Archive for category: NSSF

Gutu,Zimbabwe: The Ministry of Women Affairs, Gender and Community Development has to date registered 600 cooperatives in its database with a membership of over three million people under the sector countrywide.

Women Affairs Minister, Dr Sithembiso Nyoni, revealed this during an AFM Church’s royal queen conference at Chatsworth in Gutu, an event that was also graced by First Lady, Auxillia Mnangagwa.

Dr Nyoni said a total of 7131 women in Masvingo had opened accounts with the recently established Zimbabwe Women Microfinance Bank (ZWMB) as part of Government efforts to promote women and community development initiatives.

“My ministry has many departments, but I will zero in on empowerment. Women should have their own business so that we are not oppressed, but being submissive to our husbands. Women need training and my ministry is ready to provide that training wherever you are as congregants,” she said.

“So far, we administer more than 600 cooperatives across the country with a membership of at least three million people. In Masvingo province, 7 131 women have opened accounts with Zimbabwe Women Microfinance Bank (ZWMB).”

Dr Nyoni said people in Masvingo had also formed and registered fishing projects at the multi-million Tugwi-Mukosi Dam with many beneficiaries coming from Chivi District. She said the province had close to 260 fishing co-operatives of which 128 were in Chivi.

“As women in church you can also buy cages at the dam, to be part of fishery projects and also form savings cooperatives where you save your money,” said Dr Nyoni.

Also read:Women Urged to Join Cooperatives, call for more inclusion in Leadership.

Stop dreaming about jobs abroad women, youths told

She said government through her ministry had established incubation hubs to provide platforms to equip women with different hands-on skills. The incubation hubs, she said, were located in Harare and other major cities.

“We have enough incubation hubs that can train women on how to bake bread whose price is beyond the reach of many. In addition, we also want to promote our traditional food through cultural food festivals that we will hold next week. Our First Lady, Amai Auxillia Mnangagwa is spearheading this.

“We also market your products at the Zimbabwe International Trade Fair (ZITF), provincial fairs and I also encourage you as AFM to do your own fairs,” said Dr Nyoni.

She acknowledged that some women were short-changed in certain business deals, but said government was committed to economically empower them through the introduction of financial facilities to improve access to funding.

Dr Nyoni said women can also make use of the Small and Medium Enterprises Development Corporation (SMEDCO) to access funding for their cooperatives.

“We also have a community development fund and women’s development fund. This fund is accessed through the ministry. In every ward, we have our officers who can assist you to access financial services.

“In Masvingo, we have partners that work with the Women’s Bank such as Metbank and NetOne, which provides a mobile platform for account holders. Women can use their phones to apply for loans,” she said. (Source/ The Chronicle)

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Kampala, Uganda: Police’s main savings’ scheme – Exodus Savings and Credit Cooperative society is undergoing a forensic audit, after allegations of improper accountability from the SACCO’s members, theCooperator has learnt.

The SACCO, which boasts of 28000 members, is the Forces’ third biggest financial cooperative in the country, after the Uganda People’s Defense Forces’ Wazalendo SACCO, and the Uganda Prison Services’ SACCO. With savings of up to Shs.200billion,Wazalendo is Uganda’s biggest financial cooperative, while at an assets’ worth of shs.6billion and 9,385 members strong, the Prison Services’ SACCO is not in bad standing either.

But unlike the two, the Police SACCO has for long been beset by controversy, ranging from allegations of improper accountability to members’ failure to have timely access to their savings.

Mr. Joseph Kitandwe, the registrar of cooperatives who ordered the SACCO’s audit says, it had become inevitable:

“We were getting tired of always hearing about their issues. I therefore ordered(the audit) following reports of missing members’ cash. Let all it(the SACCO)’s books be audited afresh,” he told the Cooperator in a telephone Interview.

According to Kitandwe, the SACCO management has never produced “proper” books of accounts since its formation in 2007: “I gave them (top Exodus management) a time frame to have the proper audited books in place. That time has now passed, and the police is yet to respond,” he said.

He attributed some of the inconsistencies in the SACCO’s books of accounts to the turnover of leadership at the SACCO, thanks to routine transfers of staff, some who’re vital for audit.

Asked to comment when he expects feedback from the auditors, Kitandwe said: “I expect all audited books within two weeks’ (by June). This time they must meet the set deadline,”

Two factions at loggerheads

Exodus is not the only Police SACCO. In 1989, the former Police chief Mr. John Kisembo and former head of criminal investigations Mr. Chris Bakiza had formed the Uganda Police Savings Association Limited. Then, 18 years later, in 2007, then Police Chief Kale Kayihura started Exodus Savings and Credit Society. Much as both institutions have as their objective to mobilize savings and give loans to the members at reasonable interest rates to better their livelihoods, the current crisis at Exodus SACCO has left many members disgruntled.

At the heart of the crisis is shs.5billion of member savings, for which Exodus cannot apparently account. The cooperator has learnt that before his unceremonious exit, Kayihura had himself ordered for a forensic audit to establish the circumstances under-which the money went missing. More than a year later, the results of that audit are yet to be made public.

Last month, there was mini-chaos at the Exodus offices when tens of members stormed the SACCO to withdraw cash for the Easter season. On that day, Shs.490 million was withdrawn by members, the cooperator has learnt.

In a statement issued by the deputy police spokesperson Polly Namaye, pointed out that there was not mayhem, but overcrowding by many members from across the country. When contacted, Mr. Henry Kalulu, the Exodus chairman reinforced Namaye’s explanation, attributed the fracas to a number of upcountry members who chose to come to the main headquarters in Kampala for their cash.

According to close sources who chose anonymity to speak comfortably on the matter, the said members stormed the SACCO headquarters after the regional branches where they used to get the SACCO services long ceased to offer loans or any financial services to them.

But Namaye refutes the claim that Exodus’ regional branches are no longer operational. Speaking to the Cooperator, she said the force maintains 10 regional centers across the country, where members can access the SACCO services. The centers are in Hoima, Mbarara, Mbale, Kabarole, Gulu, Moroto, Masaka, Arua, Lira, and now, Kabale, whose branch was opened early this month. Two other branches in Soroti and Iganga are expected to be opened to the members by end of June, she said.

Solving the problem

Following the Easter embarrassment, the Cooperator has established that the IGP, John Martins Okoth Ochola ordered and demanded that the “mess” be sorted out once and for all. As part of “sorting” the “mess,” the cooperator has learnt that the SACCO is in the process of establishing a banking hall, where members will henceforth be lining up like in any other bank, when depositing and withdrawing their savings.

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Co-operative organisation has called Saccos to trade at the Nairobi Stock Exchange and buy government securities to raise adequate funds and register a growth to their members.

According to Co-operative Alliance of Kenya chief executive Dan Marube the societies depending on members share contributions, internal reserves and deposits to lend to the same members have unlimited sources of funds.

Savings and Credit Co-operatives should trade at the Nairobi Stock Exchange and buy government securities to diversify their revenue portfolios.

Co-operative Alliance of Kenya chief executive Dan Marube said most Saccos currently heavily depend on member’s savings, internal reserves and deposits for their lending.

“This can be taken up as a business decision on the less risky instruments rather than a policy, to raise funds that can be lent to members at affordable rates,” Marube said.

In its draft 2019 National Co-operative Development policy, the alliance proposes that Saccos participate in national payment system and agency banking.

“The policy objective will enhance financial deepening and investments through interventions in development of a regulatory framework for co-operative enterprises to raise capital using capital market instruments and the establishment of a secondary market for cooperative securities,” says the draft policy stated.

By 2017, CAK had 13,200 Saccos with accumulated savings and deposits of over Ksh430 billion, Ksh441 billion in loans and Ksh601 billion in assets.

The Saccos had a membership of about 5 million persons.

“Despite this notable success, the Saccos are unable to accumulate savings and deposits fast enough to satisfy their members appetite for credit,” says the policy.

Due to this, Saccos rely heavily on loans from commercial banks to satisfy their members borrowing needs defeating the very purpose of coming together.

The problem is further compounded by the emergence of digital platforms offering access to quick loans.

According to Marube, the new venture would be a viable commitment especially if a society has enough funds.

The alliance has also raised worries on the practice of hypothecation, where debtor or third party pledges collateral for credit by financial institutions.

The practice has tended to encourage lenders not to evaluate the business case of the society borrowing which is mainly to increase produce, value addition or revenue, while relying on member earnings or payroll deductions for society cash flow projections.

“The same lenders have tended to continue to recover loans from members’ funds instead of realising the secured assets in case of default,” it added.

Despite this, the co-operatives expect to continue competing with some of the financial institutions over the same space despite their inability to raise funds through the national financial networks. (Source/ The Star)

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Cooperative movements have been urged to adopt more technological solutions to match changing customer needs and confront emerging challenges such as cyber security.

At an annual workshop convened by Cooperative Bank, through its subsidiary Co-op Consultancy & Insurance Agency, the lender rallied chief executives of cooperatives to also ride on technology to cool off competition from other financial players and sustain their market.

Coop Bank formed the subsidiary to enhance institutional capacities of co-operative societies who form the core stakeholders of the lender.

Speaking at the workshop themed Co-operatives Tomorrow: Technology and Innovation for Sustainable and Inclusive Development, State department for co-operative development PS Ali Noor Ismail said technology will be a game changer in sustaining cooperatives’ relevance in the economy.

“With adoption of technology, we have seen new types of products introduced that meet more specific needs of members, improve liquidity in saccos and even yield better margins for co-operatives,” said Mr Ismail.

The three-day workshop at the Coast gave CEOs, drawn from different cooperatives a briefing on new opportunities enabled by digitisation as well as the frightening perils of cyber security.

Mr Ismail called on saccos to forge partnerships as they strategically think about opportunities presented by technology while also managing associated risks. “As you innovate, ensure you have a healthy balance in terms of convenience and security. As an action point, ensure you make the right investments not just on technology but on the right people too,” he advised.

Unethical system hackers

In the recent past, there has been cases of cooperatives losing either money or data to unethical system hackers due to compromised system security. Cases of rogue sacco officials misappropriating member deposits have also been reported.

This is why the government is rewriting outdated policies guiding the conduct of non-deposit taking savings and credit cooperative societies.

Coop Bank director of co-operatives division Vincent Marangu urged cooperatives not to delay in addressing challenges presented by the business environment.

“We understand that organisations are faced with numerous institutional challenges which they must address in order to attain their goals in the dynamic business environment in the country,” said Mr Marangu.

“As co-operatives are the key stakeholders of the bank, we facilitate such workshops every year to create an environment where they can deliberate, share learnings and build each other

With money laundering and terrorism financing becoming among key concerns in financial sector, the CEOs dwelt on ways of bringing on board deposit-taking saccos into mandatory reporting of large transactions

Saccos are increasingly turning to technology to reach out to more members, enhance speed and efficiency of services as well as cut on costs.

However, other institutions such as mobile-based money lenders and betting companies are riding on the same technology to pose competition to saccos, according to Mr Ismail.

Co-operative societies in Kenya employ at least 500,000 people and are the fastest growing subsector in the movement, controlling over 30 per cent of national savings.

Total assets of deposit taking savings and credit cooperatives increased by 12.4 per cent to Sh497.3 billion in 2018 from Sh442.3 billion in 2017, according to data from latest Economic Survey. (Source/ Business daily)

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Kenya: Kenyans are saving much less with pension schemes than experts recommend as daily basic needs and other saving and investment opportunities take priority, reveals a NationNewsplex review of pension data.

Consequently, pensioners are leading a much lower quality of life than they did during their active years.

Several studies show that in most cases pension income is way below what the pensioners used to earn before retirement. On average, the monthly pension received on retirement is equivalent to a third of retirees’ last earnings, according to a study that covered 65,000 members from 200 pension schemes by financial services firm Zamara Group. Another survey by Enwealth Financial Services Limited, a social welfare financial services company, puts the rate much higher at 55 percent of last wages. The Enwealth survey worked with a smaller sample involving 515 pension scheme members.

“Currently, the biggest competitors to pension schemes are saccos and land because Kenyans are not finding what they need in pension schemes. If we can widen the scope, we can achieve a lot,” says Mr Sundeep Raichura, Zamara Group CEO.

But both firms point out that the figures are way below the 75-80 percent replacement rate recommended by pension and personal investment experts to enable individuals to maintain the same standard of living in retirement. This implies that poverty lurks for many people once they hang up their boots, unless they have a retirement plan that also includes other sound savings and investments.

However, such alternative investments are not a perfect replacement for a pension scheme. Good habits such as maintaining a savings bank account, having an emergency fund and promptly repaying loans do not guarantee a comfortable retirement, since such resources can always be used way before an individual retires, according to the Enwealth Financial Services report, Retirement Confidence: How well are Kenyans prepared for retirement?

Despite the reality that Kenyans are falling short in their plans, a majority of those surveyed by Enwealth are looking forward to a comfortable retirement, with a significant number very confident they will outlive their savings. Nine in 10 respondents surveyed said they were either very confident, confident or slightly confident about their financial state in retirement. A similar ratio had no worries about adequately meeting their daily and long-term care expenses and medical costs. One in seven said they were very confident they would outlive their pension savings while another two-thirds were either confident or slightly confident.

Data from the Retirement Benefits Authority (RBA) indicates that there are 3.2 million members registered, with the 1,287 pension schemes in the country, over five times the 600,000 in 2006.

But this accounts for just one in six of wage-employed workers, both in the formal and informal sectors, and the same ratio among Kenyans age 24 and above as at 2016.

Mr Sundeep Raichura, Zamara Group CEO, says the reason most pension schemes are not attractive is that they are designed in such a way that funds are locked in until a certain time, thereby they do not cater for immediate and pressing needs. He thinks the scope of pension schemes should be expanded to allow a portion to be taken to sort out emergencies.

To boost the uptake of pensions among the public, there is a need to expand the priorities within the schemes so that they can actually serve the needs of the people.

“Currently, the biggest competitors to pension schemes are saccos and land because Kenyans are not finding what they need in pension schemes. If we can widen the scope, we can achieve a lot,” he says.

Similar sentiments were recently echoed by the retirement benefits regulator during the launch of the RBA 2019-2024 strategic plan when CEO Nzomo Mutuku said a product with a wider service than just savings was necessary to enable people in the informal sector to borrow against what they have set aside for retirement.

The Enwealth survey that involved Kenyans with pension plans showed that pension savings come third (15 percent) in the various modes of investments preferred, after real estate (41 percent) and land (20 percent). Saving cash in a bank came last at two percent.

Due to low savings, two in five pension schemes are below the level required to enable one to maintain the same lifestyle they had before retirement, shows the Zamara survey.

But many clients might not even know it because many schemes do not provide adequate information that can assist them to make proper decisions in the form of financial targets.

When was the last time you got to know how much your pension savings have accrued, or how much more you needed to contribute to be guaranteed a stable retirement? Despite the assurance of a lump sum of money at retirement, has your pension scheme briefed you on the looming shocks such as health costs or inflation during your retirement years?

The study by Enwealth showed that of the 66 percent of pensioners that sought knowledge about their retirement savings from their employers, 56 percent accessed the information, presenting a 10 percent information gap.

Apart from competing priorities, little information and low financial literacy, some people also see their sunset years as too distant and not worth attending to, with Mr Raichura asserting that even people who should know better do not make an effort.

Poor coverage

The informal sector is largely uncovered by the available pension schemes. One effort made to address this gap was through the introduction of the Mbao Pension Plan in 2009, in which any Kenyan above 18 years could be contributing, via M-Pesa, a minimum of Sh20 daily, Sh500 monthly or Sh6,000 yearly, without any penalty for a lull in contributions. The fund has over 100,000 members, but this is less than one percent of the 14.8 million people engaged in the informal sector.

Lack of trust

A move by the National Social Security Fund (NSSF) to compel workers to save more was resisted by the Federation of Kenya Employers (FKE) and the Central Organisation of Trade Unions (Cotu) through a court order in 2014 after FKE complained that employers, besides implementing statutory NSSF deductions, had in-house pension schemes in which they contribute higher rates and thus the increase would compel some to stop these private arrangements.

Mr James Chege, co-founder of Usalama Tech Group Limited, an IT start-up company with four employees, is concerned about the financial costs the business would have to incur once its staff grows but considers such increased contributions a worthwhile investment if the workers would receive all their dues on retirement. “While the new regulation will hugely affect firms with many employees, I would not have an issue if it would have tangible impact on the employees once they retire, but the fund (NSSF) must show what the increase directly translates to once we retiree,” he adds.

Given the recent scandals dogging some of the public pension schemes, many Kenyans are less willing to increase their contributions, concerned that they will not benefit from the fruits of such higher contributions if the fund is not properly secured.
For instance, about Sh970 million that NSSF had banked with Chase Bank and Imperial Bank could not be accounted for after the two banks were placed under receivership, according to the Auditor-General’s NSSF Audited Financials for the year ended June 30, 2017. Only about Sh27 million was recovered from Chase Bank. The audit report also revealed stalled construction of the Hazina Trade Centre in Nairobi, with Sh1.9 billion already spent on the project.

The state-run pension scheme also had its total expenses (Sh5.5 billion) as a share of total assets (Sh198.5 billion) standing at three percent, above the set ceiling of two percent, implying that less was available for investment.

The RBA has already warned six public universities called out by the Auditor-General for failing to pay Sh5 billion worth of pension arrears that they risk losing their pension assets. Pensioners under the Kenya Ports Authority Pension Scheme also moved to court last week to bar the fund’s trustees from transferring pension houses to real estate agents, over fear of a hike in rent and evictions.

Lump sum

The 2019 FinAccess survey shows a drop in the share of Kenyans saving for retirement, be it in pensions or otherwise. About one in four (23 percent) Kenyans age 16 and above saves for old age, a decline by half from two in five (44 percent) in 2016.

Whether people save for the future or not is also dependent on their socio-economic status. The reluctance to lock into a pension scheme a sizeable share of one’s income is not only pervasive in public pension schemes.

The study by Zamara indicates that nine in 10 Kenyans with private pensions choose to have back the maximum possible amount of their retirement savings when they leave employment or change jobs, indicating that they might spend it and would have to start saving for retirement all over again in their next ventures. It also shows that 100 percent of members of provident funds opted to access their benefits as a lump sum and used all within less than three years of retirement. (Source /Daily Nation)

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