1. Building a Model Stima Sacco By Paul Wambua Thursday March 26, 2015

2. MODEL SACCO BUILDING – OVERVIEW
We shall:
Regularly Survey members’ financial needs.
Design new products to meet those needs.
Determine the most efficient and convenient method of delivery
Price products to reward savers and borrowers alike.
Practice institutional financial responsibility
Safeguard members’ assets.
Educate members on financial management issues.
Recruit and develop SACCO leaders and staff.
Seek to be leaders in financial innovations and solutions

3. THE OPERATING ENVIRONMENT IN KENYA – POSITIVES
SACCOs:
Enjoy widespread coverage and are well known.
Have the benefit of “check- off” systems through their employers.
Mostly have low delinquency and default rates.
Are growing quickly
Are very active in micro-finance.

4. NEGATIVES Credit dominated movement at the expense of the saver
Unable to meet a growing demand for loans.
Mostly withdrawal of savings on retirement.
Grant loans on formula basis rather than on credit worthiness.
Low adoption of technology
Weak capital levels
Weak regulations.

5. PERCEIVED PROBLEMS Membership demands cheap credit.
Loans are granted without consideration for a member’s ability to repay.
SACCOs are unable to invest in new services due to low margins.
SACCOs are unable to invest in new technology.
You won’t deposit if you can’t withdraw.

6. NEW REFORMS NEEDED
Increase loan interest rates to come closer to market.
Empower management committee members to set interest rates as needed.
Pay market and/or competitive rates on savings.
Sustainable profitability
Build institutional reserves.
Lend on basis of worthiness, not multiple of shares.
Recruit and develop dedicated members to assume positions of leadership.

7. THE BENEFITS OF REFORMS FOR STIMA SACCO
Sufficient liquidity to meet loan demand.
Market and/ or competitive rates (interest) paid to savers.
Solid capital base for growth and diversification
New savings and loan products.
Stronger SACCO – safety and soundness.
Increased convenience to members.
Increased accuracy – information management as a result of improved technology.
Sustainable SACCO