Ukulima Sacco : Celebrating 37 years of growth

There is an increasing acknowledgement that cooperative societies hold the key to economic growth that spreads wealth across all populations. But the question has been that of proper management. Ukulima Sacco, one of the top 10 saccos in Kenya, is an example of what a sacco with proper management can achieve.

Mr. Stanley Chemng’orem’s involvement with Ukulima Sacco Society came when he was elected unopposed as the national vice chairman in 1974. Two years later, he became the chairman of the sacco which by then had only one staff, no office and practically no records. Today the sacco is housed in its own ultra-modern, 11- storey, Ukulima House right in the heart of Nairobi.

The building which is owned 75% by the sacco members and 25 per cent by the sacco itself in keeping with cooperative investment regulations, has three basements which can accommodate 60 cars. It is fitted with high speed lifts and is, as Mr. Chemng’orem proudly puts it, “a land mark of the existence of the Ukulima Sacco Society and an important contribution to the economy of the country.” The society’s membership, although it has climbed down from its peak of 51,664, due to a combination of external factors such as deaths, retrenchment and government embargo on civil service employment, still remains one of the highest at 26,129 in the country. It comes from 85 employers, a record in itself, thanks to a change in the sacco bylaws that enabled the stretching of the common bond.

Member Recruitment

“This has enabled the society to recruit members from virtually all ministries, parastatals and even reputable organizations from the private sector,” Mr. Chemng’orem told Investment News. “Our strategy is to grow the membership base by 10% every year,” says Mr. Chemng’orem. “The society has a lot of potential for growth with the opening of the common bond. We have introduced new and varied products and services to attract and retain members,” he adds.Share capital has grown from a miserly Shs206, 330 in 1972 to an impressive Shs2.9 billion and is targeted to grow by 10% annually. To achieve this, Mr. Chemng’orem is relying on the confidence the members have in the sacco and their propensity to save. “There are many high savers in the society whose share contribution exceeds one million shillings,” he says. In deed, some of them have saved more than Shs2.4 million with the cooperative.”

By December 2008, the sacco’s fixed assets stood at Sh361, 644,010. And they include Ukulima Cooperative House, 46 residential houses in Eldoret and Ukulima Towers plot in Nairobi. The sacco also has other investments such as Shs13, 778,430 shares in the Cooperative Bank of Kenya, Shs1,131, 500 shares in Kuscco, Sh683, 502 in the CIC and Shs 50,000 in Codic.

Growth Rates

With this kind of growth rates and member support, Ukulima Sacco is in a good position to offer better, varied and efficient products and services to members. In deed, it was this financial might that enabled the sacco to come to the rescue of members then locked out by commercial banks through restrictive policies and unaffordable high minimum account balances in 1999. A front office activity was established to offer banking services to the members. Now the Fosa constitutes an important part of the big success story of the Ukulima Sacco. (See story elsewhere). “We see the sacco itself as an investment for its members. We are therefore urging them to reinvest their loans in income generating activities to improve their lives.” And in deed, many members are heeding the advice, with some taking loans as high as Shs3 million for reinvestment.

The normal loan processing period has also been reduced to one month or less. And the processing of emergency loans has been decentralized to the sacco branches countrywide to save members time and money travelling to the society’s headquarters. The essential outcome of this is excellent returns on investments for members. In 2008, dividends and interests were paid at the following high rates: main shares 8%, Ukulima Cooperative House shares 15% and Eldoret houses shares 5%. The total dividend paid for the year 2008 was Shs243, 247,306 which represented an increase of 10.9 per cent over the previous year.

Experience

The experience of building Ukulima Sacco Society has made Mr. Chemng’orem come up with a 10-point sacco management principle of good sacco leadership. A sacco leader must be:
1. A person of unquestionable integrity, selfless, honest, transparent, accountable, disciplined, efficient, dedicated and of good moral character.
2. A role model, leading from the front and ready to lead by example.
3. A person with the welfare of the society at heart, a desire to have it advance to greater heights and more prosperity.
4. Able to serve the society and members faithfully, without fear or favour.
5. Proactive, visionary and entrepreneurial oriented
6. Able to ensure safety and soundness of members’ funds
7. A team player
8. Able to ensure that unity prevails in the society. A society full of squabbles cannot prosper.
9. Able to encourage openness and dialogue with and among members. Members should feel free to discuss and criticize when necessary.
10. Able to recognize the role of a supervisory committee as positive and complementary. Supervisory committees play roles in building a strong society. Everyone should be regarded as a member of a team working towards the same goal—that of making the society a success.

It was because of this concern with improving management style that Mr. Chemng’orem and his team introduced the annual delegates system and scrapped the annual general meeting (AGM) system for the sacco. “It was felt that the delegates system could improve members’ participation in the society's decision making,” says Mr. Chemng’orem.With AGMs, it was only members from around Nairobi who could attend and vote on issues. “Being a countrywide sacco, we felt this was unfair. The sacco was being run only on ideas of members who were around or in Nairobi. There was no input from the rest of the members around the country.” Currently, the society has 95 branches spread throughout the country. Each branch elects three delegates who represent their members during the annual delegates meeting (ADM). The delegates elect 9 members to form the Central Management Committee and three members to form the Supervisory Committee. This is the group that’s entrusted with the day to day running of the sacco.

Management Style

The management style requires an informed membership. And that is why Ukulima Sacco has put members’ education as one of the priorities of the sacco management. “Members need to be informed about their sacco’s operations, their rights and obligations, “says Mr Chemng’orem. To fulfill this, the central management committee and managers regularly hold meetings with members to educate them on various issues of interest. Educational materials such as newsletters are also made available to the members.”

Members rights and obligations are further elaborated upon in a service charter developed and adopted by the management. “The charter is to improve service delivery. It articulates the members’ rights and obligations. It is firmly based on the sacco mission to provide quality savings, credit and front office facilities that enhance members economic and social empowerment,” says Mr. Chemng’orem.

Challenges

Among the challenges Mr. Chemng’orem and his team have faced while building the Ukulima Sacco was dealing with the initial prejudice among potential members. “A large number of them at that time had the mistaken idea that saccos belong to junior staff who have little money,” he says. The effect of this was that the saccos monthly share contribution was set very low—at Shs 20 for every member per month. And worse, it remained like that for long even when salaries had improved. “This meant there was little money that could not, without much diligence, satisfy the members’ loan demand.” Today contribution has been raised to Shs800 per member, every month.

Mr. Chemng’orem’s achievements have been recognized far and wide. As early as in 1985, he was appointed as one of the commissioners to revive the Kenya Union of Savings and Credit Cooperatives, KUSCCO. He was later elected as director and vice chairman of the apex organization, positions he relinquished in 2004. He has served as the deputy managing trustee of the National Social Security Fund (NSSF) and was awarded the Order of the Grand warrior of Kenya (OGW) by the president in 2001.

After graduating from Egerton College, Mr. Chemngorem joined the Ministry of Livestock Development in 1966 and worked in various districts before becoming the head of artificial insemination department at the Animal Health and Industry Training Institute, Ahiti, Kabete. He has travelled extensively and attended many courses and seminars in the country and abroad.

He counts as his greatest achievement, the implementation of the Strategic Plan at the Ukulima Sacco Society,“A strategic plan is a tool for good governance, and a road map that helps the society define its own preferred future,” he says.

With a strategic plan, he adds, a society can quickly and effectively respond to the changing needs and expectations of its members.

So what are his plans for the sacco? Mr. Chemng’orem has several, the most important of which are:

1.To reduce loan processing turn around time to 24 hours
2.To develop and introduce more and relevant products and services.
3·To enhance customer care
4·To open more Fosa branches depending on viability

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