Police Sacco launches investment body

By Correspondent
The Kenya Police Sacco Society Limited has launched an investment cooperative subsidiary for its 400,000 members.

The Kenya Police Investment Cooperative Society Limited was crafted as a fully-owned subsidiary of the Kenya Police Sacco, which means that members of the board of directors of the parent Sacco will also be the directors. The Sacco members will remain delegates of the new body with the management and staff running its activities.
Speaking during the launch held in a Nairobi hotel, Kenya Police Sacco National Chairman, David Mategwa, said the main objective of the Investment Cooperative is to provide members with options of
venturing into real estate by purchasing land and constructing houses for them.
Mategwa described the Investment Cooperative as a vehicle for wealth creation and subsequent improvement of members’ lives.
The launch was graced by the Commissioner of Cooperatives in the Ministry of Industrialization, Patrick Musyimi. Other guests included Cooperative Alliance of Kenya (CAK) chairman, Marube and Kenya Union of Savings and Credit Cooperatives (KUSCCO) CEO George Ototo.
Meanwhile, savings and credit cooperative societies are shielded from effects of financial crisis due to the nature of their business, a supervision report for the industry says. According to the new report, Saccos have a lesser tendency to invest in high risk financial markets compared to commercial banks.
"It is therefore thought that their comparative stability, under both average and extraordinary conditions, can help to mitigate crisis impact for members and clientele, especially in the short-term," the report says in part. The report however notes that since most Saccos draw their membership from the formal sector, in times of economic downturn, their functioning can be undermined if member’s incomes are destabilised by volatility in the economy.
"This may lead to reduction of members’ savings and an increased demand for loans," the report says. "Saccos have reported increase in demand for loans, but have exercised caution in responding to requests." The report further quotes a report from the IMF (Hesse & Cihak, 2007) indicating that the cooperative financial institutions tend to be more stable in times of crisis, as their investment patterns use the capital of members in ways that best serve their long term needs and interests.
"Saccos are generally guided by a conservative lending philosophy that places member needs ahead of institutional profits. This restricts them from engaging in high risk lending practices, distinguishing them from other financial institutions," the report adds. According to the report covering last year, the sector witnessed a continued growth including increase in membership to 2.3 million from 1.6 million in 2010, deposits increased from Sh158 billion in 2010 to Sh180 billion while total assets increased to Sh248 billion from Sh216 billion in 2010. The gross turnover for the sub sector grew by 13 per cent to stand at Sh25 billion in 2011 compared to Sh22 billion in 2010.