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Windfall as Sacco eyes Sh1.27Billion revenue target

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The Shareholders of Amica Savings and Credit ltd are eyeing higher dividends after Sacco announced an improved income target of Sh1.27 Billion for 2023 following a difficult year of rising inflation that led to calls to conserve cash.

The Sacco’s National Chairman Hezron Muchiri said at a press conference that the company will ride on the improved business environment to meet its annual revenue targets for the year ahead, and has earmarked deposit mobilization, loan book management, and strategic partnerships as some of its key pillar growth areas.

“We project to generate a revenue of Sh1, 272,000,000 in the year 2023. We shall use Sh894, 000,000 of this revenue for our Sacco expenses, and the remaining Sh378 Million will be retained as net income,” said Muchiri.

During Sacco’s recent special delegates meeting, the firm will also generate revenue from its interest income of Sh 834 million, service income of Sh122, 200,000, and investments and other income of Sh103 million.

Runaway inflation that has persisted for the largest part of the year, new taxes, and depreciation of the shilling against world major currencies have hit several firms hard, most of whom have warned of reduced profitability.

Kenya’s Sacco’s regulator has since recommended voluntary mergers of some stressed institutions to reduce unnecessary competition and improve financial positions.

The Sacco Societies Regulatory Authority (Sasra) for instance said in August that some savings and credit societies have failed to meet their obligations to members because of weak cash flows.

The regulator, in its annual report for 2021, recommended that some Saccos start a policy dialogue on voluntary mergers and consolidation in an effort to mend economic flouts in the financial sector.

The country’s annual inflation rate accelerated for the eighth straight month to 9.6 percent in October from 9.2 percent a month earlier and above market forecasts of 9.5 percent – marking the steepest inflation rate since May of 2017.

This breached the upper limit of the central bank’s target range of between 2.5 percent and 7.5 percent for the fifth month.

The outlook for 2022 and 2023 now remains extremely uncertain, according to economic trends.

The last time the country witnessed this kind of inflation was in June 2017 when it hit 9.21 percent, according to inflation data by the Kenya National Bureau of Statistics (KNBS).

The firm which was feted the top MSME Central region taxpayer award for the 2022 Taxpayers Awards by the Kenya Revenue Authority (KRA) held last week, is however optimistic that the recently hiked interest rate by the Central bank will not hurt its revenue targets.

The Monetary Policy Committee raised the Central Bank Rate (CBR) to 8.25 percent at its September 29, 2022 meeting – a move that ordinarily pushes the cost of credit to the borrower.

“Fortunately for us as a Sacco we do not expect such a challenge going forward, we will however keep our shareholders well informed on any market corrections if necessary,” offered the firm’s Chief executive James Mbui, adding that the company will seek to surpass the Sh978 million it posted for the year ended December 2021.

The devastating Covid-19 pandemic, coupled with the war in Ukraine has negatively impacted small and micro businesses (MSMEs), with most having to layoff, halt work, reduce employee salaries, or temporarily shut down while other businesses choose to shut down, with just a few having reopened at full capacity.

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