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- Saccos urged to invest in product development to remain competitive with banks;
Savings and Credit Cooperative Organizations (SACCOs) have been urged to increase investment in product development and embrace new technology to fight rising market competition, especially from commercial banks.
Macloud Malonza, Cooperative Bank of Kenya Vice Chairman, said that commercial banks have increased the activities of developing products, tapping all types of depositors in a big way, especially those who are formally employed.
“We have seen a deep business competition from the big boys in the money market, a trend exerting more pressure on the financial cooperatives.
The commercial banks, because of their up-to-date and high skill and improved liquidity, can capture more segments of business,” Malonza said.
He also noted that the high level of competition has resulted in a dwindling market share, placing credit unions in an unfavorable position.
In response to this increasing competitive pressure and the resulting decline in market share, Malonza urged:
“As the leaders of the cooperative movement, we must move with speed by investing in new technology, product innovation and increasing the intensity of customer engagement.”
He made the remarks during a leadership meeting and inauguration of Ushirika activities at the Kenya Bankers Hall on Friday, under the theme “Cooperatives driving inclusive and sustainable solutions for a better world.”
He called on the SACCOs’ leadership to diversify their investment models, such as a particular focus on Information and Communications Technology (ICT), and to shut governance loopholes that could have stunted growth.
He further called for increased investment in research and development to take care of evolving trends in the market and enhance capacity building for entry into the market.
Despite these necessary calls for strategic improvements, Malonza, who is also the CAK Chairman, acknowledged the cooperative movement’s 10 to 15 percent annual growth rate.
He said that this positive trend reflects the existence of a largely untapped market with significant potential for financial inclusions.
In addition, David Obonyo, Cooperative Commissioner, commended the cooperative movement’s contribution towards the country’s economic growth, especially in generating rural wealth.
In 2024, he stated Saccos subsector recorded a 10 percent growth despite business realities.
On deposits that were registered during the reviewed period, Saccos absorbed Sh1.2 trillion, assets worth Sh1.8 trillion and a loan book that was above Sh1.1 trillion.
“Kenya cooperative movement boasts some of the continent’s best institutions for instance, Co-operative Bank of Kenya, Kenya Union of Savings and Credit Co-operatives Ltd (KUSCCO), CIC Insurance and the National Co-operative Housing Union (NACHU),” Obonyo said.
To boost governance in the cooperative industry, the government is developing a model that will have a four-tier structure comprising primary cooperatives, secondary cooperatives, unions and apex bodies, Obonyo said.
He promised SACCO members that their savings are secure, adding that the government and the stakeholders are highly involved to close the loopholes in governance and ensure efficient management.
Daniel Marube, CAK chief executive officer, noted that there is poor governance on cooperatives.
“With interventions and reforms of the last decades aiding in slowing down instances of resource mismanagement in the cooperative movement, we are today proud that there are good regulatory initiatives already in place, for example, SACCO Societies Regulatory Authority (SASRA),“ stated Marube.
He revealed that the leadership of the cooperative movement is engaged in talks with the government to acquire 100 acres of land within the Ngong Forest for farming and tree planting
He also appealed to the stakeholders in the cooperative to step up advocacy and apply pressure to member of parliament to hasten the passing of the Cooperative Bill 2024.
