Kenya National Police (DT) Sacco opens doors to non-police members in new changes

By Steve Umidha

The Kenya National Police Deposit Taking (DT) Sacco has formally opened its doors to non-police members following last month’s name change. The entity previously operated under the label, Kenya Police Sacco.

The Sacco’s Chairman David Mategwa said the new move is part of the firm’s ambitious target to hit Sh50 Billion in assets by the end of 2022 when the Sacco will be marking its 50^th year anniversary.

Adding that the new changes came after consultation with professional stakeholders with a view to spreading the business that currently has over 63,000 members – 99 per cent of whom are drawn from the police service unit.

“The 1 percent we are targeting has a huge potential of meeting those targets. We are also running a countrywide financial education programme to our top savers, whose mission is to encourage member savings and prudent use of loans obtained from the Sacco,” said Mr Mategwa in an interview.

The Sacco ranked the third largest society in Kenya, was registered in 1972, and presently has an asset base of Sh39.1 billion and a loan portfolio of Sh32.6 billion as of December last year, compared to Sh34.8 Billion in assets it announced in 2019.

The announcement also comes barely weeks after South African rating agency Global Credit Ratings (GCR) raised the rating of Kenya Police DT Sacco, citing good asset quality, healthy funding and liquidity.

The agency said in a notice that it has raised the Sacco’s Kenyan long and short-term issuer ratings to “BBB+/A2” from “BBB/A3”previously, assigning it a positive outlook.

“The ratings on the Sacco reflect its favorable asset quality relative to financial sector peers, good capital and leverage and sound funding and liquidity, counterbalanced by its limited competitive position in the context of the broader banking/financial institutions sector,” noted GCR in its June assessment of the Sacco.

The agency further noted that the society’s dividend policy dictated that the dividends declared and approved by the board are the net surplus after retention of Sh1 billion or 20 percent of the net earnings and fulfilment of the capital adequacy requirements.

GCR also upgraded the rating due to the Sacco’s low-risk rating, due to a stable membership base and low non-performing loan (NPL) ratio of 0.8 percent compared to the industry average of 6.15 percent.

Mategwa says the company will continue to register a strong capital position into the long term, sustained by a conservative dividend policy and strong earnings.

This comes even amid plans by Kenyan Saccos to implement an inter-Sacco lending market and eventual integration into the National Payments and Clearing system in a development.

Through sector regulator Sasra, the industry regulator is 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) where Saccos can lend and borrow money from each other thereby cutting ties with Commercial banks whose loans are considered very costly.

Under the new 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.