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By Steve Umidha
James Kimani Mbui took the reins of Amica Sacco close to a decade years ago, with an ordinance to forge a new path forward for the brand, previously known to many as Murata Sacco.
His mission was a clear-cut one; to redefine – or simply tweak – everything the company’s Board of Directors felt was awry at the time.
The result is a strategy that, in a nutshell, describes the true meaning of hard work and resilience.
Mbui, presently holding the position of a Chief executive officer, reveals that the journey was a dreary and the toughest assignment he has undertaken in his career to date, but one that eventually “Paid off.”
“I deeply remember when the Board reached out to me to undertake the role at the time. To be honest, it was a painful and very emotional task I’ve had to take on in my thirty years of service in the Sacco movement,” discloses a chivalrous Mbui during a recent visit at the company’s head office in Murang’a town.
Rebranding pays-off
The overall aim, he tells me, was to ensure the company’s survival beyond the lifespan of its initial founders who voluntarily stepped back – in an effort to allow him spearhead a rebranding exercise the firm had set out in 2017.
It was an obligatory task Mr. Kimani, a part-time farmer reveals, meant that the institution’s older staff would leave the room for the fresher and younger generation to provide the needed impetus, if the Sacco was to remain competitive in the eyes of its rivals.
But that came at a cost.
The Mbui-led team, having pondered on the decision, expeditiously issued a communiqué targeting employees aged over 40 years in a voluntary early retirement deal.
That announcement, unsurprisingly, left many red-faced.
“It was an emotional and unpopular decision but we had to do it nonetheless. Eventually we came to a conclusion and offered them a decent send-off package,” he confirms.
On its facelift menu, the firm’s management intuitively embarked on a restructuring blueprint which saw Murata adopt a new name – Amica Savings and Credit Limited, Amica Sacco obtaining a mix of navy and nimble blue colours for its corporate identity.
“It was a process that would see us spend over Kes 300 Million in the rebranding exercise alone including expenses of about Kes 70 Million in systems upgrade as well as expansion of agency banking to target our rural customers,” confirms the low-keyed family man.
Further, the Amica Sacco boss who is moderately involved in avocado farming and tree planting, says the re—branding decision also compelled the company into training its new and fledgling staff to offer the desired oomph which was necessary in the transitioning period.
Prior to that, the entity operated under Murang’a Farmers District Co-operative Union (MFDCU) as a Union Banking Section (UBS) which later transformed into a separate legal entity from Murang’a Farmers District Co-operative Union (MFDCU) and registered as Murata Farmers Sacco Society Limited.
From a loss-making entity
“We needed to react and as the company’s management leader, I had to champion my staff in converting the Sh200 Million loss we reported in December 2014 for instance to earnings and that needed a well-calculated strategy which put me on the spotlight,” narrates a softly-spoken revered church elder.
Five years into the rebranding exercise, Mbui concedes that the process has substantially paid the much-needed dividend.
“It was worth the trouble,” he chuckles.
The veteran Sacco industry intellectual, who has worked in five different Saccos across the sector proudly says the company has grown more than five folds since its rebranding in 2017, posting an impressive Sh500 Million in total revenues for FY 2020 and Sh 978 Million for the year ended December 2021 – just Sh22 Million shy of hitting a 1-Billion mark for the 56 year old financial giant.
Naturally, a number of reasons contribute to a company posting losses — a non-existent business plan, and lack of capital and poor management are among the most popular reasons, which are key areas Mbui says were identified in fixing the gaps.
The Kes1.2Billion target
Today, Amica Sacco is ranked one of the best Deposit Taking (DT) Saccos in the country with an ambitious target to hit Sh1.2 Billion in total annual revenues by Year End despite the existing macro-economic challenges.
Even the Covid-19 pandemic hangover as well as the looming general elections – slated for August this year, will not stand in the way of achieving that feat, according to Mbui.
“We are aware of these challenges and much as we believe the year may not be as stable as we had earlier anticipated, we believe we will meet those targets and perhaps surpass the Sh1.2 Billion the company has set out to achieve,” expressed the confident leadership coach.
To meet its ambitious target, Amica Sacco will aim to focus on its revolutionary innovations such as the mobile banking platform (AMICASH) to build on the successful reworking of its business strategies over the last few years.
The Murang’a – based Savings and Credit Cooperative (Sacco) will also enhance its growth plans from increased deposits and loan repayments among other aims.
It is also betting big on its digital makeover as well as new opportunities in the industry brought by the Coronavirus pandemic which upended businesses across the segment for most part of 2020 and 2021.
Industry realignments
Available industry figures show that total assets, loans and deposits have improved despite the pandemic concerns, with industry asset base jumping to Sh622 Billion in 2020 compared to $5.1 billion dollars in 2019, according to figures by Sacco Societies Regulatory Authority (SASRA).
Further, industry adjustments could see Kenyan Saccos commence an inter-Sacco lending market in a development that will eventually see Saccos drift away from external borrowing as a funding source for their assets, largely due to the expensive loans and stringent conditions by commercial banks.
Through, Sasra the industry regulator will be working with a multi-agency team comprising the State Department of Co-operatives, the National Treasury, Central Bank of Kenya (CBK) and the Kenya Law Reform Commission (KLRC), and has drafted the legal framework for the operationalization of the Central Liquidity Fund (CLF) – a kin to the US model where Saccos can lend and borrow money from each other thereby cutting ties with Commercial banks whose loans are considered very costly.
The then Co-operative Principal Secretary Ali Noor said the Cabinet approved the establishment of Central Liquidity Funds and the Share-technology platform in July 2021.
The government is also operationalizing the Deposit Guarantee Fund to protect members’ savings when societies collapse.
The PS revealed 250 non-deposits taking Saccos with deposits above Ksh 100 million will now be under the watch of the Sacco Societies Regulatory Authority (SASRA).
“The task force appointed by the Cabinet Secretary to fast-track implementation of the National Co-operative Policy is concluding its assignment, and it is expected to give recommendations that will overhaul co-operative management,” said Noor.
The actualization of the Central Liquidity Fund is now a reality with parliament expected to approve it after many years of speculation.
The fund enables Savings and Credit Cooperative Societies (Saccos) to lend to each other.
This move will create a robust cooperative culture where Saccos can lend and borrow to spur each other’s growth, decreasing their dependency on borrowing against high loan rates issued by external, non-co-operative lenders.
The central fund will be well structured and secure, thus boosting Saccos’ efficiency in lending to their members and more competitive rates while dealing a blow to predatory lenders.
More than 55 Saccos have indicated their interest in joining the fund to lessen the burden of costly external borrowing from banks. It is estimated that Saccos borrow to the tune of Ksh 2 billion from local banks that charge high interest rates.
Under the regime, Saccos will run their own inter-Sacco market where they can lend and borrow from each other at reasonable interest rates to offset their financial positions which was not possible in the past.