rebates and dividends. its like if you own shares of uchumi and someone comes to tell you to instead do your shoping at nakumatt. that person must be sick.

fourth, i just discovered zimele was actually a cooperative society. and again for an adviser, it doesn't make sense to be specific with recommendations like that. is zimele the best asset managers really?

i think those 4 are enough for now

i was asked here to declare my portfolio. i promised then forgot but now that i remembered here it is:

1. BBK
2. Stanbic UG
3. Express Kenya
5. MSC
6. ARM

return for the year to date counting stanbic 46%
without stanbic -13.9%


  1. It is only yesterday when a colleague ogf mine went to the Sacco of his previous employer to pull out, when I asked him why, he told me jhe had joined our current sacco and that its illegal to belong to two at the same time. i was shocked to learn that. What could be the reason behind it?
    Zimele ceased to be a cooperative, its now Asset Management, though Saccos have invested heavily in and through it. Did you know that it has better returns than the big boys (African Alliance, Old Mutul & Britak)?
    Cheers for declaring your stable, its enviable. I'll let someone else do the arithmetic!!

  2. So Stanbic is the only star in the portfolio?
    Dump mumias- i think year end results will be down.

    SACCO interest rates are better than bank rates, do the numbers and you will see the difference.
    Also remember bank loans have additional charges like negotiation fee

  3. Od, some of your stocks are good for the longterm e.g. BBK and KPLC.

  4. That Manyara guy is being blinded by the recent surge in capital markets. Saccos may seem outdated but they have propelled many Kenyans to prosperity.

    Saccos have succeeded in Mashambani, in towns and even in the chaotic matatu industry (just look at NENO, 4NK, and 2NK Co-ops).

    I admire these groupings, because they are people's answers to their own problems. Am sure you've discovered how small Saccos (merry-go-rounds) have helped akina mama to furnish their homes, start businesses and even educate their kids.

  5. I think Equity are finally going after the Saccos market share and will gobble up some of the Saccos.

  6. I hold Stanbic, Diamond Trust, Total, Express and Mumias...will never sell my Mumias at a loss-I'll accumulate more now that the price is low.

  7. @jakarumba, i dont know where the employer got that. its not illegal to be in more than one saccos. in fact you can be in as many as you want and you can also move from one sacco to another. on unit trusts, please remember that these schemes have been giving good returns for only 3 years while the saccos are time tried and tested. also you can borrow from the saccos whithout reducing your shareholding value

  8. @pesatu, stanbic is the current star but am rather a long time investor. most of the losses were due to mumias and KPLC. however am not the least worried in fact am taking up more positions. i keep counters for at least 3 years.
    the best way to look at saccos is this, take nation for example, they gave their members a rebate of 15% yet these members take loans from the saccos at as low as 12% per anum. do the math! no bank can give you that anywhere in the world.

    @mainaT, i think even MSC its only express which is ish ish

    @kenyanomics, thats so eloquent i cant pretend to be able to add any icing to it!

  9. @mainaT, i doubt it, equity is now a bank owned by multinationals. the generosity will eventually stop and people will have to run back to the saccos for help. the sacco model is unique in that it gives you 4 things at ago 1. savings scheme 2. investment scheme 3. credit facilities and now 4. banking through fosa on top of that it gives you the social management almost welfare aproach. i doubt if there is a bank which will be able to match that. again members of saccos can be elected to become directors

    @anon, you are thinking like me really.

  10. Great update. I think SACCO's have a long future and will not be affected by banks who dip in and and out of hot sectors. In a few years, banks could go back to government and corporate lending, and SACCO's will still be there building savings, and lending to their members.

  11. SACCOS have merit, and lots of it...however there is a whole other scenario that makes an exit from SACCO, well tenable.

    Per example. The SACCO I belong to has byrules that require 8% of salary as contribution, loan notwithstanding. Great for savings...however that limits my capacity to borrow.
    We all know money today is better than money tomorrow (NPVs...na hizo zingine...) it would therefore make sense to increase my capacity to borrow todays money to get a return.
    I suspect since we all recognise the contribution the SACCO system has made to the average mwananchi, we are all caught up in the sentiment. Times done changed...banks are more approachable...and the dynamics have changed. Is always prudent to save...but is more smarter to make credit money work to bring in the bread....heck enough so that you can go back to the SACCO and save.


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